PMs Are Fintech: How Column is Rethinking Property Management Banking

Speaker A: If you really think about it, property managers, especially third party fee managers, are actually physical financial technology companies in the sense that you are a fiduciary, not only managing the properties on behalf of the owners, but also managing the underlying funds flow.

Speaker B: Welcome to the episode of the Profitable Property Management podcast. I'm your host, Jordan Whela. I am here with George Chang from column. George, thanks for coming on.

Speaker A: Absolutely pleasure to be here and thanks for having me, Jordan.

Speaker B: Um, George, we got a lot to talk about today. I want to cover a lot of topics, but I want to start here. We met via your work with with column and Column has been in the space, property management space for a couple years now, doing some really interesting, innovative, kind of on brand for this era and this timeline that we're in right now. I think of Column as The new Banking 2.0 solution taking another crack at banking and trust accounting. And I want to start here. For those that don't know anything about column, give me just like the basic quick 4 1, 1 before we get into the details.

Speaker A: Yeah, ah, absolutely. So kind of taking back to the founding of column. So Colum, we really started building back in 2019 when our founder William Hockey, who's also the founder of Plaid, which is a uh, 13 billion kind of financial infrastructure company, we actually acquired a bank that had been around since the 90s. So Colum, we are a nationally chartered kind of OCC regulated, FDIC insured bank. But the big thing that we did differently versus everyone else is we actually took the time to build all of our own proprietary core banking software, payment processing, direct connection to the Federal Reserve from the ground up. And why that's unique is because every bank that you work with, whether it's, you know, J.P. morgan, Wells Fargo, your local regional or community bank, everyone is actually kind of using third party legacy banking software from Fis, fiserv, Jack Henry. And so we're actually the only bank that controls our underlying technology. And so originally what that looks like is we actually are the bank that powers some of the largest financial technology companies like Biltcard, Brex, Mercury, Ramp, um, you know, Flex, kind of buy now, pay later, um, Rent, where these companies are actually using our technology, our software software and our APIs to actually build their financial products. But what was interesting was probably about two and a half, three years ago we started getting some inbound from tech enabled property management companies. These are folks like Poplar Homes prior to their acquisition by Everness of course, and folks like Vacasa on the vacation rental side before they got Bought by Costco earlier this year. And what was interesting there was they also wanted to use our kind uh, of APIs in our software for doing things like rent collection, owner distributions, vendor payments. That was like a light bulb moment for us where we said, hey, hey, if you really think about it, property managers, especially third party fee managers are actually physical financial technology companies in the sense that you are a fiduciary. Not only managing the properties on behalf of the owners, but also managing the underlying funds flow, collecting rent on behalf of the property owners, doing distributions, paying the vendors on behalf of the owners as well. And a lot of banks, we quickly kind of, you know, um, um, realize didn't actually understand what it meant to bank a fiduciary, like what it meant to actually set up a proper kind of trust account that's holding money on behalf of the beneficiaries with the inherent protections afforded to that. So we said, hey, this is interesting. Let's actually build out a dedicated division and business unit, vertical solutions, vertical banking, to really focus on the property management sector where what we're doing is really taking the best in class technology that we've built, tailor, make that for property management. Combine that uh, with a deep understanding of the industry for things like real estate trust accounts, pass through FDIC insurance, DRU regulations, helping our customers through audits and all of that. And then lastly having that relationship banking experience, experience that's so important in this industry where if anyone has a problem, they can pick up the phone, kind of call our bankers directly, you know, have that white glove experience. And you know, this has been something that we've seen a lot of growth in in the past three years. We went from, you know, very few property management clients to more than, you know, the 300 plus uh, that we have today. So still a lot of room to grow of course, um, but it's an area that we're very focused on. And so if I could sum it all up, um, kind of in one sentence would be kind of column. We're a bank that specializes in banking fiduciaries. Whether you're a, you know, technology company or whether you're a property manager managing, you know, single family, multifamily commercial properties on behalf of your owners.

Speaker B: So tech and banking are kind of fundamentally juxtaposed right out of the gate. When I think of banking, I think of the opposite of a really great tech experience. We talked about that prior. I have a 20 year banking relationship that I don't like and I haven't liked for a decade plus and as of this moment I don't really have any plans of switching just because of the pain of, of moving banks. We could get into that more later. But the point here is there have been multiple way waves of technology that have happened in banking to the extent that it ever happens in banking. Right? Going from first having online portals which at some point was innovative, to more recently we had a run where companies like Mercury Brex were represented innovation. But right now at this exact moment, this is being recorded In August of 2026 when we talk about technology and innovation, my mind goes to one very specific place and that is giving me more access and control via modern tooling. Y my dream banking relationship is largely interact interacted with via Codex cloud code, some kind of a tool that I'm using in my day to day workflow rather than a separate portal. That's kind of clumsy or honestly maybe it's great, but it's a separate portal, et cetera. I just kind of uh, assume that 99% of people are not going to get that anytime soon because the industry is so stodgy and so slow to adapt. And yet there is some hope on the horizon apparently. So what is the most progressive use case that this new technology actually enables? Not just the idea of technology, but like give me a practical use case that a property manager might have a meaningful operational unlock from.

Speaker A: Yeah, so I think it's a uh, it's a really good question Jordan. And so it kind of also goes back to the broader discourse around AI and how it could be best utilized in property management. And so to your point, it's banks are inherently not technology companies, right? Most banks, they don't build their own technology, they just buy technology off the shelf. So if you think property management is a sticky software, core banking software providers like Fis, Pfizer, Jack Henry, that is probably like the stickiest software in the world. Like they, they sign 10, 15 year long contracts right with the banks that they work with. It's like the last thing in the world any bank wants to is switch out their core banking software for someone else. And so the fundamental kind of unique differentiation here is instead of column just using like another kind of core banking software, maybe like building some kind of tooling like on top of it. We actually built everything from the ground up uniquely ourselves. And that is why some of the new guard of uh, financial technology companies are neobanks like the Mercurys, the Brexit, the Rams, the chimes of the world. They're actually using our technology to power their products. But to answer your question, how is this relevant for actual kind of property management operators? And the way that, you know, myself and our team and even our customers have been kind of thinking about this is if you think about a lot of the recent kind of innovation AI, it's been really focused on the front office, right? Leasing, maintenance, kind of better CRMs, better workflows, um, you know, helping you better communicate with your owners, better communicate with your tenants. But there hasn't really been any sort of conversation on the back office in property management when it comes to financials, when it comes to accounting, especially trust accounting, when it comes to, you know, apar kind of getting your owners paid faster, where your vendors paid faster. And I think that is where there's a lot of opportunity in this era that we're moving into, where AI and agents and Codex and everything you're talking about, not only can it be really beneficial for the front office, but also the back office. For example, kind of a lot of our customers who are using column today, they're actually using our open APIs directly that they're building against, you know, using Codex or you know, cloud code or Replib or whatever agent of their choice. And they're doing things like actually automating bank reconciliations in an agentic way, right? Where they're able to pull in information from the bank directly in real time, match it up to the information their PMS accounting software do the matching and when things don't match, actually having the agent do an exception processing, do an analysis, reference historical reconciliation transaction and make recommendations. Hey, this didn't match. This is off by amount. It was a refund from Home Depot that was off by 50 cents. And here's why, and here's what you can do to actually, you know, kind of reconcile this and like, you know, add in a offsetting journal entry and um, you're all set and kind of good to go. And so that is an example of leveraging kind of AI technology and agents using the technology at the bank and the property management software to actually derive real value or things like getting your owners kind of paid a lot faster because now you can connect your bank via API directly to your property management software. So instead of owners waiting, you know, three to five days and start complaining about hey, like why haven't I gone to my distribution yet? They can get paid either instantly via real time payments or same day where next day via ach, that's connected directly to your property management software. And so I think where this comes down to, Jordan, is When your bank is also a technology company and gives you access to the data within, whether it's through APIs or MCP kind of CLI, now you actually can truly kind of automate and kind of make your business more efficient, not just on the front office, but also in the back office as well. Because historically banks have been just like a black box. You can't get data out of there unless you're downloading PDF statements, downloading CSV statements, just like logging to the bank, kind of comparing transactions side by side. Hacking the 2fa where it's like SFTP file sharing or something like that, hacking the 2fa, which inherently is not very secure. Whereas like with an API that is inherently an authenticated, permission secured way that you can scope how you want in order to access your data securely, but also in real time as well too.

