What If a Digital Bank Actually Felt Like Your Local Bank?

Episode Overview

In this episode, Roland Howard sits down with John Kingma of Old Glory Bank to explore what it takes to build a digital-first bank in a rapidly consolidating financial industry. As traditional institutions move upmarket, small businesses and everyday Americans are increasingly left behind.

Old Glory Bank was built to serve that gap, launching nationwide and reaching customers in all 50 states within just two weeks. The conversation dives into the realities of starting a bank, from regulatory pressure to operational scale, and why so few new institutions are entering the market.

John shares how Old Glory approaches digital transformation differently, treating it as the core experience rather than a secondary channel. The bank’s flexible technology strategy enables faster innovation, while its distributed workforce allows access to top talent across the country.

The discussion also covers the future of banking through embedded finance, including crypto and stablecoins. Old Glory is building a fully integrated experience where customers can move seamlessly between fiat and digital assets, enabling faster payments and greater flexibility for small businesses.

Finally, the episode highlights the importance of financial health and education, with upcoming tools designed to help consumers and business owners better understand their financial position, improve outcomes, and grow over time.

Episode Timestamps

[00:00] Introduction

[00:18] Banking consolidation and market gaps

[01:23] Why small businesses are underserved

[02:13] Scaling to all 50 states in two weeks

[03:06] De-risking and politicization in banking

[04:32] The challenge of starting a bank

[06:22] The shrinking future of banking options

[07:09] Why fintechs underestimate banking

[07:35] Personal motivation and small business roots

[08:08] Building a flexible tech stack with Q2

[09:11] Crawl, walk, run approach to innovation

[09:48] Talent strategy and distributed workforce

[11:23] Hiring outside traditional banking

[12:38] The emotional nature of switching banks

[16:14] Where digital transformation fails

[18:00] Entering crypto and stablecoins

[19:16] Why invest in crypto now

[20:08] Avoiding fintech disintermediation

[21:47] Financial health and wealth tools

[23:02] Customer feedback driving product decisions

[23:54] Crypto in business payments

[25:12] Business insights and financial tools

[26:21] Closing and where to learn more

Want to work with Propagate Fintech? Fill out a contact form at www.propagatefintech.com

Transcript

SPEAKER_01 0:04

In this interview with John Kingma at Old Glory Bank, we talk about how his De Nobo institution was able to sign a customer in all 50 states within two weeks of opening their doors for business. And this is the interview. John Kingma, welcome to the show. How are you doing? Great. Thanks for having me, Roland. Well, I'm stoked to talk to you about what is going on at Old Glory Bank. For those who may not have heard of Old Glory Bank, you guys are a digital bank that really feels like a community institution. Is that a fair assessment?

SPEAKER_00 0:33

Yeah. We uh we recognized early on that the regional and national banks were able to pick winners and losers. And unfortunately, everyday Americans and small businesses were not amongst those chosen group. And that really became as a result of the mergers and acquisitions that were happening in the financial industry over the last 20 years. There's half the financial institutions that are in existence today that were in existence two decades ago. Yeah, big, big consolidation happening. Huge consolidation. And that just led to an environment for everyday Americans and small business owners that allowed those larger institutions to um decide de-risk out of certain industries that whether that be small business, manufacturing, agricultural, or firearm manufacturers, they got to pick and choose who they wanted to do business with. Those smaller uh businesses also became a line item decision for those larger institutions.

SPEAKER_01 1:39

Yeah, and small business is traditionally low margins. Financial institutions aren't really making a ton of money in this space. And so the support model and the product offerings really kind of follow suit.

SPEAKER_00 1:54

That's right. As they go up market, they're looking for that larger clientele, those larger balances, and that just didn't fit the mold for small businesses.

SPEAKER_01 2:03

Sure. High complexity, low revenue equals crappy product and experience, basically. So in getting to know you and old glory, I learned something that I think is so cool. And I'd love to unpack how you guys pulled this off. But within two weeks of opening the doors at your de novo institution, you guys had a customer in all 50 states. How did you guys drive demand like that?

SPEAKER_00 2:28

Yeah, the market responded. Once we we started to think about building a new bank and focusing on that small, that small business and that everyday American, where the other banks, like we talked about, were moving up market from. We decided to focus on that group. And we had a customer in all 50 states, like you said, in in about two weeks to really go back to it. When we decided to make a new bank, we decided to make a bank, a new bank for America. We went to the heart of America and launched the bank from Oklahoma with the mindset and the focus to launch that from a coast to coast. That allowed us to go compete with the national banks by being able to uh bring financial services to all 50 states, focused on the segments that they left behind. Love that.

