Trends That Matter: Preparing Financial Institutions for 2025

Virginia Heyburn is joined by Fabio Biasella, Director of Strategic Services at Engage fi to discuss the top trends banks and credit unions should be prioritizing in 2025. As we look ahead to a new year, the industry continues to evolve quickly, bringing both challenges and opportunities. From modernizing operations and embracing artificial intelligence to engaging the next generation of customers and navigating open banking, they dive into key areas that demand attention. 

Transcript

Virginia Heyburn (00:03.538) 

Hello everyone and welcome back to another episode of FinTech Unleashed. My name is Virginia Habern. I'm the Director of Research, Insights and Advocacy at EngageFI. And today I'm really lucky to be joined by my colleague, Fabio Biasella. Fabio is the Director of Strategic Services at EngageFI. He does a lot of strategic planning for banks and credit unions. He has perspective that I really value and I think you will too. We're going to be discussing the most important strategic priorities. 

for banks and credit unions in 2025 after what can only be described as a year of uprooting in 2024. And so as we look ahead to 2025, it's clear that the financial services industry is shape shifting. It's evolving rapidly. It's testing the limitations of existing business and technology strategies. So in other words, what's worked until now is simply not going to work going forward. 

from modernizing operations, embracing new ways of thinking, to engaging the next generation of customers and members that want insight-driven financial services. Financial institutions are also fighting back against new competition. They're dealing with a really hot regulatory environment. So you can see there's so much to talk about. No better person to have this conversation with than you, Fabio. Welcome to the podcast. 

Fabio Biasella (01:32.226) 

Well, thank you, Virginia. Thank you, Virginia. It's nice to be here. It's nice to see you again. Happy holidays to you. 

Virginia Heyburn (01:32.582) 

Bobbi, it's good to see you. 

Virginia Heyburn (01:39.014) 

Thank you. Happy holidays to you and everybody listening in. So Fabio, it feels to me after 25 years in the industry, I think you've been here longer than I have. It just feels like we've reached an inflection point in the financial services industry where if we don't make some big changes, it's going to be really difficult to compete. So there's this meaningful conversation that is brewing. It's expanding about the future viability of 

financial institutions, especially the smaller banks and credit unions. Why do you think this conversation is getting louder right now? 

Fabio Biasella (02:17.688) 

Well, I think what you're seeing, Virginia, and I'm certainly hearing it in the conversations I'm having inside the boardrooms and C suites during planning sessions. 

A lot of forces that have been at play for a while now, certainly the last five years, kind of pre-COVID and that COVID regime and then the post-COVID regime that have been accelerated are now reaching tipping points seemingly simultaneously. So this notion that we could plan methodically for the growth of our organizations against a backdrop of certain forces that have kind of been there for the last several decades. 

That's changing completely now. 

Finally, those points have finally come together in a coalesce where we need to speed up the change or at least speed up our approach to changing as smaller financial institutions in particular and developing the nimbleness, if you will, to be more responsive to how the marketplaces are changing, the demographics, the preferences of the new sets of customers and members that are emerging into our marketplaces. And then, of course, the 

the speed of digital transformation, kind of that all-encompassing umbrella, taking on ever, ever faster paces and moving into different pieces of the business now more than ever. Against a backdrop of a regulatory base and an operating model. 

Fabio Biasella (03:51.054) 

that's moving a bit more slowly. you've come to a point where doing the same old things, maybe just slightly varying them or maybe broadening them, doing the same old things in a broader way is gonna cut it less and less. So it's a real exciting time for the more progressive shops, the more thought provoking shops to really. 

sharpen their, what they're gonna do. So good and bad, right? It's good and bad, but it is definitely an inflection point you're seeing. And then, and I think it's driving a lot of the forces we're talking about, we're gonna talk about here today and certainly driving the consolidation we've been seeing in the financial crisis space. 

Virginia Heyburn (04:30.862) 

Yeah. Fabio, you did mention agility, and that's a word that is, I think, really urgent right now. And you and I both, so many of us in the industry, we've been talking about the need for agility for a long time. But now we actually have competition that is demonstrating that. Before, we knew it would be there's a better way, but there wasn't this urgent need to really adopt that better way. But now... 

banks and credit unions are competing against fintechs that are agile and that is putting a fire underneath them. 

