As we navigate through an ever-evolving financial landscape, it's leaders like Kirk Coleman, President of Q2, who are at the forefront of revolutionizing how banks and credit unions serve us. This episode is a treasure trove of insights, from the seamless integration of digital banking experiences to the resilience of checks in an age of instantaneous payments. Kirk's journey from Ohio to the helm of Q2 in Austin is as compelling as the innovative solutions he champions, bringing a personal touch to the complex world of banking technology.
Kirk and I delve into the current state of play in the payment industry, where challenges abound but so do opportunities for those willing to adapt and innovate. We explore the intrigue of mergers and acquisitions, the quiet before the storm of 2024, and how banks are finding value in efficiency over expansion. The episode peels back the layers on the scalability of new payment systems and the shifting generational talent within the banking sector, offering a clear view of what it takes to succeed in this rapidly changing environment.
Topping off our conversation, Kirk shares pearls of wisdom on achieving a balance between a demanding career and a fulfilling family life, emphasizing mentorship and the adaptability required within the payments and financial services sectors. He also encourages us to chip away at the complexities that often muddle the financial services industry, advocating for collaboration towards simplicity, security, and improved customer service. Join us for this enlightening discussion that's as much about the heartbeat of financial innovation as it is about the human stories that drive it.
As we navigate through an ever-evolving financial landscape, it's leaders like Kirk Coleman, President of Q2, who are at the forefront of revolutionizing how banks and credit unions serve us. This episode is a treasure trove of insights, from the seamless integration of digital banking experiences to the resilience of checks in an age of instantaneous payments. Kirk's journey from Ohio to the helm of Q2 in Austin is as compelling as the innovative solutions he champions, bringing a personal touch to the complex world of banking technology.
Kirk and I delve into the current state of play in the payment industry, where challenges abound but so do opportunities for those willing to adapt and innovate. We explore the intrigue of mergers and acquisitions, the quiet before the storm of 2024, and how banks are finding value in efficiency over expansion. The episode peels back the layers on the scalability of new payment systems and the shifting generational talent within the banking sector, offering a clear view of what it takes to succeed in this rapidly changing environment.
Topping off our conversation, Kirk shares pearls of wisdom on achieving a balance between a demanding career and a fulfilling family life, emphasizing mentorship and the adaptability required within the payments and financial services sectors. He also encourages us to chip away at the complexities that often muddle the financial services industry, advocating for collaboration towards simplicity, security, and improved customer service. Join us for this enlightening discussion that's as much about the heartbeat of financial innovation as it is about the human stories that drive it.
Welcome to the Leaders in Payments podcast, where we talk to C-level leaders from across the payments landscape. We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments. We will also hear stories from our guests about their journeys to the top.
Speaker 2:One of the key aspects of our platform and this is part of what makes it a platform is our integration to thousands of different cores and ancillary systems, right and all stripes, varieties and combinations that you might see inside banks and credit unions, but also through our innovation studio, having integrated to 150 different fintechs, allowing those fintechs to provide their solutions in a secure way, directly through our platform, so that our customers can turn around and make decisions about how they might want to, in turn, provide those services to their customers, and so it's a way for us to really expand the kind of innovation that we can deliver to our customers.
Speaker 3:That was Kirk Coleman, the president of Q2, and he is my special guest on this episode of the Leaders in Payments podcast, and I'm your host, Greg Myers. Q2 is a leading provider of digital transformation solutions for financial services, serving banks, credit unions, alternative finance companies and fintechs in the US and internationally. Kirk and I talked about the various services that Q2 provides, the four things that makes Q2 unique in the marketplace, as well as where Kirk sees payments and banking heading in the next few years. We've got a great episode ahead, so let's get started. Hi, Kirk, Thank you for being here and welcome to the Leaders in Payments podcast.
Speaker 2:Greg, it's a pleasure to be with you today. I'm really excited about our conversation.
Speaker 3:All right. Well, let's dive right in, if you don't mind, tell our audience a little bit about yourself, maybe where you grew up, where you went to school, where you currently live, a few things like that, and then we'll jump into your professional career in a minute.
Speaker 2:So I was actually born in Cleveland, ohio. Both of my parents are from Michigan and that's where I spent some of my childhood before moving down to Dallas in the early 80s. And that was a transformational kind of change for our family, moving from Ohio down to Dallas at a time when JR was about to be shot, I think. But I always say I kind of grew up in Dallas, that's where I got all my most formative years were Went to Baylor where I got a degree in economics and knew from that time that I wanted to spend my career in and around banks. I'm not sure why I'm wired that way, I just am. And so I started my career at Accenture doing just that working for banks, married my college sweetheart, raised three boys in the Dallas area, moved around a little bit professionally, and now I'm talking to you from here at Q2 headquarters in Austin.
