What Banks and Fintechs Get Wrong About Each Other w/ Ethan from FS Vector

Ethan Singleton 0:00

I think relatively fairish on most stablecoin use cases, international remittances, clearly the best to the use case.

Eli Wachs 0:15

Everybody, welcome to the Risk and Reason podcast. I've still not been fired as the host, so I'm back for another week. I'm joined with a phenomenal guest this week, Ethan Singleton, managing partner at FS Vector. Ethan, welcome to the show. Thanks for coming on. Thank you so much.

Ethan Singleton 0:30

It's my pleasure. We'll take out the managing in case my CEO is watching. Just partner. Just partner for now. Just partner.

Eli Wachs 0:35

Yeah. Okay. Partner at FS Vector. We're thrilled to have you. You this is called risk and reason. And we often have on fintechs and they complain about banks, and we have on banks and they complain about fintechs. You probably every day get both those people complaining to you. How did you end up in that role? There is legal background, but why did you want to have people in all sorts of sizes in fintech complain to you all day?

From Big Bank To Fintech Builds

Ethan Singleton 1:04

Yeah, I well, I don't use the term complain. Seek advice. Seek advice. I started my career, so I'm a lawyer by training, worked early in my career at HSBC, obviously one of the largest banking institutions in the world. Really enjoyed working at a large institution. I'd learned a lot, had a lot of surface area interaction with a lot of different people internally and externally. And when I shifted over to the consulting world about seven or eight years ago now, I started interacting with fintechs as well. And fintechs who were building things for the first time and didn't really know what risk or reason or compliance was. And they were like, we're going to leverage your expertise to like build and operationalize risk and compliance programs. And I really enjoyed both sides because it was large institution, large banks. Oftentimes you're kind of like maintaining the status quo. Operations have been built out. You're just looking to mature those operations. And there's some interest in that, certainly. But on the fintech side, it's about building and designing and strategy of how risk and compliance actually impacts your business. And that building side, once I started working on that, was just so addicting. And so I about four years ago joined my current firm, FS Vector, who the you know pitch to me was the only thing we do at FS Vector at the time is build and launch products. And most of that's on the fintech side. And so I heard that that pitch and I was like, look, I can do that all day. Super appealing. So I pivoted pretty heavily to just focus on fintech and fintech product builds. And that was across kind of all different products you could think of: accounts, payments, cards, a little bit of crypto, pretty much everything except for insurance. And then pretty early in my tenure at FS Factor, uh, we had gotten all of this experience from launching fintech products, often in the context of bank partnerships, um, that we realized that we had this core competency of like what makes a good bank partner. Um, so we kind of took that expertise and started pitching what we called bass builds to community banks. And that was bank partners uh when they're first entering the space, thinking about the strategy, thinking about the execution, obviously getting kind of senior management and board approval and regulator approval. Um, but helping them with that plan and then helping them execute on that plan. Um as you know, it's oftentimes involves uh plugging in new reg tech to supplement existing bank technology. Um so all that said, you know, it started, and I thought I was gonna pivot very heavily and just focus on fintech. Yeah. Uh and then it became this kind of like full circle moment at FS Factor over the years that we just, by nature of banking as a service and bank fintech partnerships, and fintech's relying on banks that I get to go back to the bank side as well.

Why FS Vector Exists

Eli Wachs 3:50

And Evans V, it it's a pretty amazing. I I had the pleasure of meeting the founder, who's a legend in the space. Really cool history in DC, now also as a venture fund. So like you see kind of these different areas coming together. Couldn't we talk about why there's such a need for these services?