Fabio Biasella (05:07.554) 

Right, it's the atomization of financial services, the financial services behaviors themselves. They're no longer simply coalescing around products. They're coalescing back around the actual behaviors, right? And you're having all these fintechs emerge that are focused in on doing those behaviors really, really, really well. 

and they're attracting that certain base level of consumers who happen to be Bank and Credit Union customers slash members. They're simply layering in those services into their environment, particularly into their digital environment. So the best way that I've described this now working with... 

C suites and boards is if you think about the meaning of kind of being the primary institution for a consumer in the old days that used to be your bank or credit union and you would accumulate products and services to that individual or that small business Now I think it really means about how well you play in the customers digital life or the members digital life So think about your own telephone, and I'll use mine as an example 

Most people, most consumers heard all their financial and banking apps, insurance apps, onto one slide, onto one screen, or into one file folder. I don't know if you do that, but I did that many moons ago and quite subconsciously. That's a more accurate description now of primary status with the consumer in particular. Are you on that screen or in that file folder? 

How well do you interact with the other apps that are in that individual consumers ecosystem? Totally different way of thinking about gaining primary status and total different to the concept of agility. How do you work with all those apps symbiotically, if you will, or? 

Fabio Biasella (07:10.04) 

cordially at least to affect whatever the consumer is trying to do and then being able to support that in a profitable way. Totally different challenge than kind of customers into your locations or into your just into your ecosystem exclusively. 

Virginia Heyburn (07:26.288) 

Yes, and you know, when we talk about agility, it's varied in the necessity. We need it, of course, to connect better with our customers and our members. No doubt about that. We're in the midst of a huge generational change. And I want to get into that in a little bit. But there's also the whole matter of efficiency. Efficiency is a huge problem in the financial services industry. And we're looking at ways to implement technology so that we can take out 

a substantial amount of cost. And it's important. 

Fabio Biasella (07:58.016) 

Absolutely. Absolutely. Or be able to create an environment that allows you to scale the growth. That's another kind of interesting thought experiment, thought challenge I've had with a lot of places is what I call the 10x example. 

Can we figure out how to take our current suite of technology and human capital and systems and processes and literally re-engineer them, recombine them to be able to handle 10 times more of whatever it is? And when you start footing the strategic question that way, you open up to a much different kind of conversation. And you begin to start testing those limits that we've kind of all grown comfortable with and kind of just over the last few 

few years of kind of just allow ourselves to bump up against. But now because of the way things are, you have to blow through them. So it leads to a lot of discussions about how you arrange the technology, how you deal with the vendors that you're chosen to deal with in the future. How do you create more strategic partnerships, true strategic partnerships with them? How do you speed up, go to market for new services and new products? Or even a good one, I think, is how do you challenge even 

in the need to create new products and new services internally. A lot of interesting things happening now. How can we take the energy that's on that fintech side that you described and use that to our benefit and work more in a plug and play environment with them, Virginia, so that they can do the development, the speed to market, and we can make it accessible to our customers, our members in a much more fluid way, or much more 

agile, quicker way. I think that's a very interesting concept that I'm seeing emerge more and more. And think we need to, as an industry, focus in that direction as well. So that's a really good sign of the way I think thinking is changing rather than kind of the traditional waterfall of... 

Fabio Biasella (10:00.268) 

discover a need, explore the way to fulfill the need, bring that need into our ecosystem in the traditional product development kind of way. Test it, build it, test it, offer it, and get it rolling. I think you're thinking about a way to kind of leapfrog that process and connect customers and members to the things they need to do. 

in a different faster way. It's very interesting discussion, very new, but definitely emerging to address these issues. And I think that's one of the ways you get to scale too. 

Virginia Heyburn (10:32.25) 

Yeah. So scale, definitely important, but you also said something else that I want to dive into. You mentioned new products and services, and I think this is so important right now because banks and credit unions are facing an environment where traditional revenue is going away. And for the first time in a long time, banks and credit unions are going to have to address product innovation and bring new products and services to market that they may not even 

know anything about at the present time. 

