Bank and credit union data is incredibly useful and almost everyone in the industry needs it. You can find potential customers, leverage it for investment banking, competitive analysis, due diligence, and monitoring the health of the industry. Finding financial institution (FI) data seems pretty straightforward – a good amount is publically reported. However, once you start digging, you will find that it’s not that easy. The dominant provider of this data is SNL Finance, which was acquired by S&P Global for $2.23 billion in 2015.
As with anything in FinServ and FinTech, we like to ask ourselves: who is challenging the old guard? That’s how I got to know FedFis, an FI data provider from Austin (FinTech Cowboys). After learning more about the company, I thought you should know about them too. Typically, this type of story would involve me calling up FedFis’ CEO, Dave Mayo (someone I’ve got to know over the last year), but I didn’t do that. Instead, I spoke with Walt Boyer, who leads investment banking at Mundial Financial Group. Walt has decades of banking experience (37 years, but who's counting?) and has worked first-hand with data from SNL and FedFis.
I wanted to know why he uses FedFis. Walt and I spoke for about 45 minutes so I’ve edited our conversation for brevity and clarity to highlight why FI data and FedFis are worth your attention.
The ‘80s: FI Data History
The ‘80s were an interesting decade for banking (deregulation, regulation, S&L crisis, etc.). Walt sets the stage:
“In the mid-‘80s, there was a lot of bank turmoil in the industry, so the regulators and others wanted to be sure that you as a bank were protecting your bank from the negative condition of another financial institution. If you are a commercial bank, you are required to monitor your bank’s exposure to other banking institutions. You're supposed to be able to measure or gauge the intensity of that exposure, recognize if certain degradation happens, and have a plan to protect your bank. That meant that we needed more financial data on financial institutions.
We were left asking ourselves: ‘How do we measure the banks? How do we recognize and compare a bank’s financial condition – their capital ratios, thresholds, and when to take action?’ It made sense and I wish we were there about 10 years earlier.”
FinTech before FinTech
FinTech isn’t new; it’s just different. Data/actionable information about banks was every bit as useful in the ‘80s as it is today. One of the more fascinating things about Dave Mayo, FedFis’ CEO, is that he’s been helping create the banking data ecosystem for almost four decades. Walt continues:
"The introduction of technology, like personal computers, meant bank data was delivered not in hard copy and bound books but on floppy disks (and later, over the internet). Early on in this process, I met Dave because he was delivering the early versions of bank information systems. He had a unique ability to recognize the needs of his customers and deliver the data that fit my needs."
The next two decades of Walt’s career took him to Amegy Bank, Keefe, Bruyette & Woods, and Alvarez & Marsal where he leveraged SNL for financial data in his M&A, investment banking, and broker-dealer activities. After joining a startup broker-dealer, Mundial Financial Group, Walt needed financial data and naturally wanted to implement what he was familiar with (SNL) but couldn’t afford it, so he turned to Dave.
“I don’t care how old you are, switching to something new after 15 years isn’t easy. At first, I had to think about it in the old system [SNL]. It would have been hard but having the FedFis team hold my hand and walk me through it helped a lot.
“After we got through the initial training, we recognized that FedFis’ data was remarkably thorough – we had all the same core data. I was pleasantly surprised at how experienced FedFis are at understanding how we did things in the old system, like financial models, and moving it over to his platform getting the same result.
“Also, in the cases where we couldn’t make an exact replacement, the team helped us recognize where you can get the data and find new innovative information. Plus, you save a ton of money and also sleep well at night knowing that, you know, once a year, you're not going to get some phone call that you dread where you're going to have to adjust your budgets for the next five years.” [Note: I was quite surprised to find out that FedFis guarantees your price will not increase.]
Admittedly, as soon as I heard “Fintegration Ecosystem,” my interest was piqued. The world of banking data, its uses, and how difficult it is to maintain was enlightening; however, the culmination of 30 years of financial services data coming together with FinTech data of today seemed unique. Walt put it in perspective:
“Something that I have not seen in any other bank data service provider is their Fintegration Ecosystem. Yeah, it’s a mouthful. In short, they are able to provide data on financial institutions’ vendor relationships like core processors, online banking providers, and merchant services.
“I wish I had that 12 years ago when I was a commercial banker doing M&A buy-side deals, because one of the things that really helps you sharpen your pencil with regard to what consideration you can pay for an acquisition is how expensive and successful will a conversion be in terms of compatibility, contractual obligations to vendors, and potential merger issues.”
Been there, done that: What you can learn.
FinTech, and technology in general, has an obsession with the youth and what’s new. We shouldn’t ignore the new tools at our disposal – be it mobile, blockchain, or machine learning – talking to Walt about FedFis and Dave Mayo made me think about the key to a company's success.
After almost four decades of pushing the envelope in providing banking data, Walt attributed FedFis’ success to the ethics of the people on the team. It gave him confidence that they can just “go about their business.” It was one of the highest compliments and perhaps, a sign of a company that truly understands its customers.