Speaker 3:That's a great segue. Let's start talking about Q2. So tell our audience what Q2 does.
Speaker 2:So we're celebrating our 20th anniversary this year. We were founded in 2004 with the goal of building stronger and more diverse communities by strengthening their financial institutions, really acknowledging the central role that credit unions and community banks play in supporting their communities in a really special and specific way. We provide digital transformation solutions for financial services, and our customers are banks, credit unions, alternative finance companies and fintechs across the US and internationally as well. About one in 10 digital banking customers in America are using our single platform for digital banking, so it's more than 20 million end users and a couple million businesses, and we provide comprehensive portfolio solutions that allow our customers to better onboard, grow and serve their customers.
Speaker 3:How big is the company?
Speaker 2:So we're about 2,300 employees. Our top line. We're actually doing earnings. Later this week Our top line revenue consensus is right around 625 million in revenue. We serve more than 1,400 customers, so that's institutions and companies of all different sizes. About 42% of the Forbes best banks in America are Q2 customers and about the same percentage on the credit union list as well. So that's we love doing well. We really like it when our customers are doing really well. So we're really grateful to be able to serve so many different size customers in so many different kinds of communities.
Speaker 3:I was going to actually ask you a little about the size. So, from a bank perspective, obviously there's the very large down to smaller banks and community banks, credit unions. Does the size of the bank really matter? It's not so much the size.
Speaker 2:It's what they're trying to do with the bank or the credit union or the fintech or the Alt-Fi company. Our best customers, whether they're a $150 million bank or a trillion dollar bank, are ones who are very forward-leaning in terms of how they think about using technology and digital. Specifically, they know who their customers are and why they're banking them and what they need, and we're providing them with the capabilities to be able to go to market and really provide a tailored experience to their customers, not a one-size-fits-all approach, and so we believe that that leaves lots of room for very good, healthy competition amongst many thousands of banks and credit unions who all have their own special strategy, their own special way of serving their customers, and we love supporting them in that pursuit.
Speaker 3:So could you maybe break down a little bit sort of the platform and the different services that sit on and if I'm describing that incorrectly you can correct me but the services that sort of sit on the platform, from payments to all the other digital services.
Speaker 2:Platform's the perfect way of describing it. We have a lot of different products, but I'll stick with the digital banking platform. We have a single platform that serves from very simple consumer savings accounts all the way up to very complex commercial banking relationships, and we're actually the only platform ranked number one in all those categories by firms like IDC, javelin and DataSinsights, and so it's something we've worked really hard on. So we believe if you're running a bank or a credit union, you'd really prefer just to run a single platform, and to be able to do that, you have to have a platform that's really functionally dense, right? So you can serve for lots of different use cases, some of which many of which are payment related, right? So how do you pay your bills, how do you transfer monies to individuals or make payments between businesses, and all the complexities and capabilities that come with that, whether you're using wire, ach or some of the newer payment rails.
Speaker 2:We're doing that at a very large scale for our customers, for commercial banking relationships. Those can be very big, complex and also some of the best relationships inside of financial institutions, right. They're very valuable. They're hard fought when won, and so the kinds of functionality that we're providing to them is really critical to how all not just the bank, but how the end users actually run their businesses, how they live their best financial lives.
Speaker 2:One of the key aspects of our platform and this is part of what makes it a platform is our integration to thousands of different cores and ancillary systems, right and all Stripes, varieties and combinations that you might see inside banks and credit unions, but also through our innovation studio, having integrated to 150 different fintechs, allowing those fintechs to provide their solutions in a secure way, directly through our platform, so that our customers can turn around and make decisions about how they might want to, in turn, provide those services to their customers, and so it's a way for us to really expand the kind of innovation that we can deliver to our customers in a non-traditional way. You don't have to kind of do the old, really long cycles on innovation right. You can do it a lot faster, which we think is good for everybody involved.
Speaker 3:And you mentioned fintechs there a couple of times. So do you both partner with them and they're your customers.
Speaker 2:That's right, and FinTech covers a lot of ground. Right, that's a pretty broad term, but that's exactly right. In some cases, we're serving them directly. That might be through our banking as a service solutions, or it could be where we're directly integrating their solutions into our platform, and that's actually been a really it's really great being having that position in the FinTech ecosystem. Right, it allows us to really be great corporate citizens for our customers, right, representing them well in terms of helping others drive innovation on their behalf, but also kind of being a good, responsible manager of relationships and risk inside this ecosystem for our customers.