Licensing And Lobbying In A New Era

Ethan Singleton 4:06

Yeah, and I'll I'll kind of go back to I guess it would have been eight years. Yeah, and what he saw when he started. Yeah. Um so our founders, John Betya, uh, who was first general counsel, chief compliance officer of Circle way back in the day. Uh, and Raj Date, who came from kind of the DC regulatory background, first deputy director of the CFPB, uh, kind of ventured into the investing early stage VC space. Uh, and and I think the story, and I might be misquoting, but I'll try to remember the story, is that John and Raj were in Boston at a bar like seven, maybe I guess about eight years ago. Um, and Raj was talking to John about how a lot of the early stage fintechs that he's investing in are kind of having trouble with that initial finding of a bank partner, building of a compliance program, thinking about product and how like risk and compliance interacts with the product side of launching a business. Uh and I think they actually like mapped out on a napkin like what could a consulting firm look like that could service those innovative, you know, emerging technology companies and finance and service and help them build and launch products. Uh and that was the initial impetus of the idea. And it started uh as that kind of build-focused advisory firm. And now we do so much more. We still have the kind of the core advisory practice, the team that I sit on and help lead. Uh, but we also have now a licensing practice, very, very busy in the fintech space, doing a lot of MTL acquisition, lending license acquisition, yeah, uh charter work that's really, really hot right now. Um, and then if you think further past the maturity of the kind of startup work that I do and even some of the licensing work, we have a lobbying team. And that government relations team is extremely plugged in. So it's Rogers Roots and DC. Yeah. That's right. Um, and so we have um Peter Freeman and Andy Barber and Ashwin Bassan, partners that lead that team. Uh, and as you can imagine, the kind of the current regulatory environment, particularly when we think about digital assets and the passage of the Genius Act and now the market structure bill, there's just so much going on on that space. Uh so it's really important for clients, whether you're a bank now, which is crazy to think that the the intersection of bank and crypto is like so potent right now. Yeah. But whether you're a bank or a blockchain native company, like having someone plugged in on the hill, like our lobbying team is really important.

Eli Wachs 6:26

And what does that look like? You know, if I if I'm working with you and I I say, you know, it'd be really helpful if uh regulators were more friendly towards X, Y, or Z. What would your advice be? Yeah, I mean it a totally it's not just one size fits all.

Ethan Singleton 6:40

Yeah, certainly not one size fits all. Depends on really two things. One, your product. You know, if you're if you're asking that question as a community bank, it's gonna be a very different answer than if you're a international crypto company who's trying to break into the US market. Yep. Um and then the second piece being you know the maturity of your company. If you're kind of early stage um and you maybe are are dabbling in novel or even like gray areas, uh, you probably don't want to like jump at the bit to like interact with regulators and be like, here's what I'm doing. It's this crazy thing, maybe it's in the bounds of legality or not. Um but if you're very established and you have certainly the capital and the resources to be able to actually get in front of regulators uh and then like pose that innovative idea as something that they should be aware of. Having an FS vector lobbyist uh or having just someone who knows the stakeholders in DC and knows the regulators and kind of get you in front of those regulators is a really nice tool.

When To Engage Regulators

Eli Wachs 7:43

Um before we get back to this, I want to ask you about culture, in that, you know, Raj this super personal guy. You, I've known you for many years now, and you've always been not just a knowledge, but very friendly. And I think that there, you know, the this maybe sounds strange, but like I wrote recently a post about you know culture and and what it means. And I think it's just a reflection of people in your org, but it is really important when you think about, you know, you're in an area, I'm in an area that we're we're not in the sexiest area, but we're in such an important area where when things go wrong, it when it goes really wrong, you end up with the need for the Patriot Act, right? Where it's like really bad things are happening with our financial rails. To say when it goes wrong, it's people's data is getting leaked. It's there is there is over three trillion dollars of money illicitly moved on rails last year, is a is a number you commonly see. Half a billion, uh half a trillion uh of fraudulent activity. So there's so clear. And how have you thought about just building out the business? Because it it's I feel now whenever you speak with a partner bank or a fintech, and it's who are you working with for consulting, it's FSV.

