03

Interview with David Ness: Fintech Partnerships Within the U.S. Bank Ecosystem

In this episode

In this episode, David Ness, Senior Vice President of Innovation at U.S. Bank, discusses his journey into financial services and his role in leading fintech partnerships. He emphasizes the importance of being humble and curious. David explains how, to know which partnerships and investments to prioritize, U.S. Bank identifies internal pain points and customer expectations. He also shares examples of successful collaborations. Finally, David highlights the impact of fintech in reaching underserved communities, and the importance of transparency and authenticity when building trust.

Key takeaways

  • Being humble and curious are important qualities in the fintech industry.
  • Identifying internal pain points and customer expectations helps prioritize partnerships and investments.
  • Successful collaborations have solved issues like deposit switching and digitizing assets.
  • The fintech space has made a positive impact in reaching underserved communities.
  • Transparency and authenticity are keys to building trust in the industry.

Transcript

Rory Holland

Well, awesome. Good to have you here in Austin, Texas.

David Ness

Thanks for having me.

Rory Holland

Yeah, for sure. David Ness, U.S. Bank. Why don’t you tell us something about where you’re from, but first, where are you from? I know Minneapolis is where you are now, but are you from Minneapolis?

David Ness

I am not. I’m originally from Scotland. So I moved to the States about 20 years ago. Tale as old as time: came over for a job, met a girl, stayed, and here I am, so yes. I used to work internationally for a company called Cargill, a big, privately held company headquartered in Minneapolis. There are so many big companies that are headquartered in Minneapolis, you just kind of stay there from a gravitational pull, and so now at U.S. Bank, leading their fintech partnerships and investments team and love it. It’s a good job. I think it’s the best job in the world.

Rory Holland

Good, we’re gonna have a lot to talk about. So, how did you get into fintech? One doesn’t just arrive at your role, a Senior Vice President of Innovation, is that right? 

David Ness

Long and convoluted story. I’m originally a cognitive neuroscience major, which means philosophy and psychology. And then I wanted to have a radio philosophy show, right? So I took a job at the BBC, absolutely hated it, and then went back and got a master’s. Then I did a range of positions and jobs all in technology through to strategy for numerous different companies and ended up at Target, where I was a chief strategist for their then Chief Information Officer and this was two months before the data breach happened if you can remember, the data breach back in 2015-2014 whenever it was and then I lost her and all the direct reports who were my customers and so had a new boss who was busy scratching his head saying what do we do with this mess that we have right now, and I said I’d really like to setup an external innovation function where we could look outside of large companies and find small companies that are solving our problems and bring them in. And so he said, David, I don’t care what you do. Go away for six months, right? And said, if you need money, you can sign a check up to $30,000. If you need anything else, come and see me, but just come back in six months. So I did that, and that was about 12 years ago. And so from them, I basically learned how to take small companies into bigger companies. I then went and did a venture creation company too with Intel, MIT, Target, and IDEO Design all about the future of food, tying back to my Cargill background. That got defunded, as most, some startup things want to do, and at that point I had a friend at U.S. Bank who said, you know what, we need help setting up a fintech practice. And I was like, I don’t know anything about fintech, but I know a lot about bringing small nimble companies into larger organizations. So that was like seven years ago. 

Rory Holland

Wow, that’s cool.

David Ness

Yeah, it’s fun.

Rory Holland

So you brought, so going back to your education, the cognitive, which I think is philosophy. Super interesting. So you carry that forward into everything that you do, more or less. I mean, we’re all human.

David Ness

I’d say so. I don’t wax lyrical on big philosophical topics anymore, but the analysis and the critical thinking that you learned through that really helps. And then psychology is something I joke about but actually, most of my job is reading people and putting the right people together in a room and knowing what’s going to happen. So I actually probably use it more than I think.

Rory Holland

Yeah. You’ve been doing that it sounds like for most of your career and putting people together. So doing the analysis, critical thinking for technology, where it might fit, bringing those two together. And so is that, tell me, tell us a little bit about what you’re doing at U.S. Bank.