Speaker 3:So what would you say differentiates you from your competitors out there?
Speaker 2:Yeah, it's probably threefold. One is one of the things about digital banking particularly when you have a single platform which is a differentiator, a very clear differentiator having a single platform that can do both consumer and commercial and everything in between. But in order to get really good at that, and particularly in the commercial arena, you have to have a lot of implementations, a lot of different types of implementations Implementations for large institutions and small institutions. Every bank might have its own approach to how and who they bank and the use cases that they're trying to solve for, and so it takes a lot of abats to build up that functional density, and so we see that in our results. We can see that in what others say about us in terms of how they rank our capabilities. So those two would go together Single platform, highly functionally dense.
Speaker 2:The third is that we're kind of agnostic within this financial services technology ecosystem. Right, we're not tied to just one core. We're not tied to just one big company, that for whom we only do digital banking for right. We'll work with any core. We'll work with any company that's out there in terms of the integrations, and we count many of them as really great partners in terms of working together to deliver great service for our combined customers.
Speaker 2:The fourth I might add on top of that, if we had a bonus, is that going back to our mission of building stronger, more diverse communities by strengthening their financial institutions, that anchors very directly to the origin stories for nearly all of our customers, right, that's why they started their bank or credit union to serve their community. And so having that strong alignment in terms of why we exist and why they exist, I think, is also a real strength, because over time we always have their best interest in mind and we're aligned in what we're trying to do. So you can do a lot of things if you're aligned with your customers that way.
Speaker 3:Well, the next question is more about sort of your vision of the future of the industry. But I want to make sure if we can sort of break it maybe into two parts. One so what are you seeing on the payment side that affects your business? But I also don't want to ignore sort of what we're seeing in the industry. I mean, just yesterday is big news across everything is Capital One buying, discover and sort of what's going on in that landscape of mergers and acquisitions. And you talk to people outside the US and they're like, oh my gosh, the US has so many banks. It's crazy. So curious of your opinion on both sort of what's happening in payments and where you see that headed, and then as well as kind of the whole banking industry as a whole.
Speaker 2:Well, let's start with payments. Payments is an interesting space because if you go all the way back to the 90s and electronic payments were really starting to scale some of the more traditional electronic payments rails, there was a lot of talk about when were checks going to go away entirely? And here we are in 2024 and there's still a lot of checks out there. I don't know if we'll see it in the course of my career, but at some point maybe the last check will be written, but I think it's a ways out there. And so what's happened? What we've seen over time is that as new payment types and new payment rails are added, that it doesn't necessarily mean that all the old ones go away. In many cases, they're allowing customers and users to do new types of things with their payments that maybe they couldn't do before. And, of course, now we have the new instant payment rails that are coming online in this really the first new core payments infrastructure in the last 50 years since ACH was established, I guess and I think that there's still a lot to play out in terms of how FedNow and RTP both gain traction. I think there's about 500 customers signed up for each both RTP and FedNow out of nearly 10,000 banks and credit unions. So there's still a lot of scaling to be done. A lot of people are starting with receive not send, and so it's heard a great quote the other day. It's sort of said like everyone has a mailbox but no one's sending any mail, and so I think there's a lot to be done here in terms of how that's going to scale.
Speaker 2:But I think what will happen over time is that you and I and people inside the industry, we will care a lot about all these different payment rails and types and how they're changing, how they're being adopted and things like that. But it's our responsibility to turn around and, from a customer experience perspective, right the end user kind of make those payment methods fade away in terms of knowing all the particulars, because what an end user really just wants to know is like, hey, I'm paying this person or this business, I'm transferring money for this reason, and I want a variety of ways of doing that that fit my specific need, whether I need a special type of speed, or I want particular types of information to flow with that payments. I need it real time, or I want it scheduled or any manner of other reasons why someone might be moving money or making a payment, and so maybe over time, while all of those inside the industry will all be talking about all these different iterations of innovation and payments, but for the end users that'll start to just look like a lot of really great flexibility and we'll be able to build some very different kinds of customer experiences that might be very use case specific or might be more ubiquitous across all different payment types. So it'll be interesting to sort of see how that plays out and what it does to volumes over time. I think if we switch gears and talk about the industry and I'll stick with M&A and consolidation as a to start we've been at historic lows over the last, certainly over through all 23 really historic lows for M&A activity in the financial services space, or maybe starting to see some of that start to percolate. It'll be very interesting to see how the regulators approach 2024 and if it's any different than 2023 in terms of the speed of approvals and some of the requirements they put on some of these deals. I think the deal with Capital One and Discover is going to be one worth watching on that front and it'll be interesting.
