Project Description

Seth Marlowe:  Welcome.  And thank you for joining us for today’s webinar, Winning in the Outcome Economy:  Transforming Treasury for Next‑Generation Expectations.  I’m Seth Marlowe, a Treasury Insights Consultant with Wells Fargo, and I’ll be your moderator today.  Whether you’re 25, 35 or 55, I’m sure you’ve noticed some profound change in the past few years.

It’s the convergence of powerful technology trends and the changing expectations and behaviors of younger generations.  Together, they’re driving a seismic shift in how we live, we work and we play.  Simply put, it means that we’re no longer competing based on the features and benefits of the things we offer, but on the impact that those things have on customers, suppliers and employees.  It’s all about the experiences and outcomes, or the outcome economy, as some people call it.  As treasury professionals, we may be tempted to dismiss it as something that only applies to the product, marketing or strategy teams in our organizations.  But in reality, it’s critical to understand what these emerging generations expect, otherwise your product, your payment method, even your brand, could be a swipe away from being replaced.

Today, we’ll talk with what these generational expectations and behaviors are, why they matter, and how treasury can respond.

Joining me in this discussion are Ryan Jenkins, millennial and Generation Z expert, author and speaker; and Kathy Borowy, Chief Financial Officer of Gradifi.  They’re going to provide us some really great information and perspectives to guide us through our discussion today.

First, Ryan is going to lay some groundwork for what we mean when we refer to the next generation of expectations.  Then I’ll drive into how we go about creating or influencing effortless experiences within our organization.

Next, Gradifi will then share how they are transforming the experience for employers and employees in the student loan repayment process.  Finally, we’ll provide some actionable tips on how to find and eliminate friction points in your company, and wrap up by opening the phone lines to hear what questions you may have for our experts.  Let’s get started with some generational perspectives from Ryan Jenkins.  Ryan, great to have you with us today.

Ryan Jenkins:  Thank you, Seth.   Pleasure to be here.   And hello everyone.  When I think about the outcome economy, I think of this simple example:  People don’t want a three‑quarter drill bit; instead, what they really want at the end of the day is a three‑quarter‑inch hole.  Now I’d like to give you some context on how the emerging generations view the outcome economy.  So I’d like you to remember your first Uber ride.  If you’ve never used Uber or Lyft or any other ridesharing service, I want you just to imagine what it would have been like to have experienced your first Uber ride.  So you heard a lot about the application.   You decide to download it one day.   You open the application; you fill out your account profile, put in a profile picture, your credit card information, and then you put in the destination of where you’re heading that day.  And effortlessly you are assigned a vehicle.  And it tells you in real time when the vehicle, the driver is going to come pick you up.  It says it will pick you up in five minutes.

So you swipe over.   You check some email, stocks, social feeds; and in five minutes you receive a notification saying that your car is outside.   You look out the window.   Sure enough, it matches the make and model of what’s showing on the application.  You go outside.   You enter the vehicle and you start heading towards your destination.  Now, as you’re arriving towards ‑‑ close to your destination ‑‑ again, this is your first Uber ride ‑‑ as you’re approaching your destination, in the back of your head you’re thinking:  What happens next? How do I complete this ride? You might be thinking:  Okay, do I need to swipe my credit card? Well, that doesn’t need to happen; there’s no credit card machine in the Uber.  You might be thinking, okay, do I need to reopen the application and execute something and complete the ride? That doesn’t need to happen.

And if you’re a millennial like me, you might really start to panic because you’re thinking, oh, no, does this driver expect a cash tip?  And that’s a problem for us millennials because we left our cash in the ’90s.  So none of those things need to happen.  What ends up happening, and hopefully ‑‑ again this is your first Uber ride ‑‑ you had an experienced driver that actually looks back, looks at you funny and eventually says:  Get out.  And you thought:  Oh, my gosh, that’s it?  You exit the vehicle; you close the door.   The car drives off.  And that’s when the feeling hit you.

Remember that feeling?  It was a feeling of that was effortless.  That was a seamless experience.  And whether you know it or not, and no matter your generation, that effortless and seamless experience is going to become an expectation that’s going to ripple into every other aspect of your work and your personal lives.  However, for the emerging generations who are having more and more of these effortless and seamless experiences at every turn of their lives, that effortless and seamless expectation is rippling exponentially faster, and it’s showing up sooner in the emerging generations.

Thus, they have different behaviors.  They have different values, and they have different expectations.  So the big idea I want you to keep in mind during my portion of today’s presentation is this:  The next generation provides data points into what’s next.  What’s next for your business, what’s next for your leadership, what’s next for your communication, what’s next for your product and services.  Now, more than ever before, understanding the emerging generations provides us data to help us get ahead of the curve so that we can lead, communicate and deliver products and services like it’s the 21st century.  So here’s a snapshot of the U.S. generations.