SPEAKER_01 3:21

And you guys even talked a little bit about uh can I call it cancel culture and that intersecting with people's finances and their bankability. Is that something that you guys wanted to take on when you launched the bank?

SPEAKER_00 3:34

Yeah, as we were talking about the that de-risking of certain industries, was firearm industry, for instance. That's usually that's a cross section of manufacturing, small business, and um that that segment just got obliterated while that compression was happening in the financial industry. Okay, and so they were hard to bank, essentially? Hard to bank, um may have require more observation, more oversight. So as as we as already a line item or a cost center, they're just de-risking out of that, they're also cost mitigating out of that out of that section. And in some instances, we know that um you know personal politics comes into play. And really, financial services shouldn't be about politics.

SPEAKER_01 4:21

Makes sense to me. So you guys started a bank, there's not a lot of people doing this. The total addressable market for banks and credit unions, if you're let's say a fintech, you're a Q2, you're a FIS selling to the market is shrinking every year. More and more consolidation is happening. You guys were the crazy people kind of running the opposite direction. What's way harder about starting a bank than most people would think?

SPEAKER_00 4:48

Scale, operationalizing, uh, usually getting, you know, being acquiring the customer and growing and having it make sense. For us, acquiring the customer, we became easier for us because we were focused on a segment that was being left behind. And in that decision for us was was great because to focus on small business owners and to bring an innovative tech stack to them and bring financial services that they haven't had access to or have been harder to get because they had to go to a national bank that didn't necessarily care about them. And all they were looking for was a bank to bring financial services and an innovative tech stack and allow them to go compete and punch above their weight.

SPEAKER_01 5:34

I like that. And you know, the hard thing about starting a bank in my mind, I've never done it before, but you really can't afford to get it wrong at all at a bank when you when you're starting because it's people's money, it's people's livelihoods, it's their credit, it's and then you also have the boogeyman of the regulators kind of looming over your shoulder. And so it's, you know, that's gotta be a little spooky kicking things off.

SPEAKER_00 6:00

Yeah, you're exactly right. And that that um overhead, that burden, that scale, that scope, that scariness of it all has prevented a lot of banks from entering net new into the market. So those de novos aren't coming in. We're not hitting replacement rate. What we talked about earlier in the segment, how how that that market is already or the banks, the financial industries have already collapsed through consolidation by about half in the last 20 years. And if we look at number number of new banks coming online and the number of banks still being consolidated, Americans could be looking at an of half that again in the next 10 years. So you're our options are becoming less and less. And so that that's scary from that standpoint. You have to get it right. Everybody expects their money to be available anytime, anywhere, but secure from anybody at any time or any place, right? So you need availability, but you need to trust that it's gonna be there as well, not be uh stolen from you, your system's being hacked or your system's bound. So that operational expectation is huge for banks. This and fintechs that we see coming into the market, often underestimate the scale, the operational side of it or the regulatory side of it. Oh my gosh, absolutely, it's huge. So that that plays a huge piece in to blocking out financial services, especially uh it is so if you're bringing something to market, you do naturally in tendency once you want to go up market. I can see that. Um, it's just we know that the lifeblood of the American economy is being left behind, and that's something that has hit my core for a number of years. There, you know, my upbringing was a small business household. So that's that's where I uh when I leaned into the financial industry, that's where my heart and soul went into and all my passion.

SPEAKER_01 8:01

So the bar is really high in terms of anything that is exposed to the customers and you know, the people that are helping you build the bank. I know that you guys are a Q2, you know, online banking shop. How was how did Q2 help you guys prepare for and meet the demands of launching a digital bank?

SPEAKER_00 8:23

Yeah, they've been a great partner. They have their their ecosystem allows us to take a a buy-build partner approach to innovation. So if we want to customize or write our own uh experience, we can. If we're doing um, and this is something that I've uh uh something I've used in the past working with fintechs or working with with banks, but if you're launching into a new segment, maybe that investment of all the development and innovation as you're first entering into a segment, uh doesn't make sense. And so with Q2's ecosystem, we can buy, we can partner, we can build, and allows us allows us to pull down that barrier and enter into a segment quickly and innovate uh on scale, uh, innovate efficiently, effectively. Uh so it is a flexible platform.

SPEAKER_01 9:23

That's awesome. So you could basically crawl, walk, run into a new vertical effectively with with Q2 and with a and and with an SDK.

