Chris Black

SPEAKER_01: Hi everyone, welcome to another episode of FinTech Talks, and I'm here today with Chris Black. Uh Chris, would you mind introducing yourself? SPEAKER_00: Yeah, hi. Uh thank you very much, Sandry.

Appreciate the invitation. Chris Black, CEO of Threadbank in uh Nashville, Tennessee. SPEAKER_01: What does uh Threadbank do? And and you know, how long Tesla give us a little background on that?

SPEAKER_00: Yeah. Yeah, so so Thread Bank, you know, we're mostly we're a community bank, uh, Tennessee State Charter, FDIC Community Bank that really specializes in sponsor banking, embedded banking. A lot of people call it banking as a service, uh, different ways to think about it, but but that's what we do at our heart. We uh recapitalized a small bank up in eastern Tennessee about five years ago.

Uh, really a group of like-minded bank private equity, fintech venture capitalists, bank executives, technology executives, you know, kind of the blend with the mindset and and really what we've been able to execute of delivering embedded banking, threading, that's the name, to to thread or to embed uh banking products and services for partners, mostly focused in small business vertical, uh part of part of the market. SPEAKER_01: Like after you've built it, like what what has been the market response like?

And and you know, what are there particular areas that have been more interesting? SPEAKER_00: Yeah, you know, it's been it's been great. It's been a pretty amazing run, uh, full of ups and downs, more, many more ups than than downs. As you know, you know, banking is tough, technology is tough, uh bank technology is is tough, but the opportunities are are extreme, very high.

So, you know, we came at this, like I said, kind of a blended mindset of uh you know bankers and technologists. Interestingly, the tech, you know, all of our technology folks, most of them have very deep expertise in banking and building uh or running bank software companies, you know, more infrastructure pipes, back end. So there was a you know a high degree of uh really expertise and understanding of banking, even from the technology side. So all of that together, you know, has presented this pretty incredible opportunity for us to do this the right way, to do this as a bank first.

But uh I like to say the way we've thought about it, and I think how the market looks at us is that you know, banking is and always will be about deposits, loans, capital, liquidity. That that's what a mentor of mine had a long time ago taught me. And interesting, I said, I think we're missing something. I think payments also should be on there.

And that speaks to a lot of, and we get into more of the why and and what we've done and you know, what's behind it, the motivation. But it's on that foundation of non-negotiable characteristics and safety and soundness and risk management first. But then after that, you know, our mentality from day one has been to challenge uh every paradigm in terms of how banking is thought about, how banking products and services are delivered, and really what the position of the bank needs to be in the modern digital ecosystem.

You know, the and so it means we're we're viewed in many different ways uh and and accepted in different lights. Uh in some circles, we're probably a pariah because we're a bank who says, you know, we we don't have to quote, own the end customer. Now, they're our customer and we're highly interested in who they are, what they're doing, and how they're transacting. But, you know, we can either go and attempt to hire many, many teams of dedicated SMB verticalized focused bankers, or we can partner with technology firms who are really good at delivering uh specific and detailed and deep value to those same customers with non-banking products.

And then we bring the banking, the compliance, the infrastructure oversight. And together that's an incredible synergy. It's an incredible partnership. And, you know, I like to say our partners are the best relationship managers a bank could ever hire.

So instead of fighting them, you know, we want to enable them. And that's where the paradigm comes, uh, paradigm challenging comes in and and and looking at this in a different way. Again, non-negotiable on the rules of banking, which have been in place for thousands of years and aren't going to change, but the delivery mechanisms of banking have done nothing but change for thousands of years. And and so that's how we think about it.

So it's really nothing new. Uh, it's just challenging some of the um sacred cows, you might you might say, in banking. SPEAKER_01: As you've grown the company, like have you focused on any like uh, you know, let's say geography sector or uh, you know, what what what's what how do how do you look at the market? SPEAKER_00: Yeah, so you know, geo geographic concentration focus has been, I think, one of those paradigms in banking that um, you know, have to be challenged.

Maybe, maybe no one wants to challenge it because banking in your community and the idea and it, you know, it's a wonderful life, all those things are the type of dynamics that have made community banks great. And they've made community banks a staple by definition within the community. But that's that's not where our society and economy are per se. Now, we think communities are really important.

And having small banks being innovative and and driving growth and opportunity within small communities is really important. But the the the connection of that to that geography is what needs to and is what we break down. And we don't we don't put that as a primal part of our business model. We do have two branches, two legacy branches in East Tennessee that we run and fully dedicated to, and and those are really nice markets and our bankers do a great job over there.

