Central Payments & Starion Bank Team Up for Future Growth

Speaker A: Hey, guys, welcome back to another episode of Fintech Brews. I'm Nikki Rohde and this guy is Eric Cotton.

Speaker B: Hey, you all again.

Speaker A: And today is going to be a fun celebration episode that I just can't wait for you guys to all dig into. We have very special guests from a new Central Payments partner. Big move for us, Starion Bank. Don, Rick, would you guys introduce yourselves?

Speaker C: Yeah. Hi, everybody. My name is Don Morgan. I'm the CEO of Starion Bank. Happy, uh, to join you today. Very excited about our partnership, uh, here with Central Payments. And, uh, very, very happy to join you and, uh, join this podcast.

Speaker D: Rick Jelof, cfo, uh, coo, Starion Bank. And like Don, very excited to celebrate, uh, this and kind of commemorate it with this podcast.

Speaker A: Yes, sir. Well, we are too. And I just can't, uh, you know, I think a little bit about what it's taken to get here. And so we're going to dig into all the meat of this partnership, what it means, what it looks like, um, for us, but also for the industry. And so as we think about Central Payments, you know, most of our listeners know, um, who we are and what we do, but I'm going to back it up just a little bit because Central Payments was founded, um, by a payments, or, excuse me, by a community bank. And in 2022, we spun out of that community bank and are now a standalone company. And part of that, we still use that same bank to issue card products and facilitate funds movement to do all the things we do. But as we've grown and evolved, that move actually gave us a unique opportunity to find another partner bank. So. Drumroll. As everybody can imagine, we've landed on Starion bank out of Bismarck, North Dakota, and just really could not be more happy. There is a ton of, um, things happening in payments in the digital space. Money movement, Obviously, we know 2023, 2024 has been a lot of enforcement orders and all this different stuff. Some people are pulling back, others are leaning in, and it's just there is a, a continuity in this partnership that, um, almost can't be described. But we're going to try and do our best with that here today. So with that type of, kind of context or backdrop, um, I really want to know, Don, for you, if you'll just kick it off from the Starion side, um, tell us a little bit about Starion Bank. I know I teased out the Bismarck part, but what else?

Speaker C: Yeah, uh, we're a community bank headquartered out of Bismarck, North Dakota. Been in business about 50 years. Founded by, uh, Frank Larson 50 years ago. We're about 1.8 billion in asset size. We've got 16 branches, 13 of those across North Dakota, and then we skip over to Madison, Wisconsin, with a few branches. So, um, for us, um, we're always trying to look ahead and look around the corner. You know, our Corvette, we're an EOS shop. Um, our core values are to seek the need, act with discipline, inspire confidence, get her done, and do the right thing. And with those core values, we feel the need to always look ahead, right, look around the corner. And when we looked ahead, we said, boy, fintech is, um, it's happening. And for us as community bankers, it's very disruptive for us. And, uh, so we said, you know, what are we going to do about that? And we, uh, said, you know what? We got to get in and learn this space. We got to find the right partner, and we've got to get in this space. We got to get involved. Um, and every year that goes by, you know, you're about three years further behind. So, uh, we started that search for that right partner, and, uh, we are sure that we found it in Central Payments.

Speaker D: We.

Speaker C: We couldn't be happier joining up with you guys. Uh, number one, you're helping us learn this space tremendously. Um, and also, we've got some exciting things we're working on together. So, um, as for us, it's just moving forward strategically. It's kind of how we're wired. Um, we like to provide good, solid community services for all the financial needs, kind of like every community bank does. But we also like to look around the corner and try to stay, if not ahead of the curve, you know, at least keep pace with the curve.