SPEAKER_00 9:32

That's right. Yep. We can uh Yeah, it really allows innovation at scale and allows innovation, you know, in a thoughtful, not boil the ocean approach where you have to do all of it at once.

SPEAKER_01 9:46

What is it what has it what has it been like for Old Glory Bank when it came to finding talent who was capable and wanted to work in the banking industry to help you leverage that SDK?

SPEAKER_00 10:03

Yeah, so we uh we had the fortunate of being a digital first bank. We can and we're uh work from home or work from uh work from your local community. So we're building a community of team members throughout the country. The heart and soul is in Oklahoma. We have we actually we have a branch in Oklahoma, we have a call center in Oklahoma, and that's where that heart and soul, that customer experience builds from. And we're able to then acquire the talent that maybe not maybe is not available locally with that that specific expertise, and we can go to market for that in uh throughout the country.

SPEAKER_01 10:45

So you could find.NET developers and that's right. Yeah, your your your team, you could basically tap it wherever the talent is. And you don't care where they're located, as long as um you know they're capable.

SPEAKER_00 11:00

That's right. If they're capable, and we do have uh with onboarding, we have a our our our HR team has a great like onboarding process with our our culture, but it really it's really centered around that customer experience and really centered around that customer. So mm some of our team members come to our bank without any banking experience, and that's even better because they're living that experience as the end user, they're living that experience as that small business owner. Um, so they don't come with that traditional legacy mindset of a financial institution. They're coming with much.

SPEAKER_01 11:38

We've always done it like this, or they see all the no's and they're kind of thinking like I don't want to say negatively about things, but they're not thinking we can take this to basic principles and we can do it a better way.

SPEAKER_00 11:51

Yeah, going with a fist first principle approach is always a I'm a fan of that. I've never been a uh this is the way we've done it, uh, so this is the way we have to do it mindset. So having that fresh look is is even for somebody that's traditionally like myself been a financial industry outsider. Um, yeah, after you work in the industry, it's always refreshing to get that new blood, that new talent in without those preconceived notions of what it should be.

SPEAKER_01 12:20

Yeah, because uh they're coming from a space where their interaction with software is probably from an industry that's not as heavily regulated. Most of their software exposure has probably been in a B2C type of orientation where experiences are pretty nice, better, you know, generally better than they are in the banking industry because there's not KYC and there's not, you know, all this all this red tape that we have to try to polish and make you know make make work.

SPEAKER_00 12:52

That's right. That is such an interesting part of the journey for a customer is to build in the experience with the requirements, right? So that customer journey, you want to those expectations are not fun with from the banking industry. And that's where FinTech usually they try to rains on your parade as a product owner. It does. Um, because when you're getting a customer, they're making and what they're making an emotional decision most of the time. They switching your financial institution, your bank account. It's like you don't wake up one day and be like, I think I'll go find a new bank. No, you're usually emotionally motivated for it uh to make that leap, that decision. And as a small business owner, that's even a larger lift. Now you have payroll, you have operators, operating accounts. Can't get it wrong. Right. So um that is that's an emotional decision, and you don't want to slow that process down. You want to make it as seamless, as low lift for the customer as possible while you're also meeting regulatory expectations. The that that's a balance. And to get that right, I've done through proof of concepts with fintechs, other FIs, being on the advice on advisory boards for fintechs over the years. I have over 500,000 customer journeys that I've been directly or indirectly and directly a part of. And so coming to Old Glory Bank and that challenge of going, okay, we're gonna launch and and we're gonna launch at a national scale, all 50 states at once, that was a great challenge. And I'll tell you what, that that was one of the motivating factors of coming to Old Glory Bank. I'd always wanted to do something on a larger scale to help small businesses, to help everyday Americans in the financial services industry. And Old Glory Bank provided that. It was meeting the founders in late 2022 and becoming part of that founding launch launch team was was I don't know if they were ready for my level of passion for serving the small business and everyday American segment.

SPEAKER_01 15:08

Where did that come from? Why why are you so like excited about supporting that? I mean, I get it, I think it's great, but what I guess what was the motivator for you?

SPEAKER_00 15:18

Yeah, growing up, I was I grew up in an entrepreneurial household, right? Um grew up in a small business owner's household. We we focused on the my mother's business focused on the tour tourism industry. Okay. So you had about eight to 12 weeks to make 52 weeks of income.

SPEAKER_01 15:38

And that you learned a do-or-die feast or famine environment.

