Podcast Interview Transcript

Jordan Hansen: Hello and welcome everyone. I'm here with Nancy Schneier from Vikar Technologies. Really excited to talk with her. Uh, I had a chance to meet with her marketing person, Stephanie first, and we learned more about what they're doing and it really cool stuff. But first, Nancy, welcome. Do you wanna give us a little introduction to you and kind of your background?

Nancy Schneier: Absolutely. So, uh, as you alluded to before, when we first got on this call, I've been in banking, FinTech. Technology in general. Probably my entire career, without revealing my age, 40 years and consulting as well, but always in financial services. That's been the vertical I've served in.

Jordan Hansen: Okay. So what made you want to get into that industry? Like why, why financial and, and especially FinTech.

Nancy Schneier: Um, just, I loved the intersection between what banking and, uh, the financial services sector is doing and how technology can be a grant, great enabler to make things happen, to drive innovation and really understanding not only how these banks work, but how the two can come together and really make a difference. So having had the opportunity to work at banks first, I did start my career in banking on the banking side. Could really understand that intersection quite well.

Jordan Hansen: Yeah. And you have, you've worked with some very large banks, um, you know, some very big players. What led to the creation of Vikar? Uh, why, uh, you know, you were one of the founders there and it was eight years ago now. Is that right?

Nancy Schneier: Yeah, so it's kind of a cool story. Um, as I alluded to, I worked in consulting, I worked, I worked at KPMG Accenture, so big, big organizations. And in those roles we were responsible for making transformation happen through technology. I also spent some time working at smaller and bigger Fintechs, Broadridge being one of them, Walters Klu, another. And then the last one before we started Vikar was a company called App Way. Now FNZ and App Way was. Completely focused on business process automation, if you may, for high ultra net worth clients, wealth clients. So our clients, when we worked at App Way, and I say we, uh, uh, liberally in the sense that we were the four founders of Vikar, also worked together at this other company. And at that company we saw the journey of how process automation using technology can really empower institutions to transform the way they do their businesses today. And so we recognized that there was an opportunity, a market out there that was greatly underserved community banks. So after spending six and a half years at App Way, the other company where we were responsible, uh, four founders, Glenn was the general manager there at App, way along with Adam and, and Ruta, the, the four, three other founders. We took that business from nothing in North America and built it to over half the global revenue. And that experience empowered us to say, Hey, if we did it here, let's do it someplace else. Community banks was the market we identified because we felt they were greatly underserved with technology.

Jordan Hansen: Huh. So app way, just to get a little background there, their focus was on ultra high net worth individuals. But they were a bank n no, they're like a FinTech.

Nancy Schneier: They were a FinTech Swiss based FinTech. Mm-hmm. And they developed technology for. High ultra net worth, uh, individuals who worked at banks. So our clients were the JP Morgans of the world, the Bank of New York, Mellons of the world, the big guys.

Jordan Hansen: Okay, got it. So you had the software that JP Morgan was using to service those, like the end consumer was that ultra high net worth individual. Yep. But used through Chase or whoever else.

Nancy Schneier: Exactly. And through that journey we recognize that technology can be the grand enabler, if you may, and business process automation, the whole concept around how do you automate the opening of an account, um, you know, get rid of the paper, get rid of the manual tasks that are being done repetitively. And we recognized community banks was a prime market to do that for two reasons. As I said, they were really limited. In terms of the technology, they had to do these kind of things and also the resources, they didn't have a full fledged IT organization. They really needed other resources. And so that's where we came in because we came in to talk about how they could automate certain processes, whether it be the account opening process or the loan origination process, and then develop technology software actually to automate each of those processes.

Jordan Hansen: That's fascinating. We talked about this a little bit before we hit the record button, but community banks to me, has to be honestly one of the most challenging markets to sell to. 'cause all those things you just listed now, they're certainly underserved, so they're probably demand. Yep. But resources, you know, they know it always, cashflow is not huge 'cause they have a smaller base, so Correct. I, I'm just in awe, admiration of your choice to say, yes, we're gonna go for this really, really hard one.

