1766 – Embracing AI in Community Banking with Rich Edwards

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0:59with us right now rich edwards rich you are the ceo of mind span systems you're found on the web at mind span inc.com rich thank you so much for joining us hey thanks josh thanks for having me all right well give us an overview of the work that you do with mind span yeah so we're a data services firm. We do a lot of work for community financial institutions, banks, credit unions, storefront lending organizations, things like that. And kind of what we really do is along the lines of kind of helping them with some of the heavy lift from a data standpoint. And that typically gets into things about how they do marketing automation, how they do both communication, but then also offering personalization and like using their data to provide a more relevant service to their customers.

1:48And as of late, that's kind of really gone down the path of artificial intelligence and how to use that. And particularly tools like generative AI and chat GPT and a lot of things that people have seen. So. Yeah. Well, I can't imagine. So talk about like who, a little bit more about who you're working with and what that work looks like. Sure. Yeah. So we're usually, and there's some industry and systemic things about like size and all that. But typically we're working with institutions that are below 10 billion in assets. That's how they would identify themselves. And a lot of that has to do with the, that's kind of like a regulatory ceiling for certain things that come into effect.

2:29Below that, you see organizations that are really good at banking, really good at customer service, not really great at technology. They have a handful of core providers that they rely on, and it's a fairly insular market, which means there's not a lot of innovation going on. So when they want to look at something and take advantage of, say, machine learning and how they do predictive responses to campaigns, for example, there's some generic tools around that, and there's some tools that come from the industry providers, but nothing that really melds those two things together. And that's where we step in as a professional service for that.

3:09Wow. And so I think all of us listening to this conversation right now, participating in this conversation, are banking consumers of some sort. I'm sure you have some insights on the attitudes and trends of banking consumers. What have we been thinking? What have we been saying? Yeah. So, I mean, obviously this has been the year that kind of started off with, are we going to have this horrible bank collapse like we saw in 2009, 2010 that didn't pan out? And one of the main things you look at when you kind of start digging under the numbers is there's almost like this barbell effect, right? You have a handful of very large, typically Wall Street-based banks.

3:54You look at like JPMorgan Chase, Bank of America, Citibank, well, part of Chase, but very, very large financial institutions in the trillions of dollars. And then there's kind of this desert in the middle of anything from that tens of billions up to the trillions of levels, the ones that we were looking at that people were most afraid of and kind of got really scared when you looked at Silicon Valley Bank, Republic, Signature Bank, they were all in that hundreds of billions of dollars of assets. Really hard to be a bank like that today, like for many reasons. But then you kind of go further down to like the local community bank, the bank that's been there for 100 years that has maybe 10 branches, you know, that you kind of drive past and you see all the time, or the credit union that's associated with a trade industry or your employer, or it's just, you know, they have like a regional element to what they do.

4:52They do very well. And when you look at like the ins and the outs of money, like people putting money into deposits or taking money out of particularly where loans are originated from, you see most of the activity occurring at both ends. And particularly like the sticky money, the money that sticks around, it's at both ends. So it's this barbell effect. It's either very, very large or very, very small. And we're really there where we play is on that small end, very high number of smaller institutions. Yeah. So here we have this intersection of, you know, where AI is just opening up so much possibility.

5:31And it's almost like we're given this new tool or technology. And, you know, in some ways it's almost like watching Oppenheimer this past summer, right? It's like, we have this new thing. What do we do with it? Like AI is that same thing. And I think it, I was just commenting on your LinkedIn post on this topic. You know, I think that there's going to be some people that are going to make some pretty bad mistakes with the technology because they can. And there's a temptation because of cost savings or whatever to cheapen the human to human connection that I think we all really should aspire to, right?

6:10But then there's going to be some leaders who say, no, no, no, no. I think we could do this in a way where we can actually become way more human and we can use AI to enable that. I'm sure you've got plenty of thoughts on this topic. Yeah. I will typically talk about it. And you may be looking at the one post, the kind of good news, bad news, good news for the whole thing, right? And the good news is the technology is not there. And this might be a yet discussion. It's not going to take your job right away. Like there is not going to be a wholesale outsourcing of any particular job across the board.

6:45There's certainly some things that are coming up when you kind of look at certainly some of the copywriting elements of what those initial use cases are. But once you spend a little bit of time with it, you kind of understand there are limits to it, particularly when it kind of comes to context and understanding things that are like broader than just general knowledge. Right. So that's the good news. The bad news is it's this incredible productivity tool, which means you shouldn't be worried about the tool itself. You want to be worried about somebody who's getting proficient with it, who's being much, much better, who's like that 10x person.

7:20You're certainly seeing this right now in certainly the generation and the writing standpoint, some of the things that are happening in PR and marketing communication, even more so in coding. There's always that mythical 10x engineer that everybody's looking for. And that's becoming more and more accessible with tools that will pick up the route part of workflow. The things that you're really not adding a lot of value to, but are essential. You have to do them, but they're not going to be a differentiator. And the more of that that gets automated, the more of those tasks that are, the more productive that person's going to be, the more time they spend on the thing where they really add value.