Speaker A: Yeah, makes a ton of sense. And, you know, I just have to commend both of you for your tenacity to get even to this point, too, because it's. It's a lot of work, and to use your words, it is disruptive. And we'll talk later on the operational front, Rick, about what that's meant for, um, for the operations of Starion and getting the team kind of on board with that and marching again. It can be a, uh, a tense conversation of, like, why pivot? Is this a pivot? Are we pivoting, or are we just evolving and recognizing, you know, probably one of my favorite things, you know, Eric's been in the space for. Oh, gosh, he's so old. Um, a long time, and myself included. One of my favorite things has been watching banks and fintechs come together versus the threat that was perceived for such a long period of time. Bankers are saying fintech's, you know, coming after our customers and fintechs are saying banks are too slow and methodical and there is a middle ground. And I think watching the space evolve to get to this point has been really cool. And yeah, lots, lots of innovation happening. And so I just, I thank you guys for staying. Um, the get or done value is awesome and I have to believe it is literally get er done. Is that right? Is it? Yeah, like that's why you've got it written.

Speaker C: We talked about the political correctness of that, but we decided, hey, we like the way it's written so we're just gonna.

Speaker A: I love it. That's absolutely perfect.

Speaker B: Perfect. And I think, you know, uh, Rick, this one's for you. Don touched on, you know, kind of why, why Sarian got into the payment space. You know, I'd like to ask you Rick, a little bit about, you know, obviously we're finding uh, especially under the current regulatory climate, navigating it wildly complex, you know, a lot of moving parts, enforcement actions seemingly coming out every week. Um, uh, why, why now for Starry on why. What makes this partnership unique? What, what are all the things that, that you feel really good about given the, you know, the, the under the regulatory undercurrents today?

Speaker D: Well, I think the first thing is it's not um, the current environment isn't really conducive to entering the space. Right. But we're not just entering the space today. We've been looking at this space for several years. I mean our interactions started with you guys several years ago, prior to even looking at this and really digging in and looking at due diligence and looking at the environment and looking at kind of our bank and the methodical growth as, as Don instituted. We don't see this as, as you guys or anybody says, pivoting um, away from community banking. We see this as an addition to community banking and really allowing us to even do more for our communities than what we're doing now. And I think that's the biggest thing is we continue to give back to our communities that we're invested in and this will allow us to continue to do that for the individuals and everybody else that relies so heavily on community banks throughout everywhere else. Um, you know, this space is near and dear to my heart as ah, Don knows. I've been kind of studying this for a while even before we started talking central payments and uh, it's really game Changing, as long as you can do it right and you get the right partners. And. And we really feel like we've gotten the right partner in central payments to get us over that hump.

Speaker C: You know, I would add. I would add, too, if I could. Um, you know, our customers are really driving this, and community bank customers are really driving this. They're changing and evolving what they expect from their banking financial institution. Um, and, uh, and they're changing their needs and wants into a space that we, as bankers, we don't necessarily have that expertise, um, to fulfill on. You know, they want that great app experience, they want that depth and breadth of continuity across all the different apps. And how do you marry that up with, you know, kind of our historical traditional products? So, um, it's kind of even more of us following our customers, uh, more so than anything.

Speaker A: That's really brilliant. And I love the idea of, Rick, what you were talking about. It's not an either or. It's an and. You know, and Don, you just kind of edified that is this, this isn't about a pivot for y'. All. It's. It's being aware, being in tune, being bold, and partnering with the right folks to. To bring that vision to life. And so that's. That was summarized quite well. Um, so, Eric, I, I want to ask you a question. This is a dangerous place to be careful. Look at the fear in his eyes. Um, so I laid the backdrop of, of where we've been. Um, why is this. Why did we land on Starion? And why is this a unique and special partnership for us?

Speaker B: Yeah, I mean, I think first and foremost why we landed on Starion. Um, you know, we're talking to two of the reasons right now. I think the, you know, the leadership team there, as, you know, we'll. We'll. We'll probably extrapolate on in this. In this discussion more. Has the desire to expand beyond, you know, the walls of their bank to get, you know, this potential national presence, to engage with, you know, large national brands. A fintech company. It wasn't, it wasn't forced. You know, Rick, Rick touched on it. It's. It was a desire of theirs. They've, They've done their diligence. They've been looking at this for, you know, quite some time. And, and now they've chose, you know, ideally, we. We found each other. Uh, um, and it's, you know, been a very symbiotic relationship. I think we look at, um, um, you know, as a. As a fintech. You know, we'll air quote that. But we very much look at ourselves as an extension of the bank. And I think that's almost how you have to, as a fintech ultimately, you know, the, the bank is the regulated entity. They have, you know, the regulatory risk. The FDA is everything runs through the bank. You have to accept that role, act as an extension of the bank when you're, you know, out in the market, you know, working with, you know, other companies, embedding a financial product. So, um, I think the openness of both parties just to, uh, realize, you know, where, where the, you know, where the expertise lies in certain areas and the balance that that displays has worked, you know, really, really well, um, you know, throughout the, you know, the unfun part, which is the integration and all of the work and the hours and hours and hours of training and meetings, um, you know, has not been as painful as one would think because there's a lot of learning going on, there's relationships getting built. So it's been, you know, it's been, it's been a really, really fun ride so far. And, uh, you know, we're excited for what's to come.