Culture And Being A Trusted Advisor

Ethan Singleton 8:46

Yeah, it's it's uh really, really important for us as we think about our growth and as we've been hiring more advisors. Uh naturally, as a professional services firm, you know, a lot of what we do is uh interacting with people, and you have to be personable and you have to be able to communicate well. Um I think that the really unique thing about FS Vector is that we look for people that have those qualities, but we kind of look for people that go a bit above and beyond that, and they're really trusted advisors, and that there is no question or problem that we can't help you think about. Uh, and in the context of the fintechs that we're helping build and launch for the first time, that's really, really important. And something I personally take pride in is that this is the biggest, oftentimes biggest move of their life. They're starting a company, they're dropping everything, you know, they they have investors that they have to kind of answer to and and spend a lot of time keeping happy. There's just so much pressure in launching a fintech or any company, really. Um and so our FS Factor team, like we recognize that. Like we and any any consulting firm could put together a risk and compliance framework and set of policies, hand it to a founder and say good luck. Like FS Factor, what we do is so much more than that. It's this framework of risk and compliance that then we communicate to the client and help educate the client on, and of course help operationalize in many different ways, but oftentimes in the plugging in technology like footprint for identity and verification and fraud prevention. But it's really that like personal component. And and a lot of the fintechs I've advice, even if we're not working together, it goes on the bank side as well. I'm very friendly with the people I've worked with. I've built amazing relationships with the people, um, which really makes it really fun. Like compliance is not that fun. I'll like I'll be the first one to admit it as a career compliance professional and you know, attorney by training. But um, the people that you work with, whether it's the the internal people at FS Vector or the clients, like really make it fun and you get coming back for more for sure.

Eli Wachs 10:51

Can we talk about AI? Never heard of it. So, you know, uh um at right uh if you're a developer and Claude or cursor comes out, great. Let's start using this tomorrow. If you're a bank, if you're a fintech, uh, you know, we very much have been spending a lot of time, we've worked with you, in getting your advice of how do we build out uh AI tools and agents for financial crime that can can hold up to regulatory scrutiny. It's also very much a a new frontier. How much has uh that changed uh the advice you've given, or how how much uh I guess how many people are coming to you saying, how do we use this technology responsibly?

Ethan Singleton 11:28

Yeah. It's uh almost every day it comes up with a different client. Um and you know, maybe a year and a half, two years ago, when you know we were kind of first seeing these LLM models come in and the even in some of the early kind of a agentic AI solutions or machine learning solutions for compliance in particular. Um my advice has always been like it's a tool to put in your toolbox that makes you better at being a compliance professional. We'll kind of stick with the compliance example. You 100% should be exploring it.

Eli Wachs 12:02

Yep.

Using AI In Compliance Safely

Ethan Singleton 12:03

Um whether that means you know exploring it using a third-party tool and kind of purchasing the AI capabilities or building it a house, which like there are banks that have the developer capabilities and the expertise to build kind of in-house AI agents, which is super exciting. Because if you can, you know, remove the abstraction layer and get directly to the model, and and uh there's so much more you can do, particularly in terms of like just protecting your sensitive data as an institution. Um, but the exploration uh of the AI capabilities that are out there have to be paired with really safe and sound risk management practices. Yeah. Um, whether you're a fintech who's working with a bank partner or a bank partner who's directly regulated, when you're ingesting potentially very sensitive data into these tools, um, when you're relying on these tools to make decisions on your behalf that historically maybe were a human-made decision, you really have to have sound model risk management practices. You have to build out kind of existing model risk management practices and augment them with AI-specific uh evaluations. Um, and you have to rely on vendors who like actually understand what that means. Yep. Um, so if you're a reg tech company, for example, and you're selling into these financial institutions, you know, auditability, explainability, you know, data privacy, security, all of these things should be kind of core to your business as you're going and interacting with these banks. Um, but it's fundamentally changing how my bank and fintech clients operate the compliance policies and procedures that I help build out. Um, and even like FS Vector, you know, we're thinking about how we can better use AI tools to help our advisors be faster and smarter and better at their job. Uh and I I'd be naive if I didn't admit that like professional service firms and consultants and and lawyers, you know, we're all thinking about how AI could replace us someday. Um, but we're also thinking about how do we, you know, make it so we're a better advisor to our clients.

Eli Wachs 14:07

You bring up something really interesting there about there's some banks that maybe are going to try to build agents on their own. Some will buy this. You work with both banks and fintechs. Uh how do you when do you when are you advising a bank to buy versus build? And on the same side, how are you what advice are you giving to a fintech on what bar they need to clear for a bank that historically builds, but maybe they would buy if it was good enough?