The middle column is the age of the generations.  On the far right, that’s how large the generations were at their peak.  You notice two asterisks in the bottom right corner.   That indicates these generations aren’t that large anymore; but, rather, that’s how large they were at their peak population.  So it gives you a sense of how the generations stack up.  It’s clear to see that millennials are the largest generation in the United States and are the largest generation on the planet.  Now it’s really, really important to note, when we talk about generations, that generations are clues; they’re not absolutes.  Generations provide big clues on how best to work, communicate, lead, engage across generations; but please keep in mind, generations are clues.  They’re not absolutes.  All right.

So we have our first poll of the day.  You’ll see the question there on your screen.  And you have four generations to choose from.  So just select whichever generation you identify with.  And we’ll see the results here in just a few seconds.  All right.  Let’s look at the results.  Looks like we’ve got Generation X representing the largest majority here, with 43%, followed by close second with baby boomers and millennials and, sadly, no Generation Z.  But that’s okay.  Very good.  Thanks for participating.  We’ll have a couple of polls throughout the day.  So you’ll see more polls in a few.

All right.  In 2016, millennials surpassed Generation X to become the largest share of the workforce.  So now, today, more than one in three workers are millennials.   Staggering, isn’t it? And millennials are just now stepping in their prime working years, and they’re just now stepping into their prime spending years, which is one of many reasons why the millennials are so highly talked about.  So as more and more of the emerging generations enter the workplace, the 2025 workplace is going to change rapidly.  In fact, it’s going to look like this:  Three out of four global workers will be millennials in Generation Z.  So I want you to think about this for a minute:  How different will your industry, your organization or your workplace be when the digital pioneers and digital natives step into decision‑making roles, when they begin stepping into leadership positions.  My gut tells me, and I’m sure your gut is telling you the same thing, it’s going to be massively different.  Perhaps so different that when we look back from 2025, we will barely recognize the 2018 workplace.  So let me give you a few numbers to help you better grasp the behaviors and trends of the emerging generations.

We’ll look at millennials and Generation Z.  24 trillion is the estimated wealth of U.S.  millennials by 2020.  56% of millennials have adopted alternative payment services such as Venmo.  And now switching to Generation Z.  63% of Generation Z doesn’t remember a time before the great recession.  And lastly, 77% of Generation Z rely on tech to help them achieve personal and professional goals.  So a question that might be likely rolling around in your head at this point is:  How do we exceed expectations of the emerging generations? Before I give you some advice or some answers there, I need you to understand this:  That the emerging generations are a critical mass of change agents.  So what is a critical mass? When you have a balanced scale and you finally have enough of something on that scale to cause it to tip, that’s critical mass.  Because millennials are the largest generation on the planet.   Wherever and whenever they show up they tip scales.

Now, that doesn’t mean they’re different or that doesn’t make them unique, because baby boomers were the same way, because of their sheer size they caused scales to tip.  So why are millennials so different? It’s because of two things:  And these two items, these two forces are the greatest disrupters and the greatest equalizers the world has ever seen.  And these two forces are:  Technology and the Internet.  These two items have changed how every single person listening in today lives, works and plays.  It’s changed the game for all of us.  So you place these two ultra disruptive forces on the shoulders of the largest generation on the planet and that, my friends, is the recipe for massive change.  These three forces have created exponential times.  Now, to further flesh out this idea of exponential times, I want to do a quick exercise with you.  I want you to simply think of an invention of the past.  And you can go back as far as fire.

Think of an invention.  What are the few inventions that pop into your brain right away? Now, I bet, for most of you, if not all of you, the inventions that came to mind were physical inventions that impacted our physical world.  Things like an airplane, stopwatch, ping‑pong, car, cotton gin, printing press.  These are probably all inventions that bubble up in many of your minds.  Now, because these were tangible inventions, they had limited capacity to gain mass adoption; and, thus, they had limited capacity to quickly change our behaviors or impact society.

So take the automobile, for example.  It took decade upon decade upon decade for the automobile to be invented, and it took decade upon decade upon decade for it to actually change culture and to impact society and change how you and I live and work.

Now, I want you to contrast all of those physical inventions with many of the inventions that are now happening in today’s exponential times, and many of today’s inventions are nonphysical.  They’re intangible.  Things like software apps and software as a service and Facebook and Amazon, Netflix, et cetera.  These are inventions that are happening in cyberspace, in the cloud, in the digital world.  So because they’re essentially intangible, and because we’re now connected, we live in a connected world where many of us have a supercomputer in the palm of our hands 24/7, today’s digital inventions have the power to change our behaviors and impact our lives in an instant.  So to take this one step further, I’m going to give you a couple examples of how this is happening.

Many of you might recognize this logo.  That logo represents Pokémon Go.  A couple of years ago, Pokémon Go was released; and for those that don’t recall what Pokémon Go was, it was an augmented reality game where people downloaded the application to their mobile device and they could catch digital creatures in the real world using their mobile device.

Well, Pokémon Go was the fastest‑growing application of all time.  In the first month, 130 million people downloaded the application.

And I hope you’re sitting down because this next statistic’s even more staggering.  In the first 90 days, Pokémon Go netted 600 million in revenue.  It was the fastest‑growing app of all time, and it was the fastest to hit those benchmarks of all time.

So it’s an example ‑‑ that type of scale, that type of reach, that type of explosive growth is an example of exponential times.