Nancy Schneier: Well, you know what? I will tell you how, you know, we did a little bit of research. It's not like we just randomly said This is who we're going to go after, but where it became so obvious that they needed technology and could no longer sit back on the sidelines, you may recall, and this was. In our second year of Vikar, PPP hit, right? Mm-hmm. And COVID hit, and that was a real test because these banks were used to, again, doing things manually. And so they tried to service all of their clients with automating the PP loan, PPP loans with no technology. So the first round, a lot of them did it manually, and I mean, all the way across the bank from the CEO, all the way down. And then I think the light bulb went off and said. You know what? We cannot sustain this anymore. We're gonna need some kind of technology to automate some of these processes. So that really became a catalyst for us to not only, and we ended up building out PPP loan origination and forgiveness software for 20 financial institutions, community banks, and all of a sudden, for us and for them, it's like. Yep. I think technology's gonna change our world. I think we have to, you know, go with what our other bigger banks are doing for us to remain competitive and also compete against the other community banks in, in our market, if that makes sense.

Jordan Hansen: No, yeah, that totally makes sense. Mm-hmm. So two years before COVID, the PPP loans, Vikar was already going strong. So that wasn't the impetus for you to start Vikar? No. I'm kind of curious. Yeah. I'm kind of curious how those first two years were, oh, that had to be somewhat challenging.

Nancy Schneier: It was challenging it, but then you always find that first client, right? Mm-hmm. The first client who believes in you. And truth be told, this first client was a former client of ours, meaning we had sold to this individual in our previous careers. So they believed, let's just say in us, okay? And we went in there and we said. We believe, and this was our hypothesis, that community banks are greatly underserved by lack of technology. Can you help us validate that? And they said, yep, I got a real live example. Here's what's happening today for me. We have what's known as a loan origination. Software, software that automates the, uh, origination of a loan. But once that loan is originated, we turn it over to our loan operations people and then we've got to quote, book that loan to the core. And our operations people are manually reentering the same data or adding the missing data that the loan operation, uh, that the loan origination system doesn't have. So we said, we think we can solve for that. Give us, you know, some time we'll build you a prototype. And we did. We had such a strong background in software development from our previous careers together. Um, and we, we designed a loan onboarding product that automated the booking of the loan to the core, got rid of all the manual reentering of the data, and they're like, okay, you guys are onto something. And then we took that product and sold it to another bank. And then we took that product and built out the loan origination PPP loan origination software that I. Described to you. Mm-hmm. And the reason why we were able to do all of this so fast and furious, if you may, is underlying both of our products, our loan origination product, and our account opening product is a platform that has all of these reusable components and business rules built into it with an open, and you've heard, you may have heard this expression, API, which is application program interface. Which enables us to connect into third party software quickly and eliminate a lot of the manual re-keying of the data. Make sense?

Jordan Hansen: Mm-hmm. Oh yeah, totally. No, I'm this, I'm right in the realm of where you're, where you're talking about. Okay. So they had the LOS of the loan origin, right. Origination system. And originally didn't intend to replace it. You just kind of built something to connect it to their core.

Nancy Schneier: Correct?

Jordan Hansen: Yeah. Okay. Correct. So, but then eventually you ended up replacing. I mean, originally it was for PPP, but it sounds like you look at your website, that's a big part of what you're selling is that, hey, we have a fully automated LOS or loan loan origination system. Correct. Is that correct? Now you're fully just, you are an l os, like, so if you were to describe your product right now, Uhhuh, you would say loan origination system. Right. This is automated from. Beginning of the end.

Nancy Schneier: Yeah. And, and I and, and, and I'm glad you keyed on the word loan origination because it's a misnomer. There are plenty of products in market that are, quote, loan origination systems. We're one of them. Okay, but there aren't too many products that are true, and that's why we call it loan lifecycle management product, which takes it all the way, meaning we've got the borrower portal for you, for the borrowers to upload documents to interact with the lender, right? Then we've got the loan origination system that does the credit underwriting, and there are plenty of those in market today, but. None of those have the next piece, which is loan onboarding, which books that loan from the loan origination system to the core. And then finally, we have a fourth module, which is portfolio management, which enables the bankers to do annual reviews. Covenant tracking, all that fun stuff. All sold is a modular software, so to your point, if the bank has a loan origination system already, we can plug in the other modules around that. That's one side of the house. And then the other is on the deposit side, which we have a full end-to-end account opening solution, both for online. Account opening and branch account opening, and again, sold modularly. So if they only want online and not branch, we can offer that. But if they want branch with full connectivity into their backend, uh, KYC, know your customer processes as well as integration into the core. We do that as well. And we can do annual reviews and maintenance of those accounts and both products. This is what the really cool part is, sit on the same underlying technology. Which is super cool because then a banker and their customer can originate a loan and open a deposit account all in the same platform, which is pretty cool.