Fabio Biasella (11:03.124) 

Right, absolutely. And start to speed up the adoption cycle of these kind of ancillary services that members and customers are paying for now. 

routinely indicate they wouldn't mind getting from their their main bank or credit union if they were to offer them. So that's whole sea change around what product really means comes to mind. And you know all the examples of most of the people who are going to be watching this know the current prototypical examples, the buy now pay later services for acquiring things, the number of people who are purchasing crypto, for example, the two of the more kind of 

leading edge types of things. They're only going to grow in usage in the go-forward market. We have to be able to speed up our ability to understand those things and play in those spaces. Because I bet a donut, having done this a couple of times myself and then helped clients doing this, when you go and look at inside of your own bases, who's actually already doing these things, the numbers can be pretty compelling. It's not uncommon to see 5%, 10 % usage of the product we 

were just describing already in your base. So why should we not be figuring out how to support those activities with our own products or our own services? It becomes a real opportunity, I think. And you're going to need to do it. Everything else is under threat. The traditional sources of fee income are under both regulatory or under regulatory threat and competitive threat on the interchange side. 

particular coming down the pike. The margins, we've seen this slow steady decline in margin income. mean, long term declines in margin income that we've masked industry wide through the growth of fee income. That's not going to return. So you have to be able to drive deeper relationships. So you're accumulating balances in light of declining margins. 

Fabio Biasella (13:10.888) 

And you have to really rationalize the cost of your systems. And the systems need to be rationalized not just in terms of cost, but the scalability for the cost you're getting. I'm OK with paying for systems or setting up systems that allow me to grow 10x without having to add 10 times the bodies or 10 times the human capital or 10 times the variable cost for that matter. So those are the kinds of. 

things I see clients starting to wrestle with more and more and asking us to help them wrestle with which is a great opportunity for us. 

Virginia Heyburn (13:48.914) 

For sure. And this is really your wheelhouse. You facilitate a lot of strategic planning sessions for banks and credit unions. You're an advisor to them. What are you recommending they change about how they're running their financial institutions right now to deal with this very different and difficult environment? 

Fabio Biasella (14:08.594) 

A couple of things, all right? The first recommendation is, and we kind of alluded to this a bit ago, is you're seeing a major demographic shift take place. So the baby boom generation is phasing almost completely out of its work portion of its life cycle now, and that their needs are changing. 

Most banks and credit unions aren't prepared for meeting the needs of that group in that station of life. So you need to do that, first of all, is think about what the next set of product suites should be for a generation that's fully retired. And then the next generations, you've got two vectors you really got to prepare for. They're much more digital. 

than prior generations, including you and I, kind of digital adopters versus digital natives, meaning that their ability to shop and their ability to spread their relationship around is almost frictionless now. I think we had discussed that on several occasions about the fact that dealing with your... 

customer right now in a frictionless competitive environment poses its own changes and approach that need to take place. And I'm not seeing clients do that fast enough, right? So we need to speed up that process where if the cost to leaving for the consumer or small business is very low, then you better develop the next generation of intimacy with them. And that leads to... 

Virginia Heyburn (15:50.962) 

Let me just jump in on that one, Fabio, because I think that's such an important point. The cost is low. It's so easy to switch these days. It just doesn't take any time at all to open a new account, switch the relationship, fund the account, and be done with your prior financial institution. 

Fabio Biasella (16:08.878) 

Right, and not close the old one. So they've, as my 14 year old puts it, because he's been in too many of these discussions, the consumer ghosts the old organization. You still have a shell of a relationship. they look like they're a member or a customer. They may maintain a few small balanced accounts, but it's really lifeless. 

Virginia Heyburn (16:20.081) 

Yeah. 

Fabio Biasella (16:32.3) 

Right. And preventing that from happening is going to be mission critical going forward. And you've got to do something because we see that growing, that percentage of those types of relationships is growing in many institutions. So can't have that blob of inert quasi customers, quasi members inside the organization. you've got to, once you get them in and you have them, you have to begin 

demonstrating that you know something about them. 

Right? Which means you're beginning to use the data that you have about their behaviors at your disposal. So I think that's a way to mitigate this reality with this kind of digital, digital natives. But you have to begin to present the reality to them that, we're seeing this about you and others who are doing these types of things may need these types of services or these types of products. 

