Hi guys. Welcome to the Fintech Coffee Break. I’m your host, Isabelle Castro, and today I shared my coffee break with Robert Mann, Co-Founder and CEO of Standard C.
Standard C is a compliance and risk management software and advisory service for small businesses and community banks. Focused primarily on high-risk and complex businesses, Standard C establishes a digital identity for them, enabling streamlined access to financial services.
I spoke to Robert about how they implement technology to help them do this.
Isabelle Castro – Hi, Robert. Welcome to the show.
Robert Mann – Thank you, Isabelle. A pleasure to join you today.
Isabelle – It’s really good to have you on. So to start with, what gets you up in the morning?
Robert – Well, like most founders, we don’t sleep that many hours. And what I’ve learned over the years is that very often, in the evening, I will kind of reshuffle the deck of the day, what happened, sort my cards, and come to some revelation about how to solve a problem.
So it usually wakes me up as I wake up at two or three in the morning or four in the morning and say, Wow, that is the solution to this problem. I run downstairs, get my cup of coffee and take notes. Sometimes that allows me to go back to sleep. But often, I’ll dig in there.
That is how we really got to the key differentiating factor about what we do at Standard C, which was the pain point that I saw with both small businesses of every type and small community banks. And we’ll go through why small community banks and credit unions are really essential to providing access to small businesses later on. But it’s there where I realized that we could create this digital signature for a company, really, almost the genetics of the company, that phenotype showing everything that a bank or credit union or a lender would need to evaluate open an account in an easier way. So that came out of that wake-up that we discussed.
Isabelle – Okay, cool. Well, it sounds like a really productive and positive way to start your day. I wish I had that. takes a bit more than a bit of coffee to get me out of bed. But yeah, so you found it Standard C, tell me about that process. Because you had this idea? What led you to this idea? How did you get that aha moment, and where did you go from there?
Robert – It’s a great question. So I was retired, and trying to be retired. However, for serial entrepreneurs, it’s really hard to do that. And I ran into a good friend. And he asked me what I was doing. And then I said, “Well, I’m retired.” He said, “Well, you can’t retire,” I said, “Well, Richard, you’re retired. Why should I not be able to?” He said, “Well, why don’t we look at something together?”
His name is Richard Laiderman. And Richard was the head of Global Treasury at Bank of America, Head of Global Tricia visa, very knowledgeable, thoughtful guy. And as well, I should listen to Richard if he has an idea. And what we realized was that there was a provenance problem on data for small companies, where you can go to. LexisNexis are the big global leaders and have data companies and good data on large companies and well-established companies, but there was nothing there about a small company. And that made it very hard for these small companies, especially in emerging markets, to secure standard financial services at reasonable costs.
So basically, we realized that we could use technology to level the playing field, both for small banks and credit unions that don’t have access to the technologies that the giant banks have. And for small businesses that didn’t have the staff or means to meet all the requirements to attain new financial services. So to answer your question, it was to level the playing field for small community banks and for small businesses of all types
Isabelle – And how Do you specifically go about doing this? What is the kind of process that the client will go through?
Robert – Well, the core of the system is that we allow small businesses to self-declare a business identity around their founders, their investors, their financials, their customers, even their vendors.
We package that in this portable identity that is absolutely reusable, by the way, so that once that company establishes this digital identity, we validate it, we then call it the standard see credential. And that can be used to open bank accounts, payroll accounts, loan guarantees, of legal services in a much faster mechanism, it’s almost a passport to get these services.
So the mechanism we use to level the playing field for the small business is to create this digital identity. And for the small community bank, they just don’t have the technologies that the mega banks have. We want to provide technology so they can read that digital identity, and understand it share it between business development, share it between compliance, which by the way, is not shared at all. Now, they live in siloed worlds. And quickly decide whether to open the account or not.
And then that same digital identity is continually enriched with new data that allows the financial institutions to manage transactions to simplify their exams and audits, with the end goal of reducing their cost structure, allowing them to open more and more accounts and more complex businesses without growing their staff.
Isabelle – Okay, this sounds really amazing. You target higher-risk businesses, as far as I can see, including things like cannabis businesses, which I’ve seen quite a lot of press on. This was your initial focus, right?
Robert – So when Richard and I first looked at what we would tackle, we said, let’s tackle the biggest problem in banking. And at the time when we started the company, banking for legal cannabis licensed cannabis companies was almost impossible. The compliance requirements were so hefty it was expensive and difficult. So we decided, okay, if we can solve that problem, we can solve the problem for any other type of company, whether it’s, you know, a cryptocurrency company or just a Mom and Pop small business that doesn’t have the data around them to secure services. So that was the origin of the cannabis piece, which is still a big chunk of our business.
Isabelle – Okay. Okay, this makes sense. I understand where you’re going with this now. So a lot of the factors that you kind of came up against in or built for in the cannabis industry, you can use them for other high-risk and underserved areas.
Robert – Absolutely. If you look at our technology stack, we only have one element of our technology that looks at the detail of the cannabis companies, which is their license status. All the other factors of ownership, financials, and vendor analysis, are the same for every business.
So our platform is universal. And we just have this one special niche setup for cannabis. And that’s allowed us to attract some large customers, including one of the largest payroll companies in the world, which had a problem where their sales reps would go sell, and they didn’t always know it was a cannabis company. Or they didn’t disclose it. And we started with them in a pile about 18 months ago. They now have over 750 cannabis businesses there. And our platform is now used to connect the Salesforce data for the prospect of a business development person pretty soon with the compliance needs of the compliance department that has to approve the account. So we can expedite that new account opening and assure this payroll company’s bank that they have good compliance policies for all their customers.