Speaker A: Yeah.

Speaker D: You know, Nikki, and if I can add one more thing, the, the, the culture to us was a big piece, uh, of this relationship. And the melding of the two parties together and, and, and how we intertwine and interact with each other really plays heavily into how we've been able to integrate this partnership so well. And you know, us being an EOS shop, that's one of the high values that we really, uh, really hold very near and dear, is making sure that any vendors that we partner with, they exhibit those same values that Don talked, uh, about earlier. And what we saw in Central Payments was that exact same thing. They had the same desires that we had, and they treat their people as well as we do, um, throughout the whole, uh, integration process. So I can't speak highly enough about what you guys do with your organization as well.

Speaker A: Oh, thank you. That's very kind. And also, um, eos. And so when we, um, really started to get a little farther along, and I think I've even called Rick and said, hey, we're a little bit newer to the EOS kind of journey. What do you think we should do about this thing or that thing or how did you guys do this over time? Because we've only been running EOS for, um, really well for six to eight months.

Speaker B: Um, do we have to ask? We are non, non paid commercial disclosures. Yeah, I think that'd be a good disclosures. All the disclosures.

Speaker A: Uh-huh.

Speaker B: Got to keep the compliance.

Speaker C: Scroll that fine print, please, now.

Speaker B: Yeah, exactly.

Speaker A: Just so everybody knows, this is a terms and conditions disclosure. Nobody's getting any credit for the EOS shop. Wow, that was good.

Speaker D: Pretty good.

Speaker A: Remember Micro Machines?

Speaker C: You remember Rick, you are not old enough to remember Micro Machines.

Speaker D: I absolutely am.

Speaker A: He probably collected them, Don. Who?

Speaker C: I did.

Speaker A: So I just. The, I think the, the egos, um, have been completely set aside or just straight non existent in this whole process because we all acknowledge the pursuit for the greater good, why we're all doing this. And you know, one of central payments is, uh, taglines really is making financial experiences better, making financial lives better. What does that mean? What does that look like? How do we stay true to that? Um, that kind of ultimate aspirational vision and partnership. Partnership. Partnership. And then partnership is a big part of it. So that is, um, an important part of, of why we ended up with you all as well. So we're grateful, um, for all of those things.

Speaker C: You know, Nikki, one more thing on that topic. It's just something I've learned that's resonated with me, uh, as we've moved along here. You know, I've definitely learned there's a lot of fintechs that speak fintech and we as bankers, we really speak banking. Um, and what we found with you guys is you speak both. And I think that's critically important, that kind of that language barrier, that mindset barrier, just that existence barrier. Um, uh, I know we found that in you guys and you do speak both. And I think that's critically important for any bank looking to get in the space or any fintech looking to partner up with a bank. Is there, is that language barrier there and you gotta somehow overcome that. And I think you guys bring that to the table.

Speaker A: Well, I think that kind of speaks to one of our value propositions and differentiators is we spent nine years under a bank in a wholly owned subsidiary of a community bank. And so we know what it's like to sit across the table from regulators. We, we know what it's like to be in the hot seat, um, and be able to have to structure product lines to be compliance first minded. And so it does kind of help translate, um, into that space. Uh, but thank you for that. That's a great compliment. Uh, Rick, I want to throw something your way. So when I think about operations, and I alluded to this a little bit before, but when you stand up a new business line there's natural disruption, there's natural kind of questions, um, what are some things you're doing internally to kind of drive excitement around this and integrate within your current, current environment? You know, when we talk eos, one thing that EOS beats on once again. I'll just remind everybody there's no disclosures, um, but there's a thing called the proven process. And so when you've got these proven processes and you bring something like this into the fold, what are you doing to, to smooth the disruption?

