Why one of fintech’s most powerful women bought a 95-year-old community bank

Fortune

Lead Bank CEO Jackie Reses, a former Square executive, bought the Kansas City–based bank to address compliance and technology challenges facing fintechs.

Transcript

00:00What made it really easy for us, for people to say, like, of course you did, like, go you.

00:06I'm not surprised. Of course you bought a bank, Jackie. Of course.

00:10It's one of those very funny things because I like if I tell people, they'll say, like,

00:15you, you bought a bank, like, you know, unless you know me from Square.

00:19It's such a weird thing to say, like, yes, I own a bank. I went and bought a bank.

00:24But when you understand the story of, like, having built one from zero,

00:28you know, from an idea that I had, it kind of feels obvious.

00:34Welcome to Leadership Next, the podcast about the changing rules of business leadership.

00:38I'm Alan Murray, and I'm Michal Evron.

00:43People who know you will associate you with FinTech and Square in particular,

00:49but not necessarily with a, you know, nearly 100-year-old community bank in Kansas City.

00:56So explain the strategy because not every FinTech company has a bank.

01:02In fact, none of them do except for Square, ironically. It's very hard to merge the two

01:08because the strategy around both of them are almost diametrically opposite in both,

01:16in both business lines. So for me, when I was at Square, one of the things I experienced was

01:23extreme pain and frustration in working with bank partners. And what most people don't realize

01:30is that financial infrastructure products that they have in their wallets every day,

01:34so debit cards, credit cards, you know, loans that they might take out, 100 percent of them

01:40are built in the banking system. There's always an underlying bank involved with every transaction.

01:47With the evolution of FinTech, people think of FinTech as like the front end of that relationship.

01:54Like you have a relationship with a firm. You have a relationship with, you know, XYZ FinTech

02:01company. It could be PayPal, Square, Chime, Ramp, you name it. And so that's the way people think

02:09about it. But underneath there is the infrastructure that helps build those products. And so that's

02:15what we do. And so at Square, I had this challenging situation where we would connect

02:22with banks that were very traditional banks, and they weren't used to dealing with technology

02:27partners like us. And so I decided that I would go buy a bank to do this with a technology angle

02:36and the substance of compliance knowledge from the environment of like, what is it like to be

02:42a customer? What is it like to be involved and support what regulators are asking of us?

02:48But translate it through the lens of understanding both sides of that puzzle so that we could deliver

02:55a really unique experience to our clients. Our clients are, you know, huge FinTech and consumer

03:02companies or scaling FinTechs where they all want to run highly compliant programs because they're

03:10highly successful companies, but they want someone who can operate at the same speed that

03:15they can. And so that's how I've merged the two sides of the business. You know, we have a really

03:20strong team that sits in compliance and legal, a really strong team in finance, a really strong

03:25team in engineering and product. And the engineering and product piece is usually the piece that most

03:30community banks don't have. And our engineering team is second to none in the banking industry.

03:36They're fantastic. And they understand how to build primitives to support banking in a way that

03:42most, you know, most banks don't have. It's pretty cool. I have to say what we're doing is pretty

03:49unique in the United States. What kinds of other products, tech products, FinTech products,

03:55are you currently developing? Like, where are you focusing your energy?

03:59It always sounds really silly to say because it's like master of the obvious. I feel like

04:04I'm talking about products that have been around for 5,000 years. First of all, they're all APIs.

04:11So they're direct connections with our clients through APIs. And they're around core banking

04:18primitives in lending, in money movement, in issuing. And so it sounds kind of funny to say

04:26like, oh, we focus on money movement, but that's kind of what we do.

04:30And just to clarify, though, you're talking about APIs. You're developing tools that your

04:35customers can use to develop their own tools, basically.

04:38Yes. And they embed it into their products. You would never know that we exist except for

04:44if you look at the back of a lot of people's debit cards and credit cards.

04:47This is why it's one of these funny businesses, like everyone uses us, but no one realizes they

04:52do. And if you look at the bottom of a debit card or credit card, you're like, oh, issued by,

04:57huh, there's some bank on there. And interestingly, a lot of the banks that those cards

05:03are issued on are usually small banks located in the middle of the country. And so we're one

05:08of those small banks located in the middle of the country.

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