David Ness

Yeah. So partnerships and investments and the investments is relatively new because there was a change in regulations that allowed us to do it more as a because banks obviously very heavily regulated, very risk averse, but are trying to create solutions for the customers that are constantly changing and their expectations are being set by fintechs everywhere. And so what we do is spend a lot of time just saying what are either our internal pain points or problems or challenges and or what are our customers wanting and expecting from us. And we sit with those business line leaders and we get a list of those things and we kind of make them into a kind of a short list of things that we’re going to go after sequentially. Then we set up a series of partnerships with venture capitalist players, people like Alloy Labs that are out there, ecosystem players and we have them help us find the right people for these problems. So if I say I have problem X, who do you know that might be working on this? And so we get a list of that. We go check them out and say, OK, this one kind of rings true as to what we think this one will work from a cultural point of view. Technology is great on this one. Let’s do that. We sit them down and then we kind of my team shuffles through those and then puts them in front of the business. We tell the business if you like them you have to work with them. Meaning you’ve taken, you’ve asked me to go and find you something. You’ve got to take it to the next level if I find what you’re looking for.

Rory Holland

So, I brought you together.

David Ness

So psychological guilt, that is basically the biggest tool that I use in my job. Right. So it’s like, I’m spending my time and resources. So if it’s serious and we, when we find someone that can hit the metrics we’ve defined, you then have to do the pilot with them and take it from there. And the reason we make the business do the work after we’ve done the initial lift is that relationship component. Right? So if they, if the relationship isn’t there, you can’t commercialize a solution where the business doesn’t want to own it. Right. And businesses want to own it if they see the results and they like the people on the team behind them.

Rory Holland

Yeah. Isn’t that true, though? If you’re, if you have good connection, good chemistry, we think about that at CSTMR, and our agency is good chemistry, good alignment with the leadership team that we’re working with because it is so hard what we all do for a living to build these brands and satisfy our customers, follow through on our promises, do all those good things. Yeah. Is there an example? I can imagine there’s a long list of problems or better ways of doing things that the different folks at U.S. Bank want your help to achieve. Like are there any examples you can share?

David Ness

Yeah, one that we… One of my favorites to talk through is account, so deposit switching on accounts. Sounds really boring, right? But think of it this way, if you want to set up a new bank account and you want to easily get your employees, your paycheck put into the new bank account, it takes quite a while. It’s painful, it’s a friction-full process. We were asked by our business four years ago, and so this is not an anecdote for the speed of innovation, right? But four years ago, we were asked to try and solve that problem. We found a company that was actually in our own backyard in Minneapolis that was doing it. So we brought them in, had a pilot, right? So again, got the business to do the pilot, right? But it was just still too much friction, right? There, and so we paused it at that point and said, thanks very much, it’s just not working out. And then we kept an eye on that company. They ended up being acquired by a different company, but someone that worked there went off and went into stealth for a while. And because we knew them and we had a conversation with them, they put their hand back up and said, hey, I’ve got this problem. Remember we were trying to solve this deposit switching thing? And we said, yeah. And so he said, I think I fixed it, right? So he comes back, great solution. The company’s called Atomic Financial and we commercialized that. And so now you can switch your paycheck over as you set up a new account, three clicks. It’s so smooth, it’s beautiful and that has allowed us to get a ton of deposits of those last year.

Rory Holland

Yeah, and so few people outside of our industry know how many partners it takes. It’s almost like how many licks it takes to get the center of a tootsie pop. I mean many. So the Atomic Financials that’s one example. That’s a good one. Are there any others that come top of mind?

David Ness

Trying to think of all my exciting ones I’m working with right now, so I can share them.

Rory Holland

Yeah, you don’t have to share names. I’m just curious. Is there a bank like U.S. Bank that is so large, has so many constituents, so many demands from the business to solve problems for the customers, are there any other ways that you see that are newer or innovating that you are solving problems using fintech? Like the deposit switching makes tons of sense.

