As the financial sector continuously evolves, it is vital to understand how traditional banking is merging with fintech innovation to craft the future of finance. In the latest podcast episode, we are introduced to Cross River, a financial institution that has not only witnessed but also contributed to this evolution. The episode offers an in-depth exploration of how Cross River, under the guidance of Adam Goller, EVP, Head of Fintech Banking has developed a unique niche at the crossroads of technology and traditional banking.
The 2008 financial crisis is known for its destructive impact on the global economy. However, it also provided the impetus for innovation and the creation of new business models in the banking industry. Cross River was birthed during this tumultuous period with a vision to redefine banking by integrating cutting-edge technology into the traditional financial sector.
The podcast highlights the need for a resilient ecosystem in modern banking—one that can withstand the pressures of regulatory changes and market fluctuations. Cross River's journey serves as a case study for other financial institutions navigating the convergence of fintech and traditional banking.
As the financial sector continuously evolves, it is vital to understand how traditional banking is merging with fintech innovation to craft the future of finance. In the latest podcast episode, we are introduced to Cross River, a financial institution that has not only witnessed but also contributed to this evolution. The episode offers an in-depth exploration of how Cross River, under the guidance of Adam Goller, EVP, Head of Fintech Banking has developed a unique niche at the crossroads of technology and traditional banking.
The 2008 financial crisis is known for its destructive impact on the global economy. However, it also provided the impetus for innovation and the creation of new business models in the banking industry. Cross River was birthed during this tumultuous period with a vision to redefine banking by integrating cutting-edge technology into the traditional financial sector.
The podcast highlights the need for a resilient ecosystem in modern banking—one that can withstand the pressures of regulatory changes and market fluctuations. Cross River's journey serves as a case study for other financial institutions navigating the convergence of fintech and traditional banking.
Welcome to the Leaders in Payments podcast, where we talk to C-level leaders from across the payments landscape. We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments. We will also hear stories from our guests about their journeys to the top.
Speaker 2:We offer a holistic product set. So, whereas we may have competitors in different verticals, as I mentioned before, we have no competitors that I'm aware of that offer the holistic products that we offer today. So when you come to CrossRiver for a lending program and you want to expand that to offer cards and then facilitate payments and then offer deposit accounts, you can do that not only with the same bank, crossriver, but on the same APIs that are all connected to the same core but on the same APIs that are all connected to the same core.
Speaker 3:Greg Myers, crossriver's API-driven banking infrastructure embeds financial services across industries and provides the foundation for regulatory compliance upon which their partners grow. Adam and I take a deep dive into CrossRiver, including what makes it different and unique in the marketplace. We also discuss how and why it was started and the pivots that they've made over the years. We've got a great episode ahead, so let's get started. Hi Adam, thank you for being here and welcome to the Leaders in Payments podcast.
Speaker 2:Thank you so much for having me. It's really a pleasure to be here.
Speaker 3:Great, so let's go ahead and dive right in If you don't mind. Tell our audience a little bit about yourself, maybe where?
Speaker 2:you grew up, where you went to school, where you currently live, a few things like that. Sure, I'm not sure how interesting that will be, but I'll try my best. So I'm actually a New Yorker, born and bred and really never left. I grew up on Long Island. I'm actually one of two children. I'm a twin actually I have a twin brother Grew up on Long Island and I really never left. I got married after college and spent four years at a local college in Manhattan and then I got married right after that and moved right away to Queens, within New York, and then, shortly thereafter, four and a half years later, I moved back to Long Island with my wife and bought our first house, and so I raised our five children in Long Island and so born and bred New Yorker and never really left, I think, outside of sort of my family life where I have five amazing children and an amazing wife. I'm also an active athlete. I play tennis and I'm a big runner and enjoy a lot of time away from the office as well.
Speaker 3:Awesome, well let's talk about CrossRiver, so tell the audience what CrossRiver does.