Speaker B: George here's one of the disconnects that I experience right now in my use of AI day to day. What I notice is that while the models are getting better in some ways, for a lot of the stuff that I'm doing day to day, the models were already good enough. The harness is really determinative of how much value that I get. But even separate from that, the inputs, the API keys that you're feeding into are the core unlock. So much of the discourse that I see in SMB world is focused on the model and not talking about these other two things. And in my m, in my mind, 10 years, years from now, the model we have, then Skynet, right, the thing that's going to end it all will still be fundamentally limited based on the data it has access to. So for my money, give me a slightly inferior model with all of my API keys ported into it. So I don't want to um, oversimplify things, but if you just told me it's a banking solution with a well permissioned API key, not all API keys are created equally, but to me that's massive value. Right now the application layer is getting consumed. The application layer meaning discrete SaaS products. So for example, think about a, um, financial service, a finance SaaS like Mint, for example. Mint back in the day, awesome product, exciting. I use it now. The idea of logging into anything like Mint, a little frustrating, little frick. Why would I want to log in if it's just purely analysis? Do it in the tools I'm already using, however, absolutely impossible if I don't have my API key plugged in. So my question to you is the tension on the other side of that is security authentication, a API Key that can move money around is kind of the, it's the nuclear version of an API key. API key to uh, Wistia or uh, an email platform that could kind of go bad, but the ability to move money via an agent, wow, that could go astronomically bad. So my enthusiasm for doing it, uh, frankly it overwhelms the concerns. However, the concerns are legitimate and we're not talking about personal finance. I lost some money.

Speaker A: My agents talking about trust funds as well too.

Speaker B: We are talking about the role of a fiduciary. So walk me through. For somebody that does want to walk into this brave new frontier, what controls exist to present a, uh, very expensive. Oops.

Speaker A: Yeah. And Jordan, this is such a kind of good question and insight because when it comes to money movement and being a fiduciary, security and controls is paramount above all else. Right? And so that is where kind of going back to what I mentioned a little bit earlier around permission scoped API keys and why they're so important. So at column, for example, you don't just generate an API key that's all powerful, that you can do everything with it. You can apply fine grained permissions to each of the API keys you're generating, whether it's a view only API key, a view only API key to specific accounts, a view only API key that can only view certain information within an account. Where it's a API key that enables payments, but it can only do ACH payments, it can only do check payments, you can choose what sort of payments give it access to. And most importantly the API key, you can set it up so it's going to require transfer approvals. And what I mean by that is what you can do is you can build out an application, right? Let's say it's a automated AP for paying your vendors or paying your owners or something like that, you can generate a permission API key out of column for doing so. You can get your application or your agent right to initiate those transactions, but you still have the final approval where you have to log into the column banking dashboard using MFA using a passkey touch id, right? And you go in there and you actually approve the transactions before money actually leaves. And so we basically give you the control and the permissions and the security protocols in place that enables you to set the level of permissions you want. If you're someone who's super confident in your abilities to manage API keys securely by using, you know, secrets, managers, environmental variables that you're very confident, the infrastructure that you built out, right, like by all means, if you want to make it super frictionless, have an agent just do everything without permissions. Like that's your call to make. But for most folks, folks I would say, who are kind of in this brave new world of vibe coding, building their own tools, we highly, highly recommend we have a lot of guides and a lot of resources and help. Right? Where it's like, hey, let's think about what you want to build here, right? Let's think about what sort of access that you need and then let's scope the permissions fine grain and still make sure you're using secret managers and environmental variables. But either way, if something really really bad happened, right, let's say it's a view only key where it's a key that requires permissions. Money can't just like leave your account just like that because the keys are permissioned in scope and authenticated.

Speaker B: When I think about Jevon's paradox, which basically says that as the costs go down, the usage is actually going to go up, I think about everything going from being really uh, stable and firm and formal to very loose and fast and ephemeral. And with an API key, for example, even the idea of having this powerful API key and you give it to me and it's on this piece of paper and we need to have this strict transfer protocol better. Is the idea that this API key could just get destroyed in a minute.

Speaker A: Yeah. It's not invoking the keys, deleting it instantly.

Speaker B: Correct. Exactly. It's not some crazy secret. It is in the sense that you don't want to share it, but it's not in the sense that it's well permissioned and it's ephemeral. It can be easily destroyed. I think that a lot of the shift for operators in this space is going from a SaaS paradigm where everything felt um, predefined and like this is the way it is and there are defined swim loan, swim lanes and you work with this vendor and this is the structure and the SOPs. 2. I have one use case. I built a new app or piece of tech just for this use case.

Speaker A: I rebuilt some great new reporting kind of solution for example.

Speaker B: Yeah. And it solved a legitimate problem. I quickly got value. I got value for 90 days and then I blew it up and I built another one. Everything is ephemeral with security and with these API keys. The value of just knowing what's going on with your own data is insane. And ah, I think it's the unlock a lot of folks are on missing when they're thinking about agents and AI, they're thinking about building things in a paradigm that is somewhat like SaaS, as opposed to just starting with having a supreme command of what's happening. Build nothing, just get a really strong command of what's happening as a baseline. Talk to me about the insight and the intelligence not necessarily related to trust accounting, but more related to the FPA business strategy. What's happening in my business that you think is unlocked?

Speaker A: Yeah, uh, it's such a good question because when you think about kind of finance, back office, FP and a strategic finance, forecasting, trust accounting, all of that, like in some ways the holy grail is when you can connect your accounting software and it's fully linked up into your bank where the transactions are actually happening. Right. Your accounting software tells you like what should happen.

Speaker B: Mhm. Right.