David Ness

Yeah. So we do it. Maybe let me answer, non-answer your question with numbers. So I talk to thousands of fintechs annually, and when we start doing work with them, we start tracking them. Last year, we worked with over 369 companies.

Rory Holland

Wow.

David Ness

Across all ranges, to your point across all ranges of the bank and so we call everything fintech. But if you look at my portfolio, it’s probably about 40 to 50 percent enterprise tech. We’re a large organization, right? We’ve got 80,000 people. Large organizations have very set needs as far as data management, clean robotic process automation, all those kinds of things, and so a lot of the success is all behind the scenes. But if we can shave a basis point of a process we’re doing amazing things, right? Because that translates to millions of dollars for the bank. And we used to literally have truckloads of paper turning up, right, into an office in Boston where people would then be employed just to transcribe that paper, data entry, right? Remember, in university, you’d get those terrible jobs for like 20 bucks an hour, right? Just because no one ever wanted to do it. Exactly, but automating that kind of stuff, it’s just so there’s all these different things that are still out there, problems trying to be solved. It’s never the same thing twice, which is what I love about the job.

Rory Holland

Yeah, that’s incredible, so 300 plus partners in the ecosystem and probably always adding, moving around, there’s new things coming out all the time. What do you think is one of the biggest challenges with what you do?

David Ness

Great question. One is staying on top of things, right? Because yeah, somebody told me a stat that there’s a new company formed every six seconds.

Rory Holland

Oh God.

David Ness

If you think about it, I have a team of five. 

Rory Holland

That just stresses me out just thinking about that. 

David Ness

How do you even manage that? And so that’s why we took the approach to build out an ecosystem around our discovery mentality. So reaching out to those partners in the ecosystem that we built relationships with, that we trust and that knowing what their sweet spots are. So we talked to about 40 to 50 VC’s firms pretty regularly. We have investments in some of them, but we know each of them we kind of curated for the stage of companies they invest in and then the industries that they go after and then their thesis. And so I know if it’s a hospitality thing to go to talk to those four people, right? And so that really helps us speed up and stay on top of things, and then my team can work more on the harder part of bringing them into the bank, getting them through all the regulation and the hoops and the security that we have to go through.

Rory Holland

So it’s a lot like business development.

David Ness

That’s pretty much what I do is business development. 

Rory Holland

And you have a pipeline just like you would in sales. 

David Ness

My wife is in sales. So we joke about this all the time. Because five years ago, she said, you’re in sales, David. I’m like, no, I’m not. I’m absolutely in sales. And I do have a pipeline and we look at the value that these solutions could bring to the bank. And that’s how we prioritize a pipeline.

Rory Holland

So, you prioritize it based on impact to some degree. Okay. And are there a lot of people shouting for that impact? Like from internally saying, you know, I have these problems I need to solve or.

David Ness

Yeah, there is. So we have evolved the team where we used to be just like a first in first out kind of approach. And then a couple of years ago we split it and we have dedicated people over dedicated businesses now. So think of it as a relationship manager and account manager, whatever terminology kind of works. And through that we built really great ongoing connections and relationships. And now we know what it is they’re looking for. And so yeah, but because we have a team of five and we’re servicing up to 24 different business lines in the bank, we can’t be everything for everyone. So that’s why we’ve learned we had to prioritize. So I’m gonna get to you in two months because this thing outweighs what you’re trying to solve, right, and have those conversations with them that way.

Rory Holland 

You have a tough job.

David Ness

I have a great, I have the best job. I’m very, so here’s the tagline: here’s what makes my job easy. Our tagline for our team is quick nos, longer yes’s. And we said that originally for the founders, so we would always be transparent with you, because through my time at Target. I saw senior leaders not being particularly transparent with founders, and I saw founders putting too many eggs and baskets that were never gonna happen. So it’s just not fair or ethical. 