Speaker 2:Sure. So CrossRiver is actually pretty interesting. So we were formed in the last recession really 2008 and the crisis and really with the idea of being a little bit of a different type of bank. So we're a bank like any other bank. We're FDIC insured, we're state chartered. However, we operate in a very different model. The bank's focus is enabling banking products for non-banks. What that really means is that we're a B2B enterprise. We focus on finding interesting platforms in various verticals of banking that are looking to offer a service to their end user, and we enable that through our licensing technology. So, as an example, a platform has a really good acquisition strategy for acquiring customers for, let's say, point-of-sale loans. We can facilitate those loans through our licensing and technology, as well as our regulatory infrastructure. That applies to payments, it applies to deposits, it applies to cards. So essentially, you can think of us like a middleware or a technology layer between customer-facing platforms and banking products.
Speaker 2:Okay, so can consumers or businesses open a traditional bank account, of course, that's actually one of the more unique things about Crossover and I should highlight that. So, aside from being a technology enabler, we're also a bank like any other bank. So if you want to come to the bank and apply for an SBA loan, or you want to come to the bank and get a commercial real estate loan, you want to open a retail CD at our branch, you can do that. So we actually do merge the traditional banking with the technology-enabled banking, and that's what's sort of unique about us. Most folks in the fintech space have chosen that path exclusively, and many folks in the more traditional banking space have chosen that path exclusively. Crossover is a hybrid of the two, enabling direct transactions, while it also focuses on enabling transactions at scale using our technology.
Speaker 3:Okay, and you mentioned the technology aspect a couple of times and fintechs is sort of the customer. Is there a certain sector or sectors within FinTech, or can it be basically any type of FinTech company?
Speaker 2:Sure. So that's actually a really important point that you make, I think. Whereas historically, we've focused more on the consumer and have enabled a lot of consumer loans and consumer payments, consumer card and consumer deposit accounts, we do a lot on the small business front as well. We're enabling small business loans every day. We're enabling cards to be issued for small businesses. We're processing payments for small businesses every day. We're also offering deposit accounts for small businesses through our technology platforms. So I think that we serve the consumers and small businesses alike, noting that historically, we have done a lot more on the consumer side.
Speaker 3:Okay, and how big is the company?
Speaker 2:Company. On a balance sheet standpoint, it's about $7.5 billion in assets. That's one measure. I think the other important point is that we're also approximately 800 people and that staff goes across two different continents. We have most of our staff in America, but a good portion of our staff is actually in Israel, and that's where most of our tech folks live, and so we have a lot of technology that's built, maintained and developed in Israel. Okay, and is your customer base international or just in the US? Today, we serve mostly domestic customers within the United States, with a limited activity outside the United States. Obviously, our aspiration is to become more of an international company and serve the same clientele for enabling international transactions as well.
Speaker 3:And your sort of go-to-market strategy? Do you have a sales team that works this or do you work through partnership channels? How do you go to market?
Speaker 2:Great question. So, all of the above, we have a sales team. So, maybe, describing the organization, we have those two channels I mentioned before. We have a little more traditional banking group as well as the fintech banking group. Within fintech banking, which is the focus of here, we do have a sales team that's outbound, that looks for unique platforms that offer products we want to enable. In addition, we have a lot of inbound leads that come in through our VC investors, through our board and others as well who know us from the industry. We have a reputation we've built as far as being a technology-forward organization, one that thinks a little bit differently, and so, whereas we have a reputation we've built as far as being a technology-forward organization, one that thinks a little bit differently, and so, whereas we have an outbound strategy and an outbound sales force, we do get a fair number of leads that come in just organically through different channels of our board and others.
Speaker 3:Okay, great. What would you say differentiates you from your competitors out there?
Speaker 2:So we get this question a lot. I think there's a lot of folks in this space. I think we compete in every vertical we're in. A lot of people in different business lines like to say we have no competition. The opposite, we have a ton of competition. What's unique about CrossFibber is that our competition is really focused on different verticals, and so when I think about our competition on the payment side or on the lending side, on the deposit side, on the card side, it's fierce. There's a lot of folks in the space. It's competitive from a pricing standpoint, competitive from a product standpoint.
