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What does embedded banking mean to you? Listen to Ken Gavrity, EVP and Head of KeyBank Enterprise Payments and Analytics on the Leaders in Payments Podcast. Ken discussed Key’s embedded banking strategy, our recent acquisition of XUP and where the future of payments is headed.

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Transcript

(00:01):

Welcome to the Leaders in Payments Podcast, where we talk to C level leaders from across the payments landscape. We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments. We will also hear stories from our guests about their journeys to the top.

Ken Gavrity (00:18):

We are looking across the portfolio. One of the areas he asked me to take a look at was commercial payments and said, boy, typically when you're good at lending, you're good at investment banking and payments is a portion of that, that travels along with the lending side of the business. And we would expect to be doing better there, what's going on in that space? And so my development corporate strategy had on it started down a pathway of just understanding where he was versus the competition. Your typical diagnostic, is it people, is it value proposition? Is it scale? How are we playing and what are our opportunities? And that really birthed an outside-in view for us.

Greg Myers (00:59):

That was Ken Gavrity, EVP and head of enterprise payments for KeyBank. And this is episode 140 of the Leaders in Payments Podcast. And I'm your host, Greg Myers. Ken has had a fascinating career and has a wealth of information when it comes to the current challenges the banking industry is facing, especially in the payment sector. In fact, when asked how he defines the competitive edge, his company brings to the market place, he defaults to his core strategy for success. Solving problems before, during, and after the payment cycle. KeyBank has approximately 17,000 employees and a portfolio of assets totalling $180 million. Regarding where he sees the industry going in the next two to three years automation, embedded banking, and cryptocurrency are the top drivers he holds a focus on.

Greg Myers (01:43):

In fact, according to Ken, 8% of cardable spend was going through software platforms in 2019. But this number is expected to jump to an impressive 40% by 2025 making the embedded banking sector, a big trend to watch for on the horizon. As far as the key components to making any business successful, he coins culture as the competitive advantage that can sustain any company over time. We've got a great episode ahead so let's get started. Hi Ken, thank you for being here and welcome to the Leaders in Payments Podcast.

Ken Gavrity (02:20):

Thanks for having me, Greg.

Greg Myers (02:21):

Absolutely. So let's dive right in. If you don't mind, tell our audience a little bit about yourself, maybe where you grew up, where you went to school, where you currently live, we'll dive deeper into your background and your professional background in a minute. But maybe just a few of those things to get us started.

Ken Gavrity (02:35):

Sure. So grew up in the Albany, Troy area of New York and that's where the immediate family was. But lots of family downstate, Staten Island, aunts, uncles, grandparents, so that really... New York was home base. Then I went to school in the Midwest, which definitely was a bit of a departure from where the rest of the family was. I went to Allegheny College for undergrad, which is just north of Pittsburgh. And then for graduate school, I went to Carnegie Mellon, which is in Pittsburgh and now have slowly drifted even further west, I'm in Cleveland now, which is a home base for KeyBank.

Greg Myers (03:08):

Okay. I was actually born and spent 10 of my first years of my life in Pittsburgh. So very familiar with that. Great. So let's talk about KeyBank. So if you don't mind, obviously in the name, it's a bank, but maybe tell us in your words, what KeyBank does.

Ken Gavrity (03:23):

Sure. So 12th largest bank in the country. So we have about $180 billion in assets and about 17,000 employees. And typically I know a lot of folks associate banks with whether or not they see them in the footprint. And so we do have a physical location, your standard retail branches in about 15 states and that's on the East Coast and Midwest side. So think New York and Pennsylvania, Ohio, Indiana, but then we have this big West Coast presence as well so think Washington, Oregon, Idaho, so it really is a broad swap of coverage. But that's the retail and the business banking or small business side. We also have this commercial franchise, which I would say is arguably one of the best banks focused in the middle market in the country. And that's where we go to market on a much more vertical and industry basis.

Ken Gavrity (04:13):

And that's, think industrial, tech, real estate, healthcare. And that's where we have customers in all 50 states. And it's a really big part of our business and definitely a place where we're differentiated. That's the bank overall, the area, Greg, if it makes sense for me to hit that here, that I run is payments, business, and analytics as well. Payments for us a little bit unique compared to a number of other banks that are out there. We've put all payment capabilities together in one business. So we serve from the consumer end, so think credit card, debit card, digital wallets, all the way up to the commercial side, so think core treasury, card merchant, all your traditional capabilities.

