Featured Guest: Charles Potts

Charles E. Potts is executive vice president and chief innovation officer for the Independent Community Bankers of America® (ICBA).

In this role Potts drives ICBA’s innovation initiatives, and financial technology strategies, working with ICBA leadership to develop impactful, value-added solutions that help community banks seize new market opportunities to meet customers’ evolving financial services’ needs.

Potts’ extensive experience in banking and financial service firms provided the background Potts needed to start, co-found or lead various fintech start-ups including digital banking, mobile engagement, financial management and payments providers. Many had successful exits via IPO’s or acquisition via strategic acquirers.

A frequent speaker at national trade shows and conferences, Potts previously served as executive managing director at First Performance Global, where he led international business and corporate development activities for its card-control and fraud alert platform. Before that he served as CEO for NetClarity, a start-up in the University of Florida’s Business Incubation Hub. Prior to ICBA, he worked at the Advanced Technology Development Center (ATDC), leading the fintech practice where he mentored startups as part of the Georgia Tech-based incubator.

Charles attended the Georgia Institute of Technology, did his graduate studies at Georgia State University in Atlanta and attended the Graduate School of Banking at LSU. Potts, an avid masters runner, cyclist and soccer fan, lives with his wife in Atlanta, GA. They have a daughter who recently graduated from the University of North Carolina at Chapel Hill where she was a nationally ranked pole vaulter on the Track and Field team.

Episode Transcript

0:00 – [MUSIC PLAYING]

0:01 – Charles Potts

My cautionary tale to the community bankers out there is the next gen banker doesn’t look like them and has probably never set foot in their branch. And that means we, collectively as an industry, have to continue to reach the bankers of the future where they are.

0:24 – David Reiling

Welcome to the NextGen Banker Podcast, where we explore what’s next in banking and talk with the innovators responsible for creating positive change in the financial sector. I am your host, David Reiling. And I am very excited to welcome Charles Potts today. Charles, thank you for being on the NextGen Banker Podcast.

0:39 – Charles Potts

David, it’s my pleasure. I enjoy doing these things with you guys. Thank you.

0:44 – David Reiling

Fantastic. Well, just for our audience to start off, the quick reminder, stick around for the musical feature at the end of each episode, and particularly, this one. We’ll showcase a new artist from somewhere around the globe, representing a wide range of genres. So be sure to check that out.

1:00 – David Reiling

And so, Charles, just a little background on yourself and your illustrious career, which is very exciting to me, by the way. Charles is executive vice president and chief innovation officer at the Independent Community Bankers of America, known as the ICBA, where he drives innovation initiatives and financial technology strategies. He is also an advisor for the National Fintech Organization and is a general partner at BankTech Ventures.

1:28 – David Reiling

Charles also consults for fintech companies at The E-ffect Group and has spent the last 25 years building, leading, growing startups in different companies. So, thrilled to have you today, Charles. And hey, maybe we’ll just start out with, how did you get into the crazy world of financial technology? What drove you here?

1:50 – Charles Potts

Wow. And thank you again for hosting me. I have the distinct pleasure of getting out in and talking to a lot of community bankers, day in and day out, in a lot of state conventions and state associations. And one of the things that often find myself reminding them is not many of us actually went to school to become a banker.

2:19 – Charles Potts

I fancy myself that accidental banker, who woke up one day and looked around after about eight or nine years of doing it and went, wait a second, how did that happen? But it was actually by necessity. Like many of us, I was going to school, and paying my way through school, and working every job I could find at the time. I was doing some intern work and some co-op work.

2:46 – Charles Potts

And my mother happened to be working at a bank, and she called me one day, and said, hey, there’s an opening that might fit your schedule. And here’s the punchline because I asked this of some bankers earlier this year. It’s inside and it’s air conditioned.

3:05 – Charles Potts

I think air conditioning is probably more responsible for people going into banking than we want to give credit because I had been actually working on the baggage ramp at the Atlanta airport at the time, outside. And I’m like, yes, I can go inside? That’s awesome.