Another example is Airbnb.  Airbnb is the number one hotel service in the world.  The number two hotel service in the world is Marriott.  Marriott has one million rooms available, and they’ve been in business since 1927.  Just incredible.

The Airbnb has double that with two million rooms available, but they’ve only been in business since 2008.  Again, that type of acceleration is unprecedented, except for the exponential times that you and I live in.   Facebook, some of you may remember on August 24th, 2015 Facebook hit a milestone.  Mark Zuckerberg announced via Facebook that it was the first time that they had one billion users in a single day.  Whoa.  Let’s pause, wrap your head around that.  That means one out of seven people on the planet used the exact same service in a single day.

You and I live in a connected world.  We live in exponential times where things are happening fast.  Now, today, Facebook has over two billion monthly users.  The smart device that you have in your purse, your pocket or in the palm of your hand, that device is 100,000 times smaller, several billion times more powerful than a computer was in the early 1970s.

And lastly, the S&P 500, the average company tenure in 1965 was 33 years.  Now, that’s expected to narrow by 2026 to 14 years.  So by that current churn rate, half of today’s firms on the S&P 500 will be replaced in 10 years.  You and I live in exponential times.

And my friends, these are not the anomalies.  This is the preview.  So let’s go one step further and I want you to ‑‑ we’re going to talk about how the emerging generations, how is that their expectations are truly elevated.  And I want to go back to our first Uber ride example that I used at the top of my portion of this presentation.  And I want you to remember that effortless and seamless experience that you had using Uber for the first time and how it’s going to ‑‑ that’s going to become an expectation that ripples into every other aspect of your life.  And remember that, for the emerging generations, that ripple effect is going to happen exponentially faster and it’s happening sooner.   Well, why that’s happening exponentially faster and sooner in the emerging generations is because, for the emerging generations, they can’t remember a world prior to Uber.  If you can’t remember a world prior to Uber, then Uber isn’t an invention.   Uber is not an innovation; it’s a standard.  That’s where your expectations then start.  Now, that’s true of all of us, no matter your generation.  If you can’t remember what it was like before an innovation, then to you it’s not an innovation, it’s normal.  It’s standard.   And that’s where your expectations start.  So let me give you a couple of examples of how the emerging generations, how their expectations are being elevated.  They’re going to find themselves standing in line at a grocery store, and they’re going to be frustrated thinking this isn’t a seamless and effortless experience because I know Amazon Go allows for walk‑out technology where I can enter one of those stores, grab anything in that store and just walk out.  There’s no lines; there’s no cashiers.  Expectations have been elevated.  Or they might be thinking:  Why do I need to enter into a physical store to purchase something, when Ray‑Ban offers me to just chat with a chatbot and actually try on the sunglasses I’m interested in via augmented reality on my mobile device, and then I can use my generation’s native communication tool of texting to purchase the sunglasses right from a mobile device, or they might be thinking, next time they’re at a hotel:  Why do I have to stand in line to get my hotel key when I came from another property where I was able to download my key in advance to my mobile device, skip the front desk, skip the lines, go right to my front door of my hotel room, use my mobile device to gain access, and use my mobile device to communicate with all of the staff and to use that as my form of communication while on the property for my entire stay.

And, lastly, why should I stay at my employer when I can go to and see all of the other companies and employers that are a better fit for me, that have better ratings, that have better perks and benefits.

You see, my friends, exponential times are holding you and I accountable to deliver exceptional experiences and outcomes.  So if we can’t deliver effortless and seamless experiences, this emerging generation, as Seth mentioned, they’re just a finger swipe away from finding someone who can.

So let’s talk a little bit about the power of experiences.  Did you know that 75% of millennials would choose to spend their money on an experience rather than buying something desirable.

So I want you to just think of yourself and use yourself as an example for just a second.  I want you to imagine you as an individual consumer, which you are, and I want you to go through the scenario of buying a laptop.  Let’s say you decide to buy a laptop.

Well, as an individual consumer, when you buy a material good, like a laptop, your satisfaction starts high and it goes down over time, doesn’t it.

You know, a new update might come out.  The device gets worn.  Its satisfaction overall goes down.  Now I want to you compare with buying an experience, say a concert or a vacation.  Your satisfaction starts lower, but it goes up over time.  The anticipation of the event, your satisfaction grows.  You have the event.  After the event, you have pictures, videos and memories to relive with friends and family.   So satisfaction continues to rise.

So if you asked an economist how to get the most bang for your money, they would tell you buy experiences.  Well, the same holds true inside the workplace.  If an employer views ‑‑ excuse me, if an employee views their employer as a material employer, that would be someone, an employer that used their employees as cogs and wheels or perhaps they oversold the position in the recruiting process.  Well, job satisfaction starts high and goes down over time.   But if the organization’s ‑‑ if the employer is focused on extending an effortless and seamless experience to their employees, job satisfaction is going to start lower but it’s going to go up over time.  Resulting in more engagement, employee satisfaction, et cetera.