Can we help you? Kind of building out from that notion. 

through the digital platforms, through their telephone screen, right, as opposed to just the bricks and the mortars, is where a lot of opportunity exists, I think, to help rectify this situation and keep those consumers in your ecosystem and looking to you. I think it's the new definition of interaction that's available to us. 

Virginia Heyburn (18:04.432) 

Yeah, I agree with that. I think a lot of it has to do with the generational shift. So baby boomers, my generation, Gen X, the services that we wanted were very much transaction oriented banking services. Whereas Gen Z, what they're really looking for is advice driven banking services. And that is a completely different operational setup to support those two. 

Fabio Biasella (18:29.454) 

Correct, yeah, and that's one of the strategic questions we have is how do you convert a transaction-based front end and back end, right, into an advocacy-based front end? 

that can deliver the kind of advice and support that the consumer's increasingly seeking and needing, and then be able to have a backend throughput system that can scale to meeting those needs and creating that value. And then exploring all those additional ways we just talked about about creating value that folks are willing to pay for, which we've traditionally let go to others. So it's a real fascinating time for the industry. 

in that respect. It's great, actually. But we have to begin to step up. That's the other point. Now is the time to put those flags down, if you will, and say, we will begin to demonstrate data proficiency, data understanding of our customers or our members, even if it's just a small subset. Start with your very best customers of numbers and do that. 

Virginia Heyburn (19:35.824) 

Yeah, absolutely. And, you know, I just spoke at a state banking convention last week and shared a lot of these insights that we're talking about here today. And I got so much feedback, Fabio, from smaller financial institutions, bankers coming up to me and saying, you're scaring the heck out of me. I know I have to do it, but how am I ever going to pay for this? Ninety nine percent of resources are locked in with their vendors. It's the model doesn't work anymore. The model isn't nothing. 

Fabio Biasella (20:03.884) 

Yeah, exactly. Exactly. mean, and you hit it right on the head. 99.9 % of the resources that I give at Shop Bar are locked into what I affectionately call the death grip of making sure the institution can do today what it did yesterday, right? 

So that place is a real emphasis kind of on future thinking and how you might have to change the technology landscape, change the vendor landscape and change the human capital landscape inside your organization to create just a little bit more bandwidth to be able to do this. And I think the other council that I would give folks is we can get into boiling the ocean real quickly here. 

Don't keep your use cases small, smaller, right? So if you want to develop intimacy, for example, a better understanding or a way to demonstrate your knowledge of a customer, start with your very best customers upon whom you have most of their information anyway, and generally have one or two bits of human capital who know those customers very well. 

and create a model that lets you start to discern what their behaviors are as a group, and then translate that into larger and larger pockets. 

of the organization as you grow more comfortable. I think what you're seeing is because our organizations are kind of locked this way, you take whatever resources you have, that little sliver you have that can be forward looking, and now you have to forge different kinds of partnerships with vendors or fintechs that can allow you to affect these really narrower case studies. And they can both be forward facing, like I just said, understanding your 

Fabio Biasella (21:55.808) 

customer and or member or inward-facing. How do I take this process here and whatever it is, processing debits and credits in the GL for example, or processing alone exception or whatever, and set something up that allows me to do 10 times the volume with the resources that I have. 

And just start with those small use cases and then build that muscle memory to change the organization forward. It's going to require a different kind of leadership, Virginia, a different flavor to leadership. 

Virginia Heyburn (22:26.512) 

Yes, different kind of leadership, better technology. That's the good news. We have advanced technology that allows us to bring efficiencies into the operation. We just didn't have those technologies five years ago. 

Fabio Biasella (22:38.124) 

Yeah, we. 

We do, they have matured and we have to figure out how to kind of leapfrog that development process that I was talking about so that we get there more quickly. 

And then the other thing that I counsel clients on is that to remember that we are high trust organizations. Generally any banker or credit union that I'm dealing with has a good deal of latent trust still imbued with their existing base in particular and oftentimes segments of their markets. Leveraging that reality, leveraging the fact that we are a trusted institution to these people, I think gives you a leg up in these use cases. 

Take that use case and bring it to the people you get into the segments you trust the most or who trust you the most and see what they say and get the reaction feedback going. 