Isabelle – Okay, cool. There’s, I saw there was a particular kind of focus on accessing the business loan. Yes. Tell me more about this.
Robert – Yeah. So so, that’s a current pilot program. We have it in California, where there’s $1.2 billion available for loan guarantees. And the way this works is if a bank wants to make a loan, but the customer, let’s say it’s a small business, doesn’t quite have the credit history or data to support a business loan. That bank, through our system, can apply for this loan guarantee or the state. And that loan guarantee will guarantee up to 80% of the loan amount. So it allows small, small community banks to make loans to higher-risk customers, customers without data, and to enlarge their lending capacity.
So we are very hopeful that that will open up lending to small businesses of every type, especially now where there are so many changes in the economy, where people really need cost savings, they need the availability of cash, and access to capital, which can be difficult to achieve.
Isabelle – Yeah, I was gonna say, in the current kind of macroeconomic climate, this must be really helpful for everyone involved. Right?
Robert – It is. We were shocked to learn that most banks and credit unions were unfamiliar with this program.
Isabelle – Really? Okay. Yeah. Why do you think that is?
Robert – I think that, you know, the state of California doesn’t necessarily promote what they do efficiently. That the entities that facilitate the loan guarantees are small. They’re generally nonprofits, and they won’t have access to a lot of technology. So we’re hoping to expand the awareness and also the technology they need to really expand their programs. Up till now, all the paper was managed manually, fax and email, real documents. We’re digitizing that whole process to expedite it and lower their costs as well.
Isabelle – Okay. What are the major challenges that you’ve come up against in doing this?
Robert – I’d say, you know, the major challenges are that financial institutions adopt new technologies very slowly. Okay. Yeah. And that this concept of a business identity, this credential, this digital object, is a new concept for everyone.
To the best of our knowledge, we’re the only company, the only technology doing this now. So it’s a new technology, it’s it can take some time to bring to market. You know, Isabella, that that changed quite a bit recently, in that when we started selling about a year and a half ago, banks would say, Well, who are your other customers? And I said, Well, we don’t have any. You’re the first. And now we’re in a place where we have a track record. We have existing customers. So we think that adoption will be expedited now and that we should be past that problem.
Isabelle – Okay, cool. Is there any kind of more technological advancements that you’re excited about that may feed into what you’re doing?
Robert – All right. I, I’d say that there are more and more good data feeds and good data available, mostly in startups. And we’re trying to leverage that data now and create partnerships with those emerging technologies so that we can continue to enrich that digital object, that centered Standard C credential.
Isabelle – Okay, and what do you hope to have achieved within your sector within the next 10 years?
Robert – So what our objective is, create this data standard for the credentialing of businesses. And right now, there is no standard. Okay. And we do that, in this digital format, to enable near real-time access to a wide range of business services. There’s no need for someone to have to wait a month or two months to get approval on a bank account. We can turn that around within days with the adoption of this digital object, and the acceptance of the standards that we’re creating now.
Isabelle – Wow. Okay. Is there anything that you think will get in the way of that? Because I mean, it sounds like you’re about to do this already, that you’re already doing this.
Robert – You know, I’ll just say that for all the other fintech entrepreneurs out there. The venture market has completely changed over the last year, and months. And we as entrepreneurs, have to validate revenue growth. We had to validate profitability in a way that may not have been quite needed earlier on. And so we need to meet that challenge to get the type of funding we need to continue to develop the technology work together across fintech sectors.
Isabelle – Okay, cool. What’s your favorite quote, and why?
Robert – My favorite quote is be happy while you’re alive.
Isabelle – I love that quote, I can, I can see how you follow that as well. You’re just all smiles.
Robert – Well, you know, you can be healthy and unhappy. I don’t care. I wouldn’t want to be healthy and unhappy. You can be wealthy and unhappy. What is it? So I think happiness is the key. And there’s no, you know, there’s no guarantee of an afterlife. I hope there is. I feel like there’s a place for me after this world, but just have to be happy every day and try and express that with everyone you work with.
Isabelle – I love that. That’s great. I’ve got one final question for you, which is the curveball question. You’ve had a really varied life, which did not has not ended in retirement, like you had planned. If a movie was made about your life, whom would you like to see play you?
Robert – Oh, my goodness.
Isabelle – I know. It’s a difficult one. I’m sorry. The random picker made me do it.
Robert – I, I haven’t ever thought about this before. But I think it would it be it would be Richard Dreyfuss.
Isabelle – Okay. Okay, cool.
Robert – Yeah, I think it might be Richard Dreyfuss.
Isabelle – Okay. Do you want to go into that? Or should we just leave it there?
Robert – I have to say that his portrayal of a committed, driven person in Close Encounters of the first type I think that was the name of the movie is, is really like my attitude towards doing things. I just don’t give up when I dig into something. And I like that character. A great deal.
Isabelle – Cool. I like it. How can people get a hold of you?
Robert – Robert@standardc.io is the best way, or LinkedIn, Robert Mann on LinkedIn.
Isabelle – Okay, cool. Well, thank you for being a really great guest. Thank you for coming on the show.
Robert – Thank you. All right. Have a good day.
Isabelle – You too.
As always, you can chat with me on my LinkedIn or Twitter at @IZYcastrowrites. But to access great daily content, check out Fintech Nexus on LinkedIn, Twitter, Facebook, or Instagram. You can also sign up for our daily newsletter, bringing news straight to your inbox.
For more fintech podcast fun, check out the website, where you can find more fascinating conversations hosted by Peter Renton and Todd Anderson.
That’s it from me. Until next time, enjoy your downtime.
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