So the power of experiences.  And I want to put an exclamation mark on this idea of elevated expectations as we begin to wrap up.  And I want to use a personal story.  I was recently speaking to a group of 300 folks, and it was a live session.  And we were in a Q&A portion, and there was a gentleman in the front row that asked a question.  Tremendous question.

I did my best to answer it.  And I responded ‑‑ I ended my response with this:  I said, “Because if not, your millennial employee will use LinkedIn to find a new job by lunch. ”  I was trying to put an exclamation point after my point, but when I said that comment, there was a brave millennial woman in the back of the room who shouted out, as if on queue, she shouted out, across 300 people, she said, “Why wait until lunch?” Can you believe it? And the crowd fell silent.  They eventually made the connection.  And ultimately what we learned in that moment was this:  Just like you and I are empowered consumers, right, we have a smart computer in the palm of our hand and we can price check in the aisle of our favorite store.  We are empowered consumers now because of technology and the Internet.  Just in the same way you and I are empowered consumers, the next generation of employees are empowered employees.  And if they feel dissatisfied, if they feel disengaged, if they feel disconnected from your products and services, again, they’re a finger swipe away from finding something else.  So the bottom line here is mobile technology and ubiquitous connectivity, meaning connectivity everywhere, has empowered the next generation.  And, thus, it has raised the bar on the experiences and outcomes that we must deliver.

So in closing, how to succeed expectations of the emerging generations.   Before I give you the answer, consider this:  If this always‑how‑we’ve‑done‑it mindset is a slippery slope to irrelevance.   Irrelevant in the eyes of your employees, and now more than ever irrelevant in the eyes of your customers.  So we must keep innovating in order to offer uniquely better and seamless experiences.  Because those are the outcomes the next generation is expecting.  Seth, my friend, back to you.

Seth Marlowe:  Thank you so much, Ryan.  That was a great framework, and I think if you didn’t catch it, exponential times, effortless and seamless experiences, exceeding expectations of the emerging generations and Pokémon Go.

So as you said, well, maybe the early emerging generations were the first to adopt these new ways and these great digital tools, everyone now has these expectations.   Baby boomers even like me, and I’m just on the cusp of that, financial professionals like you, as well as customers, employees, suppliers, across all generations.   Who doesn’t want your time to be well spent, to have choices, to achieve goals as easily as possible.  That’s what I’ll cover next as we look at how treasury can create these effortless and immediate experiences.

In finance, we’ve already come a long way.  Today, you can pay in the blink of an eye, protect your data and funds, resolve problems day or night, apply real‑time insights, even leave the routine work to robots.

So from faster payments and biometrics, to self‑service apps and artificial intelligence, the transformation to effortless and immediate has already begun.  Do you know what all these examples have in common?

A shift in outlook.  A willingness to challenge the status quo.  If you take away only one thing from our discussion today, this is it:  In order to meet next generations expectations, treasury professionals and companies as a whole really need to broaden their perspectives.

The good news, today there are far fewer limits on what’s possible.   And emerging generations, they know it.  Odds are, if you can dream it up, somebody can design and deliver it.  If you think that change is occurring fast and furiously, you are not alone.  The convergence of powerful technologies has totally upended our expectations.   With innovations like these, a whole range of new experiences become possible.

Analysts predict 28 billion devices will be connected to the Internet within the next three years.  I’ve even seen some reports putting the number at more like 50 billion.  That’s computers and smartphones, cars and refrigerators, fitness centers and biometrics, healthcare devices, even industrial manufacturing.  The bottom line for treasury, if you’re not familiar with these concepts and actively thinking about how to integrate them into your payments, your cash management and your customer and supplier processes, let’s not forget the employees, you’re likely going to be left behind.

So where do you begin? It’s all about looking for ways to reduce your friction points so people have interactions that are effortless and immediate.  Take any process or experience at your organization, then consider where you can save time, eliminate steps, anticipate a need, personalize the experience, increase access.

For example, what’s the process to onboard a new supplier for payments? Does it require hand‑offs between multiple departments?  Paper forms that need to be scanned and saved, and don’t forget the data entry.  Does it default the payment to checks rather than an electronic method?

These are simple opportunities to reduce friction points and improve experiences.  Change doesn’t have to be complicated in order to be effective.

All right.  So we’re going to have our next poll, and so we’ll check in with you.  Where does your organization have friction points?  I’m going to ask you to choose one best answer.  The choices are:  In customer experiences, in supplier experiences, within treasury management processes, with other departments.  And we’ll give everyone just a moment or two to make their selections.  And I would hum the Jeopardy song but I’m not really good at that.  We’ll give you another couple of seconds here.  And pencils down.  So all organizations have friction points.  And it looks like most of you flagged “within other departments” as the primary choice.  Oh, it’s them, it’s not us.  And in the customer experience.  No surprises there.  Reducing complexity brings benefits for your company, for your customers and for your employees.  And it helps you to become a brand of choice, a place where customers want to do business and to engage in routine top talent.  Ryan just talked about that.  To be a place where employees want to work because they’re just a few clicks and swipes away from another job.  On the operational side, simpler experiences help you boost customer satisfaction.  In fact, a recent study showed that when companies reduce complexity in their systems and customer engagement processes, customer satisfaction increased by more than 83%.  And you know, you can also lower operating costs.  That very same study showed that a 200‑employee company could save $1.1 million a year as a result of time wasted navigating between multiple systems.  Let’s look at three areas where friction typically exists and where shifting your outlook can bring benefit.  Moving from industries to ecosystems, from products to experiences, and from processes to outcomes.