Speaker 2:I think, that If you went back 20 years ago, I think a lot of people just assumed it's a fork on conclusion that if you're a $2 billion bank, you want to be a $4 billion bank, if you want to be a $5 billion bank, you want to be a $10 billion, and so on and so forth, and then just there's just driving beating drum of consolidation. That's going to happen, and certainly that's still true on a lot of fronts. I do, however, think that a lot of CEOs are really focused on just run a great institution right, know who you are, who you're banking and why and run a great institution. And if an acquisition comes along that's correctly priced, it's got the right risk, it's got the right advantages, it adds to your business in a material and meaningful way, then maybe there's a deal to be done. But you don't have to think of acquisition just as a strategy for growth, and so it'll be interesting to sort of see how that plays out. We'll probably have both models the serial acquirers and then others who choose to stay perhaps smaller but still be really well run nice, profitable institutions. In both cases they're going to all be looking for.
Speaker 2:How do I find the customers I want?
Speaker 2:How do I bank them, how do I get more and more efficient internally, because none of the costs related to running a bank in the regulatory environment is getting cheaper.
Speaker 2:Right that there's a lot of cost as you particularly get larger. That goes with the risk and regulatory investments you have to make. I do think there's a lot of technology that is available that can help those institutions run more efficiently. It doesn't happen overnight, but I do see a lot of hope light at the end of the tunnel there in terms of where that may be headed. But we also have some generational changes going on inside these institutions, whether it's the C-suite or the folks in deposit operations or loan operations who know those systems and those processes really, really well. We're reaching a point in the industry where I think a lot of those folks are as some of the people that are most experienced, that have seen so many different business cycles as they start to retire but really is going to make the talent inside these institutions look a lot different, and so I think that's both opportunity but also a challenge in some ways as well. So it's going to be a very interesting period, I think, over the next five to 10 years to watch all this happen, jared.
Speaker 3:Ranere. Well, let's switch gears a little bit and talk about you, so tell us about your journey to your role there as the president.
Speaker 2:Jared Ranere. So, going back to my education, I got a graduated college I thought I'd go work for a bank. This was the early 90s In Texas. There wasn't that many banking jobs to be at. There's a lot of consolidation going on, and so I went to work in consulting at a place where Stan Andrews and consulting now Accenture. And I got there and I just said I'll do anything you want me to do, just let me do it inside of bank. And that's what I did for more than two decades. It was a great ride and just by luck, I would watch two industries transform both the banking industry through consolidation and multiple technology cycles, but also consulting would change a lot over that same period, and so it was a really wonderful experience.
Speaker 2:I did a lot of post merger integration work which is a wonderful way to learn all about banking right, because you see everything come out of the woodworks during integration work and that eventually led me to commercial bank in Dallas. I was hired there to help them grow and scale, where I ran service technology operations, a bunch of risk functions no one else wanted, and also our digital brand, and that was a great experience. I really loved that experience. It was very much a Main Street Bank, right Very close to its customers and the business owners and the community and what they're doing, and I really loved that kind of intimacy that we had with our customers and the communities we served.
Speaker 2:And when I was there on my first week as there, I had to go to this meeting for this thing called Q2, which I had no experience with the bank. I had already contracted with Q2, but had not yet installed it, and so that's how I got introduced to Q2. And so got to experience Q2 as a customer. We did a lot of good and interesting and innovative things during my time at the bank and along the way, and 21 Matt asked if I would join the Q2 executive team and I did as chief banking officer and the big joke around here is no one knows what chief banking officer does inside of a software company and so I was running product and strategy marketing and things like that and was very honored to be promoted to president last May, which was Matt Flake.
Speaker 2:Our CEO has been just a fantastic partner in that transition and it gives us a little bit more bench depth in the C-suite and allows us to cover a lot of ground, which is a lot of fun in terms of what's going on in the industry. It's not all just a smooth arrow pointed up right. There's a lot of jagged lines here in this trajectory in banking, right. So all the stuff that's been going on just in the past year. We'll see what happens in 24. But I feel very grateful to have this opportunity to continue to serve banks and credit unions in this capacity.
Speaker 3:So, when you were thinking about joining Q2, what attracted you the most to it?
