Nick Elders Of SPARK On The Future of Money and Banking
An Interview With David Liu
Empathy — So often new technology solutions come into the space that don’t recognize how actual people are doing their work today; the solution providers just assume they have a better way of doing it. Building a solution that takes into consideration what is needed on a human level will be much more successful than one that tries to force an idea without empathy.
The way we bank has changed dramatically over the last decade. It was not too long ago when you had to wait in line in a bank to deposit money. Today things are totally different. You can do your banking without ever walking into a bank. In addition, the whole concept of money has changed. In the recent past, money usually meant bills and coins. But today, the concept of money has expanded to include digital currency and NFTs. What other innovations should we expect to see in banking in the short and medium term?
To address this, we are talking to leaders in the banking, finance, and fintech worlds, to discuss the future of banking and money over the next few years. As a part of this series, I had the pleasure of interviewing Nick Elders.
Nick Elders is co-founder and Chief Executive Officer of Ignify Technologies Inc. Ignify is responsible for the design, development, testing, delivery, selling, and support of SPARK, the cloud-based loan origination platform designed to simplify the process of delivering secure and efficient lending products to small business owners. With SPARK being the only Public Benefit Corporation in the bank loan origination space, Nick is a leading advocate for leveraging fintech innovation to improve economic opportunities for small businesses and is a champion for financial inclusion, especially in underserved communities. Before starting up Ignify, Nick worked in technology strategy, process design, product management, fundraising, investor pitching, business development, team development, and sales for the national non-profit, Community Reinvestment Fund, USA (CRF). At CRF, Nick led the teams that developed the SPARK platform from the first line of code to its use by more than 30 financial institutions.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started in this industry?
I grew up in rural Washington as the second of four kids, and graduated high school in class of 17 kids. I started my first business mowing lawns at the age of 12, and worked trail maintenance for the United States Forest Service at 15. I saw first-hand what it was like to live in an unbanked area when I wanted to deposit my checks and cash into a bank — there weren’t any. We had to drive “to town,” roughly 45 minutes away. It was on one those many drives that I began to think about better ways to do this.
After high school graduation, I moved to the big city and attended Macalester College in St. Paul, Minn., and earned a degree in economics. Eventually I secured an internship in the community and economic development industry at a non-profit organization in Minneapolis that focused on small businesses and affordable housing, helping the underserved gain access to traditional financial services and stable living conditions. Through this experience I connected with the people and places the banking industry was leaving behind. It was in those places that I began to better understand what it was going to take to make a difference and the gaps in the ecosystem that needed filling. It has been a labor of love ever since.
Can you share the most interesting story that happened to you since you began your career?
The most interesting and exciting thing I have been part of, and will perhaps ever be part of, was pushing SPARK into the front lines of the COVID-19 Financial Response via the SBA’s Paycheck Protection Program (PPP). I truly believe it was a program that books will be written about, and movies will cover. Overwhelming, our ability as a small group of humans to have an outsized impact on the world, primarily because of our technology, was truly something special — I’m not sure we still fully understand all the good we achieved. For example, early in PPP, one of our larger bank customers would connect with their business owners over a Zoom call — show the customer the PPP loan submission using SPARK — and wire the money directly to the business so they could make payroll. We witnessed people cheering and crying, filled with emotional relief, all because PPP loans were flowing to businesses in need through our SPARK technology.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
I have two small kids — ages 9, 7 — we watch a lot of cartoons. A memorable quote come from Kung Fu Panda and Master Shifu (red panda). Po (large panda) is struggling with taking on a new and intimidating responsibility. In order to help Po see that he must evolve and push himself beyond where he’s comfortable, Master Shifu offers the following words of advice: “If you only do what you can do, you’ll never be more than you are now.” This idea of going past what you think you can do as being the only way you can be more than what you are really resonates with me. At SPARK, by the nature of our business, we are doing something we’ve never done before, which can be hard but also result in profound results.
Second, Navy Seal Jocko Willink said, “discipline equals freedom.” I interpret this to mean when you are faced with infinite choice and no structure, it’s paralyzing — you aren’t sure what to do or where to focus. You have a continuous paradox of choice. Implementing and following a pre-set schedule becomes what you depend on, and it builds a scaffolding around your life. When you execute on the schedule and becomes part of who you are, there’s less debate about whether you are going to achieve basic objectives. As you do achieve those objectives, it frees you up to spend the remaining time on other things, thus enabling freedom.