SPEAKER_00 15:43

It is, yeah. And you learn a lot of things are outside of your control, too, just like in business. So weather played a role into that. So that that might cut your income by a few weeks, and that was out of your control, and that might look like one year with 12 weeks of income, might look like, yeah, we get to eat steaks and maybe go enjoy the lake for the day, and the other end of it looked like hot dogs and hand-me-downs into the school year. That was where that passion came from. And then as a small business owner, you learn crisis management, you learn customer service, you learn, you know, you're the chief everything officer, you learn cash flow, payroll. Uh, it in that was that's just you know, the life of a small business owner.

SPEAKER_01 16:29

And so you've but you've really you know spent a lot of time in the trenches now of building the bank. What do you think are things that a lot of banks get wrong when they're trying to do digital transformation and they're trying to be digital? What where are they getting tripped up in making that experience?

SPEAKER_00 16:47

They uh they they treat digital as a channel, is what I found for the most part. Many banks they have an experience that they built in branch, they have an experience that doesn't translate well from mobile to the digital channel.

SPEAKER_01 17:01

Everything's a bolted on, very retrofitted. Yeah.

SPEAKER_00 17:06

Yeah, you have you you have the this is the way we've done it mindset. You have the legacy tech stack. And so instead of taking a fresh look at things, we look at, you know, in the banking industry traditionally, uh, you look on as a bolt-on aspect. And the smaller community banks have a uh disadvantage in that space and this in the smaller credit unions as well, because they're working with those larger providers, and so they they have to take what's compatible. So they're their options are limited.

SPEAKER_01 17:37

They don't have that they're getting bundled, they're kind of getting bundled mediocre free tech that comes along with the core they bought or whatever.

SPEAKER_00 17:46

That's right. Or it's paid for tech. That's the only they have limited options because because it's compatible and they don't have the dev teams to say, well, we can make these API calls and and give a better experience. So yeah, that's where treating digital as a channel for banks. The other thing is is looking at scale and um the one thing when we look at fintechs, what do they get right and they get wrong? They get the experience right, but they oftentimes don't get the regulatory side of it right.

SPEAKER_01 18:15

Totally. So talk to me a little bit about what you guys are doing in the crypto space. If you go to Old Glory's website, you will see Bitcoin, you'll see crypto is a appears to be a big part of what you guys are leaning into. A lot of people are you know seeing this as the future, stable coins. Like what's your guys' position on all that?

SPEAKER_00 18:38

Yeah, we're creating an experience that's that's we call next gen banking. Next gen banking looks to leverage that uh not a bolt-on experience, but an integrating experience where you can seamlessly trade fiat for stablecoin, fiat for crypto, uh, to help you make payments faster, to help you position into other currencies. So we're embedding that, we're creating that ourselves and embedding that right into the experience for the customer.

SPEAKER_01 19:10

And what was the signal for you guys to do to invest so heavily in this? Was it was it the big beautiful bill? Sorry, maybe I should, I don't want to trigger anybody. Um, like was it the Genius Act? You guys heard about this legislation coming together and you thought, you know what, we need to go, we should go all in. What was the impetus for you guys?

SPEAKER_00 19:30

Yeah, we were thinking about it a little bit before that. Um, and it was really people are buying stocks or buying crypto, and they're doing it all from a disconnected experience. And so we looked at early on how do we bring that into our experience? And then we're also looking at how do we enable and bring faster payments for small and medium-sized businesses? Um, give them the flexibility to choose who they want to pay, how they want to pay them, uh, when they want to pay them. And in stable coins made a lot of sense. So we were looking at it early on. How do we uh bring that capability to the segment that today they have to go out and get in a disconnected experience? That that was really where we were we were focusing on bringing it in-house, make it secure, bringing everyone a capability right inside their online and mobile banking. Seemed like a natural fit to us.

SPEAKER_01 20:22

It seems like if you don't do that, then you are really positioning yourself for a Venmo-like disintermediation from your clients.

SPEAKER_00 20:33

That's right. We we see that like P2P uh applications, you know, that that that experience or um some of the other experiences where we get we start talking about this becomes the fintech bolt on to your online and mobile banking experience. So we look to embed a lot of that into our online and mobile banking. Uh by summer, we'll be launching our uh financial health and financial wealth series of embedded experiences. And that really aims to get a good look at your financial picture. We're also bringing for a new segment of customers coming out of college, maybe open entering into the workforce for the first time. That segment doesn't fully understand how a credit score really affects their financial life. So bringing in the ability to run scenarios on your credit, understand how much you owe everywhere, um, and run that scenario and really help that that person get to a healthier financial spot in life. The the financial wealth aspect to that is you'll be able to right from your online mobile banking experience, start building stock investments for the first time. Maybe you don't have access to a 401k and you want to do investing. That'll allow that to happen right from your online mobile banking experience. So when we look at by the summer, where we aim to be is we'll be walking with people in into a healthier position and we'll be helping them uh diversify with. Crypto.

