Forget What You Think You Know About Program Management: This Is What Works Now

Episode Transcript

Ahon Sarkar:
Hey there, welcome to the Embedded Finance Blueprint, where we get past the noise to help you navigate the landscape, unravel the hype, and actually build a sustainable embedded finance business.

Today, there's no debate anybody can build these products, but who should? And if you should, how do you do it correctly? That's what this series is about.

I'm Ahon Sarkar, general manager of Helix by Q2, and I'll introduce you to a few friends, who will share their real-world lessons for success and help you avoid the potholes along the way. In just six expert conversations, you'll learn everything you need to get past getting to market, and get to growing your business.

So, let's dive in.

Welcome to Episode 5, where we dive into a term that you might have heard before, but you may not understand: program management.

Program management means different things to different people. Whenever anyone is going to build an embedded finance product, one of the things you have to think about is how to run this business. How are you going to evolve your product? How are you going to manage things like fraud and compliance? And over the long term, how's your product going to evolve?

I'm really excited today to introduce our guest, Luvleen Sidhu, who is the chair, CEO, and founder of BankMobile Technologies, which is one of the largest digital banking and BaaS platforms in the country. At the time of BankMobile's listing, she was the youngest female founder and CEO to take a company public. And over the last few years, she's been an Amazon bestselling author, a mentor to women across the country, constantly featured in the media, and, honestly, is one of the country's experts on how to run a successful embedded finance program and how to evolve it alongside large brands like T-Mobile.

Luvleen, thanks so much for joining us today.

Luvleen Sidhu:
Thanks, Ahon. Always good to see you.

Ahon Sarkar:
Likewise. You can't see it if you're not looking at the video, but we're both wearing black outfits, and we're ready to go.

So, Luvleen, we're going to start with the same question we've opened all the podcasts with, which is: Today, there's a lot of noise in the world of embedded finance, what would be the biggest embedded finance myth that you want to debunk immediately?

Luvleen Sidhu:
Good question. Good opening question.

Well, I think to your intro, these programs seem like they're hard, and they are hard. But it doesn't have to be so hard. I think the myth is that it's too hard, that the ROI is not going to be there. So, you think, "I'm going to have to hire way too many people, the regulatory complexity is something that we just can't absorb, so let's table this."

The reality is that the industry of Banking-as-a-Service has evolved and matured quite rapidly. And I would say that there's at least a handful of really awesome Banking-as-a-Service provider companies that you can work with, and can actually package a lot of this complexity.

You have one provider that brings all these different elements together and helps solve for them, whether that's, first, the technology portion of being able to provide the financial services product, or, second, whether it's the program management where we're going to spend a lot of time today—the actual running of the program—or, third, the sponsor bank. Because you need that FDIC insurance, and you need that regulatory oversight, but you can bring that together and you can make this much more digestible for any brand or any fintech to quite easily embed if you are sure that this is something that they want to do.

Ahon Sarkar:
Yeah, I love that.

It's interesting, because on our first episode, we talked about how embedded finance is hard. This—program management—is the flip side of it, which is, you have to make sure you consider all the underlying pieces. And I love that, on this episode, we're actually talking about the reverse. That yes, there are a lot of pieces, but you don't have to do it yourself.

One of the things I want to dive into maybe before we go into some of the meatier questions is program management itself.

I'm not going to lie to you, when I got into this industry, I heard that term used constantly, and I never really understood necessarily what it was. It was used as a catchall phrase to mean everything. And for people today who are hopping into the space—whether you're a large-scale brand looking to build loyalty or you're a fintech company looking to build a brand-new banking product—it can sometimes be a little confusing.

What is program management? Who does what? And so, maybe start with that. I'd love to get your perspective on, in the context of embedded finance, what program management is.

Luvleen Sidhu:
It's a great question, Ahon. And like you said—and even sometimes I ask myself—the definitions that are trending over this differ from provider to provider. Same with Banking-as-a-Service, the definition really changes from provider to provider.

So, I think the definition that it can be all-encompassing is the best definition of it. And the way that we view program management is really an end-to-end solution, to be able to define a product, to launch a product, to run a product, to optimize a successful product.

It's really being able to do all of that and components of it, which I’m happy to go into in more depth, but it's all the way from helping in a partnership way to solve the pain point and launching this product. And we help find a solution with you, whiteboard with you. We also think about the tech integrations of the touchpoints and where you want to embed this solution.

And we help all the way—compliance, BSA, AML, fraud, banking operations, customer service, program management, development work, and, as I said, optimization of the program through monthly reviews, quarterly reviews of how the business is performing.

