Shane Wilson's Blog

2025 is a big year for my wife Jan and me.  January marked the start of my final semester of Business School which means we have ~4 months until we start a very new chapter in our lives: new city, new job(s), new opportunities.  Balance and focus are critical as I juggle 3 main priorities:

• Maximizing the value of my remaining class time
• Enjoying the remaining time with our many MBA friends
• Securing my post-grad job

With so many unknowns in the near future, I’ve found myself reflecting back on my last ‘last semester’ at Colgate in 2014.  I had just wrapped up my football career in a rather disappointing fashion- an early season injury deteriorated until I could no longer play.  My fall semester was marked by physical pain, frustration, the emotional pain of saying goodbye to a huge part of my young life, and a sudden vacuum once the season ended ignominiously in a snowy loss which the lionshare of my class watched from the sidelines (we were almost all injured come game 10).  When that last spring semester rolled around I was not ready to think ahead. I needed to heal and transform my body (in total, I lost 50lbs between my last game and graduation day).  I wanted to catch up on college fun I had passed up on for athletic commitments.  When it would have made sense to be building my resume, I threw myself into writing projects, playing music in bars, and a particularly fun class that was focused on developing a Children’s theater production.  Not surprisingly, when graduation day came that May I had no idea what I was going to do next. 

Fast-forward more than a decade and the situation is a little different.  Academically, I’m diving deep on relevant subjects and skills like M&A modeling, value creation for privately owned companies, and behavioral economics (no children’s theater productions this go-round).  On the fun front, we’re going on the MBA ski trip this weekend and Wednesday night Hockey practice is still sacred but there’s a marked down shift in the volume of events on our social calendar.  That said, job security post-grad is my primary focus.  As an MBA student focused on VC, there is not much institutional support for networking, interview prep, opportunity sourcing etc.  This is a build-it-yourself career path.  Gather experiences, build a network, teach yourself about the sector and do your best to make a cohesive, compelling story that convinces a GP you’re worth the time, effort, and salary.  

A New Opportunity: BankTech Ventures Fellowship

This is the backdrop for my most recent career-focused endeavor: the BankTech Ventures Fellowship.  For the uninitiated, VC Fellowships are somewhat of a practicum/internship hybrid: funds structure networking and learning experiences to educate a class of Fellows on the fund’s thesis, the universe they invest in, and how they operate.  In return, Fellows apply these concepts to tasks and projects relevant to the fund.  I learned of BankTech’s Fellowship last fall thanks to a Yale SOM connection- Jake Fuchs (class of 2021) is leading the charge for BTV’s inaugural cohort.  I had the chance to meet Jake in person in NYC in November and was impressed by the vision of the program, the caliber of BTV’s people, and the opportunity to learn more about VC investment in the banking and FinTech space.   Throughout my pre-MBA career, I was on the periphery of finance selling products and services to banks, insurers, hedge funds and private equity firms.  Many of my projects, dating back to my time with General Assembly, focused on AI and Data Science readiness for financial enterprises.  I intuited much of what banks do but never thought deeply on their operations and transformations beyond what was relevant for generating sales of my products.  During my MBA, I’ve concentrated on finance broadly including classes on Renewable Energy Project Finance, Security Valuation, VC and Private Equity and more.  Yet I have not spent much time understanding the technologies that power modern finance or thinking about what could be next.  This Fellowship seemed like the perfect compliment to my classroom learning to expand my perspectives and explore FinTech, one of the more exciting and lucrative VC concentrations of the last 25 years.

About BankTech Ventures

BankTech Ventures (BTV) is a strategic investment fund focused on transforming Community Banking.  Launched in November 2021, the firm has quickly established itself as a significant player in the fintech investment landscape with more than $50 million invested in 20+ companies including BillGO and Adlumin (the firm’s first exit; acquired by N-Able Technologies for $300mm in 2024). BankTech Ventures is unique in its GP/LP structure.  BTV’s LPs are a consortium of Community Banks who look to the firm to generate returns while identifying new technology opportunities to drive innovation.  In this way, it is like a CVC with a strategic mandate but rather than serving the strategy of one parent company BTV is serving dozens.  I’m particularly excited to see how this structure can accelerate value accretion for portfolio companies- being able to provide catalytic capital in combination with introductions to hundreds of potential customers could prove to be a unique one-two punch combination.  

Looking back on Month 1 of the Fellowship

I look forward to providing updates on this experience across the roughly 6 months of the Fellowship.  After month 1, we’ve had the opportunity to meet our cohort-mates, see how BTV connects startups with its LPs, and receive a crash-course in community banking circa 2025.

Networking

The Fellowship kicked off with a welcome session to introduce the program, the firm, and create connections between the roughly 25 Fellows of the inaugural cohort.  The group boasts a diverse range of experience- there are highly accomplished undergrads, FinTech founders, career Bankers, and a few MBA students like myself.  Our first networking session was a chance to meet each other and the BTV team.  I was really impressed by how many BTV teammates took time out of their Fridays, including Managing Director Cary Ransom, to welcome us to the team and the program.  