Speaker 2:What makes us different is two things in my mind. One we offer a holistic product set. So, whereas we may have competitors in different verticals, as I mentioned before, we have no competitors that I'm aware of that offer the holistic products that we offer today. So when you come to CrossFiver for a lending program and you want to expand that to offer cards and then facilitate payments and then offer deposit accounts, you can do that not only with the same bank, crossriver, but on the same APIs that are all connected to the same core. That's really unique about us.
Speaker 2:The other main thing that's really really important to understand and this is very different than most of the folks in our space is that we truly are a technology company. I mentioned before the size of our development team abroad, but that's actually true. Not only do we build things like a technology company, but we're actually our mentality, our creativity is that of a technology company. So when you're a tech company or a unique platform and you're facing customers, you're offering a really unique UX, matching yourself with a bank that traditionally is known for being slower and stodgier, having more stale or maybe more generic technology. It's really important to think about what future scale looks like. And working with a bank like CrossFever, who has not only its own developers and engineers, but a tech-forward approach, is really important. Its own developers and engineers, but a tech-forward approach is really important. So those two things in summation I would say, the tech-forward approach and the technology embedded in the bank's offering, as well as the holistic product set, make us really unique versus our competitors.
Speaker 3:I know when, many years ago, when I started in payments, I was at Chase Payment Tech, obviously the payments division of JP Morgan, and sort of the strategy was, hey, a business comes into a branch or back, then they couldn't do it online, but today I assume you could. You open a checking account and then we tried to sell them merchant services. So there was sort of this path that we kind of walked a company through right and then you could offer them, you know, a business credit card or whatever it might be. I mean, do you see that today as like a checking account, as like the core product, or you see it much different today?
Speaker 2:Actually it's another great point, but I think something also that's a little different to what it used to be. So I think to your point, the first point of contact for cross-selling or for growing a relationship was always typically to your point let's have a checking account. So who needed a bank account? They was always typically to your point let's have a checking account. So who needed a bank account? They didn't have a bank account. A startup business needed a bank account and then over time you would layer in things like cards, or maybe you'd layer in a loan product and maybe ultimately they would need other services payment services.
Speaker 2:I think for us today, the way we set up our technology and our platform, it doesn't really matter. Someone can come to us today and say, hey, they want to process payments and then tomorrow can say you know what? We want to offer a loan program for our customers. For us, we're actually agnostic and the technology is set up in such a way where the incremental products that we add on don't really require that much more effort. It's simply just more diligence on our side. So I think that actually has changed and that's shifting in general. Specifically for CrossServer, I think that the way we built our having to care about how they come to us. Once they come to us, we can then continue to offer new products to them once they need it.
Speaker 3:Yeah, and I also want you to touch on if you can maybe a little bit around sort of the compliance and the safety of the bank, because that's a big topic these days. Right, we're seeing, you know, there's some negative news out there. I'm not going to talk about it, but it's important to people to understand that value of coming to someone like CrossRiver.
Speaker 2:Yeah, that's an important question and, yeah, it's not the most interesting or exciting topic to talk about. At the same time, it's one of the most important. If you are a platform who wants to work with a bank and not become a bank yourself and not be licensed yourself you have to think about the right bank partner. And the right bank partner means making sure that both you and they are on the same page about how to attack the market from a compliance standpoint, because the reality is, the expectations of regulators today are higher than they've ever been, for whatever reason and I don't want to get into the politics of it, but there has been an attack on this fintech non-bank partnership and I think that when we think about how we cope with that, we could sit here and start complaining about it and say, oh, we feel they're being too harsh, or we feel they're being onerous as far as the requirements and part of that may be true.
Speaker 2:At the same time, I think our approach is more okay. We have to comply with it. So what do we have to do? What do we have to do to elevate our game, to make sure we're complying with those regulations, to make it a competitive advantage?