Rory Holland

It’s a very fair and responsible and professional way to handle it.

David Ness

Thank you. It came through a lot of guilt basically. Yeah, I felt bad like this felt wrong, this wasn’t right. I knew they weren’t gonna move it, but I didn’t have the power to say it at the time. So I said, I never wanna be in that situation again. So here’s our standard that we have as a team. We’re a Midwestern company, so not everyone likes saying no. So some executives don’t like saying no, so we say no for them, right? We love your solution, they’re not ready to move. We’ll reach out to you again when either we’re ready or something changes on your side, and we’ll keep the relationship.

Rory Holland

Well, that upfront and being honest, I think when I think of U.S. Bank as a brand, and this is my next question, it’s gonna be about customer experience that’s so critical that from the inside out, you guys are living that mantra. 

David Ness

We have a great philosophy. I’m biased, obviously, but I’ve been around a few companies. The ethical structure and culture that’s at the bank is awesome. Yeah. Just takes a weight off your mind. Because the checks and balances are in there, you know you’re going to have to try really hard to do something wrong. 

Rory Holland

Yeah, you know where everybody stands.

David Ness

Exactly. You know what’s expected. You know what acceptable behavior is.

Rory Holland

That’s great. So the question I want to ask about customer experience is thinking about your view of how the work that you do impacts the end user, whether that’s a consumer customer or a business.

David Ness

So that’s part of what I think makes it for me is sometimes a good customer doesn’t see it, right? So the behind the scenes kind of thing they don’t see. Sometimes they really see it and they live it. And I think this is one of the things about fintech that’s so awesome is it’s reaching out into some critically underserved communities where they just haven’t had either the knowledge or the access to some of the services that banks can do. And I’m still learning finance, right? So, I’ve only been at the bank for seven years. I know nothing. I might learn, I know nothing about finance on a daily basis, because there’s so much that goes on that’s just convoluted and hard to understand, but there’s so much benefit from being in control and having access to money at the right time in your life. And having access to money in a fair way is just amazing. And so there are certain solutions that we put in place that have just granted access to people that previously even haven’t had the knowledge or the ability to be able to do that. And so that’s an amazing experience.

Rory Holland

I love that. Yeah, we spoke earlier with a friend, Nick Elders, who founded SPARK, based in Minneapolis too, a neighbor of yours, and similarly bringing automation and using fintech to help solve problems for the underserved market so they can get financing to do the work they need to do at a fair rate and as quickly as possible with as less headache as possible because it wasn’t like that before and fintech has made that possible.

David Ness

Yeah, it’s amazing and also just the ecosystem around fintech too we did, we paid fora  study with one of our local kind of nonprofits that were an accelerator for diverse founders. And what they found is every dollar that they received was basically manifested back out into the ecosystem by 120%.

Rory Holland

Oh, that’s beautiful.

David Ness

So every bit of funding they could see, and we paid for this research to show it, there’s $120 in return for every dollar you give them.

Rory Holland

God, that’s beautiful.

David Ness

Yeah, it’s awesome.And one of the big cores of the bank is community. And so whenever we can see things that benefit the community as a whole, it’s amazing. And what you find is when you start diverting money into communities that haven’t had them, the effect is absolutely stupendous. 

Rory Holland

What do you see for U.S. Bank and your role, what do you see as the next big opportunity? And I don’t know that I want to even cede the statement AI at this point.

David Ness

It’s hard not to say it these days, right?

Rory Holland

Yeah, but whatever the technology is, where do you see it going from here?

David Ness

So I think the productivity, the promise of AI is huge. It’s hard not to go there. I’ll make a prediction, and I’ll probably get fired from making this prediction. But I think one of the things that banks in general have had trouble really getting their head around has been underwriting and that kind of automation of credit worthiness, etc. and so you have things like credit scores are in existence and everyone relies on those because they’re trusted, they’re true, they’re regulated. There’s stuff around that. So I think it was a huge… And we’re seeing a lot of fintechs now, right, step into that space and using different data around that. And so I think banks are going to start to embrace that more. So it’s going to be very slow because there’s a lot of regulation we’ve got to get through. But I think that automation of underwriting would be the thing I’m probably most excited about over the next three years or so.