Uh, but you know, we we disconnect that paradigm of geography to focus on the markets. And the markets that we focus on, you know, if you think about you've got consumer, you've got commercial, small business, you've got horizontal and you've got vertical. You know, we we serve in different ways each of those combinations of consumer, commercial, horizontal, vertical. But we're most interested in uh and you know, where I think the growth and the opportunity in the market is definitely on the commercial side.

And then, you know, it lends itself that there are more flavors of the verticalized partners. And that's really where our focus and and growth and partnerships has come from. And none none of that has to do with geography. I'm I'm a foreign banker myself as well.

SPEAKER_01: And um, predominantly in the retail side, but also with larger organizations and and working with these larger organizations, I I needed to be more creative. I I have have you found that as well too? SPEAKER_00: Or flexibility with within those kind of hardened principles we have, the non-negotiables, yeah. We have to be able to uh decipher, we have to be able to maneuver, we have to be able to take the attitude that we're we're here to serve our partners because ultimately with them we're serving that the end customer.

And so, you know, we we have um we have a lot of different principles and ways we look at things. One of them, I like to say that you know, we leverage the similarities and risk manage the differences. So we want to, you know, we we we've created a homogeneous uh data architecture and technology infrastructure and and you know, risk management, all these type of things, so that hopefully that's a repeatable, scalable type of infrastructure so that when we get to the heterogeneity or the differences that the partners present, yeah, in terms of that, that's what we want to celebrate, right?

We wanna we want to accentuate their ability to capitalize on their unique place in the market. And we don't want them to all look the same at the branch level. We think of each of them as branches. Yeah.

Uh, but in order to to be able to do that in a scalable way, it's really contingent upon as muck much of the infrastructure, and and that's different. There are a lot of banks who are in this space who don't take that approach. Uh, some of them have done that quite well. I think in the long run, it it inhibits their ability to scale, anyone's ability to scale effectively and you know do so with operating leverage.

SPEAKER_01: You also mentioned uh, you know, some of the various product types or the financial needs, I guess. And for example, called out payments. Um how do you think about the suite of services that a bank can provide and and you tend to lead with one more than the other? Or is is one one area particularly, you know, you you tend to hear that a lot when you're talking to these to clients?

SPEAKER_00: Yeah, well, I I think you know, we're we are we are limited. We are a bank. So there are only so many things that and products you can offer, deposits, loans, payments, generally speaking. And then, you know, I think in there are different ways that SaaS would would come into that also, which would be different than than most banks.

Uh, but you know, it to this point, we've really just led with the deposit products from an embedded lending perspective. Uh sorry, embedded banking perspective. That's how, you know, most of the great banks over time had been built on a deposit base first, and then you then you layer into other products. And so that's really been the approach.

We're we're now in the mode where over this year we'll begin scaling uh into the embedded lending products and then also on uh some specific things on the differentiated things on the payment side. Yeah. But those are all built on that deposit base and and the deposit chassis. And so when we think about our partners and think about them as branches, again, we're just doing simple banking, banking 101, uh branch infrastructure, right?

To to have a full service branch, you've got to be able to offer all of those products to your customers. And so that's that's really what we look to do. Uh, we call it multi-threaded. We we want to have our partners to have multiple threads.

It's hard though. You know, it's uh this isn't something you snap your fingers over, and it's all built upon relationships and our ability to deliver for partners and you know, listen to them and and bend and flex with them and and really suit their needs. Because ultimately, if we're suiting their needs, by definition, we're suiting the needs of the end uh end depositor or end borrower. SPEAKER_01: And and um I actually'm wearing this sweatshirt because uh what which I got from Cornell Reunion because I I saw that you were also a Cornell graduate.

And and when yeah, I actually when we both left, we were both, you know, engineering and technology focused. And and now being more business focused. What what helps you filter out like what's going to be impactful from a technology perspective in the near term versus something that you know is is probably gonna take a little bit of time. SPEAKER_00: Thankfully I'm surrounded by a lot of really smart people who know who know more about who know more about technology than me.

Uh you know, and I think I think that's I think that's what it is, that we've got, you know, we what we provide, what we offer, what we have, the assets that we have are are really valuable. Bank charter, right? The ability and and willingness and plan to uh embed banking products and services into technology. So we get looks at uh many, many, many different things in our DNA, you know, in our investor base, uh embedded in our in our board of directors.