3:25 – Charles Potts

But it was just a blessing that I was going to Georgia Tech and I was working in a very innovative bank at a time that all of this new technology that we knew of, called the PC, came about. And I was Mikey in the Chex commercial. Everybody was like, hey, give it to Charles. Let him figure it out.

3:51 – Charles Potts

And I say all this because I got to experience what technology could do to improve the way we ran our bank. I mean, I really got a chance to see it at the bit and byte level, playing with this technology and figuring out how to improve what we’re doing, and that really formed the foundation for my desire to ultimately move to the other side of the equation and start working for technology companies. And so, I’ve had an incredibly blessed career.

4:23 – Charles Potts

I’ve had a wonderful chance to work with an amazing group of technology companies in my career. And the management team at the ICBA created this new innovation initiative and this new innovation directive. And one of my good friends, Kevin Tweddle, had moved out of, again, his own fintech background as well into the ICBA, and he said, hey, would you be interested in this? And I just kind of looked at it and went, Wow! I have the coolest job on the planet.

4:57 – Charles Potts

I get to sit at this cool intersection between bankers and fintech companies, and help us as an industry create this uplifting rising tide of innovative opportunities for community bankers. And David, I just couldn’t be more excited about what we’re doing. And it’s– and you know this, because we’ve worked with you guys, it’s just a great time and place to be here.

5:24 – David Reiling

Yeah. It certainly is so exciting. So now, Charles, I got to– I have to unpack and unwind that a little bit because your comment around air conditioning, I was a teller one summer. I worked construction every other summer of my life. And I’m like, this is a good gig being inside. Yeah, I’m with you, not breaking my back. So, I only understand that.

5:44 – Charles Potts

We need to go do that survey. We need to commission the research and find that.

5:48 – David Reiling

I think so. I think bankers had horrible summer jobs prior to that.

5:52 – Charles Potts

Exactly.

5:53 – David Reiling

So, wait, I’m going to go to the ICBA, and you’re Chief Innovation Officer, because there are questions that I want to ask you. But to go into that space of fintech for a second, and maybe just in regard to that, the National Fintech Organization, what does that do? What’s your role there?

6:12 – Charles Potts

Yeah. So, there’s a group of us who have worked together in this space over the years. And one of the things that we’ve recognized is new entrepreneurs, up and coming fintech companies’ entrepreneurs, idealist, the cocktail napkin stage companies, they need to figure out how to navigate this industry. They need to figure out how to really engage.

6:43 – Charles Potts

And while we’re doing some of that on the ICBA side and there’s associations that I’ve been part of most of my career, like the Association for Financial Technology, we tend to focus on a little bit more mature either early stage or mature companies.

7:00 – Charles Potts

This NFO thing that has been put together is really focusing on how can we be a cooperative clearinghouse to bring fintechs together and give them a path to learn how to engage with the ICBA. Or with banks, or with some of the core vendors, or the digital banking vendors, or all of the more mature players in the space. Because, look, there’s some amazing people out there doing some amazing things. And it’s oftentimes very difficult to figure out where to start.

7:36 – David Reiling

Definitely. Especially entering into that financial service, that regulated world.

7:40 – Charles Potts

Yeah.

7:40 – David Reiling

Charles, one side question for you. When you’re working with startups particularly, because a lot of the audience are going to be bankers and in various institutions large and small and around the globe, but what would you say the difference is working with a startup?

7:56 – Charles Potts

Well, so look, here’s one of the things I do know about our community banks. They are without doubt some of the best small business owner operators on the planet. They’re already small businesses. And they’re already having to work with startup founders, right? Two guys in a garage door company, right?

8:18 – Charles Potts

So, they’re already used to working with entrepreneurs and business founders. That they happen to be working with technology is sometimes viewed as scary. So, one of the things that we impress upon the banks is kind of take that step back and forget what the tools are. Forget what the solutions are and look at it through the lens of how you look at any other business.