Ok wonderful. Let’s now shift to the main focus of our interview. Can you tell our readers about the most interesting projects you are working on now?
Where SPARK has been and where we are going are both important. SPARK started with the ability to digitize Small Business Administration (SBA) loans, which are notorious for being complicated with a lot of compliance rules and regulatory restrictions. Because of the complexity, most lending solutions won’t support SBA lending processes, and that’s how and why SPARK got its start. SPARK has been helping banks and non-profit organizations digitize and simplify their existing SBA lending operations for over 10 years. This has been a challenge because there is a lot to do along the digitization journey, but the market rewards the groups that accomplish hard things and SPARK is a good example.
Now and next, SPARK is helping these banks extend their existing journey by offering a data and machine-driven approach that sits alongside the complicated solutions they’re already offering. These banks trust SPARK because we are able to help them digitize the products and services they are offering today. If we can digitize current product offerings, it makes sense we’d also be able to do the same in a new context, leading them to a brighter future as a result. We also want to bring non-profits along on this same digitization journey. Eventually our plan is to knit it all together so the products and services of both are fully available in a digital context to the small business community.
How do you think this might change the world?
Offering the unbanked and underbanked equal access to traditional financial services will save time, resources, and dollars. But more importantly, it will help them meet their potential. Some unbanked and underbanked don’t even begin to engage with banking institutions because of the lack of trust in the systems that have been established over years and years of abuse. Others try, but once denied, fall victim to predatory products and services such as quick, online loans with high interest rates. Rebuilding trust and providing education on solution options will unlock opportunities and allow financial freedom for these populations. We also need to help the unbanked and underbanked understand that there are local non-profits that can help with capital and become an advisory partner. Help is their mission. Once that education is done, the small business owner can go back to the bank for a new bank product to continue the growth cycle.
What most excites you about the banking or payments industry as it is today? Can you explain what you mean?
The COVID-19 pandemic turbocharged the banking industry and brought forward seemingly 10 years of progress, fundamentally changing the relationship with money, funding, and technology. The idea that banks couldn’t work quickly, citing too many regulations, essentially ended in a week. Everyone that rose up and met the challenge in their COVID-19 response with a digital solution generally won. These lessons on progress cannot be forgotten when COVID-19 isn’t as prevalent in our lives as it once was.
I also believe digital currency is currently where the internet was in the early 1990s — people are wondering if it’s really worth the fuss. It’s still early, but there is a lot of capital supporting Web3, Blockchain and Cryptocurrency, which is fundamentally changing our relationship with digital currency. The future will be more like a Venmo experience, where the world will be able to send money electronically without any additional international fees, but this will also reduce a government’s ability to manipulate currency — something many depend on to implement a legislative agenda. Many governments will have a hard time making that leap to a decentralized, autonomous service, which is why several are struggling with Blockchain and Bitcoin adoption.
What most concerns you about the banking or payments industry as it is today? What would you suggest needs to be done to address that?
As it relates to banking generally, one of the biggest concerns we have is inertia. Older generations running community banks don’t fully understand the change that needs to be made and are somewhat paralyzed by not knowing what to do. I attended a banking convention recently and saw first-hand just how many solutions are presented to these decision makers every day. The problem is that many of these services are individual facets of a whole solution, without offering the whole solution itself. The industry would benefit from some form of gold standard to help cut through the noise, so banks and vendors can rally together and move forward — spending less time evaluating software and more time thinking about how to serve the community.
How would you articulate how the concept of money has changed in recent times? Is it really a change? How is it still the same? Can you explain what you mean?
During the COVID-19 pandemic, with all the stimulus checks being sent out, we saw the first experiments with universal basic income, which was mind blowing as the beginning of a change. With that stimulus several million people were lifted out of poverty, many for the first time in their lives. However, despite these novel approaches to a pandemic, the actual physical movement of currency and cash is no longer a thing and hasn’t been for a while. For the past 20 years we’ve been using a form of digital currency — through digital loans, ACH, auto deposit/auto withdrawal, etc. — we just haven’t been calling it ”digital currency.”
Based on your vantage point as an insider in the finance industry, what innovations should we expect to see in banking in the short and medium term?
