Fintech South 2024: Mike Morris and Glen Sarvady with TAG Fintech Society

Intro: Broadcasting live from the Business RadioX studio in Atlanta, Georgia. It’s time for Atlanta Business Radio, brought to you by Kennesaw State University’s Executive MBA program, the accelerated degree program for working professionals looking to advance their career and enhance their leadership skills. And now, here’s your host.

Lee Kantor: Lee Kantor here, broadcasting live from Fintech South 2024 at the Woodruff Arts Center. So excited to be talking to my next guest, Mike Morris and Glen Sarvady. And they are with the Tag Fintech Society. Welcome.

Glen Sarvady: Thanks for having us.

Mike Morris: Thanks for having us.

Lee Kantor: Well, before we get too far into things, Mike, why don’t you share a little bit about tag Fintech Society. How you serving folks?

Mike Morris: Yeah, so we started about 2010 and really trying to promote this wonderful ecosystem we have here for fintech in Atlanta. And with that, we want to pull people together through networking, events, content. And one of the things Glen will talk about in a minute is our ecosystem report, which really tries to dive into how great our ecosystem is and what it consists of.

Lee Kantor: All right. So, Glen, why don’t you share a little bit about the report?

Glen Sarvady: Sure. We’ve been doing this report and taking kind of different angles of the ecosystem for oh, I’d say at least ten years. This year, one of the things we took a look at, if you think about the word fintech, it’s actually the combination of two words financial and technology. And we spend a lot of time as the Technology Association of Georgia, probably focusing more on the technology side, but it doesn’t exist without the fin side. And that’s one of the things we took a closer look at this time, particularly the financial institutions. At one point, there was much more tension where the the fintech companies kind of thought they were going to eat banks lunch and kind of take over and disrupt and pretty much knock them out of business. I think both sides have realized that there’s much more they can do together than there is, that they can do separately and heated battle with one another. You’ll find that most fintech companies actually make the majority of their revenue from revenue, from the billings that they put out to banks and credit unions. So it’s it’s a pretty symbiotic relationship. And I think it’s continuing in that direction. And that’s part of the ecosystem that I think that George is particularly strong at now.

Lee Kantor: Are you finding growth? Are more and more companies starting serving the fintech community as a whole? And are companies moving here to Georgia to be part of our ecosystem?

Glen Sarvady: I’d say yes and yes. Would you agree, Mike? I agree with that. We’ve got a list. It’s an ecosystem map that we update on a regular basis. So on an annual basis we actually print it, but it’s always updated on our website Georgia fintech org. We always have new companies coming in there. But frankly we’ve got several that, as we like to say, that are just kind of hiding in plain sight, that they’ve been doing fintech in this space for some time. And we frankly, there’s been 3 or 4 that I’ve just learned about in the last six months. We’ve added them to the list too. We’re over 260 at this point.

Lee Kantor: Now, what about kind of verticals within that niche are there, or is that a growing area as well?

Mike Morris: Yeah, within the niche. Yeah. We’re seeing a lot of diversity in the types of ideas coming forward and the areas where they can help the financial institutions. It has become a lot more collaborative. And I think now the fintechs are starting to really realize that we really need the bank’s understanding of compliance and anti-money laundering and all the different things they have to worry about on the bank side, that it’s A22 sided coin. They both have to help out on this. So we’re seeing a lot of good diversity in ideas and in ways to help the consumers that work at the the customers of the banks. And also, you know, with, with the banks themselves, with how they’re able to serve their customers better.

Glen Sarvady: Another way we talk about it sometime is the, you know, again, the kind of the subunits regtech regulatory technology that’s definitely a big piece. And, you know, there’s all kinds of applications. I think most of the I think McKinsey was one of the ones that did the studies, one of the the biggest areas for opportunity within artificial intelligence, AI, which everyone’s talking about is in financial services. So we’re seeing all kinds of companies pop up that even if they hadn’t been doing something that could have been called artificial intelligence before, they are now.