Ahon Sarkar:
That's so helpful, to break out those underlying pieces, so people can cut this definition with a subset of this universe. But from your perspective, it's really that entire thing, and it's a question of what components of that are you looking for partnership on.

I think one of the fascinating things about the way that you and BankMobile approach your partnership is really in the flexibility.

For those listening to this podcast who are maybe not familiar with the early days of program management and industries like prepaid, one of the restrictions of program management historically was that you typically got a one-size-fits-all product.

And, logically, it checks out, because if you are the company that was offering prepaid in a program-managed form, you wanted something that was scalable. You wanted something where you could offer Company One the same thing you offer Company Two and put a different logo on it.

And you scale your operating costs, scale your front-end costs. And so, those that chose to partner with a program manager back in the prepaid days would say, okay, yeah, I'll put my color on this. I'll add one unique hook and then you just deal with it.

In this world of embedded finance, though, it's a little bit different. Because embedded finance isn't really about, “Let me just tack on a prepaid card and co-sell that.”

It's actually a lot more about how do I, to your point, identify a pain point inside my existing business and actually deeply integrate this inside of what I already do, which, if you want someone to help you manage it, requires someone who's going to understand how your business works, the ways in which it is different, the ways in which this product has to be different, and they partner with you at that level. This is because success is intrinsically tied to your ability to differentiate and your ability to grow your existing business.

So, my question for you is maybe a simple one and a complicated one: How do you do that? How do you think about scaling a business that helps large-scale companies like T-Mobile with program management, but that still allows for them to have flexibility, that still allows for them to differentiate, that still allows for customization that will allow them to stand out from the rest of the pack?

Luvleen Sidhu:
It's such a good question, Ahon, and it really is reflective of how this industry has evolved and why it's leveraging innovation and technology in new ways to really deliver customized solutions. Because that's the differentiation.

Ahon Sarkar:
For sure.

Luvleen Sidhu:
It’s customization, and like you talked about, the embedded part. Why do you embed it over there? How do you balance the two? Because you don't want so much customization that it's not scalable.

So, we have the good fortune of working with a large wireless company. And there are many parts. You have to start with that question of why you are launching this. What is the value driver in your core business that this embedded product is going to drive?

So, once you have that clarity, okay, what are the touchpoints where you hit a customer, where does it make the most sense to embed this financial services product to drive conversion and therefore the value that you're hoping to get?

How do we do it? We work with the customer and solve this and ask the right questions. For the wireless provider, where do they customize? Well, they already have a ton of information on their customer base. So, we embed it within their own operating system to be able to pre-fill a lot of the information, to be able to make this one of the fastest signups that I've ever seen to onboard a new customer and drive conversion.

And also, where? If you're a wireless customer, you're coming into a retail store. You might be opening up a new wireless plan. So maybe it’s being part of the wireless onboarding process and checks for this bank account and embedding it in there. That's an example of the customization part of how you problem solve with a partner.

And then the part where you don't want to keep customizing is just the scale. The platform itself needs to be scalable where it has nuances. With a partner like you, Ahon, you can do card controls, you can do transaction controls on a user level. But being able to add money in different ways, move money in different ways, spend money in different ways, that's a platform. That's going to be generic, but you can create in a nuanced way. So, it's really this balance between customization and scalability and the balance of both.

Ahon Sarkar:
For sure. It reminds me a little bit of cars. Because you can look at a Lamborghini or an Audi and actually find a chassis that is very similar to what is inside a Volkswagen. What changes is everything else. What changes is how the car is structured, the type of engine that's in the car, what the features within the car are, the level of how premium it is, the way in which it's built for the specific type of customer who's buying it.

But the chassis, some of the functional components of the car, are a platform because the car manufacturer has to print tons of those cars, whether they be Volkswagens or Audis, for different kinds of customers.

I have seen you guys work through this in our partnership, and you mentioned one of the unique ways I think we work together to help folks personalize and build something unique. It is really about how do you take those core components and make them consistent and scalable and easy to use, and then how do you help somebody actually evolve everything that's on top to build something that feels completely unique to a customer and that feels very native inside of their ecosystem.

I'd love to dive a little bit deeper into that and maybe understand how you'd help what we found to be the two types of customers who are looking for embedded finance products. At the highest level there are some customers, and typically we find that they are either fintech companies or folks who have built financial products before and have this type of expertise, that want to have a lot of granular control. They have experts on their team, they want to be able to reuse maybe their compliance experts or their deposit operations experts, or what have you. And they want to control some of the things like BSA/AML policies, KYC, fraud management, product management, feature management, all that kind of stuff.

And then on the flip side, you have maybe large-scale, household brands that know they want to do this, and have a good reason for doing it, but maybe have no idea how to do it. And they  want to find somebody like a BankMobile to help build, manage, and grow this product. And they’ll do the distribution, the marketing, help you with where they need the value of an expert.