Speaker A: Your bank tells you what actually happened, what did happen, like when did the transaction actually settle. And so when you do have access using APIs, what you can do now is honestly everyone can have their own really expensive FP&A, and strategic finance person where now you have kind of full end to end insights, not just about your accounting software, but about your actual kind of cash flows and money movement. And with that you can combine it and actually build, you know, really bespoke forecasting. You can build much better kind of owner kind of reporting. And like, you know, theoretically you can even build your own kind of better version of an owner portal that gives the owners a lot more insights into the performance of the property and the cash flows that it's generating. Right, where it's not only data from the PMS now but also the actual bank data. Tenants like rent paying in on time, you know, any sort of vendor distributions going on, owner distributions, they can track that all uh, very easily. And that kind of goes back to one of the key insights from the PM Trends report that um, you co authored where there's an expectation now that you know from owners where they don't want their property managers to be property managers, but more asset managers as well. Well, and part of asset management is the forecasting, the financial analytics, right, like building like the customer reports, which historically it's expensive to kind of hire folks with that sort of skillset. Uh, and it's time consuming to generate custom cuts of a report, especially if you're doing it on Excel. Like you have to be a bit of an Excel wizard, right? But now with the power of AI agents, with the connectivity into your property management software and also now with the connectivity into your bank via Open APIs. That world just opened up.

Speaker B: Every bit of innovation that happens eventually becomes table stakes, advantages always competed away. I think right now a bank offering API keys that are well permissioned, et cetera, that feels really exciting. Right now I can't see how that doesn't become table stakes. I can't see long term how if that's available, people are going to choose to operate in a paradigm where they don't have that level of visibility. When I think about what most single family residential property managers are trying to build, it's a small business, they have a couple of hundred owners, a couple of hundred tenants. The level of in house sophistication that they have related to something like a finance department or a cfo. It's a little fantastical to even talk about. And in some ways it's not helpful to pretend that the Fortune 500 best

Speaker A: practice should be right, should be applied, should be overlaid.

Speaker B: That's not actually constructive and yet, but now there is something like that that can be done. So when you see clients switching over, I assume that there's uh, a couple of different reasons that they're coming. I know that you guys offer credits, um, similar to what's been done in the industry, but for use case enablement. My question is where might a client feel the impact? Not the PM operator, the client's client, the owner. Where might an owner or a tenant feel a benefit, uh, or some kind of upside as a, of somebody making the most of all the tech that can be taken advantage of today.

Speaker A: Yeah, so let's start on the owner side. Right, like, because that's, that's the, ultimately the end customers for the property management, um, companies as well and the operators. For owners, one of the biggest upsides is getting, you know, their owner distributions faster, having more visibility into their owner distributions versus feeling like, you know, it's going out into the ether and then three to five days later or maybe even longer depending on, you know, the way federal holidays can fall sometimes on a Monday or a Friday, like not having that visibility. And sometimes, frankly folks need that in order to make their mortgage payment, for example, on that property that they own. And so for the owner, it's really a combination of getting paid faster and then also having more insights and visibilities when a property management operator really starts using the capabilities that we offer from an open API perspective. So everything that I mentioned earlier about kind of generating better owner reporting, kind of forecasting that benefits the ownership, it builds trust, it builds a stickier relationship between the owner and the property management operator as well too, I would say on the tenant side. Right. This is where it also gets fairly interesting because we also have kind of really good relationships with folks like Bilt, for example. Bilt is powered by column, the Bilt card. And so there's also opportunities to kind of collaborate with some of our partners to kind of give our, you know, give the tenants of the property management companies like a lot more benefit with like a rewards kind of credit card, you know, for kind of paying rent that way. And so, so, ah, there's a bunch of different ways that we can kind of think about it. And in addition to things like, um, if you're using kind of column, um, you can also potentially give your tenants like kind of more information reporting on whether they actually paid on time, you know, whether certain things got returned or not. And you know, some of our kind of customers have even started using real time payments for collecting rent versus standard ach. Because with real time payments there is actually a capability called request for payments which is more like a Venmo esque experience where you send a request for payment, the tenant gets a notification from their bank to say accept or decline this payment. They click accept. And then because they click accept, it's a good funds model, right? So there's no like refunds where returns after 60 days or 90 days or something like that. And the rent also gets collected instantly as soon as, you know, the tenant hits that button. And so some of our kind of operators who are at the forefront of testing some of these out, uh, they've been using that to kind of give value to the tenants. Because now the tenants also, instead of just having money leave their bank account every month via ach, they have very little visibility to once they sign that, you know, like click the button in their, you know, property management portal for authorizing the rent collection. Now they also like can kind of see it every month and click accept. And that also builds trust, you know, with the tenants as well.

Speaker B: When moving money, speed is of paramount importance. And I understand you guys have built your own in house technology. However, the rails of moving money is, is bigger than any one bank, right? This is fundamental infrastructure Fed now, et cetera. So these payment rails are, is it, I guess to get a little bit into the weeds. Are you using a different set of payment rails and what are the constraints or limitations? For example, I assume that the opposing bank m that you're sending money to also has to be using the same rails, correct?

Speaker A: Yeah, so you're absolutely right. The payment Rails we use, it has to be consistent across other banks or else if you're just on your own little proprietary rail and other banks can't receive your payments, there's nothing really there. But what's unique about column and the payment Rails is that because we've essentially gotten rid of the middleman, these like, you know, core banking company like core banking softwares, like payment processors, like the Jack Henry of the world, we basically have like bare metal access at the Federal Reserve level, at our Fed master account level with like the most kind of bare bones access you can have to the payment Rails. And what I mean by that for example is even for a very kind of tried and true payment rail, like an ACH for example, what people don't actually know is, you know, ACH is a bash based process. It settles, you know, like, like every day there's a couple windows where there's like a bash that hits and then like there's a net settlement process that actually happens between different banks. Most banks maybe give you access to one or two ACH Summit windows. And so most of the times if you pay via ACH directly from your bank, things have to settle next day or next business day at uh, column because we built everything directly, we actually expose all six Federal Reserve ACH settlement windows to our customers. So what that means is like you have more windows that you can hit in order to even get, get paid via ach, like same day to the vendor or the owner that you're trying to pay. And so what I mean by that is even on existing tried and true payment Rails we're able to innovate because we built directly to that payment rail so we can give more access. Same thing with wire transfers as an example. Most kind of folks think of wires as it's something that's open, you know, Monday to Friday, 9am to 5pm when the bank is open. The reality is Fed wire at the Federal Reserve is actually open six days a week, 22 hours a day. M. Right. And so I call them whether you're initiating a wire transfers at midnight right on like a uh, Monday or a Tuesday, or whether you initiate it during business hours, you can still process that payment and the money will still settle like at the bank that you're sending like the counterparties kind of funds to, right? So even just among like tried and true Rails, like there's innovations that we've been able to build in because of the fact that we built our own kind of technology and the advantage of

Speaker B: building all of this Infrastructure is offset by the cost and the overhead, which is the challenge for existing incumbents in the space. Let's talk about like size and scope of a bank. I really have no clue what a big bank is, what a small bank is, how one compares, or whether or not it has any practical impact for the customers. Walk me through some of the basics there.

Speaker A: Yeah, so couple things as folks thinks about like the size and scale like of a bank, right?

Speaker B: We got state, we got federal.