Lee Kantor: Now, um, how are we navigating this balance between the customer who’s wanting speed? It’s as quickly as possible. They want also transparency, and then also deal with all the cyber security issues that come along with speed. You know, the other side of the coin, when it comes to speed of how do you protect the person from somebody else who’s trying to leverage speed also?

Mike Morris: Yeah. And so unfortunately, a lot of the the banking technology is getting dated. And so it’s really having that front end omnichannel experience for the customer that they’re more used to with other industries. Right, to get into Amazon and other other and eBay and different places like that. So you’re really having the ability to Um, have that knowledge, but I think a lot of it is the regtech itself too. Coming into play is really helping get in there and, um, uh, help them with the regulatory issues that the banks are facing and also the fintechs are facing. But, you know, and that’s on the customer side, too, because it’s the protection. It’s like, hey, how do we make sure they have cyber resilience? You know, these these fintechs are quick to get started, quick to get building. They’ve got to build product and they’ve got to take it to market. And sometimes there’s gaps in their security. Right.

Lee Kantor: So they’re just want to go at full speed all the time. And then there’s got to be somebody that’s saying, hey, you know hit the brakes here a little bit. Let’s learn something first and then we can make some adjustments. Yeah. And that’s that balance is the magic right? Absolutely. That’s exactly right. That’s the challenge.

Mike Morris: And that’s where the banks have a lot of good experience, because they have had to do vendor management and due diligence over these fintechs for years. And they’ve had regulatory oversight. And so when the fintechs get in, they sometimes don’t know these, these areas of, of um compliance. And they have gaps. And so this partnerships with the banks really helped them learn. Sometimes it’s frustrating, right?

Lee Kantor: Both sides are frustrated though, right?

Mike Morris: Yes, but they’re getting to a happy medium. They’re starting to to understand how to speak bank on the fintech side and understand the compliance and the alphabet soup of all the different compliance things they need to worry about.

Glen Sarvady: I was going to say one of the things they can always do is agree to not like the regulators. Yeah. And we’ve had some we’ve had a lot of great presentations here from the regulatory authorities who belong in this conversation for exactly the reason that you mentioned. And I think, you know, it is it’s a it’s a delicate balance or a natural tension, whatever you want to call it. You know, you do have the need for speed, the desire for speed, but you have the desire for safety, too, especially in something like financial services, which may not necessarily apply the same way. I think it’s a much more important thing to be safe than it is in some other things where you’re not dealing with something like people’s life savings, right?

Lee Kantor: Exactly. Like that. Stakes are extremely high and extremely personal. When something happens to you, you know, and it’s another.

Glen Sarvady: One of those. And again, it’s, you know, it’s kind of a never ending loop where, you know, the fraudsters have access to new technology as well. So it’s always this arms race of who’s going to be ahead, right? So there’s the artificial intelligence that gets in the arms of, in the hands of fraudsters.

Lee Kantor: People.

Glen Sarvady: To creating deep fakes and faking voices, spoofing, breaking passwords. But then you can also use those same tools to make sure you create defenses.

Lee Kantor: And then I don’t know if the listener understands it. The bad guys that are doing this are not just some kid in the basement with Cheetos and Red bull, right? Like, this is a organized groups of people that are behind some of the fraud.

Mike Morris: They run like corporations. I mean, they are very well organized. They have research and development best.

Lee Kantor: Practices, you.

Mike Morris: Know, best practices.

Lee Kantor: They’re walking into an office with a briefcase and a whiteboard right in there. That’s how they’re doing their work. Yeah.

Mike Morris: Retained earnings. They go build more tools and build the next mousetrap to get us. So yeah, it’s a it’s a continuous battle. And that is where again the banks I think have a leg up to help the fintechs because they’ve had to deal with it for 30 years now. And these fintechs are learning and they’re doing a good job. But it does take a little time. But yeah we do want to protect the consumer. The final piece. And with the money again faster. Fraud payments are faster is faster fraud sometimes. So we have to have the regtech that can help us with that as well to look for that in real time.