But it can be done and it will need to be done. But I think these kind of broad sweeping changes are a little less realistic. think what you need to get into a habit of is consistent, small change. One of the best things that I've heard is, we all got to be innovative. How many times do we hear that? And certainly we go out and challenge clients every day to be more innovative. One of the things that I would encourage clients to do when they're thinking innovation is just think better. 

Fabio Biasella (24:05.064) 

anything that I can do to make something better, either a process simpler, a process better, a process more scalable, a process more able to drive member or customer intimacy as an innovation. Okay. And there are enough of these things lying around in those organizations that we kind of just leave there as part of the environment. You know, they're just too small in and of themselves to be noticed if we start 

noticing that and start doing those things, we can get on this innovation life cycle really, really quick. 

But you're going to have to find yourself really good partners who have this approach and you're going to have to be willing to tap into the younger talent you have in your organization that's closer to all these digital natives that we've been talking about. And most institutions have at least a cadre of people that I think they could tap into and listen to more vehemently. And we're starting to see that more and more. 

those digital advocacy groups. Certainly something that I've seen come up in my planning sessions more and more and seen instituted. And then giving them some actual authority to change the status quo. 

Virginia Heyburn (25:21.732) 

agree agree completely in other words if you if you want to know a better way to bank ask your kids 

Fabio Biasella (25:27.778) 

Yeah, ask them how they talk about banking, right? And they'll set you straight. And more succinctly, our kids tend to be insiders, so they tend to be imbued with a little different concept. Ask their friends how they pay for things. So that's always illustrative on what's really going on in the marketplace. 

and can offer those insights that you can change what you're doing. Because yeah, it's only going to continue apace. I'm fearful. I used to be fearful over the last five years of the relevancy argument for smaller institutions. I'm more fearful now that we're not even in the consideration set. Once we can be considered, we tend to be able to be relevant. Because we tend to have very good human capital that can overcome whatever shortcomings 

coming as we might have. But if we don't get to the consideration set and increasingly we're being interdicted away from that, you won't even get a chance to have your existing human capital shine as it should. So there should be ways to bring those two things together. Virginia, I think you and I talked once or I was tracking digital account openings. 

Virginia Heyburn (26:43.056) 

Yes. 

Fabio Biasella (26:43.468) 

Right? This is a good example of what I'm talking about, right? Most clients have opened digital account openings and they're seeing much higher levels of digital account opening than they are of branch account levels account openings. But because the process is so kind of barren, 

you see massive attrition through the digital channel, even after what I affectionately call the fraud zone, the fraud period, the first 30 to 60 days where the fraudsters are trying to test you. You see attrition continue to accelerate through that curve over a 12 to 15 month period to the point where oftentimes you're left with. 

Virginia Heyburn (27:13.562) 

Thank you. 

Fabio Biasella (27:25.612) 

maybe 20%, 25 % of accounts that were open digitally still being with you and active after that 15 month period. Whereas those relatively smaller number of accounts that have come in through the human capital, you're seeing 80 % retention, right? So that poses a very good kind of thought experiment for clients. Okay, how do you take that valuable human capital and project that into the digital channel since that's where the consumers are, but allow you to connect it 

Virginia Heyburn (27:40.05) 

through the branch. 

Fabio Biasella (27:55.546) 

to quickly so that you can preserve and retain those relationships over time. Really good example, I see clients starting to figure out how to tackle, right? In their processes and in their marketing and even in their backroom analytics, right? 

Virginia Heyburn (28:11.954) 

Yep. So huge trend for 25 is going to be channel optimization. I'm hearing you say. 

Fabio Biasella (28:19.298) 

Yes, yes, channel optimization, right? In particular, through the account opening process. If you think of kind of the magical marketing funnel, right? When they get into the purchase phase of the funnel, what happens inside that purchase phase digitally can no longer be as passive as it has been, right? So you need to be thinking about your new customer onboarding. 

really expanding both in complexity and the number of touches and number of things that are taking place in that. There's a great javelin study that I quoted some of my presentations as well. The old onboarding model was three steps, right? Get the account open, get the debit card ordered, get it activated and sign them up for online banking. 