8:42 – Charles Potts

Somebody comes to you and says they want to start a retail store or a grocery store or a landscaping business, a pool cleaning business. You know as bankers, how to talk to these people. How to understand whether or not they have good business skills and business acumen. Start there before you start digging into what it is, they’re building.

9:09 – David Reiling

Yeah, really good point. Gosh, that’s such a great way to introduce a startup, particularly a startup fintech to a community bank.

9:18 – Charles Potts

Absolutely.

9:18 – David Reiling

And compatible. Yeah. So, at the ICBA, you are– you’re working at that intersection of community banks and fintech. And maybe we just jump in a little bit, how are you helping community banks kind of bridge that technology speed with what we see out there?

9:38 – Charles Potts

Yeah, so there’s, I think, three very important things that underpin what we’re doing. And the first is a very strong belief that here we are in the year 2022, and the technology that is available to community banks of all sizes is on par with the biggest, baddest banks and fintechs on the planet.

10:04 – Charles Potts

That there really is no technology barrier anymore. It’s so easy to acquire, it’s so cost effective. SaaS-based solutions just make it so much easier for banks of all sizes to acquire this technology. And getting kind of beyond that initial concern is really the first part of the equation.

10:27 – Charles Potts

The second is we work to avoid the kind of classic shiny object challenge that many innovative programs focus on. This is not Shark Tank; this is not deal flow for a venture capital type venture. And those all have great places. I’m not dismissing what they do.

10:50 – Charles Potts

But community bankers have real problems and challenges that need to be addressed. So, we need to start– and the second part is a very clear understanding of what those problems and challenges are. And we collectively, as the ICBA, we go out, and with some amazing bankers who help me in this filtration process, in this vetting process, we scour the world for solutions to address these key problems that the bankers themselves have identified. And we use a lot of research and surveys to help form that.

11:28 – Charles Potts

And then the third thing is collaboratively, the bankers are coming to the table, willingly. Coming to the table with these fintech entrepreneurs to help mentor them, to help coach them, to help guide them, to help mold and shape the solution so that what we call product market fit works for community bankers.

11:50 – Charles Potts

So, we take bankers, we identify real problems, we find entrepreneurs and solutions that can resolve those problems, and then we work collaboratively to make sure that it works. It works for a community banker. And at the end of this process, what you have is a mission-driven and purpose-built solution banks can acquire very easily and efficiently to solve their problems.

12:24 – Charles Potts

Otherwise, and this again, I go back to the shiny object, the classic solution in search of a problem. Otherwise, what’s the point? Why do this if the bankers can’t use these things to meet their needs?

12:41 – David Reiling

Yeah, good point. And I’m a classic shiny object person. So, I identify perfectly with what you’re saying. But it sounds like, I mean, you line this up so nicely for community banks and definitely with the engagement of those banks. What do you see then are the challenges or the roadblocks for community banks adopting, accepting?

13:03 – Charles Potts

Yeah, there’s two key aspects to this. The first is, it is oftentimes overlooked, and that’s the imagination or willingness of the banks to take that first little step. And look, this is repetition. It takes a little repetition. Bringing them, showing them, reminding them. The classic pitch model of tell, show, tell. And so, there’s a little bit of imagination you’ve got to help the bankers navigate so they can see the possibilities and the potential there.

13:43 – Charles Potts

And then the second part is showing them what those baby steps are. Showing them what those– dip their toe in the water, easy crawl, walk, run approaches can be, to get them engaged. And that’s for those bankers that don’t have a kind of innate operation to acquire and consume and integrate technology.

14:09 – Charles Potts

So, you have to take the vast majority and help guide them through a very thoughtful process. And here’s where it becomes key, oftentimes focusing on what you would call the low hanging fruit. What are the areas of least impact inside the bank where they can gain some comfort and competency? Fix something in the back office, deal with something that’s like reporting or risk management or even cybersecurity before you do those kind of heavy forklift projects like a whole new digital transformation undertaking.