SPEAKER_01 22:01

I think that's awesome. And I feel like financial wellness, you know, we recently had Rachel Fox from Sunny Day Fund who came on to just talk about in their case, it's all about building emergency savings. That's right. And how financial wellness, if you can really nail it as a financial institution, is a great way to just increase that sticky factor with your customers. You know, because there is some generally some configuration that goes into standing up a financial wellness interaction. And so the more supported I think these guys feel, the more invested they are with you as a client, they're going to stick around.

SPEAKER_00 22:41

Yeah, yeah, that's the hope, right? You that's the hope. Yeah. You go through the and we listen to our customers. So if we're not getting it right, we take that to heart. Our customer service team is phenomenal. They will echo that customer's experience to us. And so when we talk about product and design, we pull the customer experience teams into those conversations early and often. And they're throughout the life cycle of the product development and then ongoing support. So that when we talk about stickiness of customers, if we're not getting it right, we listen to that and we aim to get it right. That feedback loop is is very important to us. We have customer product journey owners that are focused on acquisition and then continuous onboarding and adoption. And so we take that customer experience. We sit take that uh product owner of that journey. And if we're not getting the adoption, that gives us a signal that we're not getting it right.

SPEAKER_01 23:52

I think that's great to be cognizant of that. Let me ask you one more question here. So if I'm a business owner, how should I start thinking about crypto in terms of money movement, payment, settlement? Where does this weave into my day-to-day?

SPEAKER_00 24:08

As a small business owner, you may be paying an invoice payroll. It could be done through stablecoin, could be done through uh our own old glory pay embedded app that we have. That's if everyone's a customer of Old Glory Bank, you just pay them instantly. So if you have employees, you can do a small payroll that way. You can still do ACH, you can still do check, you can still do wire, so you can do international payments.

SPEAKER_01 24:32

And I can do this all with crypto.

SPEAKER_00 24:34

You can do you can do some of it with crypto, and you can do some of it with the the traditional channels. So where we're looking at from a small business owner standpoint is it gives you another channel, another flexibility of instant payment, or it gives you that flexibility of being able to pay anyone through any channel at any time.

SPEAKER_01 24:55

So if my if my wallet is in a good place for payroll or paying an invoice, Old Glory Bank can actually give them the option to hey, do you want to use USD or do you want to use crypto?

SPEAKER_00 25:12

USD, crypto, fiat, ACH wire. Yeah, we're looking at all the channels will be available to our small business. That's awesome. Yeah. We talked about financial health and financial wealth for our consumer segment, not the business segment. Bringing leveraging cash flow analysis, how you position in not only your maybe your uh geographical footprint, but your segment and your industry. Uh, we bring that analysis is also for basic is free for our online and mobile banking users. Very powerful tool. We call it business insights. And our treasury services, like we talked about, our channels are very affordable. We try to price position that as making it very economical for small businesses. We we're really looking to help whether you're a consumer or whether it's a small business, find out where you are in your journey and understand where you want to go or where you're heading, and then help knock down some of those barriers. Bring in the tech stack, bring in the payment channels, lowering the barriers for your next step in your financial journey. Whether that's I have a side hustle, I'm a gig economy worker, um, I want to own my own business someday, today. Uh, you use the analogy sometimes of I I want to start a coffee shop. We want to be with you during that that journey.

SPEAKER_01 26:36

That's awesome. Well, you guys are you guys are walking the talk at Old Glory Bank and supporting small business owners. John, thanks so much for being on the show. Where can people learn more about what you guys are doing?

SPEAKER_00 26:46

Yeah, oldglorybank.com, our website. You can actually watch more in-depth video and podcasts about next gen banking and crypto. You can find us on your favorite social media platform. Yeah, like us, follow us, love to have you as an old glory bank customer.

SPEAKER_01 27:02

Awesome.

SPEAKER_00 27:02

Thanks, man. Thank you so much. Great being here today.

SPEAKER_01 27:06

Hey, did you know that Propagate FinTech is also an end to end marketing and PR firm? If you'd like to explore working with us or coming on a podcast, reach out to us at propagatefintech.com and we can explore whatever you're working on.