Speaker 2:So, to give you an example, we had specifically something with fair lending without regulators. So we looked at it and we said, okay, we have a fair lending improvement we have to make in our program. Should we just solve the problem or should we build something to make sure that when we come out of this problem, we have the best solution in the market, which will put us ahead of others going forward? And so that's what we did. We built an API that will ultimately enable fair lending to be done in a much more unique and customized fashion with the data sets that we have and should enable scale going forward.
Speaker 2:Now, they may not help us today, but we view that as a competitive advantage now, and so I think that can be applied to all of the recent news on AML and on model risk management all the hot topics that regulators are covering. The question we think about is okay, we have to comply with a more rigorous regulatory review in those specific areas, but when we look to solve that attention that they're giving it, we look to solve it in a way that will give us a competitive advantage going forward and will enable us to grow in a way where it won't require the same level of manual intervention and the number of people we offer staff. And so we think about it as how can we make compliance a competitive advantage going forward?
Speaker 3:Yeah, well, I appreciate you answering that. So when we look at just the payments portion of sort of what you offer, where do you see that heading, say in the next three to five years?
Speaker 2:Yeah, that's an important question. I mean, the easy answer is quicker, easier, more seamlessly, and I think that, if you think about it, it's almost like the music industry, right? I remember as a kid, and I'm sure you do as well I don't know how old you are, but we had cassettes, right, and I remember when I was I think I was in junior high school when CDs came out, right, and how long were CDs out for before they had MP3s? And now, with MP3s, everything's digital and it's online.
Speaker 2:The speed at which things change just accelerated so quickly. It's very similar in the payment space, but for years it was like, okay, you sent a wire right and they're working on making wires better. And then ACH was available and ACH became the same day ACH, and as soon as the same day ACH came out, then you had very quickly RTP and now you have FedNow, and so what we're seeing is the acceleration of faster payment rails is really proliferating in the market. Crossriver, specifically, was able to adapt to that very quickly. We were the first bank, certainly of our size, to be able to offer RTP through our own core. The same with FedNow. If you look at the banks who offer those products, they were much bigger than us, and so we've been able to stay with that changing tide and enable those products really, really fast. And so for us, what we think about is how quickly can we keep up with the change, the requirements that customers have to speed up those transactions. So when I think about what the future of payments looks like to me, there's two things that come to mind. One faster. How can we get folks money faster? I think cost is a big consideration. So if faster means it's three or four X the cost of an ACH, probably not going to last long-term, but as that cost starts to come down, when you start achieving the scale, then it's a no-brainer and people will offer RTP or FedNow over an ACH.
Speaker 2:In addition, I think there's two other parts that I think are important to focus on. One is the interoperability of those products. Can we create smart routing and CrossRiver has been able to we actually had an announcement on this, I think, two weeks ago enable interoperability between FedNow and RTP. So when you come in to CrossRiver and you want to process a payment, you actually can choose the rail live, and if one doesn't work, the other one will work. And so those are really important for us because it speaks to the same demand for quick technology that enables faster payments, but also interoperability. In addition, I think, the ability to use products internationally. So we have products like Push to Card, which will enable international transactions and it's the same product domestically. So, as we know, ach is really a domestic product versus an IUT, which is somewhat international, but the demand for products that can be used across geographies. So I think it's the speed, it's the geography that these payments will support. I think it's the cost of these payments as we grow.
Speaker 3:Okay, great. So let's switch gears a little bit and talk about you. So maybe walk us through your journey graduate, college, first job, how did you get to Cross River, and then how did you get to the role you're in today? It's a fascinating story actually.
Speaker 2:So maybe rewind a little bit Graduated college I think it was in 2001. First job out of college was actually working at a mortgage bank and I was underwriting loans for their mortgage banking division. I did that for about three years three and a half years. Then I actually went to pursue a job as an analyst at a rating agency. Now you have to know exactly where we were in the context of time.