14:53 – Charles Potts

And we feel like this landscape and the broad diversity in our community banks allows us to show bankers other success stories and case studies that they can lean into to help them navigate where to start. Because that always becomes the first question. Where do I start? Well, OK, let’s start small. Let’s start in something with limited risk. And then can give them some comfort that they’re taking the right steps forward.

15:28 – David Reiling

So, yeah, that approach is such a good way to introduce fintech in and to get that foothold, if you will, if not just practically, also from a mindset standpoint. So, you mentioned one opportunity of the combo of technology and community banking as being this, there’s no technology barrier from the largest institution to the small. I mean, the technology is out there to be consumed. What other big opportunities do you see for community banks in the fintech space?

16:00 – Charles Potts

Well, so part of our responsibility at ICBA is listening to our banks and making sure we’re addressing a broad set of their needs. And that– and our three pillars at the ICBA are advocacy, education, and innovation. And so, if there are aspects of this that need more education, then we build it and deliver it.

16:26 – Charles Potts

We’ve done some webinar series, we’re doing our own podcast, we’re building more education to help the bankers with this journey and train them on how to acquire, adapt, use, and be successful. Obviously, advocacy where it touches on adjacent areas to these fintech and innovation things, that’s our core DNA, and we do that– do that all the time.

16:57 – Charles Potts

But one other thing that we– one additional thing that we saw last year, actually started hearing about two years ago that we took on an active role in, is how do they invest in these companies? And we, the ICBA and several partners, we all looked at what are the best ways to do that, and we helped form Bank Tech Ventures.

17:22 – Charles Potts

And Bank Tech Ventures is a venture fund that has community banks as its investors. They are the limited partners. It has community bankers and the ICBA, has the general partners who are running and managing the fund, and the fund is investing in bank enabling technology that meets the needs of community banks.

17:42 – Charles Potts

So there’s another way for community banks to actively participate, actively engage and learn more about how to work with these kind of companies, and reap the advantages of investing in a venture fund that can kind of complement the natural R&D, if you will, that comes from what’s happening in this space.

18:09 – David Reiling

Yeah, the Bank Tech Venture Fund is great. I love the whole premise of it and the way it’s set up. It is very cool. It’s something worth checking out. in my opinion.

18:19 – Charles Potts

Well, it is. And I can’t stress this enough, it is a direct reflection of the bankers holding up their hands and saying, hey, how do we do this?

18:27 – David Reiling

Definitely.

18:28 – Charles Potts

And you can’t ask for much more than the bankers giving you direct guidance on really how to improve what’s happening in our community.

18:38 – David Reiling

Yeah. Now, Charles, one of the things that I don’t know a lot about that the ICBA has, but you have the ThinkTech Accelerator. So, tell me a little bit about that. And so, what does the accelerator do?

18:50 – Charles Potts

Yeah. So, the ThinkTech Accelerator is, in fact, this core program where we work– primarily it’s a structured 12-week program. We start early. We’re actually in the middle of right now a kind of selection and evaluation process.

19:11 – Charles Potts

And as I said, we’ll look collectively between ourselves and our partners that we work with and other third parties that are supporters and subject matter experts that participate in this program. We’re looking at 1,200 to 1,500 companies a year. We’ll get applications in, around 300 and 350 applicants. These are early stage companies. So, they already have a product. They already have some customers. They already have some revenue.

19:43 – Charles Potts

For those who kind of know investing structures, we would say these are pre-series A. So, they’ve raised friends and family and seed investments and Angel investment. But they haven’t really taken their first formal investment from a structured venture fund.

20:00 – Charles Potts

And what they’re looking for is, again, this collaborative process, where our bankers have clearly articulated the problems and challenges, and these companies are looking now over a 12-week program that will start early in– our next one will start early 2023. And it’ll run for 12 weeks.

20:22 – Charles Potts

And the companies every day are pitching and refining to bankers, to regulators, to the court vendors, to the marketing companies, the accounting firms, venture capital firms. All of the people that play in this ecosystem, to help ensure that what comes out the other end of this assembly line is going to hit the ground running and serve the needs of the community banks.