We have multiple fintech venture capital uh professionals and and and not just you know venture capitalist capitalists who have been investors their whole lives. They're actually all of them have been operators uh for the majority of their careers and then in recent years have turned into to venture capital folks. SPEAKER_01: Yeah. SPEAKER_00: So we have a really unique environment, a really unique ecosystem where we have um a strong finger on the pulse of of what's happening in the market.

And, you know, we we've been fortunate, we've had great partners, and so we've been able to establish ourselves, you know, specifically in the embedded banking market. Yeah. And, you know, once you have that position, you've you tend to have a lot of friends and a lot of people who are willing to talk to you. And we try to listen, we try to take good notes.

And, you know, I spend most of my time and with my senior team, you know, really honing our strategy and then how do we, you know, take various technologies and relationships and bring them together to leverage it so we so we provide that best experience for our partners that we can, yeah. Uh, and really predicate it upon that that homogeneity and uh with a mind towards scale. So I'm not I'm not someone who's gonna be great at going and evaluating code and and uh UX's per se, but we've got a lot of good folks on the team who have different parts of those skill sets.

SPEAKER_01: You you mentioned sort of the the network. Um, and one of the uh b best ways to build out that network is is like at an event like fintech meetup. Have you attended FinTech Meetup and what what was your experience like? SPEAKER_00: I think this is three years now, three or four years perhaps uh where we've attended.

And it's it's always been a great, you know, open collaborative place where we we always think of these things as extremely efficient. Yeah. First year or two that we attended, nobody knew us, we didn't know anybody. And you know, we're kind of walking around with our eyes pretty wide, thinking, what what is this?

And and candidly, my first takeaway uh from you know, whether it's fintech meetup or or other large, you know, large events is wow, there is a lot of capital pointed straight at community banks like as a weapon. And so uh one, I'm thankful that we're you know have been our eyes have been open to see that and understand that and to take part and benefit in that. But I really am worried about uh the thousands of banks who either have no idea or or or have no idea uh that it it exists or of how to manage it.

Yeah. Um so so that's kind of the first thing that it did for me was can was very confirmatory and uh open up you know kind of mental horizons more than more than maybe I had had realized they needed to be. Yeah. And then through that, we've just grown, you know, relationships and our our business in the market that uh when we go now, like I said, it's it's a very efficient see, many familiar faces.

And so that that also makes it easier to meet new people and to find new opportunities or or new companies, new products that we maybe wouldn't have had access to in the normal day-to-day course, but we're able to um you know either find it ourselves or we get introduced by many of those friends. So uh it's become a very familiar, friendly type place to go. SPEAKER_01: What advice would you have for let let's say uh a f a fellow, a banker who is thinking about attending fintech meetup?

Any any words of advice? SPEAKER_00: Yeah, well, I I think they should just go. Even if they don't believe that they uh have any real place with fintech or would even know uh how to start, or it might seem daunting or or out of reach or out of touch. I think uh there's nothing there there's no instinct in in the human set of instincts quite like survival.

And so that that's maybe the first thing that they would figure out if they they showed up is that maybe they uh need to need to figure out what's going on and why there are so many people here and why there's so much capital and why it's growing so much every year. SPEAKER_01: Looking at your background, I I would be remiss if I didn't ask you about being an F-16 fighter pilot, uh a trainer, and and like any analogies between like running a bank and and and flying a flying a fighter jet?

SPEAKER_00: Well, it's funny. Uh people on my team right now are are rolling their eyes and going, I can't believe he just asked that question of Chris, because they're the the analogies, uh I probably have a book of analogies that that I use and many I have a saying. There there's a book, uh, maybe you've heard of it, that everything I needed to know in life I learned in kindergarten. Yeah.

I I say and the Air Force. So you know, that maybe maybe for an L2, a little bit, uh, but but really and in the Air Force, because it's just so applicable. Right? There's no um there's no room for posturing, there's no room for fabrication, there's no room for lack of transparency.

Everything literally is life or death every day. And you know, you nothing can happen on your own. Even in a, you know, an F-16 is a single seat, single engine airplane, but we're completely meaningless without our wingmen, uh, without the air traffic controllers, without the intelligence folks, without the absolutely the maintenance, you know, our our maintenance guys. And so it's it's kind of an across the board life lesson in uh in in in how to be successful on a team uh as you know as an individual and how to work toward common goals and and really uncertain problem sets that um you know that that you you are not gonna have the full answer to.