Speaker A: Yep, you got, you got state chartered banks. You got like federally kind of nationally chartered banks. They're you know, kind of regulated by different kind of regulators. State charter banks, they basically are um, beholden to like the state banking regulators in addition to the FDIC typically. Right. Whereas nationally chartered banks, we have one regulator, which is the occ, the Office of the comp Controller of currency. The largest banks in the nation, JP Morgan Chase, Wells Fargo, Citi, bank of America are uh, all nationally chartered banks. And so is Column. And on top of that, nationally chartered banks, basically there's some advantages around our ability to be able to kind of offer banking services to customers in all 50 states and our ability to kind of open up branches in different states that we want because we just have to gain approval from one regulator, which is occ. Whereas for state charter banks, a lot of times they have to navigate more of a myriad of kind of state kind of banking laws and different state banking regulators in order to do business across kind of state lines or open up a new branch or something like that. And so that is the distinction between a nationally chartered bank and a state chartered bank at a very high level. Um, and in terms of kind of scale, I think a couple of things are important. I think one is the ability for the bank to actually process payments at scale. Because one natural question you might have is, hey, Column kind of built all of this core banking technology in house, but how scalable is it? Yeah, you can knock the legacy kind of core banking software fis fiser jacket all you want, but they've been battle tested. They've been around for a while. A lot of different banks use them. Um, there's some security and kind of piece in that. But what I'm really happy to share is is Column, we're actually probably the fifth largest kind of bank in terms of transaction volume. We're processing four and a half trillion kind of annually in transactions across all the different payment rails across all our different customers, whether it's the financial technology company or the property management operators. So there's a lot of Kind of safety in the ability to kind of process payments at scale. And on top of that, because of the way in property management, we're setting up the kind of proper trust accounts that's actually coded on the back end as a fiduciary account type. What that means is, is all of these accounts, the owners who are the beneficiaries of the account, each get kind of passed through FDIC insurance up to $250,000. So let's say you have one bulk trust account, which is usually the common case in the single family space. Right. And you have, you know, five different owners, um, that each have, you know, kind of $50,000 each. The entirety of that 50,000 is insured. Whereas, like if you had a million dollars in the account and it wasn't a trust account, just a checking account, M. The entire account's only insured for 250k and then 750k is a gap. Right. So there's a lot of protections that come by the fact that we understand property management. We're setting up these trust accounts properly too. So it's the pass through FDIC insurance, also legal aspects where there cannot be set offs or liens against these accounts. If there ever was a legal proceeding against a property management company, for example, and there's a court order to freeze, um, the property management company's assets, sure, your corporate operating account can be frozen, right. There's a legitimate court order. But trust accounts cannot be frozen in. Right. Uh, because they're a fiduciary account type because the money does not belong to the property management company, belongs to your property owners and the tenants.

Speaker B: So the fact that you guys are nationally chartered doesn't change my obligation as a local operator in a given state and the regulations, et cetera, what should a, A somebody, let's say in, in Colorado, you know, a state where there's, there's moving target legislation happening, et cetera, what should they be thinking about to make sure that they are still compliant with state rules? For states that are more onerous here,

Speaker A: it's very important because while as a bank, as a national bank, we can bank customer across all 50 states and the local Colorado Department of Real Estate does not have jurisdiction over the bank. They have full jurisdiction over their licensees, the property management companies. So if they have a rule that they pass and say, hey, you can only open a trust account account with a, you know, a, a bank that has a physical presence in the state. Right. If you opened an account with the bank without a physical presence, state Technically, you're not doing, uh, anything illegal from a bank perspective, right? But, you know, theoretically, your local kind of DRE could have the jurisdiction and potentially finding you where in worst case, like revoking your license, even though that's, that's fairly rare, in instance like this, they'll usually just say, hey, like, we need you to switch banks, right, to something with a, uh, physical branch in state. That whole concept originated very archaic, you know, kind of like back in the days when banking was like a lot more kind of physical. You're going to the branch, like dropping off like cash or checks and things like that. And the notion that the funds actually sit in the state that the bank has a branch in, the reality is like all funds actually sit at the federal Fed master accounts, which are just in like data centers essentially. Right. It's not like physical kind of cash sitting in some vault like at like the local state. And so, so. But what those state regulators are trying to kind of get at is if a bank has a physical presence in the state, they feel like they have also a little bit more jurisdiction over that bank. And so during an audit, they also have more ability for the bank to kind of collaborate with them and kind of ask them for information, you know, on the, on the property management company to make sure they're abiding by no commingling rules and things like that. So the approach that we always take at column is regardless of whether there's a physical location in state, when. Because we understand this industry is regulated and it's regulated for the benefit of, of the property owners and the tenants as consumers. At the end of the day, like, even if we don't have a physical location in the state and we get some sort of request from the local auditors, even if they have no jurisdiction over us whatsoever, we're still gonna collaborate because we understand that PMs are like, regulated. But also what that means is in states like Colorado, for example, we are actually opening physical branches, like in states like that in order so we can fully protect our customers who want to kind of bank and kind of build on top of column in those states.

Speaker B: So for those states that do require physical branches, what constitutes a physical branch? Is this what I would normally think of, of, you know, walk in, there's a teller, et cetera, or is the bar different?

Speaker A: So there's like, so there's a lot of like, technical requirements as laid out in like the OCC kind of rule books. Like, for us, in terms of like, what constitutes a bank, uh, branch but basically it has to be a location that's physically accessible by the public, where the public can kind of come in and make deposits essentially, whether it's a check deposit or like a cash deposit or something like that. There's no regulations around like, like the specific size of the branch that needs to be right where like the number of people that you kind of have to hire, there is some security requirements where you must have a camera kind of monitoring it because it is a place where banking business can be conducted. And so um, you know, we are always going to apply like, like fully kind of um, like, like fully obliged by like the OCC kind of regulations around what, like what constitutes like a physical branch as we open up kind of new branches in different states.

Speaker B: Prior to hitting record, we were talking about how ACH works and the different windows that pertain to when a clawback can occur, when a refund can be claimed, et cetera. Walk me through that again. ACH is one of these things that's both known because everybody does it, but there's also, there's also some things that are opaque about how it works.

Speaker A: Yeah, so ACH is a unique payment rail because it's not only a payment rail where you can push transactions to someone else. Let's say you're paying a vendor, where you're paying an owner. It's also a rail where you can pull funds out of someone else account to kind of collect funds that are owed to you essentially. And that's unique because if you think about a wire transfer, for example, you can send a wire transfer to a vendor or an owner, but you can't like, like automatically pull funds out of the owner's account via like a wire transfer. Right. So it's kind of like a one way street. And so because of the nature of ach, where there's both an ACH credit, which is money kind of going out if it's an outbound ACH credit, but also there's ACH debits which are HCA's pull which you are basically kind of, you know, pulling money out of someone else's bank account, whether it's a tenant or an owner or even a vendor in some kind of unique cases like because of that there's like very specific kind of network rules that govern like return kind of riots and return windows and things like that. The network that kind of, in the body that governs kind of ACH kind of rules that all banks oblige by is called the um, nacha. Right, like nacha. So that's kind of like the network that handles all the rules. And there's some unique instances where let's say you are debiting, um, another business, for example, right? And the debit is to another company. That company is up to two days to kind of file a return with their bank. And for funds to automatically get pulled out of your bank where you just kind of collect the funds in and the money just kind of goes back to their bank. And then of course, if you, if there's a dispute and you can provide a proof of authorization that says, hey, this vendor actually did give me proof of authorization to debit their accounts. Right. Like there's a process for kind of recovering the funds, but it's not like automatic in that case. Right. Because since you're pulling money from someone, like the network rules are designed to kind of protect them in case of actual, like actually real, like fraudulent activity in that case. And obviously when it comes to consumers, because of the focus around consumer protection, let's say you're debiting a tenant's bank account for collecting rent. Tenants actually have up to 60 days to file like a dispute, um, with their bank. And then for that bank to be able to automatically pull funds out of like your account where you collect the funds too kind of back then. And then there's like another kind of like that dispute process kind of starts if it, if the tenant is actually, you know, acting in bad faith, for example.