20:48 – Charles Potts

That’s the foundation, that’s really the iconic program we run every year. And then we also help take these companies, and we select 10 companies each year. And we help then take these companies on the road. Take them to the state associations, take them to the big conventions, our own conference at ICBA Live, things like Finovate in New York.

21:18 – Charles Potts

We’ll be coming up to Money20/20– by the time this airs, we will just have come out of Money20/20. So, we’ll be there with a number of these companies. And as a fiduciary, we have a responsibility to help continue to promote and grow these companies so they can continue to meet the needs of the community banks that we serve.

21:38 – David Reiling

Cool. So, Charles, let me just boil that down into simplistic mind that I have. So, I have a bank, a community bank, and I have a problem that I think there could be a technology solution. I contact the ICBA and say, can I– I have this problem. Try to detail the problem as best I can. And then would you set me up to meet with maybe a handful of fintechs to try to solve that problem?

22:04 – Charles Potts

Yeah, we do. So, in our strategic solutions group, we already have this robust directory of companies that we’re working with through our bank’s member relations officer. They can either go through the MRO or they can come directly to the ICBA.org website. Or they come to my team and we can connect them with solution providers who address these needs.

22:29 – Charles Potts

And if there isn’t a solution there, we kind of capture this and work to make sure that in our different programming where we might run another mini-accelerator program, we want these bankers to come get involved and help us, again, address these needs, identify solutions, and mold and shape the outcomes.

22:52 – David Reiling

Gotcha. Well, what I’m hearing you say is there’s no reason why a community bank, a, shouldn’t be a member of the ICBA for one. But two, probably give you a call because I’m sure they have a problem that a technology can certainly assist in automation or a customer experience or back room ops.

23:09 – Charles Potts

Yeah. look, and you know this, David. We want to make sure that we’re kind of the first stop. If we can’t find it, we’ll help them find it.

23:22 – David Reiling

Cool. Awesome. So, Charles, I have one last question for you. Given your wealth and depth of experience in financial services, banking technology, what does the next generation, the next gen banker look like to you?

23:38 – Charles Potts

Well, I have this conversation with our community bankers quite often in my cautionary tale to the community bankers out there. The next gen banker doesn’t look like them and has probably never set foot in their branch. And that means we collectively as an industry have to continue to reach the bankers of the future where they are.

24:06 – Charles Potts

That means we need to get involved with the schools, we need to get involved in the universities, we need to get involved and resurrect intern programs. These are mobile native, digital first workers of the future. And they have a whole different view of how financial services and banking should and could and will run in the future. So that next gen banker is not walking around in the natural spaces that we as bankers have occupied in the past.

24:40 – David Reiling

Oh, that’s awesome. I love that answer. Charles, we are running out of time. I appreciate your time and insights today. I know you’re super busy. We really appreciate you making a space for us. I can’t wait to continue working with you in the future. And to our NextGen Banker Podcast listeners, we will see you soon.

24:58 – Charles Potts

Thank you, David, I appreciate it.

25:00 – [MUSIC PLAYING]

25:02 – Becca Hoeft

For this episode’s musical feature, we’re showcasing Centerpiece. Centerpiece is a band grown by two Nashville singer songwriters around love songs for the perfect day. The project features acoustic and electric guitars, soaring vocal melodies, and heartfelt lyrics wrapped up in a modern pop songwriter perspective.

25:23 – Becca Hoeft

Here is ‘Til the End by Centerpiece.

25:25 – [MUSIC – “TIL THE END”, CENTERPIECE]

26:49 – Becca Hoeft

That was ‘Til the End by Centerpiece. You can find more of Centerpiece’s music on Spotify. If you would like your music featured on the NextGen Banker podcast, just email david@nextgen-banker.com with a link to your music and website. Thanks for listening to the NextGen Baker podcast. We’ll see you next time.