Speaker D: Yeah, that's a tough one really because we can't disclose a lot to everybody right now because we're still trying to work through kind of what's going on with the fintech, um, all of those things. And, and so you have to do it gingerly. You bring the right people in at the right times. We have a great program manager that's kind of running our, our show right now. Really integrating with, with central, uh, payments really well and kind of orchestrating what we need to do when, what people need to be involved. Um, you know, and making sure that everybody is educated. I think that's the main piece is the education process and making sure that we have the right people, whether it be consultants, attorneys, um, making sure that our teams internally know exactly what's going on and where so that we can explain it well to the regulators when they come in and ask us about it. Because as we alluded to earlier, there's a lot of regulation that's going on right now about this and probably going to change the landscape of fintech and we will work together to kind of flush that out too if anything needs to change. But we've been remaining nimble and we have to remain nimble in this space. I think Eric summed it um, up well to me one day where he said, well this is fintech, we better get used to this. It's changing every day and we have internally and that's just the mantra that we've had and, and luckily you know, internally our executive team has done very well with it. And then our, our board has been really receptive to the fintech mantra and making sure that we're doing everything that we can do to be ready for this space and the ever changing landscape.

Speaker A: Well that speaks really to your guys leadership too. And Eric, again as per usual, I never want to compliment you but your comment um, earlier was completely appropriate and it, it does, it takes leadership and, and doing that well.

Speaker C: So shockingly appropriate. Right you were looking for was shocking.

Speaker A: That's, that's Right, that's right. Because usually it's like you know, not.

Speaker B: Yeah those things.

Speaker A: Hey, it can't be everything, right?

Speaker B: That's right, that's right.

Speaker A: Uh, so speaking of, of buzz and excitement, um, our first partner brand we can't announce yet which really sucks but we will absolutely do a follow on episode that will maybe be a ah, uh, tri party conversation, something along those lines. Because one thing I can assure all of the listeners is that the first partner brand that we are integrating and bringing to market between central payments and Starion is a household name. It is a name that everybody in the United States will recognize to some degree. And so that is incredibly exciting for many reasons and specifically for Starion as a first kind of mover into a full on uh, space of digital payments. And your operational structure, your leadership style, your intensity around creating a strong foundation for this business is what is going to make that program so successful. So the newness shall not be uh, perceived as a weakness at all. It's doing it right. It's what I call second mover's advantage. You can be kind of first out there and fumble a little bit. You know, there's advantages to that too but in this case um, fast follower, second mover advantage, whatever terminology to be used. But you guys have done all the things to make sure that the foundation of this is strong and stable and compliant and we just can't wait to make that full on announcement of who that partner is going to be.

Speaker B: So tremendous restraint from your first. I know, I can feel how much you just want to shout.

Speaker A: It hurts like inside.

Speaker B: Very, very. I'm uh, watching, very proud of you.

Speaker D: I'm watching Don's face and he's like bursting at the st.

Speaker C: I can't speak right now. I'm going to stay quiet for a while.

Speaker A: Yeah, mute, mute, quick. Um, yeah, exactly.

Speaker B: Right, yeah. Don, Will this you can hold quiet here for a second. I'm going to pose a question to Rick but I'd like you, you know, to answer the question following him. Uh, just because I think both of your perspective will be very interesting. So you know Rick, when you introduce yourself, you've obviously been in traditional banking for a while, said mentioned you've been investigating fintech, kind of following the space but as we've been getting into the integration with the teams, integrating all the learnings of you know, fintech verbiage, how things work, the flow of data, the sheer amount of data that that happens and you know, obviously different unique from traditional banking. You know, is there anything that Jumps out, opens your eyes the most that, you know, kind of comes to the, to the top of your mind when you're thinking about what, what has been the biggest aha. Or the, you know, the, the most important learning for you. And you know, as we're kind of navigating this path together, uh, the most