Speaker B: I think that's kind of the shocking part for folks is that it's automatic.

Speaker A: It's automatic.

Speaker B: It's not dispute and it's not dispute.

Speaker A: And then the bank says, okay, let me review first. If there's legitimate, then we let the funds out because of network rules. The fund movement happens automatically when a dispute is open at the tenants bank, for example.

Speaker B: Uh, what do you have to say about disputes and how they work? I think some folks feel like the dispute is almost a foregone conclusion that

Speaker A: you're going to lose.

Speaker B: Is this even productive and engaging? What's happening beside behind the scenes with those disputes?

Speaker A: Yeah, so a couple things on that front. So generally speaking, the first thing, like when you know, like let's say you like let's say. Because there's actually kind of two scenarios, and I don't want to kind of confuse kind of listeners here, but there's a scenario where you're processing the rent payment via your property management software, let's say it's AppFolio or Rentvine, and they're actually using, you know, Payment processors like Jack, Henry and Forte to process that. That's a little bit of a different scenario that we can talk about in a sec. But let's just assume the scenario where you're actually using your bank directly to kind of process an ACH debit. A lot of banks, you know, don't give kind of um, access to their customers for kind of using ACH debits. But they did like we do here at column, right? You can actually kind of debit kind of tenants bank accounts directly just out of your bank account, right? So let's say you do that and then within, you know, 50 days later, we're a little bit more than two months later, the tenant, you know, moves out and they say hey, actually I never authorized, you know, Jordan's property management company to debit my account. Like they go to the bank, say I want to file a return for unhappy off, right? There's a couple different return codes, right, like R5, R6, et cetera for them to do that. And then what happens is the bank kind of automatically pulls the funds back. There's a return, right? So the tenants bank pulls funds out of the uh, property owner's bank account, right? And the funds kind of go back there. And then what can happen is you can say hey, this is not, this is, this is not legitimate because this tenant, like this is actually legitimate rent that's due that we pulled. And then the bank can then also open up a dispute and basically um, like send over a proof of authorization, right? Whether it's like a form or like the electronic kind of consent the tenants will obviously kind of agree to, especially they're using a, like a property management rent payment portal, right? To kind of go back to the bank and say hey, here's the proof of authorization. Like please send the funds back. And then the bank of the tenant then makes the decision and says hey, like this is legit. Like our, our customer is being a bad actor here. So we're going to send the funds back to the property manager like bank account. So there's that process. But then like depends on like, like what the tenant does there. Like there could be another like, like eventually if they, the tenant really tries to fight it, it could end up in like small claims court. Mhm. Kind of for example. And I think that's what like property managers want to avoid and they don't like that process. But the reality is like ultimately the tenant's bank kind of has like the final say essentially for whether funds go back to like because you're the bank that's pulling funds and they're the bank that like funds are getting pulled out of their bank. So that's kind of the trick to scenario there. And so, um, what we usually recommend is make sure you have documentation, especially the proof of authorization, because that's the best way that not only are you going to basically, like when we file that, like essentially that return of a return to the return request with the other bank of the other bank honoring it and sending funds back, but also your best chance of kind of winning in any sort of small claims course or legal proceeding for actually getting rent that's owed to your owners kind of back from this potentially bad act tenant.

Speaker B: And what about in the embedded payment paradigm?

Speaker A: Yeah, so in that scenario it's a little bit different because in that scenario, if you're processing rent through kind of Appfolio or your property management software and their payment processor, that has to go directly through them. So let's say you're banking with, you know, kind of bank of America, right? And then you're using kind of Appfolio to kind of process the debits. Right? And so what actually happens there is, um, the bank of the tenant will file like a return. Jack Henry's bank gets funds automatically pulled out of Jack Henry's kind of bank, essentially. And I think Jack Henry passes through bank, um, of Central Texas or something like that. And then Appfolio then automatically kind of pulls funds out of kind of your account at bank of America, because Jack Henry's bank account just lost funds. And then you have to kind of take it up with Appfolio and work with the payment processor to kind of start the claims process. And I actually think. I think Appfolio and others have stats around this. I think even though viscerally it may feel like most of the times you lose the dispute, but I actually think the data shows otherwise. Where most of the time the dispute is actually won. And whether it's Appfolio or Jack Henry is actually able to recover funds in a lot of instances. But of course there's also instances where the tenant ends up winning the dispute and funds are lost. But, uh, the tricky situation in that situation is your bank, bank of America has way less control over the dispute process because. Because it wasn't initiated directly out of the bank. The ACH debit. The ACH debit was actually initiated by, you know, Jack Henry and Jack Henry's bank.

Speaker B: On this theme, let's talk a little bit about financial services and opportunities in this space. You rightly mentioned referencing the PM Trends report, which column was a sponsor for that. There was in various categories an indication of interest for more financial services. We saw two things that really stood out and seemed germane to this conversation. One, we saw a very uh, predictable increased appetite and tolerance for technology based on demographics and age. It just mapped very directly. The younger you are, the more excited you are about using technology. And then additionally we also saw in various areas that people are open to fintech propositions even though the minutia, how it works and all of the guts is very opaque and we certainly didn't get into that in the survey. The general desire for would you like to have your rent consistently paid on the first guaranteed? Yes. And furthermore, would you pay some money for it? Yes. Would you be able, would you be willing to take some kind of a discount for an overall rent guarantee? Yes. So in multiple different areas we saw these desires. The question is what do we do about this?

Speaker A: What do we do about it?

Speaker B: Is the average property manager going to stand up uh, a credit organization and take the counterparty risk? Probably not. What practical opportunities do you see for actually this coming to market?