Jordan Hansen: Oh yeah. I have a lot of questions. I'm trying to go back. I'm gonna go slow first. Sure. You mentioned, uh, integrated into the core. For those who don't know, what is the core, how do you explain that to someone like you? I, I totally understand what you mean, but I know that when I first heard about it, it was completely foreign to me. I mean, explain what, what, what's a core?

Nancy Schneier: Absolutely. So banks have, and, and, and I can even dumb it down, it's, it's the underlying platform, if you may. It's a system of record. Okay. Yeah. So that is where all the customer data is housed, but having that integration into the core, so fundamentally that's hard, important.

Jordan Hansen: Yeah, and it's hard, it's challenging to do that. It,

Nancy Schneier: it is really challenging for security

Jordan Hansen: reasons and regulation. They're like, lock those things down. It's really hard to get those integrations. So the fact that you're integrating is other people are like, well, why wouldn't they have this originally? Uh huh. I totally understand. That challenge was, it's no, it's not an easy feat to do that.

Nancy Schneier: Nope. Nope. And it's so important because when you talk about, and I alluded to it before, account maintenance, meaning changes in the customer records. You wanna make sure that's, that the system that we have can make those changes, but then. Integrate back into the core. 'cause the core is, like I said, the system of record so that you don't have data integrity issues. So think about this, we're pulling data from all those point solutions into the Vikar platform, making all the changes around originating a loan, around opening an account, validating these accounts, validating the loans, doing the credit underwriting, et cetera, and then tracking the right customer information in our platform back to the core. So that eliminates any manual re-keying that you have to do and really ensures that you have a hundred percent data integrity, which is huge.

Jordan Hansen: Yeah. Okay. So then the next part you said, well, lots of things, but one thing I wanted to key in on is you're helping automate this online. Account creation for depository accounts. Um, correct. And, and I know that some banks have this and, and for individuals it actually works pretty good.

Nancy Schneier: Yep.

Jordan Hansen: A lot of people do. And so this is an important thing and it sounds like you were doing that originally, which is, is awesome. Now, KYC is normally something again that know your customer. That's something that slows people down.

Nancy Schneier: Correct.

Jordan Hansen: Um, but you can automate a lot of that for the individual. How is it with commercials, commercial depository accounts? I know I, I go up in a business account. And a lot of time, I remember when I did it originally, they're like, hold up. And I saw them like navigate manually to the Secretary of State or to handle all these processes.

Nancy Schneier: Yep.

Jordan Hansen: And And our business now is focused around the Secretary of State, so totally familiar with this KC kyc. Yep. How does that work now for you guys?

Nancy Schneier: Oh, I'm so glad you asked that $30 million question. 'cause it is really the key part of our business that is just growing in leaps and bounds. So the whole world of account opening. I like the way you segment it. There's consumer, the individual, and then there's commercial business. When we built out our platform, we recognized. Commercial business is very complex, to your point, multiple entity, entity structure, multiple owners, LLCs, you know, and different rules associated with each of these different type of entities. If you may, multiple owners under one business that can only access certain pieces of data or certain documents. The whole product is structured with a rules engine that enables you to segment. Those type of owners according to what they're able to access a big deal. A lot of our competitors, when they entered the deposit account, opening market started with the easy part first, consumer and online. We believe the harder part is commercial, as you alluded to. Much more complex and bank directed or branch, because that's when you get into the weeds around KYC processes. Multiple KYC providers you may look into to validate whether this end client. Is a legit guy or not gal or not, or business or not. And many of these banks and what we've streamlined this a lot, use multiple KYC providers. So what are they doing? They're going into one manually recording the results, going into the next one, manually recording the results. What we've done is brought all of those various K YCs providers into the Vikar platform, automating. The results of those KYC searches, creating a risk rating based on those searches of whether this client should or not, or this business be a high risk, low risk, medium risk, and whether they can proceed with opening them up the account if they're in that. Bucket of higher medium. Then we have automation around, uh, periodic reviews where they continue to go back into those KYC third party providers to validate whether this account is something that the bank should have as an accountant at the bank. Makes sense?

Jordan Hansen: Oh, it totally makes sense. I bet your customers love you. Like those operations team that were doing all these things manually when they do all these, just the fact that it can happen like that, or just like an automated process. They can walk in the next day and say, Hey, someone created a depository account and they're all good to go. Or they get the scorecard probably and say, Hey, now you can make a decision based on these risk factors or not. Is that. Accurate.