Now there's 15 steps, include loading the debit card into a digital wallet, would include downloading the app and setting up the app and connecting the app to all the other apps in the service, moving payroll through switching services. All of those things now actually become discrete steps in the FI's account opening process rather than the consumer's account opening process or the small businesses' account opening 

So lots of opportunities I think to continue to mature here to optimize that channel and again Keep you know, don't boil the ocean keep the use case small Start with the new customers or the new members and learn how to take care of them and then expand those services Back to the rest of the customer base or the number base at large 

Virginia Heyburn (30:00.37) 

Yeah, and look for ways to pay for all of that with, you know, examining your contracts, examining more efficiency with technology, better strategic planning. 

Fabio Biasella (30:11.436) 

Yes, there's an entire renaissance taking place, I think, on the contracting side, the contents of the contracts, the terms of the agreements, the transfer for value that's taking place. You're seeing organizations really start to focus in on connecting the investment that's being made for the return that can be generated or should be generated. 

for those services and getting some institutional alignment between the clients, the vendors, and the consultants who often all work in the space. I think it's a really fascinating opportunity. So you're not just coming together, bringing those three legs of the school stool together to extract cost from the system or inject additional efficiency into the system, but to begin to optimize how all those products are used. 

because oftentimes when working with clients, know this as well as I, they will deploy systems partially, right? And they will leave on the side some of the newer features that they should otherwise be adopting and have been paying for. So getting away from that reality and optimizing the deployment of all your existing structure to scale. 

Virginia Heyburn (31:21.682) 

Okay. 

Fabio Biasella (31:32.15) 

to manage costs is on its way. It's happening now. It will happen more and more. And then the third baton passing there is, how do we set up that arrangement to speed up going to market? And that's the next exciting phase, where you could bring in fintechs more quickly because you've got that environment set up better. 

Virginia Heyburn (31:58.94) 

Well, in that environment, Fabio, we've talked about this too, is open banking. It's the connective tissue to allow for greater agility, to allow for this fintech readiness, to bring in artificial intelligence, to really drive some of the growth strategies. But it's curious, right? We know that we need open banking technology as an industry to be able to do all this stuff, but now we've got regulation saying you have to do it. 

And of course, there's this big uproar over the compliance deadlines. It seems to me, it's interesting, right? It seems to me that this is an absolutely essential step for financial institutions to maintain their viability in the future. And sadly, sadly, the smaller institutions are being told you don't need it, right? 

Fabio Biasella (32:48.002) 

Yes, yeah, and it's a. 

slowly unfolding tragedy because it's not true. Smaller institutions are needed. Smaller institutions tend to serve the underserved. They tend to serve the smaller businesses in their community because they have that interpersonal relationship with them. They're vital for transmitting capital and funding growth of the small end of the business. So, yet we have to figure a way around this conundrum very quickly because 

Virginia Heyburn (33:05.338) 

right off. 

Fabio Biasella (33:18.348) 

Yes, we need the open banking services. We ought to be able to create an environment where we're able to do that safely and within an appropriate regulatory framework. What I really see is we're just simply using old mindsets and old tool sets to try to address this new problem. So some of it will be addressed by how we change the mindsets and change the tool sets to allow this to happen. Otherwise, yeah, otherwise you lose that, the ability for those 

institutions to act as the certifiers or guardians of trust for many many at-risk populations or more at-risk populations and that's not that's not healthy in the long run. 

Virginia Heyburn (34:03.194) 

Without a doubt. Without a doubt. it's also, you we talked about this, this great transformation of financial services to being transaction oriented, to advice driven, and open banking is needed to accomplish that. It's all about how the data moves, of course, customer permission to member permission. 

Fabio Biasella (34:16.088) 

to come, absolutely. 

Fabio Biasella (34:21.996) 

Yeah, and we should preserve as institutions the reality that we are guardians of the members identity to the world writ large, particularly the financial world writ large, right? If you really think about it carefully, community banks and credit unions are the protectors of... 

Fabio's identity to the business world writ large, right? So if I want to do something, and I use my debit card, they're basically saying, yeah, he's good for it, right? So. 

be loath to give that up without at least being able to play in an equal footing with the rest of the competition. And I think consumers will eventually come to understand that and want us to continue to be those guardians and be willing to necessarily pay for it, but make sure the system pays for that reality, for that service being rendered. very interesting, yet another inflection point going to come to pass. 

here in 2025 and 26 for sure. Yeah. 