Speaker 2:This was the peak of the mortgage market. This was back in 2005 or 2006. Mortgages were becoming cheaper, they were becoming more exotic, people started to create these securities, subprime became a bigger topic of conversation. The mortgage market was booming, housing market was booming, and I saw that market just go to levels that were just unfathomable at a point in time. And then, fast forward, 2008, the crisis hit and people realized that these mortgages that they package and taking bad loans and packaging them as CDOs doesn't make them better loans, and so that market blew up and so going from the mortgage bank to a rating agency focused on mortgages and then seeing an opportunity to lend in a market where nobody was lending, I actually met the current CEO of CrossFiver, who was actually my neighbor at the time, who was also the CFO, coincidentally, of that first mortgage bank that I worked for. So he approached me about starting the bank in early 2008.
Speaker 2:And over the course of the next three to four months, we put together a team of five people and we opened the bank in June of 2008 with a very small staff, and I think what we thought at the time was the mortgage market is frozen, nobody's lending. It was a really opportune time to be opening a bank, and it turned out to be true. What we didn't realize was that the initial business plan of the bank was going to change dramatically. What I mean by that is that we initially came into it thinking we were going to offer commercial mortgages, residential mortgages, because nobody else was lending. What we realized over time was that wasn't going to be super scalable. It still was very manual, the technology wasn't advanced, and so very quickly we said how can we leverage this bank charter that we have to offer loans at scale, deposits at scale.
Speaker 2:And so we met a company based in Atlanta, green Sky, and they were our first what I'll call today fintech partner. They had a platform with the Home Depot, where they were our first what I'll call today fintech partner. They had a platform with the Home Depot where they were financing all the at-home services that the Home Depot offered. And that was our first realization of hey, with the same technology, the same core, the same infrastructure, we can offer direct loans. We can also offer the ability for technology platforms to lend. For the ability for technology platforms to lend, let them acquire the customer, which they're really really good at, and let us handle all the compliance and regulatory infrastructure, which banks are good at. So it was actually a perfect partnership.
Speaker 2:So after that realization, we then branched out and we started building a number of lending platforms and after a year or so we started thinking about how can we go beyond lending. And that really created the opportunity in payments From payments we expanded to cards, from cards we expanded to deposits. And so I think it was an early realization at the bank of how can we take the same exact platform and do it at scale. And as we built our own technology, we realized if we built the right technology and assemble the right team, we can offer all the same products, yes, direct to market, but also offer it through others who have a really really unique acquisition strategy. And so that enabled the bank to get to scale and brought us to where we are today.
Speaker 3:Yeah, I'm glad you explained that, because when you first said you started a bank in 2008, I was thinking like why would you do that? But you explained it well, so I think our audience will understand that was a crazy time back then.
Speaker 2:Yeah, it was definitely a crazy time and I remember thinking at the time that, wow, the world's falling apart. And I think what you realize over time is that there are definitely different cycles and we're seeing a cycle now. I think having that experience in 2008, I think, gives a different perspective. That's sort of what will come out of this current economic downturn.
Speaker 3:Yeah, well, what are some things you're passionate about? So, maybe one business-related passion and one personal passion.
Speaker 2:So for me, I think one business-related passion is serving the customer. A really big focus of ours is how can we be a better partner For us? I always like to distinguish between and maybe it's my own differentiation, maybe I heard it somewhere, I can't remember where I heard it but I always like to distinguish between and maybe it's my own differentiation, maybe I heard it somewhere, I can't remember where I heard it, but I always think about the difference between a partner and a client. And a client is someone who you do business with, but it's sort of a cold relationship. They need something right. You need something. We want to make money. They need to offer a product. It's great synergy and you'll work together for years and things go fine and everyone gets what they need. That's not a partnership. A partnership is how can we continue to build trust amongst each other and expand the relationship in a way which is symbiotic. Everyone not only gets what they need, but they thrive and they grow, and so to me, that's a really important distinction. So when I think about how to build my team and what to imbue in them as far as the approach to what we do and how we can differentiate ourselves versus our competitors. I think about that client-partner differentiation, and if I could have one goal for our bank, it's to build really, really strong partnerships and to build fewer clients. So that's from a business standpoint.