Buy Versus Build For Banks

Ethan Singleton 14:31

Yeah. I depending on kind of what we're talking about, I mean it it varies so greatly depending on the bank, um, size, competency, capital to invest in, like building uh say an AAI agent. Um in in the the bank partner ecosystem that I mostly operate, um, there's so many buy uh versus build questions that get asked as you're spinning that program up for the first time, both in terms of the technology that you utilize to interact uh with the fintech and their customers in terms of kind of middleware or ledgering technology. Um I've almost always kind of recommended the buy approach for that. Um the reason being kind of just like speed to market. Uh, we've seen some banks like Colum and uh Cross Rover who've like built those technologies out themselves. Uh takes a lot of time to do that. But obviously there's some kind of economic advantage of doing that. Um thinking about kind of like the risk and compliance, it's it's so hard to build uh onboarding platform or transaction monitoring platform or you know, sanctioned screening. All of these things are extremely difficult to build uh if you're a bank, and that's why I think most don't do it. Yeah. If you're JP Morgan, you probably are because you have a thousand developers to do it. But yeah, that's not the reality for you know the 2,000 or so other community banks that are you know under 10 billion. Um so if you're on the other side, if you're on the reg tech side, you're on the fintech side, uh, more specifically, thinking about um uh a bank partner evaluating the AI that I have been potentially implementing, um it's gonna be easier if it's a AI that they're familiar with. Um, but the fourth party risk considerations of your fintech working with an AI company. If it's an AI company that you've heard of and maybe even have diligence as a bank yourself, you could probably get more comfortable with that risk quicker than if it's, hey, I'm a fintech, I built out all of these agenc AI models. They feed into every single thing we do from onboarding to customer service to complaints to disputes. It's all ours, it's all built. Um that's they're starting from scratch when they diligence that. So there's there's a speed component there in terms of like onboarding with that bank that if you're a fintech, you could think of. But obviously, there's proprietary advantages and economic advantages as a fintech to build it all yourself. Um, and as we like think about the Capital One Brex acquisition that was recently in the news, the BRECS built out so much of their own technology across the entire customer journey. A lot of that, which is now kind of enabled by AI, there's a lot of economic value in building it yourself in the long term.

Eli Wachs 17:16

Can I ask you some hot take questions and you complete the fifth when you see fit? Sure. Uh you bring up call and cross river there. Uh how do you respond to this statement? Calm and cross river lead, those banks are ha have a genuine advantage over historical banks that are partnering with BAS providers to work with FinTechs.

Ethan Singleton 17:36

Happy to answer this one. Uh and try not to step out anyway.

Eli Wachs 17:38

And I'm not saying that's what I believe. I'm just saying that's what some people believe.

In-House BaaS Banks Versus Middleware

Ethan Singleton 17:41

Look, there is there is an objective advantage when you do not have a third-party technology company that's part of one, the fintech onboarding uh diligence term sheet negotiation process, but two, part of the actual technological technological implementation process. Yeah. Um, so if your column across river, it's all in-house. You know, the capabilities are very, very clearly laid out. And the division responsibility internally at the each of those banks is very clearly laid out in terms of fintech uh diligence and onboarding and implementation. Just naturally, when there's less parties involved, things are going to move faster. Yep. Um now that said, like it's it's very, very hard to build out what Column and Cross River have done. And as we mentioned before, it takes takes years and millions of dollars in some cases of investment. Helps to start a company, make a lot of money. That's the dream. We can all like exit and have uh an ungodly amount of money to just buy a bank. To go buy a bank and then build a pretty much build a fintech on top of it. That's not the reality for most of the banks that are getting into the fintech uh bank space. Trevor Burrus, Jr. And how should those banks compete, though, with the columns and crossovers? Yeah, and and this is something we help banks think about a lot because if you're using a Treasury Prime or an Increase or SyncTara or Lithic, depending on the product, you know, you're you're relying on their technology uh and the adequacy of that technology uh in a lot of ways, in terms of how you interact with the fintech, how satisfied the fintech is with that technology. Um so differentiating yourself can't really come from the technology side. It has to come from the leadership side, the economic side, make you know, the market is kind of broadening in terms of the supply of partner banks. So how you price deals and how you win deals is extremely important. Obviously, kind of having a clear regulatory history helps. Yep. Um how you acquire fintechs is extremely difficult. Um you can go to fintech meetup and try to get paired up one-on-one and hope you meet a fintech there. You can go to Money2020, uh go to other conferences, but it's really hard to like organically get fintech leads if you're a bank partner. Um so there's you know digital brand campaigns you could do, and you could really like beef up your website and have your SEO optimization nailed down. Um, but I I think the best thing you could do is have like the face of your partner banking division, like early on, too. And a couple of the banks that we've done, you know, someone who we mentioned kind of like someone who could be personable and like speak fintech and like really get out there and and be a salesperson on behalf of that bank, um, that can really surprisingly go like a really, really long way.