Unlocking the Power of Customer Experience in Banking

My second BTV session was not expressly part of the Fellowship, rather it was a BTV webinar we were invited to.  This was my first chance to see how BTV’s unique LP structure can be leveraged to create synergies between startups and LPs.

In the evolving financial services landscape, Community Banks and Credit Unions face increasing pressure to enhance customer experiences and reduce churn.  In a recent Breaking Banks podcast episode a CEO of a neo-bank dropped an impressive statistic: their average customer checked his or her account over 90 times within a month.  Before banking lived on our phones, customers visited physical branches (let’s say once per week) and received periodic mailers (maybe 3x per month).  These estimates indicate ~7 touch points between a traditional community bank and a customer.  App-based banking is beating this figure by 13x.  Checking an app is not equivalent to a weekly meeting with a teller or bank manager whom you have known for years, but at its core relationship building is a contact sport.  If digitally-enabled banks are enjoying a 10x advantage in contact rate the long term value of Community Banks relationships will erode.  The reality Community Banks must face is this: companies like Apple and Amazon have trained customers to expect high-touch, seamless customer experiences that improve with usage.  Banks can no longer rely on their physical proximity to customers as sufficient for long term relationship development.

This webinar featured 3 startups that are helping Community Banks improve customer experiences, mirroring those of tech-forward banks, FinTechs, and popular apps.  Listening to these startups reminded me of my early days on General Assembly’s Enterprise team when we built our marketing campaigns around digital transformation.  Back then, we were helping large banks, consulting firms, and media companies embrace digital-first mindsets through high-dollar executive workshops and long-term skills attainment programs focused on practitioners.  A decade later, startups are providing many of the capabilities acquired through firm-wide training as out-of-the-box software and managed services. 

Year Founded	Total Funding	Category
2021	$2mm	Market Research Services

JourneyTrack helps financial institutions improve customer experience with tools to visualize and evaluate user experience quantitatively and qualitatively.   Using CEO Ania Rodriguez’s parlance, JourneyTrack helps banks evolve from process mapping to journey mapping, a shift that puts the end-to-end customers’ journey at the heart of planning exercises.  My distillation of JourneyTrack is a tool that helps banks incorporate design thinking principles and user centricity in an easy-to-follow software managed process that provides a measure of objectivity to evaluations. 

Year Founded	Total Funding	Category
2021	N/A	Digital Marketing Services

WaveCX is an “audience engagement platform for financial institutions.” The platform provides interactive demos for showcasing new products, in-app experiences to accentuate product marketing campaigns, and personalization features to create promotional campaigns ranging from all customers to highly-targeted, individual touch points.  I see Wave CX as a complementary tool for app developers that allows for more targeted, dynamic messaging that ensures new developments are served to clients in an easy-to-understand manner that increases usage.  One heat moment for me in this presentation described how pilot customers realized that internal bank employees had difficulty visualizing the customer journey beyond what happened immediately in their departments- Wave CX helps their partners see a more complete picture of digital journeys and app usage data that drives cross-functional collaboration. 

Year Founded	Total Funding	Category
2024	N/A	Onboarding and Activation

Swaystack helps streamline onboarding and engagement for banks and credit unions.  CEO Har Rai Khosla motivated Swaystack around first-person research: when opening accounts with community banks, it was common that there were little-to-zero touch points between the bank and a new customer.  Basic messaging typical of new subscribers like ‘Welcome to our platform’ emails upon registration and ‘here’s how you can activate your account’ were noticeably lacking.  In contrast, signing up for services like Chime activates a daily drip campaign that drives subscribers to integrate usage into their lives. Khosla’s research indicates that 4 out of 10 accounts that are opened go inactive within a year.  With a CAC of $300-$400 per new account, this is a significant value loss.  Swaystack helps Community Banks reduce churn risk through thoughtful, automated campaigns that ensure opening an account is not customers’ first and last touchpoint with community banks.

Banking Deep Dive

Wrapping up our January programming, Carson Lappetitto, President of SunWest Bank and GP at BankTech Ventures joined Fellows for an hour-long deep dive into community banking.  This session was valuable for filling my knowledge gaps of Community Banking by providing a first-principles understanding of the space. 

Community  Banks are locally-owned and operated financial institutions that primarily serve individuals and businesses within a specific geographic area.  Carson distilled the key tasks of Community Banks, a framework that also covers much of what Commercial Banks do as follows:

• generate deposits
• adjudicate credit
• process payments (they are the gateway to the Federal Reserve)
• Drive regulatory compliance 

Operationally, most commercial banks live off of Net Interest Margin (NIM)- the spread between the yield on loans and interest paid to depositors. In practice this means the key question for most banks is: How do I take the right risks at the right values?  You can think of NIM as a way of stacking up nickels over the long term. One bad risk can erase years of these small increment gains. 