Speaker A: Market? Um, it's, it's a good question. So exactly to your point, if for the typical kind of property manager like setting up their own sort of like you know, kind of credit product, credit team underwriting, all of that is probably impractical. And you know, it's too much work like for like the scale uh, that you're at. If you're like a major, you know, kind of like multi state property management company managing tens of thousands of units, that calculus changes where you probably want to maybe own that program. Because yes, you take on more credit risk, risk but then you also capture more of the upside, right? With more risk comes more rewards, you know, et cetera. All is fair in life in that way. Um, but what's exciting is there's you know, kind of companies that we actually work with and companies that are in the market right where they do offer kind of these guaranteed kind of rent products kind of powered by column. Because we're a bank, we can provide these companies with a credit facility. We provide them with like the money move and rails and all of that underneath the scenes too where PMs can actually kind of use, use some of these companies. An example is fixed, you know, for example to kind of gain access um, to those products that their owners want. And then there's some sort of like, you know, like economic share with the property manager like as well. And so Everyone kind of benefits in that scenario. And on top of that, I think there's a broader opportunity for even property management softwares to offer more embedded kind of financial products. And um, you know, not to give too much away, but there's going to be some exciting kind of updates and announcement kind of coming down like very shortly in a couple of weeks on that front as well. But I think you identified like a great point coming out of the PM Trends report. It is something that the industry wants and it's, you know, it's something that property owners actually want. And so I think we're going to see more and more of these products come to the forefront, not offered kind of directly through a property management company per se, but through some of the other vendors or some of the existing software companies in the space becoming more of a embedded, you know, kind of fintech as well.

Speaker B: George, I, I observe some naivete as I experience it around the enthusiasm for AI in the, that the AI is generally perceived at first value to benefit most in the areas related to labor augmentation, efficiency, et cetera. And yet we don't want too much efficiency. If you get too much efficiency, the underlying thing that it is making efficient goes away. Right. There can, there can only be a limit to how far down I could benefit from reducing my cost structure before my, my customer starts questioning what I'm doing with the money that I'm paying them. How do you see this efficiency related to accounting? Uh, which is really pretty well at the heart of what property managers do, impacting the offering and the um, economic dynamics between the owner and the property manager.

Speaker A: Yeah, so the way that, that I've thought about it is, and you know, and this comes from kind of talking to our existing customers and even prospects as well, is when you ask a property manager, operator, founder, like, like why they're kind of in this industry, like, you know, what got them into property management originally? Like, no one's going to tell you. It's because they were excited about the accounting side and like the trust accounting side. Right. That almost becomes something that they realize they have to do after they get into the business because oh my gosh, like we're actually managing funds on behalf of, you know, our property owners and we, so we had to do like even more strict accounting. We trust accounting just came out with the new kind of narpum, um, kind of standard in partnership with kind of profit coach. And so all of that is like very, very important. But I think the point that I'm trying to make is I actually view kind of trust accounting as one of those efficiencies where it's not a, it's, it's, it's not something that's going to make your owners question where's the value in the property management kind of company with the property manager they're hiring Like I think the value for the property management company comes from the ability to actually like manage those properties like find really good tenants like for these owners. Owners like take care of the maintenance. Right. So these property kind of owners like don't want to kind of think about it, they just want it to kind of operate on autopilot and get their check at the end of the month essentially for their distributions. And so when you actually automate more of accounting, especially a very manual task like trust accounting manual, um, kind of bank reconciliations, what that does in my, um, in, in my opinion is it actually frees up the time for the existing kind of finance staff to do other things that are more kind of revenue kind of generative and value generative such as as building kind of better owner relationships when it comes to financial reporting. Even at different cuts of the data as you move more with the asset manager spending more of their time on thinking about it more from a strategic finance perspective. We have all this data. How can we use this data to make decisions and where we should actually invest more time and resources? Are there new markets where the unit economics makes sense, where we should also um, onboard more property owners in that space and open up a new adjacent region for our company as well. In a lot of ways I think instead of it being like hey, it's going to completely take away the job of the accountant. It's like no, actually it frees up the accountants to do things that they probably want to do more of versus manual bank recs, which is just such a time consuming task that just involves comparing your bank statement to the journal entries in your property management accounting software?

Speaker B: Mhm. I think regulation and the hoops that people have to jump through related to regulation is actually somewhat of a corollary. It's been argued that regulation is actually a moat for professional property managers because it increases the burden and therefore makes it harder and harder to diy. But presumably this agentic paradigm will make it easier to jump through those compliance burdens. It doesn't mean that there's not an impact from the regulation if the regulation is misguided, but in so much as it was byzantine and difficult to follow. I think it has a similar corollary to accounting in that regard.

Speaker A: Yeah, and I agree with that. And I think on like the regulatory side, right, I think, you know, where you're trying to go there is like, hey, like as AI makes it easier for property owners to navigate like the byzantine kind of maze of like regulatory requirements, like will they just start self managing more. Right. And actually I, I don't think that's going to be the case. And it also comes back down to a key finding from the PM Trends report that you, that uh, you and Peter found, which is like, what is like the sweet spot, kind of like unicorn property owner you want to work with and it's someone that like they don't want to self manage their property. It's not about like maximizing every kind of roi, right? It's not about like an NOI kind of equation for them. It's a peace of mind thing. Right. And ultimately I think property management, it's about kind of giving those owners like that peace of mind that you got to handle that you can deal with those tenants, right? You can deal with like the maintenance request that comes in that does require someone boots on the ground. So then if you're just like a homeowner, you don't have to deal with like all of that. So sure, like maybe it's easier for the owner to navigate like you know, some of the accounting and some of the like the regulatory kind of maze that they had to deal with. But there are just like fundamental things that like AI will not just like automate away and like, you know, how do you like actually make sure you find like a really good tenant? How do you communicate with them? Um, how do you like make sure maintenance requests are responded to quickly. So the tenants, you know, are very happy, they'll continue to stick around, the owners are happy, so they're still getting paid on time. Like you're taking care of the owner relationships, helping them make sense of the markets that they're in. Um, you know, if you're working with professional investors, like you know, being able to more quickly generate different cuts of the data, right, that they care about for their own, reporting for their own, um, you know, kind of like, like financial packages for their investors and LPs and things like that. So I actually still think that in this property management space, like AI is a force multiplier versus anything like sure, there's going to be churn caused by like, you know, some of the property owners were like, they just wanted to do that anyways and like, because they didn't have the ability to do so, so, but now they do. So maybe they just do it themselves, but I think that's probably the smaller minority versus the majority of the property owners in the space.

Speaker B: I think there's certainly going to be more players that are selling a modified DIY paradigm. Folks like, uh, Turbo Tenant that are adding on professional services, et cetera, or folks like Hemlane that were already somewhat down market and have a more compelling case of arguing how what they're offering is closer to full blown professional property management. We talked, uh, a little bit earlier about how this exciting possibility related to using AI in combination with this new technology can unlock a lot of possibilities. We talked briefly about security. I want to come back to it again.

Speaker A: Yeah.

Speaker B: For somebody that goes to a conference, they go to an event and they don't identify as being deeply technical, but they want to benefit. They want to be with the cool kids, they want to be modern, hip, et cetera. And so they figure out how to take advantage of some of these tools and they push their staff to embrace these things. But they're not leading from the front, which doesn't have any moral implications, but it's the real practical reality. You go to the trade show, you talk to the vendor, you like this guy, you're convinced this is the person you want to work with. You don't come back and roll it out. You come back and you tell your staff, you tell your number two, this is what is happening. A concern I see is in an agentic paradigm, pragmatically, practically in terms of efficacy and from a security posture, just asking your staff to figure out this AI thing, it's not a winning strategy. And furthermore, telling them to figure it out while giving them some API keys that could potentially blow their foot off. What else do you have to say around what you've seen? Uh, you know, people are coming to column because of this tech promise. And so I assume there's some kind of selection bias where you're working with folks that naturally have this more tinkerer disposition. What have you seen practically are some of their hurdles to get through and how do you navigate that first rollout for an organization that doesn't have Todd O. At the top?