Nancy Schneier: Yeah. I mean, and, and I'm glad you said it. Our customers love us because we really pride ourselves on focusing not just on the bank's customers, which obviously the banks are focused on, to make the journey as wonderful as possible. Great client experience, if you may. But we also focus on the bank's employee experience. If they are really challenged by. Getting through the day-to-day processes to open up an account and bar down with manual inefficiencies. If you may, you, you can bet they're going to. If they don't take it out on their bosses, there's, they could take it out on their customers uhhuh. So we want them to have a happy trail journey. Just like their customers are having and creating a real easy experience for both. So the, you know, the idea is to automate as much as you possibly can and make sure you're not manually reentering the same data over and over again. And I, I, I, I should have said this at the beginning, but the reason why we chose community banks is because. Up until recently, the technology they used was what the core provided them. The core, but then they would also offer other point solutions for loan origination or account opening, and or the bank may decide to go off. That grid and suggest or pick another third party, which is great. The shiny new toy I like to call it, without thinking holistically about how all these different point solutions can all connect. And that's why when we develop both our solutions for loans and deposits, we develop them as modules. Recognizing that in certain banks you can't rip and replace, but we have all the modules that can plug into the modules or products you already have to create true end-to-end digital transformation for loans and deposits.

Jordan Hansen: Yeah, and kind of speaking to this, like you said, the core, right? We talked about it like this is the core banking software. This is what bank, every bank or. You know, community, credit union, all the, they're all using this. Mm-hmm. But there's a lot of different cores out there. Yes. And you have to integrate with all of those. Like can you speak more to that challenge of trying to integrate with a whole different Oh, yeah.

Nancy Schneier: That's a, that's such a great question. So, um, anyone who knows the banking industry, certainly the community banking industry knows the big three, which is FIS, Fiserv and Jack Henry. We integrate into all of those because each of our clients touch each of those three players. Then you're run into a situation where there's an outlier or a less popular right now. We don't have any clients that that sit outside the big three, but our prospect list is building with clients that sit outside the big three. So building a platform that we did that was designed within, as I talked about at the beginning, an open API architecture enables us to quickly, as long as that core provides the necessary APIs, documentation, et cetera, to build out that integration and obviously. There was the first FIS client that we secured the first Jack Henry. Right. And this is where our technology prowess and the belief that they have in us, because we truly know software that these community banks were willing to take a chance, if you may, if you wanna call it that, to be the first. So. We will come across others outside the big three, and we will end up integrating into others, and we're not afraid of that. So we're open to hear what the banks have and we know we could fit all the pieces and parts together.

Jordan Hansen: Hmm. The funny thing is, is, is those like they're financial technol. There are FinTech, like by definition FIS, those are all big. Those are the big three for sure. Yep. But they're not the most cutting edge, like working with those techno, they've been around for so long that they're, they're kind of antiquated.

Nancy Schneier: Correct. And they love to call themselves fintechs. I laugh when I hear that, and that is why they've wait woken up. So you'll hear things like rappers, uh, uh, certain pieces of technology that each of these. Uh, uh, cores have, uh, f uh, Fiserv has a product called Communicator Open. FIS has a product called Co Connect. Jack Henry has the ap, uh, JH Exchange, which then enables fintechs like us to plugging. Easier than we were able to in the past. 'cause they've recognized, stick to your knitting, stick to what you're good at, which is the core. They all still will try to release or announce a new account, opening product or a new lending product, but the banks are getting more sophisticated. Their knowledge of what they really need to accomplish, what needs to get done for true digital transformation. And so the course have to recognize they have to be more open-minded to allow other fintechs to play in the sandbox, so to speak.

Jordan Hansen: Yeah. Well, Nancy, this has been really awesome. I really appreciate you coming on.

Nancy Schneier: Oh, no problem.

Jordan Hansen: Just one final question. So if you were to go back, you know, let's say nine years before you started Vikar. Yeah. What would you tell Nancy? What would you tell her then to say? What advice would you say, you know, going into this situation?

Nancy Schneier: Make sure you know your market. Make sure you know the market is ready for you. Okay. And then honestly, I think the key to all this, for me personally, has been find the right team.

Jordan Hansen: Yeah, people you're working with.

Nancy Schneier: And you know, my partners, we all worked together at the other fintechs and we knew we could work well together and make sure your team has the necessary skills and skills go in multiple buckets, software knowledge, banking knowledge, et cetera. But each of you have core strengths. And then you can play off of each of your strengths and build the team together. I, I think I probably would've done this 30 years ago, 40 years ago, like, why am I starting a FinTech at this stage? It's a little crazy, but for me it came down to the right team, the right idea and the right time.

Jordan Hansen: Yeah. That's great. Well, Nancy, again, really appreciate your time and thank you so much.

Nancy Schneier: Thank you.