‘Combining our customer-first focus and local brand’: Inside Seattle Bank’s partnership with Google
- Google's new bank accounts are being launched in partnership with banks around the U.S.
- Seattle Bank, a community bank serving Puget Sound, is collaborating with Google to launch a new Google Plex account.
We’ve been talking for a long time about big tech’s move into financial services. We’ve seen Apple’s launch of a credit card, Amazon and Shopify lending to merchants, and Facebook move deeper into payments on its messaging apps.
News hit this week that gave us more insight into Google’s moves in banking. The company is launching Plex accounts, smarter and simpler bank accounts within a redesgined Google Pay app. Google isn’t becoming a bank — these accounts are launched in collaboration with chartered banks, like Citi and BBVA.
Seattle Bank also landed a partnership with Google. The sub-$1 billion community bank in the Pacific Northwest will also work with Google to launch a Plex account. I spoke with John Blizzard, Seattle Bank’s president and CEO about the move and what it means for the community bank. We discuss if other small firms can and will replicate these types of partnerships with big tech. John shares his vision for the future of small banks and technology.
The partnership with Google
We’re very excited about [our partnership with Google]. And for us, it’s great, because we really did this for three reasons. And that was to offer the best product we can in the market. We don’t try to be all things to all people. But when we do enter a niche or a market area, we want to offer the very best products or services. So [this partnership] enabled us to do that.
For us, it’s a new market opportunity with digital first customers, which is terrific, versus our traditional commercial clients that are more hands on.
And [working with Google] really allows us to leverage our technology strategy, which is a cloud based, API-ready, core system.
Tech strategy for a community bank
Our tech strategy has been in the works for years. We learned early on, and maybe naively, say five to six years ago, when we tried to do new fintech-oriented stuff for our clients — where we could really add cool, valuable experiences, we learned pretty quickly, you actually can’t do much of that with traditional bank legacy technology. It’s very difficult. The way the systems and the vendors are all set up, there’s just no good alignment there.
And so we decided over a couple year period, that ultimately we needed to change our core system and regain control of our tech stack. For us, that meant making the change to a new core provider and a new system. We moved to Finastra, a cloud-based core. This was all in the works before Google even showed up on the map.
We did a core conversion that we finished earlier this year. There are probably fewer than 50 banks in the country in a year that will do a conversion because it is the hardest thing you can do in banking. It’s by far harder than an IPO or an M&A deal. It is. There are lots of reasons banks don’t do it, even though they can be highly frustrated with their legacy core providers. It is very, very challenging.
So, we were in the midst of that when we interacted with Google. It’s just one example of the kind of things we can do with the right technology stack and collaboration and partnership with the right groups.
It’s pretty cool for a bank with one location and 60 employees that we can do something like this.
Competing as a community bank
If you’ve been in the industry, or looking at the industry, you’ve seen the commoditization, which is significant over the last 20 years. Just look at the number of banks in the country, particularly community banks, and how that has shrunk. Just in our county alone, where Seattle’s located, we had 22 banks charter in our county. I think it’s like five or six now. From the mid 2000s to today, you see that [consolidation] at the state level, as well. There are just way less community banks because it’s a commoditizing industry.
As a community bank, you’ve got to find ways to safely run your bank, to make a profit and serve your clients. Community banks are incredibly entrepreneurial — they typically have been entrepreneurial on the credit side, whether you’re an ag bank, or doing leasing, or whatever. Now, it is really critical they get innovative with digital on the deposit side.
Partnering with big tech
Big tech has different strategies for the space. I think you will see more and more types of collaboration between tech firms and community banks. I’m a huge proponent of community banks. I think it’s critical that we find ways to partner with big players to do unique things for clients. And, you know, this is great that Google is doing this.
We do have some things we’ve had in kind of Skunk Works for a while that we’re going to expand, things that have been marinating for some time, things that really needed to be on this kind of technology of a digital core. We’re going to be embarking on those in the future. We have other ways we think we can deliver value to clients through use of technology and that’s kind of exciting.
Changing core software
I probably would have started the process sooner.We’ve been working for some time on really figuring out our technology strategy to serve our clients in a digital world. While we’ve made the change, it would have been great to do that a year earlier. That would have enabled us to do things sooner. That probably is the is the biggest thing. It’s really about gaining your point of control. The way to think about it actually is in the past, these core systems, which are kind of the guts of a banking tech stack, they usually just impact the back office. This was all back office stuff that didn’t impact the customer.
Now that we got into digital banking over the last 10 to 15 years, that’s become front and center. That core infrastructure really impacts your ability to do things for clients. Today, most banks are buying what their vendors sell them. They’re not really innovating new things for their customers on the front end, where the fintechs are doing all sorts of cool stuff.
Partnership and dumb pipes
Our strategy is pretty simple. It’s like how do we drive as much value to clients as possible, and continue to do that, so it’s not a one and done thing? You have to be continuously innovating. You have to continuously collaborate with the best and strongest partners out there. What we don’t want to do is partner on a few things that are not viable, and that wastes our resources, and we don’t deliver for our customers. We think if we move fast, but pick the right collaborations, the right partnerships, then we can keep moving fast. That’ll be the difference.
If we’re delivering to customers, we’re less concerned about being the dumb pipes. The reality is that you better be driving value, or you will become a pipe anyway. It’s happening anyway. Recognize you’re in a commoditized industry that has a lot of cool innovation finally happening. Take that innovation and create a niche. That’s an opportunity for community banks and credit unions.
Competition from money centers
We probably get 90% of our new clients from big banks. We’re a net grower of business. So our boutique bank has been a very fast growing business for us. Aside from this new technology stuff we’re doing, we have a niche for folks with complexity in our private bank. That works very well: we’re very well capitalized, we’re profitable, and we have very strong credit risk. Those are the things you want to have as you innovate in banking. We’re a risk management company, number one. And we want to keep that front and center in all the things that we do. If we do that, then opportunities pop up all around us.
Working with Google to bring in new types of clients
A lot of banks will say, “We’re high tech, high touch.” Our boutique bank has a broader set of services than would be included in the new Google Plex account, which is very consumer oriented. We’re actively working with businesses and folks that have complexity at the individual level that’s more like a business.
What’s great for us is we get to go after a whole new digital first market [with Google]. It’s is a big opportunity for us to bring in new clients to the bank, and do it in an efficient way and do it through a digital first approach. That’s how we’re looking at leveraging digital and delivering the best in the industry. If we’re going to do something, let’s try to be the absolute best we can be and drive real value to customers. That’s why we’re excited about this partnership.
We’re focused on delivering on the Plex accounts — getting that to market will be key. That’ll be one of our goals for the new year. We really have three different business lines, and we’ll be looking to grow all three of those. The collaboration with Google falls in our fintech business line. We also have our boutique bank, and then we have an asset management business. And all three of those are growing rapidly and have huge opportunity.
We’re super excited about the the Google Plex account by Seattle Bank. It will be a really neat, cool initiative, but it’s one of quite a few we have for 2021. It should be a very big year for Seattle Bank.