Eli Wachs 20:36

Now you you brought up Brex earlier. Obviously, Brex and Ramp have been in the news recently. Um uh may we all have five billion dollar outcomes? Like uh and anybody who's dunking on Brex, I'm just dumbfounded. But regardless, uh you you brought up Lithic. But Bo from Lithic, you know, tweeted congratulating Brex saying I'm Lou welcome. And then uh brought up, you know, he's like Brex spent a lot of time rebuilding uh IP2, like their processor internally, and that maybe that was technology they didn't they shouldn't spend time building. This is a constant uh Robin Hood rebuilt Apex, famously internally. Like they built their own version of a brokerage. So there's a long and stored history of fintechs deciding that they want to rebuild some of the tech. However, like do you could a another type of bank point that same argument at a leader or a column and say, yeah, like they they built this tech and it's a bit sexier, but at the end of the day, why do you need better APIs for opening a deposit account? Right. What would you say to that?

Ethan Singleton 21:33

Yeah, I mean, I think it's an extremely fair argument. Um and if I'm a bank partner who's maybe like working with a lithic or working with the Treasury Prime or one of the um other providers, this might seem counterintuitive, but it's kind of a selling point of like you're not being completely intertwined with my bank's technology, like which you are with a a column or crossover setup. You know, once you have that first bank part, you're really integrating. Right.

Eli Wachs 22:04

Yeah, which is kind of but it's actually a really it's a it's a really nice selling point. Trevor Burrus, Jr. We weirdly try to pitch that it's easier to move off footprint than other companies. That said, nobody we're proud to say nobody's ever left. But we we do think that it uh I'm sorry, I can continue.

Stablecoins Real Use Cases Versus Hype

Ethan Singleton 22:20

No, it is, but it is like a real thing. And and you know, depending on the fintech that you're selling to, if if it's a d startup fintech, you're their first bank partner, they're looking to just like prove the concept uh and actually like get the product to market and see if it has legs. Uh, you can do that at a bank that isn't have this full integration, probably at a bit cheaper rate and it maybe potentially faster. Um so that's something you can sell as a partner bank, you know, who works with a middleware provider is that like, look, if you need to move fast, we can do that. We have this implementation team uh at you know Treasury Prime, for example. We um can get you what you need at a pretty decent price just to prove the market fit. But if you feel like we're not a good culture fit as a bank, you know, come two, three years from now when our first agreement is up, you don't have to completely decouple. You can go work with another bank within that, you know, Lithic or Treasury Prime or you know, middleware XYZ network. Uh once again, it's kind of an interesting argument, but it it I think it could be a selling point if you play it safely.

Eli Wachs 23:28

Um another uh hot uh let me throw you two other, we've spoken a lot about AI, two other trends that I think you hear a lot of talk about in Fantec Curious, which you're very bullish on if you maybe have a healthy skepticism on either, but we've seen a lot of stablecoin activity in the last cult year, and a lot of people are talking about gentec commerce. I'm I'm curious, you know, how much how many questions are you seeing on these topics? And how much are you what do you think smoke versus what do you think is real?