Speaker A: Yeah. Um, so a couple of things to kind of hit on, um, before I kind of answer that question directly. Exactly. I think when it comes to banking, if we set aside all the technology, like the exciting, like AI, future agents, like all of that for a second here. Banking fundamentally is a trust based relationship. There is like no higher level of trust than you have to have with your bank, especially as a fiduciary like you are as a property manager. You're not just trusting the bank with your money and your savings, you're also trusting your bank with your clients kind of funds as well. That is like a very high bar that you have to clear. And so, so first, above, like all else, before we even talk about the technology, when we are kind of like meeting with like a new prospect in the first place, like we are there to kind of establish that trust, that trusted relationship with the customer. And so what that entails is, you know, being in person with them, um, kind of flying out to kind of meet them in person, like getting to know not just them, but also their team, their accounting staff, like that whole group that has to be there. The understanding of property management has to be there in terms of setting up like the proper trust accounts with pass through, FDIC insurance insurance with all the protections afforded there. And that also contributes to trust that uh, hey, we're not just some random bank that just like fly by night. Coming into property management, we like deeply understand the space, we listen to our customers, right? And we have a lot of capabilities that we build that's tailored to your needs. So that's one kind of first and foremost and then three on this technology side, which is the exciting vision that a lot of folks are excited about because it's about building for the future versus being stuck in the past or even in the present. And I think on that front we also have a lot of resources that we provide to our customers. And so you think about a company like Palantir, they're known for their like forward deployed kind of engineering kind of model. Similarly, at column we have what's called solutions engineers, right, which are folks that specialize in kind of working with our customers and like listening to them, scoping out the product with them, um, like what are you trying to build? And then being like a guide and almost like a consultant to kind of build like a, you know, a very, you know, bespoke application together with our customers. So that's something that we also have as a resource at column, like for our customers who do want to kind of experiment with some of this more like AI forward technology technology. And on top of that we also have what's essentially kind of like a mini kind of app store almost, which are like external applications that we've built, right, that kind of benefit our customers, that different customers kind of just plug and play and start using. Whether that's like automatic bank reconciliation or like an apar kind of like owner portal, um, or kind of like different sort of like solutions there. Like there are just some like pre built solutions that you can already use like off the bat. And then if you want to, to like customize it and make it yourself, then you can kind of make your own and kind of build it on top of your own infrastructure like in that case. And that's where our solutions engineers will kind of come and help our customers like realize that vision. Um, but with that all said, right, I think what's really interesting and exciting about Column and when I spend time with, you know, our customers and our prospects is that like even without all of this AI stuff, Column is still a really good bank. Like we have a great online banking dashboard that you can use, right, to easily kind of send payments out. You can use payment templates, you have a lot of custom kind of roles and permissions you can build in. You can very quickly open up trust accounts, especially if you're in the multifamily space and you're doing like individual, you know, trust accounts versus like one bulk trust account. We make it like a click of a button, very seamless process. There's just like a lot of things we built in our online banking dashboard that benefits customers in the first place along with the relationship, you know, um, understanding of property management. And so even if someone cannot care less about the AI or they're scared of it, they don't want to deal with it, that option is always there like when they are ready for it, when they want to do something with it. But everything else about Column in terms of just, just our dashboard, you know, some of our integrations with PM softwares, the relationship banking and the understanding of property management, like that alone. Actually we have a lot of customers who are just banking with Column. Like for those reasons even they're not even touching our API capabilities.

Speaker B: George, you were with Summer Summit, a investment shop, prior. Was that just prior to Column or just prior to Column so you have context for what's going on in the space. Summit, uh, was behind Buildium, correct?

Speaker A: No, so Summit, we were actually behind Association Space. We also invest in other companies like Foxen, which also has a president kind of single family management. It's kind of like an insurance platform, a few other things and also Price Labs, which is more like the vacation rental space, um, as well.

Speaker B: So generally familiar though with the space, with the players, enterprise value, what's going on in vertical software. As I look at the market right now, I see, see every single system of Record both excited for the opportunities, but also under a tremendous amount of pressure right now. There's attack vectors happening all over the place and it's the unwinding of the closed paradigm that uh, frankly a lot of folks have complained about where they feel like it's not as open as they would like, but every different vertical solution is having to figure out how they're going to navigate this. Do they go straight towards headless? Do they do it in a very uh, uh, permissioned kind of way?

Speaker A: Yeah.

Speaker B: I know that you guys are working in multiple verticals, both within property management, short term, single family, multi, et cetera, as well as in other verticals that have similar trust dynamics, et cetera. What do you see playing out for the system of records that are having to navigate the loss of control that they had previously?

Speaker A: Yeah, so I think there's a, there's a couple things and this is something that you know, we even thought about, you know, when I was at Summit as we were just evaluating kind of vertical SaaS, vertical software companies. I think one inherent advantage of vertical software is you're not trying to be everything for everyone. From a go to market perspective, you deeply understand one vertical that you're selling to and you're building like close relationships with that vertical. And I think that is the number one thing that no matter like what vertical you're building in, you have to, to maintain that competitive advantage. Because once you start losing like the customer relationships, like you're no longer attending like the community events like the NARPAM conferences, you know, in our space, for example here, or you know, some of the other ones, um, um, in the industry, like that is going to be like a very core loss because there is still something very real about like hey, I have a relationship with this vendor because they show up and they're there for me and I, and they understand my industry. So that in itself, even though it's not exactly a technology play, I think from a company building perspective is very, very important. Making your customers in that vertical feel heard and you know, being, positioning yourself as a thought leader in that vertical as well. But from like just a broader kind of like business model perspective, I do think there's going to be like some shifts. Right. Like traditionally, you know, kind of software as a service has been either kind of per seat kind of basis where in property management a lot of times it's like based on per units, um, and um, where kind of other kind of per some metric, it's like recurring SaaS, that business model will likely kind of shift and evolve especially with this like evolution of AI, right? And like AI agents where it's probably going to go towards more like it has to be more like outcomes based pricing where if your customer feels like they're getting a lot of value out of the software that they're, they're using and they're realizing kind of good outcomes, like they are going to be aligned with you in terms of paying you more or like giving you some percentage kind of share of like the value that you're delivering. So there's probably going to be some sort of like business model shift on that front. That's going to be painful for a lot of like typical software companies because initially you're probably feel like you're cannibalizing your existing revenue in order to shift that business model. And I think privately held companies are probably at uh, like an advantage versus like a publicly traded set of companies because then you know if you have like a quarterly dip in revenue, you're going to get punished by public kind of investors, whereas you're a private company. There's more patience, right. You can take the time to kind of pivot that business model like in the right way. And then three, I think a big opportunity for kind of vertical software companies. And like I'm going to like, I'm not going to talk about the obvious which is obviously like embedding more AI capabilities like within your system and all that. So you don't give them a reason to like a horizontal like AI platform. But I actually think something that's really powerful for kind of vertical software companies in this area where they're moving into is financial services like embedding more financial services and financial products within the vertical software platform that they're already building. And there are some really, really great examples of software companies who have done that very successfully. I think Toast is a really good example of that. Right. All this, they sell like a restaurant management software pls to restaurants. Right. But they have done a lot to embed um, financial services capabilities. Whether it's offer offering a card like a spend management platform that you know, these restaurant owners can use, accrue points. It's more integrated within the accounting software offering Toast capital lending solutions, small business loans to kind of help you get started or smooth over some of those working capital periods where you know, the business may need some like additional cash. Right. And so I think similarly as we think about like the prop tech industry that we're in, there's a lot of opportunities for like embedded financial services. You know, I noticed um, you know, a couple weeks ago you had um, granted, um, um, Revela kind of on in your podcast and I think you know, that company is an example, one that's actually done a good job early on of having like embedded kind of lending capabilities built into the software and found like a really, really good kind of segment there. And I think if I could put it any more simply and it's just that sure, you can kind of vibe code a lot of like workflow kind of automation, things like that, but you can't just vibe code financial services. There's like an inherent kind of stickiness there to offering financial products. Whether it's like a lending product, whether it's a card product, whether it's like a payment product or even like insurance kind of products, for example. I mean you look at Appfolio, this is all public. They're a public traded company. The majority of their revenue does not come from software as a service software revenue. Majority of their value is in the book called value added services, which is payments revenue, which is screening revenue, insurance revenue, residence benefit package kind of revenue and things like that. And so I think we're going to see more vertical software companies start to kind of shift towards that direction where you have to have other value added services, more embedded financial services versus the model in the past where you can probably scale to 100 million ARR just on pure like software subscription or something like that.