In the short term, there will be a lot more focus on the digital experience and less focus on the branch experience. Banks have a unique opportunity to offer a digital experience that is more differentiated in the space, much more like what fintech’s are offering. While I believe the U.S. needs to maintain its position in the world with the dollar functioning as the default and backup currency, crypto and banking will force some form of digital dollar to enter our future. This is something we need to act on before a decision is made for us.
In the medium to long term, I can see banks and others building branches in the metaverse, completely changing the way customers interact, and how and with what they interact.
How has the pandemic changed the way banks interact and engage with their customers?
The pandemic digitized the customer journey with banks and accepted it as a real path. Banks that couldn’t offer a digital experience saw their customers leave and go places that could. People, despite their best intentions can’t scale the same way machines can. We learned that in the industrial revolution and we’re learning it again in the digital revolution. As much time and resources as banks spent establishing their branch network, they’ll need to spend as much time and resources establishing their digital network.
In your particular experience, how has the pandemic changed the way you interact with, and engage your customers?
Everyone has accepted that digital is the path forward. This realization cemented the SPARK business model as a requirement to be successful on the path forward. SPARK is a subscription-based provider that is always changing, never allowing an organization to be left in a bind. Solutions that can’t move at that pace and keep up with continuous updates and improvements don’t belong in consideration.
In my work in the telecom space, I’m very interested in the importance of user experience. How much of your interactions have moved to digital such as chatbots, encrypted messaging apps, phone, or video calls? How has this shift impacted the user and customer experience? What challenges do these apps present when used as a customer engagement tool?
We are still a long way from online scripted chat bots actually being helpful. Humans are difficult to run on scripts, and the chat bot interface adds a lot more friction than it does user delight. Video has clearly taken over during the last two years. Products like Microsoft Teams and Zoom have firm positions in the foreseeable digital landscape.
With so many cloud-based resources, compliance and security is something we must pay more attention to than ever before. Hacking will happen. There are more and more opportunities for fraud and malicious attacks because of the virtue of how many organizations are connected via the Cloud. Banks will get hacked and we all have to be prepared.
If you could design the perfect communication feature or system to help your business, what would it be?
I would design a tool that helps both business owners and lenders better understand each other. Today everyone is monolithic — lenders have money, borrowers want money, and they meet somewhere in the middle. But that isn’t enough. I want to go to a place that allows the two to know and understand that history and pattern of interaction. This would allow the parties a sense of what they’re dealing with before they start a relationship, and hopefully, they get to the end faster — a meaningful financial relationship that is beyond just a transaction.
Fantastic. Here is the main question of our interview. What are your “5 Things You Need To Create A Highly Successful Career In The Modern Finance, Banking and Fintech industries?
- Curiosity — Simply put, if you aren’t curious, you have no future. You need to ask insightful questions to push the envelope of growth in the modern banking industry.
- Depth of Knowledge — Goes hand in hand with curiosity. You need to be more knowledgeable in the entire fintech space and understand more than what your product offers. Knowing how all the pieces fit and work together, and what your role is within that ecosystem, is one way to be successful.
- Empathy — So often new technology solutions come into the space that don’t recognize how actual people are doing their work today; the solution providers just assume they have a better way of doing it. Building a solution that takes into consideration what is needed on a human level will be much more successful than one that tries to force an idea without empathy.
- Malleability — What you’re working on is already out of date. You need to pivot and adjust to respond, and if you get met with an alternative viewpoint that challenges your world view, you need to be able to change and adopt a new world view. “Strong beliefs, loosely held,” as the saying goes.
- Charisma — Technology is very relationship driven. To be successful, in addition to the points above, you need to know how to partner, network and fundraise.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
We all need to start and participate in a movement focused on the underbanked and underserved population of small business owners. This group spends roughly $4 billion a year on unnecessary fees associated with predatory, online financial services. This movement would connect for- and non-profit organizations, helping for-profits understand and recognize that the underbanked and underserved are an opportunity for them, and these individuals could be investing the money spent on unnecessary fees on themselves, their people, the community and other local businesses.
How can our readers further follow your work online?
https://www.linkedin.com/company/spark-ignify-technologies
https://www.linkedin.com/in/nick-elders-6904bb4
Thank you so much for the time you spent doing this interview. This was very inspirational, and we wish you continued success.