First, industries to ecosystems.  Ryan touched on this.  Lines between industries are blurring, and companies no longer have to stay in their lanes.  New mashups disrupting traditional ways of doing business.  For example, tech innovators like Google and Apple are teaming up with traditional automakers to introduce self‑driving vehicles.  Amazon just formed an alliance with JP Morgan and Berkshire Hathaway to streamline healthcare.  Companies are branching out in all kinds of unexpected ways.   No matter what your business model, this shift means you’re no longer measured solely against your direct competitors, but compared against any organization that delivers an optimal experience.

It means looking beyond your own industry to understand what the real expectations are.  It means being open to collaborating in new ways and with potentially different players.

Now, younger generations, as Ryan mentioned, put much more value on end goals and experiences than on products.  And that’s our second shift.  For treasury, products are really about how your company buys and sells, manages the company’s assets.

An easy way to gain a new perspective is to put yourself in your customer’s position.  For example, a product that a bank offers is a mortgage.  But what the customer wants is the experience or outcome of buying a home.

A mortgage is simply a step, maybe even a friction point, on the way to that end goal.  You may offer a service like auto repair.  It’s necessary and useful but what your customer wants is to get from point A to point B with reliable transportation and not having to worry that the repairs are going to need to be repaired again.

So consider briefly what your company really sells, then think about how you can help your customer or your suppliers or your employees have a better interaction and experience.

And I’ve got a quick real life example.  We recently worked with Allstate Insurance.  Their product, of course, is insurance or specifically making claims payments when a policyholder incurs a loss.  From the customer’s perspective, it’s all about finding your way back to normal after disaster strikes.

Allstate realized traditional payment methods were a major friction point.  In major catastrophes like hurricanes, banks can be closed or damaged.  You might not even have a way to get a bank, to get to a bank to cash a check.  You may not even have a mailbox any longer.

Likewise, unless you’ve memorized your bank account and routing paper, an ACH payment may not be all that feasible.

Ah, but faster payments were the solution.  Allstate adopted two methods:  Push to card and Zelle.  Now with only a debit card number, cell phone number or email address, Allstate can transfer the claims payment securely and electronically.  Customers get their funds in minutes, not days.

The product still has the same name.  It’s still insurance.  It’s still claims processing, but the customer experience is vastly different.

Processes are the last opportunity.  And finance is full of them.  Your processes should be effective but also seamless and invisible.  Here it’s helpful to ask the question why.  We’re all familiar with cash application, right? But why do we do it? You post payments to maintain strong operating cash flow, update your customers’ records and drive the accounting and to eliminate disruption for your customers.

The last thing you want is your best customers to be trapped in credit hold because of your inefficient cash app processes.  Other processes like fraud and data protection are just as essential.  But do your stakeholders need to be involved in all of those steps.

They just want to be confident in your security and trust in doing business with you.  Once you understand the outcome, you can think about different ways to achieve it.  Ways to move beyond the status quo.

I’ve got one more process example.  And that’s cash forecasting.  We do it to make investment and borrowing decisions with confidence.  That means you need a certain amount of data.  It has to be current and accurate.  You need to put it in a format that’s easy to understand.  What you don’t need is the effort of putting all that information together.

There are several emerging technologies that can transform this experience and that you can adopt without a ton of expense or IT intervention.  Two that I’ll mention are robotic process automation, or RPA.  And application programming interfaces, or APIs.  These digital tools can save you time of downloading and uploading data files.  They can extract and manipulate data between systems.  Even automate report formatting.  I like to think of it as macros on steroids.  The outcome from all of this, treasury spends its time and talents on strategic decisions and taking action, rather than hunting and gathering and manipulating data.

What it boils down to again is taking a fresh look at your ecosystem, experiences and outcomes in order to reduce the friction points for your key audiences.  Where can you substitute status quo for effortless and immediate.

So we’ve talked a lot so far about these disruptive innovative companies.  One of the things they have in common is that they’re not afraid to reinvent established ways of doing things.  They’re pretty fearless in how they think and act.  They see opportunities where others see barriers.

There’s a lot we in treasury can learn from these innovators.  Kathy Borowy, Chief Financial Officer at Gradifi, has embodied that transformation, helping her company launch a brand new employee benefit powered by a new payments platform that serves both employers and millennial‑aged employees.  Kathy, it’s great to reconnect with you.  We did some solutioning together with your team during the prelaunch of Gradifi, and I’m really excited to hear the rest of the Gradifi story.  Kathy.