Speaker B: What I'm seeing on the SaaS side is that while you guys are more like that bare metal infra, there are a lot of white labeled verticalized fintech embedded platforms. Yeah, where? And TOAST is a great example. Toast, Procore, some of the big players in different verticals. They didn't build all that stuff. They would have gotten gummed up. They would have choked on consuming all of those use cases. But they added a lot of use cases, they figured out which ones were hitting and they were able to do that using embedded solutions. And I think the property manager is somewhat of an analogy there. The property manager would presumably like a suite of offerings to be able to

Speaker A: offer their client and for their end customers.

Speaker B: The question is, it's not a question that it needs to work great. The question is around the economic participation. Who is rolling this out? There's been complaints about PMS is on occasion rolling things out without even consulting or explaining to the property manager what's happening. That doesn't even get to the issue of any kind of a revenue allocation of participation or upside. How do you see the you know what, what principles do you or thoughts do you have on. On ordering that participation in navigating the tension between the property manager, the owner and the tenant. And there is real tension there.

Speaker A: Absolutely. And I think, I think, yes, like, there likely needs to be some sort of, like, revenue sharing among different parties, but the revenue share also needs to be proportionate to like, the number of work and also the risk that's kind of taken.

Speaker B: Sure.

Speaker A: Right. So let's say, you know, a property management software company is actually the one underwriting, like the lending risk. Right. By definition they should capture the majority of the economics. And I think everyone view that's fair. But if they're using the property management company as a distribution channel to sell those financial products, whether it's lending or insurance or anything else, to their end customers, whether it's a tenant or a property owner, there should be some sort of revenue share because the property management company is also a distribution channel that's helping the property management software sell. A toll fee. Right? A, uh, toll fee. Right. So to speak. I mean, or else, I mean, just go direct to the property owners and if you find great success there, like, by all means, what's fair is fair. But if you're going to be like, working with property managers as a channel for that, there likely will be some sort of like, kind of share. Right. Similar to, you know, like the residence benefit package model that second agents do a good job in. Right. PMs are like, you know, really like a great channel partner for them to sell. But PMs also get like a very real kind of revenue share as well, like, you know, for their services, ess. And so I think alignment of incentives is going to be very critical. Like in this world that we're moving into. Obviously, if the property management software company is offering a product directly to the property management company, let's say it's like a revolving, uh, line of credit or, you know, other sort of like lending products that a property management company itself would benefit from. Right. There's like no revenue share. Like, you know, you're just paying whatever the interest. What are the fee associated with that financing. And so I think it just depends on who ultimately is the end user for that financial product. And like, what are like the partnerships and channels that you're going through to get there.

Speaker B: I think innovation looks like somebody cutting the owner in this whole idea of shared economies at scale. This is what Costco does where it's effectively capping how much you make and looking at and not out of altruism God forbid. But looking at the excess and saying, give it back to the customer, yeah, that's selfish. That's going to help us win, right? Give some back. So the owner is being left out of this equation. Equation. And in some ways it doesn't feel that bad. However, my observation is that the owner benefits from rent and for the, the tenant there's a, uh, there's an elasticity dynamic there. It doesn't matter if you call it rent, resident benefit package. There's a certain stack of money that

Speaker A: can be paid out owner benefits package

Speaker B: for anything related to my housing situation. And the more of that becomes a bigger proportion of an RBP or something else else, eventually it has to put downward pressure on rents. So there's an argument to say that by not including them, it's at the net detriment of the owner. None of this is moral. We're staying in the realm of pragmatic arguments. My point is I think there's an advantage and a breakthrough that someone will exploit by cutting in the owner. Not because it's an astronomical amount of money, it by definition can't be relative to, to rent, but the feeling and the buying criteria that can be set by saying, we cut you in. That other guy, he's screwing you. Yeah, we cut you in. I think long term that's where this thing winds up. That's my prediction. We can rewind the tape a couple years from now.

Speaker A: Yeah, I love it. Right.

Speaker B: See if it comes true.

Speaker A: Uh, we already have resident kind of benefit packages now why can't there be an owner benefits package?

Speaker B: Somebody's cooking that up right now. No doubt. Hey, it was great having you on. For folks that want to learn more about what you do or possibly get in touch, what's the best way to make that happen?

Speaker A: Yeah, um, first of all, we're going to be at all the conferences, right? So we're at Northam National. We're also at like the regional and local kind of Northumberland events as well, like Texas Style that's coming up in September. And so, you know, myself, the team will, you know, meet kind of folks just in person. But check us out@, uh, column.com property management. You'll find more information about our property management kind of specific vertical and practice. Reach out directly to me. My email is just George G O R G E column dot com. Hit me up whenever, um, drop me a line on LinkedIn. And you know, um, we're really, really excited to continue to invest in this industry and what that comes with is making sure. We continue to kind of build the relationships in person in additionally to, you know, you, um, know at these conferences and events too.

Speaker B: Here's to a bright and exciting future. Appreciate you coming on.

Speaker A: Appreciate you having me. Jordan, always a blast.

Speaker B: Until thanks next time definitely. That's it for this episode. Hope you enjoyed it. You can check out other episodes along the way if you're watching this on YouTube. Appreciate to subscribe. Any comments? I'm always here to engage. If you're listening on an audio platform. Would really appreciate review. It's a great way to help other people find out about the show.