And therefore, the only way you can approach it is with maximum preparation, discipline, and a very flexible mindset uh that that you're going to change, you can change immediately as conditions change and and risk management. So it's across the board. I I have all kinds of all kinds of sayings uh that that that that's and you said analogies, and I apply it. A lot of a lot of the folks, my kids can uh probably recite these these things.

I one of them, if you want, is aviate, navigate, communicate, always in that order. And and what that means is many, you know, unfortunately, many pilots have died or gotten, you know, really hurt and the people who are with them because they'd completely misprioritize. They were focused on the wrong things. They were they were down in the weeds when their head should have been out uh and figure out where they were going.

Instead, they were focused on making a beautiful radio call as they're crashing into the ground. Wow. So aviate, fly your airplane first, don't crash, navigate, you know, hopefully you'll get to the right spot where you intended to go and then communicate. Hopefully you flew your airplane to the right spot and you told everybody and you got there legally and no, and you're not gonna get yourself in trouble because you landed at the wrong spot without telling anybody, or the right spot without telling anybody.

Yeah, yeah. And so there's a lot of there are a lot of life and business lessons, uh, particularly as as it relates to banking in that. Yeah, another one is is near rocks, far rocks, check six. So that's a that's a cross check that pilots, fighter pilots do when they're flying low level.

So you're you're flying, and you know, there's a lot of this stuff going on today, active uh with with brethren, you know, far, far overseas and in danger, and with uh of whom I could not be more proud, but it it is an unbelievable thing to to to watch our our guys and girls just execute a plan. Uh people can agree or disagree with the plan. That's not you know what I'm talking about. It's their ability to execute in so it's it reflects great credit upon them, uh on the country, on everybody else.

But but all these things is what they're thinking about and what business people should be you know gearing toward this near rocks, far rocks concept. You're flying low level, 500 feet above the ground, 500 knots. A lot of things can happen bad quickly. And so you you look at the near rocks, what what could I hit in the next 15 seconds?

Make sure I don't hit those rocks on the ground. And then far rocks, are there mountains in the distance? Are there you know things I need to be planning to navigate around uh out and then when I've done that, then I'm gonna look behind me, check six to see if there's anybody coming back there. Yeah.

And then I'm I'm gonna look at my wingman and then I'm gonna start it all over again. And that's how that's how you break down and you you do flying things, is a bunch of small tasks done the same way and done repeatedly into good habit patterns, and then you instinctively manage your risk. And so it it's really no different than every day running a company to me. SPEAKER_01: Thank you for those analogies and and and great words of advice, uh, Chris.

Uh to close out, um, is there anything in ahead in the world of fintech that gets you particularly excited? SPEAKER_00: Yeah, you know, I think it's it's a good question. There, there's a lot. Uh some is uh creates anxiety, other others create excitement.

But I think what we're seeing a lot of is a lot of validation of the model. You know, I think the first few years we were doing this, there were a lot of question marks in the market, you know, regulatory-wise, uh and and and from others, and from fintechs even. And yeah, I think the events over the last couple of years have really solidified the the nature of what the bank is in this uh in this ecosystem, you know, in these structures, what the role of the bank charter is, and how I I say it's primal, you know, it's it's actually the common denominator between every activity that that goes on in banking is the bank charter.

And so I think uh the most exciting part is is there's uh such uh really strong, strong leadership at on the regulatory front. And we've been privileged to uh you know to really get to know at at the senior levels and then then down through the ranks and have seen firsthand how this is is really happening and kind of the you know the acceptance and the understanding that that banks, that community banks really have to innovate and have to really focus on how do they become more efficient, more scalable, and competitive with other offerings out in the market.

So I think that that's a pretty awesome thing. It's a pretty big change. It's been, you know, kind of won through blood, sweat, and tears in a lot of ways, you know, a lot of ways that we all know of and and other ways that maybe aren't so obvious. And that's that's been a pretty, pretty awesome, uh, awesome thing to see and has me very optimistic about uh you know our our future in particular, but but many others.

And I think the door is wide open if people want to come in and do it the right way and uh and lean in. And I think the regulator, which was is always a necessary precondition, is for the regulators to understand and be on board. And and I I really do think that they're there. Uh and the the motivations are are really well founded.

So that that's a pretty exciting setup for everyone. SPEAKER_01: Well that that that sounds great, uh Chris. And uh once again, thank you for joining us again uh at FinTech Talks and uh look forward to seeing you soon. SPEAKER_00: Awesome.

Thank you very much, appreciate the opportunity.