Speaker 2:From a personal standpoint, it's hard to take the focus away from my children. I have five of them and they're amazing in each of their own way and they're all really unique. But I think that for me it's about how can I raise my family to really understand what life is all about, and life's not about monetary gain and monetary growth. It's really about quality of life, quality of family, being good to others and then reciprocating back to you. I think to me, if I can give that lesson to my children of just be good to others, and they'll obviously reciprocate, grow and grow in what you love to that success. I don't have any other passions that are greater than that. I can enjoy running, I certainly enjoy eating ice cream, but I think for me it's not about anything that is too material. It's about raising children in to me the way that I think is appropriate.
Speaker 3:Yeah, that's great. Thanks for sharing that. So final question and I always like to get everyone's kind of viewpoint, because I think you bring different things from your experiences If someone came to you and they said hey, adam, I'm interested in going into payments or fintech or financial services, and maybe they're right out of college and they're looking to build a career in this space, what would you tell them they need to do to be successful?
Speaker 2:So maybe I'll take two different approaches to answer the question. I'll take the individual. I'll take the company From an individual standpoint. If you're someone coming out of college, you want to be in the fintech space. You have to ask yourself why. What about fintech appeals to you? Is it the scale of fintech? Is it the monetary gain, perhaps from fintech? What about fintech appeals to you? And I think it's about making sure that when you say you want to do something, you know why you want to do it.
Speaker 2:I remember when I was in college, everyone seemed to be making money in real estate and you ask every kid in my class and they say what do you want to do? I want to be in real estate. Why? Because everyone's making a lot of money. But you really want to do real estate. Is that really your passion? Do you think you can make a difference there? Are you good at it?
Speaker 2:I think people don't necessarily understand why they want to do something. So if someone tells me I want to go into fintech, I would just ask them why and then I would kind of drill in further to understand. If you understand the why, then the how becomes a lot easier. So to me, that's the approach I would take from an individual standpoint, from a company standpoint, which I think is what I deal with most of my day is that when a company comes to us and they say we want to be in fintech, we want to enable product A call it a loan. We want to enable a payment, we want to enable a deposit product, I say to them okay, tell me about your company.
Speaker 2:What makes you different? There's a ton of companies out there today offering the same exact product. What makes you unique? Who are your competitors? So to me it's about, I think, both cases. The thematic or the common theme between both of them is what makes you different. Why do you want to do this? How can you be successful? I think if you can answer those questions, like I said, if you know the why, then the how becomes a lot easier.
Speaker 3:Yeah, I totally agree, both on the personal and business side. I think that's a great way to view it. So, adam, we've covered a lot of ground already about you and, obviously, the company and the industry as a whole. Is there anything else you'd like to cover before we wrap up the show?
Speaker 2:No, I think we covered a lot. I'm really, really excited to be here. I really thank you for having me, and I would just leave off with this message that I think the fintech industry, even though there's been a lot of growth, is still somewhat in the infancy, just in the sense that I think that there'll be a time where even the regulators will realize that this is actually a great partnership, that the idea of having platforms who are really good at UX, customer experience acquisition and having banks who they can then oversee and monitor all the activity done in every different vertical is actually a really, really good model. I do believe that it will take time to get there, but I think we'll see a lot of growth once that happens, so I'm excited for the future.
Speaker 3:Yeah, I think that's a great way to wrap up the show. So, adam, thank you so much for being on today. I really appreciate your time. Thank you so much for having me, and to all you listeners out there, I thank you for your time as well, and until the next story.
Speaker 1:Thank you for joining us this week on the Leaders in Payments podcast. Make sure you visit our website at leadersinpaymentscom, where you can subscribe to the show and where you'll find our show notes. If you enjoyed listening, please share on your social channels as well.