Virginia Heyburn (35:29.338) 

Yes, I think that inflection point too is going to leave a lot of institutions of the smaller variety thinking, you know, am I going to be able to do this alone? And so as a result, it's my belief that &A is going to heat up in a really big way as we move into 2025. Financial institutions are going to be looking for scale, for efficiencies. It's about numbers, but it's also about throughput. You said that earlier. 

In the conversions that we manage, Fabio, at EngageFI on behalf of our clients, what kind of business outcome are we starting to see in these conversions? 

Fabio Biasella (36:06.412) 

Well, I think we're seeing we're moving closer down that road as we do conversion services or merger services for clients because we're having them more focused on the end in mind upfront rather than just surviving the conversion where you're actually going to move from a state where you're more agile, better prepared to drive engagement with the customer bases or the member bases in the markets writ large and scale your operations. 

the first steps of that happening as opposed to what's traditionally happened over the last couple of decades is where you're seeing this drive for scale through inorganic growth where you're merging institutions and all you wind up doing is creating an institution that's simply a larger version and fraught with all the same problems that the smaller institutions were fraught with and now even more entrenched because the systems are bigger and less 

to address them, right? So one of the biggest changes I'm seeing in the conversion process is the understanding, the acquiescence to the idea that we got to use the conversion process as a means to change the resulting institution, not simply create a larger version of the one that we currently have. 

institutions are much more open to that and as a result you're going to see I think better conversions and ideally you will begin to see better 

mergers and mergers where the effectiveness of the institution, the resulting institution is actually enhanced because of it. And not just simply taking the same old fixed costs and spreading them out over more units, thinking that that's going to create your unsustainable ability to perform. That's becoming less and less true with the pace of regulation, with the pace of technology that's coming down the pike. 

Virginia Heyburn (37:58.29) 

Mm-hmm. 

Virginia Heyburn (38:12.73) 

Yes, conversions. The way I'm thinking about it these days is that if you're going into a conversion simply to transform your technology, you're not getting what you need out of it. It's not about technology transformation. It's about business transformation. And if that's not the ultimate goal, then what is the point? 

Fabio Biasella (38:33.686) 

Right, and a very good CIO friend of mine always said that it's people, process, and technology, right? And your tech change needs to ultimately benefit the people, both the internal people that are running those processes, and then your constituencies, your customers and your members, who are the beneficiaries of interacting with those peoples and those processes. if you're going to convert, there's three things you've got to consider. 

Not just the tech piece, right? But the process piece and the people piece. And I think that's been our approach. That's the approach that we take for an individual conversion. That's the approach we take in strategic planning when clients even begin to consider this. We lay that out, lay that out right up front. Okay, we're going to talk about a tech evaluation, but it's a process evaluation and it's a people evaluation at the same time, right? 

And then you can get into the whole, you know, how you rationalize those pieces from there, which is unique to each client, but it must include those three things. Increasingly it is, I'm happy to say. So it's again, another sign of how I think the industry is awakening to the new realities, which is great. 

Virginia Heyburn (39:52.73) 

it's a dramatically different business environment and when we think about &A we don't just want to get bigger, we want to be more efficient, we want to grow as an organization but we don't want to have more and more people just you know doing duplicative tasks, repetitive manual processes, we've got to optimize. 

Fabio Biasella (40:12.248) 

Correct, you've got to get away from that. I know that's a bit of a bromide, but it's the cold hard reality is that's why that 10X... 

thought experiment that I put clients through is very valuable because it forces you to move away from people and the tribal knowledge providing the software to solve the edge case scenarios, if you will, and you're building the ability to take care of those edge case scenarios into your tech processes right up front. 

Good example of that is how AI can help eliminate some of those edge case scenarios and those very narrow use case inside your processes is something that I'm hearing more and more. Absolutely, it's coming. We've got to go faster. That's the message that I know you deliver in your speaking engagements, and that's the message I'm certainly delivering. 

Virginia Heyburn (40:54.79) 

That's it. 

Fabio Biasella (41:04.494) 

I don't think that the future will be won simply by the largest institutions who kind of &A their way to growth and size. I think it'll be won by the institutions who can commit to change faster. And if you do that change faster, you will grow organically and probably go grow in organically. 

faster than just the first course of action. The days of just &A for &A's sake to gain scale are taking on a new meaning. They will be done with these reasons in mind. And then that gets us really back to that customer-centric advocacy point of view, advice-giving point of view that you touched on earlier too. It's a way to kind of connect it all together. 