Speaker D: important thing is to, to, uh, you got to be ready for change, constant change. And you got to be ready when the, the iron, when the iron's hot, you got to strike. Because people are going to move fast at certain junctions of everything. And if you're not willing to move with them, uh, it jeopardizes the whole thing, especially when you're moving with multiple parties and trying to figure things out. And you have to be able to retain that knowledge, um, or at least have a central hub of that knowledge. Um, and not only that, but you have to be able to. To correspond it in a way that everybody, Average Joe's, everybody understands exactly what you're talking about. Because as you said, that jargon is so different. And what we deal with in community banking and traditional banking is similar to what we're seeing in fintech. It's just different acronyms or different ways to say it. And so it becomes a translation game and making sure that everybody is right there with you, especially in this heightened regulatory environment. You got to make sure you're corresponding in a way. And I think that's what Central Payments has really helped us with a lot is understanding that, translating it into that banking terminology that we all know and are comfortable with. Because in fintech, you have to be comfortable with the uncomfortable. And sometimes that gets to comfort, but then something else will lead you to uncomfort. Uh, but at the end of the day, when you have good partners, it leads you through that and it helps you break through those walls. And I think that's, uh, what's been so important for me to realize is, yes, you may be uncomfortable right now, but you will be comfortable. Um, and as long as we've mitigated all those risks, we'll. We'll get there and we have good communication. Transparency has been key.

Speaker B: Don, same question to do. And maybe a count of how many times you've strolled into Rick's office and you've seen him, you know, crying or weeping, uh, during the process, I think would be an interesting kind of behind the scenes.

Speaker C: Yeah, he was right before this podcast. So we got him a little whiskey, we got him squared away. So.

Speaker A: So, yeah, that's perfect.

Speaker C: Um, you know, I kind of mentioned My first one, that language, but my second, and this is real in community banks. Not just us, but there's a lot of different generations in the governance of community banks right now, um, at the, at the ownership, board and executive level. Um, and now here's my disclaimer. We are an equal opportunity employer. There is all generations have value, blah,

Speaker B: blah, blah, blah, blah.

Speaker C: But we've got traditionalists, we've got baby boomers, we've got Gen Xers, we've got millennials, um, on all there. And you've got the evolution going on in banking and financial transactions, fintech being one of them. M so trying to describe and keep on the same page those different generational power centers through this new evolution. And uh, and like Rick said, as fast as it wants to change, as many times as it wants to change, I find myself having those constant conversations of just teaching what this is and also what it's not. I mean I fielded questions from some of uh, uh, my older colleagues going, you know, this isn't, this will take us away from community banking and no it won't. This is actually where community banking is going. And so there's a lot of those conversations, um, and they're important conversations and everybody's concern absolutely has validity. Um, change is scary, evolution is scary, but we just believe the evolution is occurring. We see it occurring in our customer base, we see it occurring in the industry. Um, I think we all know and agree that it's occurring. And uh, you have to be a part of that. Uh, as scary as it may be, you have to be a part of it. And Rick said it well, transparency, communication and also patience and listening and that constant education, that constant teaching is so, so critically important.

Speaker A: You know, I, uh, I love that kind of walkthrough of the generational stuff because that's, that's really a key thing that there's disputes around. Community bank is or isn't going this way or, or this is going to be important or that's going to be important. And what I've realized is you don't have to like a particular direction, but you have to accept it. And getting the, you know, there's certain things in the way of the world. Personally, this is a Nikki thing. I struggle a bit with AI because I'm like, what's that gonna mean and what's gonna happen and all the things. And whether I like it or not, it's happening. So there's an acceptance component to that. And then you can launch off from that point. And one thing that I think is when you talk about all the different generations that are influencing maybe, uh, I'm not sure if I caught it exactly right, but the board level or anything else, there's an acceptance thing that takes time for people to, uh, get there. And so that's a really, really great point that you made. So, Don, for you, I think about what a significant move this is. You know, we generational conversations, the industry, all the different things that are happening, and you're the CEO. And so for you to be able to stay the course and get to this point with board and everybody else, I know it takes a village. But not only for Staran, for Central Payments, but we think for the industry as a whole, this is a significant move. So what are you most excited about as it relates to this new business line for Starion in general? And then I would say if you could follow on with what does it mean to you personally as the CEO?