Kathy Borowy:  Thank you, Seth.  The statistics are hard to ignore.  Last year, 44.2 million Americans carried student loan debt.  For the class of 2017 graduate, the average debt now tops $37,000.  Forbes called it “America’s crisis.” That’s because total student loan debt in this country now exceeds both credit card and auto loan debt.  It’s a burden that significantly impacts young professionals.  Those numbers and the impact they have not just on millennials but on their families, their employers and even our society as a whole, those numbers are the reason that Gradifi exists.

Seth Marlowe:  Kathy, Gradifi was launched in 2014 by founder Tim Demello.   And, Kathy, you joined the company in May of 2015 as just their fourth employee.   Being there virtually from the beginning, tell us about Gradifi’s mission and growth.

Kathy Borowy:  Sure, Seth.  Our mission is to help organizations attract and retain talented employees and together to tackle that $1.4 trillion student loan crisis we have here in the United States.  We do this by enabling employers to make direct contributions to their employees’ student loans through the Gradifi platform which accelerates the pay‑off of the debt.  We’ve grown since 2014.   And today we have 45 employees.  The finance department is two people, myself and a person who doubles as a senior accountant and financial analyst.  As a company, we have marketing, sales, technology, operations and customer support, all the functions of a full business model.   We’re just very lean.  In December of 2016, we were acquired by a bank and now operate as an independent wholly‑owned subsidiary.  College has become more expensive, yet at the same time absolutely essential.  A Bachelor’s degree is still the cost of entry into the modern workforce.  So student loan debt has a huge impact on someone’s life.  At the individual level, it influences short‑term decisions like renting an apartment and longer term decisions like buying a house, starting a family or saving for retirement.  At the macro level, it contributes to a big societal problem.

Seth Marlowe:  You are so right about that, Kathy.   As a parent of three, one who is done with grad school, one who has another year of college and a third who is two years away from college, I can totally relate.   And the costs keep going up.

Kathy Borowy:  Student loan debt is why traditional employee benefits such as 401(k) plans are less attractive to millennials.  What is valuable are opportunities for their employers to help pay down their student loans.  Nine out of ten employees would say such a benefit would positively impact their decision to accept an offer, recommend an employer or stay at their job.  That makes our employee benefit program and payment platform attractive to employers and employees.  Seth and Ryan both talked about shifting to a new mindset.  That’s where millennials are leading us, and it’s where business is heading.  For Gradifi, it’s all about shifting how we think about student loans.  Moving from this view that paying for college is an individual concern to a broader perspective where employers, families, even communities can all be part of the solution.  We make it possible for employers to direct their student loan pay‑down contributions to the respective student loan servicers of their employee’s debt, swiftly and accurately.  That’s the outcome or experience that Gradifi provides.

Seth Marlowe:  Kathy, tell us how it works behind the experience.

Kathy Borowy:  Sure.  The math is simple.  A company contributes, for example, $100 each month to the student loan account of their employee’s.  And this is applied to the principal on the student loan.  Employees continue to make their own monthly payments, and with this approach the loan can be paid off 30% faster and total loan costs reduced by 30%.

Specifically, Gradifi has created an employee benefit program called the student loan pay‑down plan, or SLP plan for short.  The SLP plan is powered by the Gradifi platform.  Today, more than 350 employers offer the benefit and use this platform.  Employees receiving the benefit also use the platform to register their student loan accounts, track payments made to their loan accounts by their employer and leverage other related tools and resources.

We’ve also built relationships with more than 100 student loan servicers, including the nation’s largest organizations.  Each month we process millions of dollars in loan contributions.  However, from day one we work to architect our technology and processes so that the outcome is an efficient digital experience for everyone involved.  Gradifi’s technology and processes were also built for scalability.  We’ve been in market just under two years.  As more employers realize the recruiting and retention value of a student loan repayment benefit for its millennial employees, we expect to have thousands of employers on our platform and increase monthly loan contribution payments by a factor of 10 to 100 times of current rate.

Millennials, of course, are a huge focus for us.  We aspire to create a set it and forget it experience that caters to their expectations.  Our platform uses responsive design.   So it works seamlessly on mobile devices.  The onboarding process for the employee takes less than ten minutes.  They use our secure website to enter their loan information and after that all they have to do is consume the benefit.

We have other resources as well.   The marketing team creates monthly engagement e‑mails so participants have a tangible reminder of their employer’s contributions.  Our website lets them see cumulative payments and access additional content about financial wellness and debt counseling.   All kinds of tools and resources related to smart management of student loan debt.

Employers are another critical audience.  Getting hands‑on feedback from our employers was instrumental in our initial launch and now as we enhance and fine tune ourselves.

Seth Marlowe:  So that’s very forward thinking from the get‑go.   But tell me, what was the experience like for your team and your initial customers.

Kathy Borowy:  Sure, Seth.  In the beginning we did a three‑day on‑site planning session with a large pilot customer.  We brought a team to work side by side with their human resources, payroll, accounting finance and technology teams.  We had a solid idea of how we wanted to execute the technology and enrollment.   But before we finalized the platform, we laid it out to them to vet the business model and processes and align with how they expected to work with us.  We looked at everything from the user experience, to security and controls.  That firsthand experience was a good way to put us to the test right out of the gate.