Glen Sarvady: And it’s kind of disturbing that. I mean, we’ve been talking about software as a service forever. Banking is a service. We have all these different things. Frankly, I just heard this term recently fraud as a service is out there. Literally. Wow. Somebody sets up shop. Hey, you want to come and commit fraud? Come talk to us. We know how to do it. We’re the.

Lee Kantor: Experts.

Mike Morris: Yeah. Phishing is a service to set up a phishing campaign and have at it.

Lee Kantor: So where do you see the opportunity? And maybe as a whole for fintech and specifically to the Atlanta and Georgia.

Mike Morris: I think the main area I’m seeing and we’re starting to get more towards this, is having that true understanding of the data flows and the transaction flows from the customer through the fintech, through the bank and back, and making sure we really understand the control points, because in the last few years, especially banking as a service, if people are familiar with that, where the bank is, is basically the wholesaler and the fintech is the and retailers going out and acquiring the customers. We need to make sure that we understand the gaps there and where the regulators have gotten uncomfortable with it. And getting getting harder on the banks is finding those gaps and not realizing it’s not the I thought you were doing this. I thought you were doing this. Who’s on first? Right. And so now they’re getting better about that. But I really think understanding those transaction and data flows through the process and really understand who’s responsible, who’s monitoring and reporting on those is where we’re going to get the holes fixed.

Glen Sarvady: And I think, Mike, you used the phrase omnichannel a little bit earlier, which basically means people have a lot of different preferences. Some people prefer to bank at a branch. Some people prefer to bank through their digital phone. Clearly the trend is toward the digital side of things, but we’re finding increasingly that people don’t necessarily just gravitate toward one way of interacting with their financial institution. They do it through a lot of different ways. We just finished a research project. We collaborated with the Georgia Fintech Academy. We actually polled 1600 consumers and again, not surprisingly, about two thirds. Primarily, they think of themselves as mobile, first using a mobile device and sometimes a computer. They still very much place value on the branch. That was another question that we asked, and most of our respondents said having a branch nearby is extremely important. One of the things that’s even more interesting is Gen Z’s answers were not that much different than all the others, so they still do find value in the branch. They may not want to go into it all the time, but they want to know it’s there, right?

Lee Kantor: And when you hear a lot of kind of anecdotal information, people think, oh, they don’t go in the branch at all. They’re just always on their phone. That’s all they care about. And that’s not always the case.

Glen Sarvady: And they don’t necessarily go in as often. They may not go in at all, but they want to know it’s there. It’s there. Right.

Lee Kantor: Exactly. So if somebody wants to connect with Tag Fintech Society, what’s the best way to do that and get involved.

Mike Morris: Yeah we have the website up Georgia fintech.org and you can get through. Contact us there. We’re always looking for new members. We’re looking for people to come in and bring new energy and bring new ideas, and we’re welcoming.

Lee Kantor: Everybody in the ecosystem is welcome, of course.

Glen Sarvady: Absolutely. And even people from outside the city, the outside the LinkedIn page, we have as well, the tag Fintech Society is a great place to keep up to date on the latest information. We have events coming up. I know we’ve got September and October already covered. We pretty much have some type of networking and content driven event almost on a monthly basis. And we’ve got the the preview about a two page summary of some of the report I just mentioned. Coming up, the ecosystem report that’s out there on the website Georgia fintech.org now full report coming up later in the year probably in October.

Lee Kantor: Well, Glen and Mike, thank you so much for sharing your story today. You’re doing important work and we appreciate you.

Mike Morris: Thank you. Appreciate it.

Lee Kantor: All right. This is Lee Kantor. We’ll be back in a few. At Fintech South 2024.