Speaker C: I think in general, um, when I took the CEO position, uh, four years ago, I told our board of directors and our ownership that there are parts of our culture that, um. Well, our culture's beautiful, but it needs to evolve. So there are parts that need to be maintained, but there are parts that need to evolve. And what's exciting to me is that this is one part that needs to evolve. I mean, we talk starting with that customer base, starting with the disruption, starting with the changes that are going on, technology that, you know, all of that, you know, we have to evolve with that. Um, I've had this direct conversation with the board several Times. You know, 25 years ago, I was in college, and at the time the first cell phone came out, and at the time, the way you could bank is you could go into a bank and meet with someone face to face. You could call them on a landline, or then you could just start call them on a cell phone. Now look, 25 years later, it's chat virtual, um, cell in person, through third parties, mobile apps, online websites. I mean, the. It's just. So think about where it's going to be 25 years from now and. And it's going to be even more evolved. I don't even think we can think of the ways that banking is going to interact and humans are going to transact financially 25 years from now. I don't think those concepts have even been developed. So that's rewarding for me, that one. I'm living up to something that I stated to the board when I took this job that I would do. Um, and that's a personal reward because I'm a type of guy. I want to provide value, I want to have a stability for my team, but I also want to recognize the world we're in and adapt with it and grow with it. And uh, so for me this move with you guys, this move into this space, it hits all those buttons.

Speaker A: It sure does. And I again can't commend you enough for having that level of integrity and get her doneness, um, to take it to the end. So this has been um, just such a joy to highlight the episode and our partnership. Um, is there anything else, Rick or Don or both that you guys would want to share, uh, with the listeners? Anything else you think is important at this point?

Speaker C: I think for me, uh, just to wrap up anybody considering getting in this space, especially any of the community bankers on the call, is, you know, recognize the reality, sit down in your strategic planning and really talk through, you know, what will the next 5, 10, 15 years look like in the community banking industry? And give that an honesty assessment and then ask yourselves, you know, where are we at in evolving with that or preparing with that? And um, and if you find spaces like we did, I think the, I think the smartest thing we did out of all of it was we said in our strategy, the very first thing is, is we have to learn, we have to be humble and recognize that we're not the experts in this space. And so we've got a lot of learning to do. And that drove us ultimately to you guys and where we're at right now is because we wanted to learn first. And I think that's really important both for risk mitigation, um, in this space and also for you know, the speed of change, the speed of evolution. Um, so I would highly recommend that to anybody is, uh, is, is learn first.

Speaker D: I just want to thank you guys for allowing us time to come on and speak to your listeners and, and to you guys. And I know we've said some nice things and now you're going to have to kind of shape, kind of help uh, Eric get back to level set here and, and do some things. But uh, you know, I can't speak highly enough of the process and understanding and like Don said, this has been a learning game and it's been, it's been eye opening. Don always talks about a three legged stool and understanding client bases and understanding the different areas that we can get into. And I think this for community banks is going to be a very uh, key thing as we move forward in the evolution of banking. And so not if you're not in it now, maybe you need to look into it just to see if that's something that you want to be into. Um, if not, that's okay. M. Because traditional bank's still going to be around. But if you want to get into this space, there's a whole different client base and, and people are continually moving in different directions and, and that's what we hope to be in and, and hope to be in different households and, and can't appreciate this partnership enough.

Speaker A: And I think I'll tack one last thought onto that because it, it bodes well is this can be done well. You know, there's a lot of press out there about what not to do. And that's just the industry or the world we live in is bad, negative, uh, attention gets more attention. But this can be done well. And I think we're excited to demonstrate that. Um, take the model that we have partner with a bank like Starion and um. Gosh, I can't say it yet. Can't say it.

Speaker B: Restraint, restraint.

Speaker A: So with that, um, I will just say there will be a follow on episode and we will be announcing who that partner and brand is. And this is a game changer. And so I thank you guys for, ah, for the time this afternoon and really just articulating, um, so well what the journey has been like and what you're excited about. So this was our pleasure to have you here and thanks for your time.

Speaker C: Thank you.