Ethan Singleton 23:57

Yeah, the say stable coin every single day we we are having conversations about that. And should we be having conversations about that? 100%. 100%. Yeah. Um the the conversations look different depending on who our clients are. We're working with some banks now who are in the early stages of we think now is a good time, both from a market perspective and from a regulatory perspective, to somehow get into stable coins. Uh what that looks like, they don't know. We help them think through that strategy and help them execute on that strategy. So there's a lot of pontification about what are the use cases for stablecoin? What are the realistic use cases for stable coin? Um, how do banks actually make money on a stablecoin issuance or a partnership? Um I'll I'll be relatively bearish on most stable coin use cases, I think, in the coming years. I think and this is a low-hanging fruit and everybody saying it, but like international remittances, clearly the best suited use case. Uh faster, cheaper, I mean the legacy systems, but uh that that have historically been in place for cross-border payments are just really, really antiquated. Yep for now, although we see Swift, you know, they're adopting blockchain technology and they're trying to integrate it so that they're they're not losing too much of the market share. Um domestic uh use cases. I'm there's there's a lot more that I'm skeptical about on that side, particularly in the short term.

Eli Wachs 25:27

I'm not asking you to name names, but any use cases like specifically that you've seen.

Ethan Singleton 25:31

I I think I'm I'm pretty bearish and skeptical on like point of sale, like merchant, like stablecoin-backed cards. Yeah. Um for the US. Because I think if if you and I went outside right now and and asked people on the street, would you ever use a stablecoin-backed debit card for to go buy your Starbucks coffee? I think they would ask, I have no idea what you just said. Can you tell me what that means? Yeah. Um and then even if it should work as tech that you don't have to think about. Right, right. Agreed, agreed. If there's something behind the scenes, I think some of the things that uh like Rain is doing with like Lithic, I think there's some like plumbing opportunities for like settlement. Um, but I think if you're aiming for a consumer adoption of stablecoin-backed cards, it's gonna be really tough to replace the whatever top of wallet card they're using. Like if they're say they are kind of a technologist and they're using the Coinbase credit card, it's gonna be really tough to say, put that down, don't get your three to four percent in Bitcoin rewards and use this stablecoin-backed debit card instead, which maybe won't even get any rewards. Um but it and so there's there's so I think that, but there's still we're still so early, which is like the really cool thing. We obviously the Genius Act passing was really helpful to set the kind of legislative and legal requirements for offering these products. Um, I think the market structure bill, whether that passes um in the next few months or even at all, I might add some additional things that add clarity to kind of stable coin use cases. But overall, I'm like very, I think, bullish on the technology over the next few years at least.

Eli Wachs 27:11

You um you say kind of next couple years, you think about the domestic stable coin use cases that on the flip side, five years from now, what do you think are some really exciting innovations that we're going to see in this broader space?

Agentic Commerce Skepticism And Liability

Ethan Singleton 27:22

Yeah, and you and you asked before, you know, kind of like agentic commerce and like where that's gonna fit in. Um that's the one that I'm more bearish on. Yeah, I I I wonder oftentimes how much people will be kind of like willing to just give up control.

Eli Wachs 27:38

Yeah, I completely agree. And I just don't see it to your point earlier about uh you walk on the street and you ask people if they want a stablecoin bag. I I just don't know how how many people are actually having an agent go and book a plane ticket for them. And if they are, that's just how many flights are you booking a year? Yeah. Uh it's like the volume is just not creating. That's right. Even that's a good example. I I I do to use amount of travel. I would be happy telling Claude, hey, could you go and check Delta for me and find the flight that leaves between these times? It's just not still not even happening that much.

Ethan Singleton 28:08

Yeah, and it's there's a stopping point. I think there will be a stopping point for a lot of people in terms of how much control they give. I think your example of using um the agent to go pull things and give you a clear itinerary or like a clear option. Yep. I think most people will be fine and comfortable with that. But in terms of like take my card. Take my card, go use it as you see fit based on the prompt that I've given you. Like that, I think is gonna be a little bit tougher.

Eli Wachs 28:37

And there's a lot of like better prompt engineering classes than high school.

Ethan Singleton 28:40

Yeah. And like, look, at the end of the day, I'm a lawyer, and most of that stuff I don't understand once we get under the hood. But like that is gonna be extremely important. Who is the liability there if the wrong flight's booked? 100%. And also, you think about like the chargeback liability and how things will change. That said, I I feel like I'm there's it's a higher likelihood that I'm wrong about agentic commerce than I am about like domestic stable coin usage. But I'll be very interested to come back to that.