Rory Holland

I’d love to see that happen.

David Ness

I would, too. The other thing I’m really excited about is the digitization of assets of any kind of asset. So if you think of banks, majority still use paper, believe it or not, for a lot of different things. Digitize that piece of paper, split it up, have fractional shares, open up, create marketplaces, invite people to it in a fraction of a second, that’s amazing. And so there’s a lot of work going on right now, and it has been for numerous years around the notion behind the digitization and tokenization of everything, and that being a new way of working. So I’m very excited about that.

Rory Holland

Yeah, that’s really cool. So you didn’t just arrive at this as we talked about in the beginning. You’ve worked your way through the industry. Knowing what you know now, would you give to someone that might be interested in coming into the fintech industry?

David Ness

Bland advice, but I think it’s still really true, is be humble and be curious. Be humble because you have to be a little bit arrogant because there’s gonna be so much demands on your time you’ve gotta be able to say, I’m doing the right thing, and here’s why I’m doing this one thing. So no, Mr. Senior Executive, I’m not gonna be able to get to you today. But at the same time, you need to be really humble with it. It can’t be cocky, it can’t be arrogant. I would say whatever company you’re working in, find out which job family runs that company. My experience has been wherever I’ve worked, there’s been one skillset or job family that is the backbone of that company, and they make the decisions. So, in Cargill, for instance, it was the CFO function. Right, so finance just controlled everything and if you knew that, you knew how to operate. And so, in Target, it was more of their traders, like the people that bought the stuff for the stores, they ran everything, right? And so they had the power. And you gotta figure out in your organization who has the power and understand how they operate and then build your systems around that, and it will really accelerate you.

Rory Holland

Yeah, smart. So I have one more. This one is around the idea, and I just want to kind of just paint the picture here, is our society and our country and our world runs on systems. So there’s this governing system that we all kind of count on being true and reliable. And I’ve seen, at least from my own perspective over the decades, a loss in trust and whether you know in the financial systems it’s the same thing. Trust is so critical, and you see some of the concerns people had in 07, 08, 09, the markets tank then and then we’ve had hiccups along the way, and then trust in general in society, I think, is a lot less than it has been, over the last several decades. So how do you see whether it’s U.S. Bank or the fintech industry or new brands coming out, from your view, how do you see them doing a better job building that trust so that we can restore faith in the system?

David Ness

That’s a great, really deep question. Um, I’d say it starts with transparency and authenticity. And so I’m a bank, I’m never, if I did a series of ads where I’m reaching out to really young kids and I’m trying to be something that I’m not, everyone’s just gonna go that’s ridiculous what are you doing right and it becomes mercenary, and you don’t like it so being authentic, so I’m a bank and I’m boring right we get that right so that’s the embodiment and that’s okay because we’re actually, they want us to be boring because with boring comes security, comes compliance, comes those things that give you trust that we’re gonna be good financial stewards for your money but I think in the future it’s just that case of be transparent, don’t try and hide what it is you’re doing. If you’re doing something for mercenary reasons, say this is why I’m doing it, because we need to make money, because money is how we get to here, how we get to here. That’s okay. But just be transparent about it. And so I think if we are clearer, and fintechs are good at this, right? Here’s my mission, here’s what I’m doing, right? And just help people understand that, and make sure you’re involving the right decision makers to guide you down that path, too.

Rory Holland

It’s been awesome.

David Ness

It’s been a pleasure.

Rory Holland

David, so fun. We’ve got to do this again.

David Ness

I would love to. This is great. Thank you so much.

Rory Holland

Thanks so much. 

David Ness

Have us back in Austin.

Rory Holland 

Yeah, man. Come on back. Thank you.

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