With this base, Carson then walked us through a brief history of the transformation of banking starting in the 19th century when banks were less-regulated and able to distinguish themselves based on the variety of services they offered.  In the last 150-ish years, regulation has limited individual bank’s abilities to creatively service their customers, effectively commoditizing banking.  There are few incentives to innovate in this environment which engenders an attitude of complacency in many banks.  AI is quickly disrupting this status quo- banks who have historically relied on a ‘squirrels in the background’ approach to technology (customer facing technologies that are really powered by the rote activity of many humans) will face increasing pressure from bigger banks with advanced AI capabilities and peers that quickly adopt AI-forward strategies.  Furthermore, a reduction in regulations that may happen in the Trump 2 administration could erode some of banking’s protection from FinTechs.  Let’s say closed loop FinTechs like Venmo were allowed to process payments with the Federal Reserve- this could obviate banks current government-mandated role in the operations of burgeoning new FinTechs.

Investment Ideas for 2025: Fintech and Community Banking

Here’s a quick outline of a few FinTech theses ranging from ‘non-controversial’ to ‘cutting edge’. 

Solutions to increase Service-Based revenues 

Following the CX showcase and Carmen’s talk, helping banks innovate their businesses to improve revenue operations and identify non-NIM revenue sources is a solid, non-controversial investment thesis.  Traditionally, this has meant ‘offer credit cards.’  As demonstrated in the aforementioned startup pitches, updating digital experiences to capture and secure customers’ wallet share is a real opportunity.  Bridging Community Bank customer relationships to modern FinTech services like Roboinvestors is an interesting idea for both sides of this transaction.  Superior data practices, like those created through the implementation of Small Language Learning Models allow for increased personalization in recommending these upsell opportunities.

Small Language Learning Models

AI adoption is doubly challenging for Community Banks as they operate in a regulated industry and the amount of investment required to make systems AI-ready is material.  Small Language Models (SLMs) are similar to ChatGPT et al but are often trained on smaller, high-quality, tailored datasets. This specialization enhances their precision and helps avoid situations where banks could run afoul of regulators.

SLMs could impact Community Banks through:

• Collating data across disparate data sources to create a cohesive vision of the firms information assets- this will allow for additional integration of advanced tools
• Improved loan decisioning with more flexible risk evaluation metrics
• AI ChatBots to support onboarding, customer service questions, and routing to relevant resources
• Supporting live agents with access to quick, relevant knowledge regarding new products and services
• Increase personalization regarding new service opportunities and product lines

DLTs

During Carmen’s talk, we briefly discussed how smaller banks that lean into Web3/Crypto could leapfrog larger players and usher in a new era of US monetary leadership similar to the dollarization outcomes of the Bretton-Woods Conference of the 20th Century.   Regulators have kept crypto and banking apart, but perhaps there are some introductory blockchain technologies that could familiarize banks with the technology and start to soften regulatory restrictions between the two worlds. 

Distributed Ledger Technology (DLT) is a digital system for recording and synchronizing data across multiple locations simultaneously, without the need for a central authority. It offers a secure, transparent, and efficient way to manage transactions and information in various industries, particularly in the financial sector.  While not all DLTs are on blockchains, DLTs are great “training wheels products” for blockchain, web3 and decentralized digital systems.

DLTs can help banks achieve:

• Streamlined Processes: DLT can automate many back-office processes, reducing the need for manual intervention and intermediaries.
• Faster Settlements: Near-instantaneous settlement of transactions can be achieved, improving liquidity and reducing counterparty risk.
• Lower Operational Costs: Estimates suggest potential annual global infrastructure operational cost savings of $15-20 billion USD

Quantum Encryption

This thesis may be a little out-of-bounds for Community Banks in 2025, but Q-day may be much closer than we previously predicted thanks in large part to AI’s help in advancing Quantum Computing.  IBM CEO Arvind Krishna recently indicated that Q-day could arrive in as little as 5 years.  While I am still working on my base understanding of Quantum computing, when Quantum becomes viable today’s means of encryption are in serious trouble.  RSA encryption, the leading solution for protecting important information for military communications, financial data, and more will become useless.  Quantum can effectively solve RSA’s currently uncrackable ciphers in a quick moment.

Quantum Encryption is next-gen data security for the banking industry. We may be as much as 1 decade from implementation of Quantum Encryption, but the long-term benefits in terms of security, compliance, and customer trust make it a valuable investment for forward-thinking financial institutions.  Furthermore, this feels like a venture scalable investment.  Basic Quantum Computing-as-a-service is being provided by third parties like Amazon Web Services which reduce the need for building these massively expensive computers.  Once Q-day arrives, a lollapalooza of demand will be realized across financial services but also security-focused sectors like Defense.