And what we've found over the last seven or so years is that those two types of businesses need different things and think about this problem in different ways. What I'd love to do is maybe break down those two types of businesses and hear the type of advice you'd give to each of them.

Let's start with the first one, a business that is approaching this and saying, "Hey, I want to manage my own program.” Either they have the expertise or want to build this as a core competency, etc. As an expert in the field, how should they prepare? What type of team members are they going to need? What type of questions do they need to ask themselves? How can they set themselves up for success in approaching this type of endeavor?

Luvleen Sidhu:
Yeah, I actually think, Ahon, maybe it's a similar question for both categories or segments that you're looking at. Whether it's a fintech or a brand, the outcome or decision is probably very different, but the questions are probably similar.

And what are the questions? To simplify it, there are probably two main questions that I would ask. One is what you hinted at already: "What is my core competency" or "What do I desire my core competency to be?" And second: "What is my objective?" It's kind of to the second question, what do I want my core competency to be?

So number one is, if I'm good at something, why should I outsource that unless it's going to create a process efficiency and a cost efficiency for me?

Ahon Sarkar:
Sure.

Luvleen Sidhu:
So maybe there's a fintech out there that already has a very robust compliance process and team in place. They also may have regulatory standing that is very favorable. That’s a core competency. And so, they say, “Let's stick with that, and let's not outsource that.” And you can understand why.

Maybe a second core competency is fraud, where it's like, “Okay, we know our customers more holistically because we might be launching a bank account with you, BankMobile or BMTX, but we do X, Y, and Z with our customer. We can risk-assess them better than you'll ever be able to.”

So again, it's a thoughtful question, "What am I good at already, and what can I do better, potentially, than an outsourced provider? Maybe it's cheaper for me to also efficiently run that through the resources I already have.”

And then the second question is, “What do I want to be known to be good at or what do I want to continue to strengthen?” For a lot of customers that we've talked to over the years, customer service is very important to them. They've created that direct relationship with the customer and they don't want anyone to get in the way of that.

So there are different models that exist. Something like that, where it's like, "Well, I acknowledge that maybe I'm not the best expert in banking, so maybe the hardest questions will still go to our program manager, like BankMobile. But maybe the second-tier questions that are more manageable, more friendly, more customer service, we'll send them and direct that to us first.”

There's also this hybrid approach where you can play around and say that maybe I keep part of it, etc. But it really comes down to, “What is my core competency?” And second, "What do I want to be known to be good at or own?”  Customer service is usually at the top of that list.

Ahon Sarkar:
That totally makes sense. Let’s dive a little deeper into that.

So, I’m sitting here and saying, "Okay, I think I have a core competency around managing financial products.” Let's say I'm a wealth manager, and I have clients I've been working with. I've been offering them investment products, maybe insurance products, all that kind of stuff.

Now I'm doing banking. I have some of that staff internally, but my boss is asking me what my MVP team is going to look like and who I’m going to need across this massive company that we have in order to actually go run this project? And I'm scratching my head, listening to this podcast, and I have no idea.

Obviously that changes. Obviously, what I'm going to need on Day One, Month One, or Year One is going to be different from what I'm going to need in Year Five. Do you have a mental map that you could lend to anyone thinking through the types of functions that you might need if you're going and trying to build one of these businesses?

Luvleen Sidhu:
I think the question is, which end of the spectrum? How much do you want to outsource the program management versus in-house? And if the example you gave right now is about owning more of it over time, that’s sort of the foundational philosophy I have at this company.

Then, I think, going back to your definition of program management in the beginning and how it has evolved over time, we’re now in a program management era where there's flexibility. So there's also a learning curve and the ability to work with a partner like this and set the ground rules and say, “Hey, Year One we're going to use all of this broad spectrum of program management from you and we're going to learn, and we're going to staff up appropriately based on our learnings.

That's a nice transition period to be able to make sure that you're prepared. Because this is not something you want to guess and mess up on. The stakes are high.

I don't want the barrier to entry to feel so high based off of how I answered question one, which is it's not hard. It's doable, but you also want to be conscientious and not assume that you know. It's better to learn and to learn with a partner that is willing to invest in the time and a shorter contract period so that you can learn, and you can staff appropriately after that learning.

Ahon Sarkar:
Yeah, absolutely. You called out some of those functions over the course of this episode—things like compliance, things like fraud management, things like product management, things like front-end engineering, backend engineering, etc., things like customer service, things like QA. Those all become important functions.

And if you're a business that’s thinking, “Okay, how much of this am I going to staff internally on Day One and how much do I maybe eventually want to staff internally,” you should be thinking across all of those functions, right?