For our treasury management and operations teams, an effortless and efficient experience was just as important.  We knew early on that applying proven payment technology would be faster and simpler than coding from scratch.  We knew that to reach profitability and scalability that we aspire to, we had to have a solid technology platform that could execute high volume payments.

We talked to three banks, and we told them that we wanted the ability to send files electronically for the bank to execute our payments.  The Payment Manager Service from Wells Fargo stood out.  It was the most comprehensive and robust.

We integrated the Payment Manager Service with our platform, and that allows us to send one aggregated payment file each month.  The file contains thousands of payments in check and ACH form and the bank pushes them out to loan servicers which pays down each employee’s loan balance.

Seth Marlowe:  Now, as I recall we talked about both batch file and API‑based payment capabilities.  Wells Fargo was just into our API payments pilot.   So while your CTO got really excited about the prospect of doing this with our brand new APIs, you all decided to go with the tried and true batch file approach of Payment Manager.

Kathy Borowy:  Yes, that is correct, Seth, but we do need to revisit those APIs in the future as we continue to scale the business and the platform.  So going back to our payments process:  The beauty of the services like Wells Fargo for a lean team like ours is that we can issue thousands of payments on behalf of our employers to the student loan accounts of their employee, but we literally have just a few financial transactions per month.  It’s equally convenient and efficient for the loan servicer because we issue a single aggregated electronic payment which covers contributions for multiple employers for dozens or even hundreds of loans.   Then, to support straight‑through processing, we also send a separate payment roster that tells them how to apply those funds.  The Payment Manager Service has a remittance feature.   But we opted to develop our own digital solution because every servicer uses a slightly different file format to apply payment.  For employers, each month, on the Gradifi platform, we provide them with a roster of payments for their eligible employees.  Once the employer approves the roster, we initiate an ACH debit to each employer’s bank account.   It’s fully automated and it provides funding of the contributions to Gradifi in advance of when we make payments.  As I said earlier, we have a small team in finance.  So it was collaboration right from the get‑go.  It couldn’t be finance working in a silo.  We had to partner to make things happen.  I work closely with my counterparts in IT, operations and marketing.  It’s definitely a joint process between treasury and operations as far as enrolling employers, pulling in their payments and executing payments to the servicers.  And of course Wells Fargo is involved as our banking resource.  You need the right subject matter experts pulled into the process.  The bank invested time to understand our business model and showed us a way to scale in the future.

Seth Marlowe:  I have to admit, it was so much fun to be there with you during the prelaunch and certainly nice where payments are an integral part of the business as opposed to the vast majority of payment projects seen mostly for accounts payable.

Kathy Borowy:  Thanks, Seth.  Technology, as you know, is integral to almost everything finance does today.  So a good relationship with your IT department is essential.  And in addition to a collaborative approach, here are three things I recommend.

These can apply to a customer‑facing solution or to transform a back office treasury process:  First, having a shared vision.  A focus was critical.  You have to get people energized and excited about what you’re doing, especially on your tech teams.  We have to remember not everyone is naturally enthusiastic about the payments space.  Outcomes and experiences are a part of that.  How the work that happens behind the scenes or in the back office really does impact a customer or employee’s experience.  For example, the developers couldn’t just build.  They had to understand the full business context of what we were trying to develop, understand it from our end and from the customer perspective.

Second, taking an iterative approach to design helps us fight things off in a manageable way.  We never think of anything as done.  Instead, we ask:  What’s the smallest thing we can enhance or release right now that moves us toward the end goal.  Lastly, make sure you look at current technology.  We found a lot of banks had stale technology and that turned off our tech team.  They wanted to be involved with something contemporary.  We chose technological capabilities that were far more advanced, and that helped keep our development resources engaged.  That’s what’s worked for us.  Thanks for giving us the opportunity to share the Gradifi story.  Seth, I’ll hand it back to you.

Seth Marlowe:  Kathy, thank you so much for sharing the Gradifi story.   You’ve given us some practical advice and shown us some great examples.  Just making it possible for an employer to pay down a student loan is pretty transformative.  I’m sure we can all agree on that.

We’ve touched on a lot of big ideas today, and you may be feeling a bit overwhelmed out there.  But pivoting your organization’s processes and experiences doesn’t have to happen in one giant leap or require an extensive technology investment.  And, most importantly, you don’t have to do it by yourself.

So we’re actually going to have one more, quick poll before we share some closing thoughts.

Kathy stressed how essential it was for treasury to collaborate with internal and external resources.  So the question here on the poll is:  Where do you see the best opportunities to increase your collaboration? Here are the choices:  Seek input from other generations.  Reach out to the IT department.  Learn from subject matter experts like your bank, accounting firm or other resources.  Participate in a pilot project.  And, lastly, ask customers or suppliers for feedback.  We’ll take a look at the results in just a moment.

That Jeopardy music again.  Doo‑doo‑doo, you don’t want me singing.  Okay.   Hopefully everyone has had a chance to make their choice.  So let’s take a look and see where you believe the greatest opportunity for collaboration is.  And interesting:  Learning from subject matter experts.  Why recreate the wheel when you can learn some best practices from key partners like your bank, accounting and consulting firms and other resources that are out there.

