We had Joe Ehrhardt, CEO & Founder at Teslar Software join us to talk about the crucial pain points banks and credit unions should keep in mind when digitizing their processes; Joe shares his thoughts while taking us through his journey setting up Teslar Software…
Tell us a little about yourself Joe, what inspired Teslar Software – we’d love to hear more about the journey so far…
I somewhat got into banking by laziness…not really! I grew up in Northwest Arkansas and the summers before my senior year in high school I was working for a local farmer cutting thistles and cleaning some old farm buildings. When my mom told me the local bank was looking for a part time teller and wanted to know if I would like to work in a nice air conditioned building, of course the answer was yes. That was 21 years ago and I’m still in the banking industry today. Over that time, I went to college and received my bachelor’s degree in computer engineering and master’s degree in information systems – all while working for community financial institutions.
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What has always amazed me about banking and made me passionate about it is that with the help of banks, people can build businesses, buy homes and cars, pay for their education and basically create their futures. When most people think about banking, they think about the deposit side and the convenience that creates; I’m much more impressed with the lending side. A small business can get the investment they need to make their dreams a reality at a much better rate than getting an equity investor.
During the 2008 financial crisis, I was running a software team for a $2 billion dollar community bank. When it was forced into acquisition, I saw a need and opportunity to launch a company that could drive community banks forward through software efficiencies. Today, Teslar Software is still focused on that same vision: empowering community banks so they can empower the communities that they know best.
In the wake of this year’s global Covid-19 pandemic, what were some of the biggest challenges credit unions and banks faced?
For almost all of our customers the biggest challenges were in this order:
- Navigating the rules and continual changes to government programs like the Paycheck Protection Program (PPP) has been a significant undertaking. In banking, rules change slowly. The fact that a new program like PPP could spin up in a month and change every single day was a whirlwind for an industry that expects rules to take months, if not years, to implement before a change.
- Many of our customers also faced challenges around COVID extensions, deferments and payment extensions. There are still a lot of unknowns on how everything will play out in 2021 for borrowers and as previously mentioned, this is not an industry that likes undefined rules and spontaneity.
- Lastly, community banks’ key differentiator is their ability to form meaningful relationships with their customers and the shift to remote work has impacted this. This was more of a culture shock and process shock than anything, but I feel for our customers that had to adapt to the new banking environment in the midst of the pandemic.
How have you seen global banks and credit unions use fintech to improve their end-user experience and infrastructure and to accelerate their digital transformation during this time?
PPP is a great example of banks and credit unions having to leverage digital to meet the requirements of government programs while providing an easy experience for the borrowers. Most financial institutions could not do this only with their staff, so a lot them teamed up with fintechs. I was highly impressed with my team at Teslar’s ability to get our customers up and running on our PPP solutions quickly while also working with Jill Castilla and Mark Cuban to launch ppp.bank to help borrowers with the PPP forgiveness process.
What are some top tips that come to mind for banks and credit unions who are still establishing digital processes?
One of my golden rules for any technology strategy uses a variation of the 80/20 rule. Quickly build secure solutions that can solve 80% of use cases and get them into your customers’ hands. They will tell you the good and bad, but if you try to build 100% of all use cases, you will never get off the ground.
Also, a good user experience is all the rage, but way too many people take that to be user interface and that is not the same. Sure, everything needs to look good, but true user experience is actually about making sure the user/customer can get the job done using your digital process and that you understand what their pain points are. That can be as simple as good instructions and not making assumptions. It’s critical that bankers and fintechs take into consideration the customers’ perspective.
What are some of the biggest ways in which you feel fintech still has a long way to go to help redefine certain areas of financial services?
Personally, I consider there to be two types of fintechs: 1) the kind that believe they can do it better than a bank and work to displace their services and 2) those like us at Teslar Software that believe that banks are the key to financial solutions because of their local and hands-on approach, but they need to be empowered to give those customers modern efficient solutions. I see the latter area of fintech as the future and also the area that has a long way to go.
As global fintech trends change and the market shifts due to business environments (and also Covid-19), what are your comments on the state of fintech in 2021 and beyond?
Market shifts have brought to light the need for greater efficiencies and strategic partnerships. Banks have had to cram five years of technology plans into one and are going to require much greater efficiencies to compete in coming years due to many changing factors, such as interest rates. At the end of the day, if done correctly, community banks have a huge advantage if they partner with the right fintechs. Their cost of funds are significantly cheaper than most large fintechs, they have physical presence if needed and they have personal relationships. What they need is speed, innovation and convenience, that’s where fintechs can help.
We’d love to hear about some of Teslar’s upcoming plans and innovations?
Continuing to migrate processes to a digital experience is huge focus of ours in 2021. Many say they are digital-focused, but how many letters from your bank do you still get today? How much paper do you still have? Most banks still deal with a lot of paper, especially in business lending. We’ve made great progress at Teslar, and in 2021 our clients can be 100% digital – everything from booking loans to reviewing documents or servicing covenants. Community banks can still have a great personal relationship with their customers while providing the best digital commercial or lending experience possible.
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Before we wrap up, what are the biggest learnings and tips you’d share with fintech innovators and leaders?
Listen to everyone…It’s easy to listen to people trying to help you, but you also have to listen to the tough critics and the people who bring you problems; you’ll be amazed by how much you can learn. I always tell our customers that there are 20+ modules in Teslar but we only made one. What I mean is I had one good idea to start Teslar and my customers have told me the other 19 problems they have. I simply listened, and we solved them. We usually get creative with how we solve problems and being an innovator is what makes it fun.
Teslar is a forward-thinking technology company out of Springdale, Arkansas with a focus on software solutions for financial institutions. With the average employee having almost 20 years of banking experience, Teslar is well-positioned to help banks and credit unions in today’s tough and challenging environment.
Joe Ehrhardt is the Founder and CEO at Teslar Software
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