Welcome to the SMB Tech Innovators podcast, powered by Gusto. We explore the intersection of financial services and vertical SaaS strategy and discuss how software combats the rising complexity of running a business. We aim to share stories, advice, and best practices from the leaders and investors behind today’s cutting-edge platforms.
For decades, traditional banking has been a convoluted process for customers.
In the podcast, Jason Zhang, COO and Co-Founder of Mercury, discusses how tech has simplified the banking process for startups and why having a strong opinion about your products makes them better for consumers.
- How Mercury differentiates itself from traditional banks
- The simplified banking onboarding experience that benefits startups
- Are there any downsides to the partner bank model?
- Staying close to customer needs while scaling to ensure meeting their needs
- Conventional wisdom for founders in the scaling phase
Listen to the podcast or read the episode highlights below.
Between having to show up physically at a bank branch and providing an endless list of information, startups need more straightforward solutions to jumpstart their businesses. Jason Zhang explores how Mercury, a pioneering neobank, reshapes the digital banking industry using a distinct approach and unique positioning.
With an educational background in biology, Jason initially faced limited job prospects. He sought opportunities beyond traditional biology roles and eventually found his way to Heyzap. His career trajectory took a fascinating turn when he joined Heyzap. Over time, he expanded his responsibilities, evolving into a versatile team member. These experiences paved the way for his current role at Mercury, where he juggles diverse responsibilities across various business functions.
Differentiating Neobanks from Traditional Banks
Mercury’s core philosophy revolves around being a technology company building banking solutions, setting them apart from traditional banks. They distinguish themselves in three key ways:
- Seamless Onboarding: Unlike conventional banks, neobanks like Mercury offer an online onboarding experience designed for simplicity. The process prioritizes user experience, featuring auto-completion and continuous saving.
- Risk and Fraud as Products: Instead of conventional risk procedures, neobanks, including Mercury, treat risk and fraud calculation as products. They analyze customer activity to create adaptable solutions, reducing friction in the process.
- Creating Seamless “Rails”: Mercury crafts products that connect ecosystem partners to ensure an exceptional user experience. Every aspect is meticulously designed to enhance customer satisfaction.
Navigating Risk and Compliance
Behind every neobank’s flashy front-end features lies a robust foundation of risk management, regulatory compliance, and fraud prevention. Mercury employs in-house expertise and strategic partnerships to ensure smooth operations.
As Mercury expanded, it brought more critical functions in-house while maintaining strategic alliances with banking and payment partners. This approach requires deep collaboration to align with regulatory requirements, such as FDIC or OCC.
The Mercury Vault Example
During a challenging Silicon Valley Bank (SVB) period, Mercury swiftly introduced Mercury Vault, addressing customer concerns about fund security. This feature was a timely response that resonated with customers, demonstrating the advantages of Mercury’s partner bank model. By leveraging multiple backend providers, Mercury created a unified and user-friendly solution.
The Partner Bank Model: Pros and Cons
While the partner bank model benefits established entities like Mercury, smaller banking apps face challenges. Success often hinges on the partnership’s specifics and the partnering bank’s app prioritization. Smaller apps may need help to connect with decision-makers at the partner bank, resulting in complications during onboarding and account management.
Transparency is crucial in these partnerships to prevent customer misunderstandings, especially regarding terminologies like “bank” and “banking.”
Balancing Customer Feedback and Product Vision
Jason emphasizes the importance of developing a unique product philosophy while staying responsive to customer feedback. Striking a balance between understanding customers and crafting a distinct product vision is critical. While feedback is invaluable, it should align with the company’s creative vision to create products that resonate with users.
Scaling Tech Companies – Key Advice
Jason underscores the significance of hiring and cultivating a customer-centric culture across all functions. Mercury assesses candidates for their customer and product instincts, ensuring everyone prioritizes customer interaction and product improvement.
Furthermore, he highlights the value of bringing in experienced leaders to accelerate growth. Mercury strikes a balance between nurturing internal talent and tapping external expertise to address complex scaling challenges.