To Luvleen's point earlier, it might be that you have a customer service staff that on Day One can take that initial first set of questions, like “What's my account balance?” You may really want to maintain that relationship, and you want to tackle that on Day One.

But maybe you don't have the BSA, AML experience. Maybe you don't have the fraud management experience, which for something like a card program is going to be essential. And so, to Luvleen's piece of advice, understand your core competency.

What are those eight or so buckets that you need to consider in running a program? Which ones do you think you can do and have evidence that you have been able to do it before? And where do you know where you’re going to need some help?

And to your point, Luvleen, I think that can really identify who the right type of partner is, for you, for your program.

So, I love that. I love that framework. I think it really helps people who are dipping their toes in to understand, “Do I want to do all eight? Do I want to do zero? Is it somewhere in between?” And I think that's one of the things that's really unique about the way you and BankMobile approach this is. It's not zero or eight. It's whatever makes sense for your business and for your program. And that's really how the world of program management is starting to change and why folks are looking for that type of partnership when building a unique embedded finance product.

Luvleen Sidhu:
Great job articulating that and synthesizing all the things we've been talking about.

Ahon Sarkar:
I really just heard what you said and said it back.

Luvleen Sidhu:
Yes, nice job.

Ahon Sarkar:
Well, to close us out, I think what I'd love to hear is what would be one piece of advice that you would give to someone who's trying to figure out embedded finance?

You've helped them understand how it doesn't have to be hard. You can find the right people to help fill your gaps. You've helped them understand what some of those gaps are and the options that they have. So, with that as their foundation, I guess what would be the closing advice that you'd leave them with?

Luvleen Sidhu:
That's a great question, Ahon, and I'm glad you asked it, because we love working with partners that answer this one question. And so my advice would be to be very, very clear about why you want to launch an embedded product, and what is that product and how does it derive value for the core business that you're in?

Because the more synergies that you create between this embedded product that you're launching and the core business, the more support you're going to have, the more creativity and marketing you're going to have behind it, the more investment you're going to have behind it, and the more you and a partner like Helix or BMTX or a combination of both of us are able to support you in optimizing and growing the program. Because it has more legs and clarity on why it even exists.

So, I hope that's helpful.

Ahon Sarkar:
It's super helpful, and I think it ties to knowing who you are and why you're doing this.

We've had the fortune and misfortune of seeing partners that go into this wanting to do it because others did it and not really knowing why they are there. And what they find is, from an execution perspective, we can help you get there. But that doesn't matter if you don't know why you're doing it, and if your own organization doesn't know why you're doing it.

Because we've heard it before on this podcast and we'll hear it again, the embedded finance relationship is like a marriage. You are setting yourself up for the long-term and working through things in the long-term, and you need to have a North Star. You need to know where you're going, otherwise you can move really fast, but you'll be going in a bunch of different directions. And eventually, it will become a distraction because if it's not tied to that core business, if it's not tied to why you exist, you're wasting your time.

So, I think that is a fantastic piece of advice.

Again, if you're listening to this podcast, think deeply about that question. If you answer that question upfront, you'll find that all these upcoming steps are actually pretty easy. You know what gaps you need to fill, you know what problems you need to solve, and you know how to build your product around that. But if you try and figure that out as you go, by the time you're on Step 5, you're going to have a hard time.

Luvleen Sidhu:
Yes. Not to be overwhelming, but you don't have to have every question answered.

Ahon Sarkar:
For sure.

Luvleen Sidhu:
That's why partners like Helix are out there, to help you solution and whiteboard.

Ahon Sarkar:
For sure.

Luvleen Sidhu:
Because we know the industry so well, but the North Star, as Ahon talks about, is how does this clearly provide value to the core business? Let's get that answered, and then we'll help you with the rest.

Ahon Sarkar:
Yes, 100%.

Luvleen, thank you so much for taking the time out of your morning to help people understand this nebulous world of program management, to put some structure to the decisions that brands and fintechs are having to make, and to really help put them on the right path so we can see a universe of unique financial products that are actually built around human beings.

I think we're just in the early innings of seeing that industry evolve, and it's players like BankMobile that are really helping bring it to life. So, thanks again.

If you're listening into this podcast and you made to this point, get excited. Our next and last episode will be with none other than Alex Johnson, and we'll talk about what you do after you launch. You've built the product, you've figured out the business model, you've found the partners, you've designed it around your customer, and you've figured out how you're going to manage.

But then what? How do you actually grow engagement? How do you bring down fraud? How do you improve profitability? And how do you make sure that you're doing your job really, really well? I'll see you guys on the next episode.