MX founder and CEO Ryan Caldwell discusses developments in the banking and payments industries and gives his predictions for the future in our Finetics™ Studio with PaymentEye’s Sarah Gill, live from the exhibition floor at Money 20/20.
Sarah Gill, Reporter: I'm joined by Ryan Caldwell, CEO and founder of MX. How about we start off with talking a little bit about what you're building at MX?
Ryan Caldwell: So at MX, we're solving the problem that banks have of not having any visibility into where they're losing to their competitors. And they also have another problem that's solved with the same solution that the end users aren't being helped by the banks in a way that allows the bank to see their full financial picture. MX inserts itself into online banking and mobile banking and enables the user to add all of their outside accounts--their held-away accounts--and then be able to see a full financial picture of where they stand and whether or not they're going to be able to achieve the most critical goals in their life, like are they going to be able to send their kids to college or retire--things like that.
Sarah Gill, Reporter: Okay, and so on the kind of consumer side of that, do you see yourselves as part of that sort of wider financial goals people are working towards?
Ryan Caldwell: Definitely. MX is rooted in advocacy. We believe fundamentally that in industries that have been around for a very long time, they may have grown up in an environment where advocacy wasn't paramount, or it wasn't requisite. But in all the modern economies, it's absolutely requisite.
An example would be if I'm going to go to a search engine. It's very easy for me to enter in, in the beginning days, an AltaVista or a different, or a Yahoo or a Google. And so even in a modern, even with Google dominating the market, it's easy for me to go to Bing.com. But users choose Google because they believe that Google is looking out for their best interests, and they believe they're going to get better service and they're going to be better taken care of by all the features and all the enrichment that Google offers when you search for something.
But in banking, there hasn't been a lot of choice. So because there hasn't been a lot of choice in the past, now currently right now, choices are multiplying by the day.
Sarah Gill, Reporter: Right.
Ryan Caldwell: But if you go decades back, there weren't a lot of choice. So since there wasn't a lot of choice, a user didn't have a lot of power. And so banks and credit unions didn't have to, didn't have to cater to and constantly worry and stress about are they taking care of an end user?
Well, now with all this choice, it's going to become--and you see all this innovation outside of banking in Silicon Valley--but also banks themselves are going to see both of them evolve at a really rapid pace, where they're going to have to be absolutely obsessed with, "How do we deliver more value to the end user?" And if they don't do that, their users will pick up, go somewhere else, and select some routes. So that's a hug change that we're seeing in banking that banking hasn't undergone yet.
Sarah Gill, Reporter: Right, because the full--I mean, people take a long time to take their financial--to change their financial habits, right?
Ryan Caldwell: Yes. There are huge walls up. There's huge friction. So for you to move banks was this huge inconvenience. But with all these new technologies becoming a little bit easier and a little bit easier, and so those walls are slowly coming down. And they're, but they're, it's accelerating at the rate that those walls are coming down.
So as soon as users can very easily switch between what card they want to take out of their wallet, what card they want to select on their iPhone, I mean, that's a great example right there. If I have five different cards, I don't carry them all in my wallet. Maybe I just carry one. But on my phone, I can have 10 different cards. And so depending on who's taking better care of me, better points, better anything, right, I can select that card and use that card. That's what technology's enabling, is switching costs are very low.
Sarah Gill, Reporter: Uh-huh, okay. Why is this something you care personally about kind of fixing?
Ryan Caldwell: So if we can increase--so anything that increases efficiency across a really broad spectrum--spectrum, right?--then it has an ability to have a huge impact on the world. So, for us, when we look at it, you look at all the--I'll use Google as an example again. The way that a great provider of any kind of product would have to get to their end user, they'd have to go negotiate with a retailer, tell him why their blender or why their stereo system is better than something else, and they'd fight and fight for shelf space, and then they'd try to get it out there.
Well, in these more modern economies, that friction lowers completely. If I have an amazing--and I see countless devices on Kickstarter or that, and they are in Kickstarter and then literally days later, they're on Amazon and they're being sold on Amazon, so the entire world can see them.
Well, within that first week of them doing that, people can rate it as, "This is an incredible device. This is an amazing experience. I loved it," and then they start to rise higher and higher in their visibility on Amazon. So the distance from a great product being designed and being innovated on and then launched and then being adopted by the water--the wider population--is much, much shorter.
So in banking, what we get excited about is how, if we can cut that down even further and even further, to where if somebody says, "Well, this is a great financial institution. They're taking really good care of their users, and they're innovating," how can I make that switching cost lower and lower? How can I empower that?
And then from a transactional standpoint, if somebody like the example I just shared, if someone's constantly flying United and they are a very valuable customer, but Delta's actually providing newer planes or better services or better rates, but this user's kind of in a rut, they're in a trend, there's an ability for this other competitive airline or maybe a new airline to say, "We'll take better care of you," because they can look at this financial data‑‑not by looking at the individual's personal information at all--but they can ask for, "Show me all users who spend a certain amount of money in airlines and let me advertise directly to them." So it makes a more efficient way to reach end users and a more efficient way to get better products, better companies out there.
Sarah Gill, Reporter: Okay. And then kind of maybe stepping outside of what you're doing specifically in looking at the wider payments, thin tech industry, are there any sort of trends that you're excited about?
Ryan Caldwell: Yes, there are definitely some trends that we're excited about. On purely the payments side, one of the trends that we're--that I think is just genius, and I think it's inevitable--is the idea of not needing a card or an ID or anything when I make a payment. And similar to the way that where you might buy coffee at a Starbucks, where you can walk in and they can identify you separate from, from those items.
So we definitely think that the future, a very seamless, a very smooth payment, point-of-sale type transaction that's actually more secure, we're excited about that.
The second component is mixing with that the history of transactional data and all the full depth of it, down to SKU level, geotagging, you name it--taking all of this transactional data and looking at it comprehensively over someone's complete spend, and then being able to aid that person in that purchase. So the smoothness of the payment and then having the actual purchases that you decide to do be able to be advised or directed based off of things that you would care about and your prior spending history so that you can discover things that you might not realize were there. Maybe it's a new coffee shop or maybe it's a new sushi restaurant, but based off of where you already like and what you already like, being able to be advised and directed there, I think, is going to be some pretty cool value adds for the consumer.
Sarah Gill, Reporter: The ecosystem as it stands now is just becoming like more fragmented as more kind of stakeholders getting involved. Do you think there's anything you'd like to see from your kind of counterparts across the industry that you feel would kind of push everyone forward a bit faster?
Ryan Caldwell: I think a willingness to cannibalize existing profits or existing solutions to allow the new innovations to come about. I think that that would be healthy for the industry as a whole. I think it would actually be healthy for the larger players that maybe might not be as willing to be onboard for that in the long term.
In the short term, they may be a tiny bit painful, but in the not too long term, it would very quickly become profitable. But there's a little bit of fear, I think, around that, of abandoning some of the old methodologies and just embracing some of the new technology. So I'd love to see that.
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