Eli Wachs 29:07

I tell the team often comes to me, they say, Eli, like we think this is exciting. And I go, I don't disagree, something probably will happen here. I just don't think it's happening in the next year. And as a startup, that means we just can't be focused on it.

Better Planning And Less Worrying

Ethan Singleton 29:16

100%. 100%. What I will say is that at FS Factor, uh, and we work with startups of of all varieties, we have not had one agentic commerce type. Which is pretty telling because you'd think they'd be coming to you if they were trying to do that. Yeah, we've had conversations, but um really what the the the focus now is still feels like kind of a very good mix of kind of traditional banking products wrapped in fintech layers. Yeah. Um and then of course the digital asset stablecoin work that I mentioned before, a lot of that's picking up.

Eli Wachs 29:48

As we get close to wrapping up here, uh I'm curious your advice. What is one thing that uh you think more fintechs and our banks are should be doing that they're kind of just neglecting? This is purposely broad.

Ethan Singleton 30:02

Oh, that's a great question. Um it's tough to think like years ahead, particularly when you're a startup fintech, or even like months ahead. Like, you know, you're kind of like, I want to launch a uh bank account product, and that's gonna be my sole focus, and I'm just gonna prove that use case and get it live. Um on the bank sides, too, we're just gonna onboard our first fintech, and then then we'll figure it out from there. Um, I I think what what could be done better is um kind of product road mapping plus strategy forecasting over months and years. Um and so if you're a fintech and you're launching that, let's just say commercial checking account product for plumbers, whatever it might be.

Eli Wachs 30:52

Sure.

Ethan Singleton 30:52

Um you should immediately what's that hot market, a very hot market. Yeah, that will not be replaced by AI. Uh you should immediately be thinking about what's next? Is it a debit card product? Is it a credit card? Are we gonna embed a wallet and allow them to get paid in stablecoin? But I think you really like that sometimes I I think the like product roadmap and growth strategy can get lost on on the fintech side. But the ones that have done like really well are like if you think about like Brex uh ramp constantly adding new products to supplement their initial kind of charge card product. Um, or even Chime, for example, you know, just kind of like starting off with like kind of relatively basic, you know, consumer. Even if you go to like Stripe Airwallets, he's kind of oh yeah, Stripe's a I mean a huge example of kind of just starting with relatively you know, kind of simple merchant acquiring and processing. Uh and then so many $500 million businesses. That's fine. It's uh it's so impressive. Yeah. It's really impressive. Um and then and then on the bank side, like I said before, kind of similar thing, like getting that first fintech and and serving that kind of first you know, use case that you're comfortable with. Maybe you only work with fintechs that are doing account products. Yeah. But then once you get that competency and you get comfortable with it, okay, maybe we'll add lending products next. Yeah. Or maybe or maybe cards or a mortgage, whatever you think you can continue to add, you know, diversified streams of revenue across your fintech partnership group, I feel like you have to be doing that.

Eli Wachs 32:18

Final question, inverse of that, what are too many people doing? Like what are you just seeing people spend time on that's just a time sync or a money sync?

Ethan Singleton 32:27

Well, if they're working with us, they're not. They're not wasting any other time. Everything is perfectly not. Exactly. Yeah. Um I think probably like worrying about things that are out of their control. Um so like go with the fintech example of you are trying to find your first bank partner, and you're going through and you've talked to like 10 or 11 or 12 of them, um, and you're in the diligence, and there's multiple banks that you want to work with. Um but you're focused too much on their process and like how long it takes them to diligence, and and what is their underwriting model internally for de-risking you and getting comfortable with you as a partner, or even like putting their pricing model together. Um, all of that time spent thinking about that and worrying about that and asking questions maybe to like your advisor at FS Fector of like what's taking them those so long. Um, obviously that distracts from very important things that should be happening, like your product build or building out your staff, or um, you know, actually having your engineers go in and build out the front end of the product. Um so it's tough because in the bank fintech ecosystem, there are so many reliances on third parties across the board. But you just kind of to like relatively stay in your lane, control what you can control, and just push forward on that.

Eli Wachs 33:54

Thanks so much for coming on. Thanks for having me. It's been great. Appreciate it.