Virginia Heyburn (41:53.106) 

Fabio, we're reaching the end of our time here today and we've talked a lot about the challenges that banks and credit unions are going to face in 2025, but let's spread a little holiday cheer before we close. What do they have to look forward to in 2025? What are you excited about? 

Fabio Biasella (42:11.446) 

I think you have lots of, always lots of things to look forward to. I think first and foremost, you need to remember that you are creating a ton of value for a good core group of your. 

customer base and or member base who gently care very deeply about the organization. You need to expose yourselves more fully to who those people are, understand them, and then work with them to help become your champions even more than they currently are. I think also that while you're seeing the drive to digital, you also have to remember that the new segments, the new generational 

segments also are comfortable with local messages and increasingly are prone to focusing on the community aspects of the organizations that they are involved with. And here's where I think we're a place where local institutions really shine and can shine more and more. What they need to do is connect what they're doing to these groups of people much more forcefully, much more boldly, and so they can leverage that reality. 

while they're bringing along their digital services in the process. So celebrate the fact that you're creating a lot of value. Celebrate the fact that many of these places are a local force, positively impacting the community, and remind them as such. 

And consumer behavior is looking for those types of things. We just have to figure out how to drive awareness and then create a better experience than we're currently creating, a much more active experience than we're currently creating. So those are my silver linings or the sunshine amongst the otherwise only partially cloudy sky, if you will. 

Virginia Heyburn (44:06.578) 

Hey, I'm going add to that, Fabio. I'm going add to that. Number one, we may be looking at some regulatory relief with the new administration, right? There's talk of rolling back some of that regulation that's just been so burdensome for financial institutions, especially the smaller ones. And then also, lending's a big problem for financial institutions right now that just flat or low growth. 

Fabio Biasella (44:16.248) 

Perhaps. 

Virginia Heyburn (44:34.031) 

With interest rates coming down, hopefully that will inspire some additional lending. That would be really good for our industry. 

Fabio Biasella (44:39.139) 

Yeah. 

And that's two vectors, right? It really, makes those deals that are already out there that were maybe marginal able to reprice in a less difficult way and it keeps those deals kind of moving forward, kind of that marginal economic impact keeps moving forward, which is good. And then yes, you get closer and closer to taking the next generation's consumer needs who are already heavily indebted in many cases. I think that's, you know, continues to bear noting, but you're maybe 

Virginia Heyburn (44:48.881) 

Yes. 

Fabio Biasella (45:09.472) 

be able to have a little bit more breathing room to help them manage that debt differently going forward. So yeah, there's absolutely those two forces are at play. The other part that I would counsel is that you have a huge opportunity to get that message out there now more than ever. So making sure that you're making the investments to engage through your frontline staff, through your digital channels, through your marketing efforts. 

this is a great time to try to generate incremental share. And indeed, when you look at high performing FIs through the years, they have found slower times, the times where they've been able to grow and acquire share through those times because they're the ones out there with those messages. So take that to heart as well. 

Virginia Heyburn (46:02.13) 

Thanks, Fabio, and thanks for joining me on today's episode. This was a really fun conversation. 

Fabio Biasella (46:05.39) 

Virginia, these times together, they fly. always learn so much. Thank you for putting these together and letting me share what I've seen going on in the last 12 months. And I'm looking forward to helping clients in the industry writ large continue to thrive going forward. And it will, and it must for my last SoapBots moment. 

Virginia Heyburn (46:27.218) 

Well, thank you. Thank you, Fabio. And for all of our listeners today, at the end of the day, financial services is about loans and deposits. That doesn't change. But what is changing is that we need to get ready to deliver loans and deposits, manage and service them in dramatically and frankly entirely new ways if we're going to be successful in the future. I want to thank all of you listening in for choosing EngageFI as your source of information. 

for banking technology services. We are just thrilled to have you as listeners, as clients, and to engage with you in the marketplace. Please be sure to look out for the next episode of FinTech Unleashed by following EngageFI on LinkedIn. Until next time, have a wonderful day and certainly happy holidays from all of us at EngageFI to you.