Speaker 2:There's a couple of things. One is, since I had some direct experience at the company, I knew what they were like culturally. I knew a little bit about how they thought about strategy and how they were going to serve their customers, and so that was a big leg up right. It has a very hand-done practical experience and what it was like to be on the across the table from them, so to speak, and how they represented themselves.
Speaker 2:For me personally, I was entering a phase in my career where I really wanted to make sure I was doing meaningful work with people I liked, and for me, meaningful work has both purpose and scale. I've got a particular skill set that helps us on the scale front and the people I like. If I could be friends with people I work with, that's great, but that wasn't really what I was after. It was more. I wanted to work with people I respected, that had a lot of integrity and that I can learn from. And I found that at Q2, and I've been really pleased after being on the inside that the company is very true to its mission and the culture that it's built up over 20 years.
Speaker 3:So what are some things you're passionate about? Maybe one personal passion and one business passion.
Speaker 2:I'll start on the business passion. One of the things that's on my mind quite a lot, greg, is maybe we do this at all phases, but when you've been at it for 30 years, you think about a lot is how are you kind of passing along your experience to those that are kind of coming up behind you, whether they're someone who's brand new in their job, brand new in the workforce, or maybe someone who's taking their first significant leadership position all different circumstances. So that's one thing I'm passionate about is making sure that I'm spending time with not just people inside Q2, although certainly there's that but also individuals outside the company and pouring back. You have to pick your spots right in terms of how you provide that. We might call that mentoring. Sometimes mentoring takes place just one person at a time, one conversation at a time, but you have to make that time, you have to be deliberate about it, and so that's one thing I'm passionate about, because I'm just so grateful for all the people in my career who took lunch, a moment, a meeting to pour into me. So that's on the business side.
Speaker 2:On the personal side, family has been incredibly important for Christy and I. We're a two-career household and we've got three boys, two of whom are out of college now and starting their careers and their families, and so we all have busy lives and busy schedules, but we are very mindful of making sure that we have time for each other, whether that's a meal or a visit or a vacation or just getting on the phone or communicating big texts. It looks a little bit different every month depending on schedules, but they're the foundation of this just really wonderful life I've been able to live as my family, so we just make sure we're always making time for them.
Speaker 3:Well, I appreciate you sharing that. So one final question. I think this is going to be easy for you to answer, given the mentoring part of business being such a passion of yours, and I always like to ask it because I feel everyone sort of brings a unique lens to it. Let's say someone is coming to you and they say I want to get into payments or I want to get into financial services, and maybe they're right out of college and maybe they're even going to work at Q2, and they say, hey, what do I need to do to be successful? What advice would you give them?
Speaker 2:Yeah I would say don't try to overplan your career trajectory right out of the gate, because whatever you think it's going to be, it's going to look different and so you can follow your curiosity. Put in the work you got to put in the work, learn as much as you can, and that means doing things sometimes that might feel mundane or super difficult or uncomfortable. All that experience is good and as you gain that experience, all that experience gets like compound interest. It just keeps building on each other and really helps guide you to the things that you're skills that you're going to be best at, the aptitudes that are really individual and specific, that can be put the work in the pursuit of a really useful career. So I would say get started, follow your curiosity and don't be too precious about the plan you thought you had when you started your career, because lots of wonderful opportunities are going to come along that you could have never expected.
Speaker 3:I think that's great advice. Well, kirk, we've covered a lot of ground, obviously, about you and the company and the industry. Is there anything else you'd like to add before we wrap up the show?
Speaker 2:Well, there's a lot. Thank you, greg. This has been a wonderful conversation and there's certainly a lot of ground left untouched. I think the one thing that I would probably just add and for everyone that's listening out there, I think if you're listening to this, you're already interested in this arena.
Speaker 2:I think, as an industry I'm going to say financial services industry, so very broad industry we're just more complex than we need to be, and I think as practitioners, as leaders, need to continue to figure out how can we work together to reduce the complexity of our industry so that we could be high functioning organizations, we can provide the best service and capabilities to our customers in ways that are easy for them to use, and we can also do it in a way that's as safe and secure as possible, and complexity gets in the way of those three things, and so I just think that'd be my one plea for all of us to continue to work on that. It's fight the good fight, because it's one of those things that only happens over a long period of time. It is us all working together.
Speaker 3:Well, Kirk, thanks for sharing that. I think that's a great way to wrap up the show. So thank you so much for being on the show. I really appreciate it. I know your time is very valuable, so thank you so much for being here.
Speaker 2:Greg, thanks so much for having me on.
Speaker 3:Great, and to all you listeners out there, I thank you for your time as well, and until the next story.