I think that’s certainly a strong way to go and something that Wells Fargo is always available to help you with.  Meeting expectations in an outcome economy does require you to transform the way you view the world.  And that means broadening your perspective beyond your industry, beyond treasury, and conventional competitors.  It means adopting a millennial mindset that cares about outcomes, ease and experiences, more than products, back‑end processes and narrow definitions of roles.  It means embracing emerging technologies and using your existing systems and new digital tools in fresh ways.  It means thinking like an innovator, by finding and eliminating friction points, by seeking ways to simplify complexity, by envisioning what’s possible and challenging the status quo.  This is a decision on your part.  Not a title.  Anyone can be an innovator.  Fortunately, you don’t have to figure it out on your own or do it all at once.  You can start by reaching across the aisle to enlist the support of your IT team, operations, marketing, all within your own company as well as external resources like your bank.

Most importantly, by paying attention to the mindset and input that comes from our younger generations, that becomes the key.  All these individuals are your allies in this transformation.

If you would like more information on today’s topic, I’d like to invite you to visit the Emerging Commerce section of our Treasury Insights website by clicking the gray link icon that’s at the bottom of your screen or you can contact your treasury management representative.  Before we move on to questions, if you attended this webinar online today for 50 minutes or longer, you’ll be eligible to earn 1.2 CTP credits from the Association for Financial Professionals and one CTE credit from the National Association of State Boards of Accountancy.  You’ll receive your confirmation of attendance certification as well as a link to the replay of this event via email within the next two business days.

And now I’ll open it up to our audience for questions for our speakers.  We’ll try to get to as many questions as we can in the time that’s remaining.  Dierdre, if you can provide instructions for asking a question, that would be great.

Operator:  And at this time if you would like to ask a question, please press star 1 on your telephone keyboard.  That is star 1 to ask a question.  If you would like to withdraw your question, you may press the pound key.  And we’ll pause for a quick moment to compile the Q&A roster.  And your first question, caller your line is open.   State your name and your company.

Question:  Carmen Zuko, Irvine Company.

Operator:  Please go ahead with your question.

Question:  Currently we have an issue with bill pay in that the banks are sending us checks.  So we push the consumer to trying to do an electronic payment but we’re getting checks from banks.  Do you know if there’s anything in process to change that.

Seth Marlowe:  This is Seth.  I’ll take that question.  Yeah, there are a lot of ways to get those kinds of bill paychecks converted over to an electronic payment.  And there’s definitely solutions that Wells Fargo offers that can specifically solve for that issue.  It’s fairly common.  I would suggest you reach out to your Treasury Management sales consultant and they can talk to you in detail about how exactly those product offerings work for you, and we can definitely take care of that.

Question:  Okay.  Because it’s kind of odd that the banks are sending those checks when you know the consumer is trying to be electronic.

Seth Marlowe:  Yeah, it’s one of those situations ‑‑

Question:  All the banks.

Seth Marlowe:  ‑‑ the connecting the dots between the consumer and the biller is just not there.  And so there are ways to be able to tighten up those connections so that it will end up converting to an ACH.

Question:  Okay.  Great.  Thank you.

Operator:  And your next question comes from the line of Maraj N.

Question:  Good afternoon.  My question is for Ryan Jenkins.  It’s about the digital currency market.  The fabulous growth we’ve seen in the digital currency market in the past one year, where do you see this market going when you talk about exponential growth? How do you see the digital currency market fitting into that?

Ryan Jenkins:  Yeah, good question.  You know, I think it’s ‑‑ anytime you try to look ahead it’s really hard to predict things, especially as quickly ‑‑ as fast as things are changing, as quickly as things seem to be pivoting.  But I think as we move forward, any friction point, any wrinkles are going to be smoothed out.  So I think I like to go back to the example of the Amazon Go.  Right? It’s a frictionless ‑‑ it’s walk‑out technology.  The same thing with Uber, right? There’s no exchange of any money.  I’m not swiping anything.  It was done in advance.  And now I don’t have to think about it.  So I think that’s where we’re going to be heading in the very near future is just having more of that in the places where we don’t have it now.  So just more effortless, more seamless, moving forward.

Question:  Thanks.

Ryan Jenkins:  You bet.

Operator:  And there are no further questions from the phone line.

Seth Marlowe:  Okay.  Thank you, Dierdre.  So I’d like to thank our two folks that asked questions, and we are now out of time as well.  So I’d like to thank our speakers, Ryan Jenkins and Kathy Borowy, and our audience for your participation today.   And I look forward to hearing about the innovative thinking that comes out of our discussion today.   And I’d like to wish everyone a really great day.  Thanks, everyone.

Millennials and Gen Zs expect life to be fast, frictionless, and managed with the swipe of a screen. Their expectations for seamless experiences and exceptional outcomes have set a new standard for all businesses — one that requires treasury to shift its mindset, work more collaboratively, and become agile adopters of technology.

For more information, contact your Wells Fargo treasury management representative or fill out the Contact Us form on this site.

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