7:58And that's what you should be afraid about. That's the risk of doing nothing, of saying, I'm going to wait until this is built into every tool that I have available, and it provides me no differentiation from anybody else. That's a very real risk that should keep a lot of leaders up at night about. Some of the work that you've done with your clients, what's kind of been the before and after that you've helped to co-create with them? Yeah, generally, it's going to be like one or two rather specific pain points, right? we're trying to get like a cost savings here. A lot of it has to do with there's a lot of support use cases.

8:36And you're looking at, you know, how much of this support cost can we just defer? How much can we make self-service, right? Create a cheaper flow to. And there's certainly elements there. I'm trying to think of like a good stat I can quote, but I've seen a couple of studies that say right now you're about on par with the tools as they are with about the lowest cost in the world from an outsourcing standpoint, you look at, you know, like a cost per ticket or cost per resolution, you can about get to that, but you're not going to do a whole lot better. And you're, you're talking about like, you know, two or$3 per ticket, like that level of cost.

9:15So it's, it's about there. You can get some of the savings. The bigger bang always comes from the thing we weren't even doing today. Right? So there's the, let's do everything maybe a little bit faster, a little bit cheaper, there's an incremental bonus to it. It's the, what's the thing we're not doing? And the analogy I always use is say, you know, you can kind of think of AI as almost like a very eager summer intern. They're diligent. They can follow instructions. You know, they can read, they can write, everything's fine, but they don't know anything. They have no judgment. They have no industrial or institutional knowledge of your business or your client or anything.

9:54But But if you say, hey, look, here's a hundred page report that kind of came out from the government or one of our industry associations, or it's an analyst looking at one of our competitors, read through this and give me the highlights. Tell me what's in there, right? They're perfectly capable of doing that without having any context around there. And you think if somebody who's only there for three or four months, if you kept feeding them that day after day after day, by the end of the summer, they're going to kind of know something about your business and be able to begin to connect the dots, right?

10:25So if you kind of think of this as, well, it's not one in turn, it's maybe a hundred or it's maybe a thousand. And the one thing that they're really good at is they can follow very good instructions and they can work together and they can do all of this coordinated work without creating a lot of overhead for you. You can give that very simple, same instruction that you would one-on-one to a thousand of them and have them work like that. Well, how would you do business differently? How would you approach your business differently? How would you treat your customers differently if you had that much horsepower available to you, right?

11:01Think of one of the things we'll talk about is like a retail banking experience, right? Typically you have anywhere between two and five tellers and maybe the personal bankers that are there when somebody comes in. Well, Well, if they each had 10 or 15 assistants that could look up information, handle routine communications, do some of the compliance things they do around fraud detection around that, some of these things that kind of creates overhead for a lot of people that are there and allow them just to focus on that interaction and be one-on-one with them, even if it's not a terribly high-skilled or difficult transaction they're dealing with, how much better would that be?

11:41How much closer, more relevant, more personalized could that service be? And that's a huge differentiator, particularly for something like financial services that has this outsized trust component to it. Yeah. Yeah. Okay. So Rich, who should be reaching out and connecting with you? We absolutely, like I said, we work in banking and financial services industry. But like anybody who just has a general curiosity about this or wants to kind of talk through it, I feel email and calls all the time. The best way you can reach me is really on LinkedIn. A lot of what we do from a content standpoint and some of the examples we talk through, like that's our first point of contact.

12:24We also have a blog where we kind of repost everything. But if you want to reach out to me and have questions, reach out to me on LinkedIn. I'm Rich Edwards. All right. So your website is MindSpanInc.com. Aside from, you know, grabbing some time with you there, are there maybe other resources either on the website or your social that you'd recommend to someone that says, listen, I don't need to take your time, but I'm interested, Rich, in your thought leadership. Where would you recommend they go? We have a guide on our homepage there at the bottom for personalization. Now, it's, again, geared towards a banking scenario, but is equally applicable in that scenario of like, how do I use the information that I know about my customers, about my industry, about what our best practices are, and use that to set ourselves apart and differentiate with our customers, with our market?

13:16I love it. I love it. Yep. I see the guide right now. Conquer the five personalization hills. Boost your community bank or credit unions success. Awesome. I love this. Again, the website, MindSpanInc.com. Rich Edwards, you are the CEO. It's been a wonderful conversation. Very exciting. I got to say, like, there's some aspects of, like, the era that we're living in, I think is very exciting. Oh, absolutely. You know, decades from now, we're going to look back at, like, yeah, remember when we were just encountering, like, you know, some really big leaps forward in AI and how exciting that was? Man, remember before we all had access to these tools, right?

13:54And every community bank out there wasn't leveraging this. We'll remember that time because, again, I think it's just at this point, it's an inevitability. Absolutely. I mean, you can look back to just one last closer just to think about it, right? You think about how in the late 80s and 90s, companies were saying, well, we're computerized. We're using computers. And then around the turn of the century, it was we're an internet company and everything was like internet. And then you get into like 08, 09. It's like, well, we're a mobile company and all that. And all of that eventually fades away that it's just a given.

14:29You're going to use computers. You're going to use the internet as a channel. And you're going to have a mobile element to your whole business. It just becomes a given. And we're in that phase right now where, hey, we're an AI. We're an AI-powered company in a very short order and probably a lot faster than any of those other changes before. That will be just a given. It will be a part of how you do business. Yeah, love it. Rich Edwards, again, CEO of MindSpan Systems, found on the web at MindSpanInc.com. Rich, thank you so much for joining us. Thanks, Josh.

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