Ken Gavrity (04:51):

But on top of that over the years, we've really built out what we think is pretty differentiated set of services, think automation. So I talk about that as the partnerships we have with software companies as well as embedded banking. And I know we'll talk a little bit more about that in a bit. But large overall business for key, about a little bit north of a billion dollars in revenue, it's been a high growth area for us. I've got about a 500 person team and that covers all the way from product strategy, through development, distribution, the servicing side. So it really a full staff overall business for us.

Greg Myers (05:23):

Okay. And what is the sort of relationship between payments and other parts of the bank? Meaning is it like in some banks payments is almost a product that becomes a cross sale to existing treasury customers or something like that. So maybe, can you talk about how that relationship is set up?

Ken Gavrity (05:44):

It's a great question, Greg. And what I'd say is we've been out publicly for the last 10 years talking about KeyBank as a relationship driven bank. And whether that's the consumer side, small business side, all the way up to the institutional side. So all the relationships really start with our line of business partners. And on the consumer side, that might be the branch, or it might be the digital offering. On the commercial side, it's our RM, the relationship managers all the way up to our investment bankers. So we definitely look at that as the customer acquisition channel. And as we're starting to tell the value proposition of what the bank brings to the table lending just like payments is a product. So those bankers are talking about the lending capabilities, the advice offerings that we had, and the payment capabilities. That's the start of the relationship.

Ken Gavrity (06:28):

And then my business development team will come in and on the payment side and take it a little bit further and make sure we're doing needs based discussions with our customers. Now, I would tell you that's kind of the 90% of how we go to market, but as you know, from all the guests that you've had on your show, really payments has become so integral to how companies run today that there are areas where we lead with payments and particularly in the technology vertical. So certainly an area of growth for us.

Greg Myers (06:54):

Okay. And you mentioned the retail foot print, but then obviously you're in all 50 states. So outside of the retail footprint, how do you typically go to market? You mentioned business development. Do you go through any kind of channel partners or is it pretty much all a direct business?

Ken Gavrity (07:13):

It's all direct business. And when we look at our investment bank, we call it KeyBanc Capital Markets, they have bankers that are throughout the country. And they're much more, they're less focused on a regional footprint and they're much more focused on expertise. So again, back to the vertical nature, we have a healthcare investment banking business. They know all the major players in that space and they're going to market based on the expertise of what's happening in that industry. Similarly, I have a healthcare pain payments team that partners with those investment bankers, so that we're going to market together because as you know well, the healthcare payments and revenue cycle management associated with that is a lot different than what the real estate company is feeling or what the business services company is feeling. So we think that depth of expertise is a big part of our value proposition and we work very closely with the bankers.

Greg Myers (08:00):

Okay. If you don't mind, can you mention a few of, and you've mentioned a few, but can you kind of go through the list? You've mentioned healthcare, technology, what are the other verticals that you guys play in and feel you have that expertise?

Ken Gavrity (08:12):

Well, I would definitely say that the power verticals for us are healthcare, real estate, and technology. And those are places where we certainly feel very differentiated. On top of that, if you were to think about the verticals that our KeyBanc Capital Markets team serves, public sector is a big portion of that serving, state governments, large municipalities, cities. Then into the industrial side, consumer package goods. So really it goes across the board into the really big areas that drive our economy and we have payment teams that are lined up against each of those.

Greg Myers (08:41):

Okay. Well, what would you say differentiates your company from your competitors out there?

Ken Gavrity (08:46):

Yeah. No, that's a really important question. And what I would tell you is it relates a little bit to my background, I would say. And I know we can get into more of that later, but I didn't come into payments with maybe the traditional pathway. If you look inside most banks, the person sitting at the top of the payments' organization or the core treasury organization usually has been in the industry for 25, 30 years. And there's nothing wrong with that, expertise is incredibly important, but my background was much more strategy cooperate development. And I came to KeyBank about nine years ago now, running the strategy and merger and acquisition side of Key, the broader business side. I had a partner who did the retail side, and we did a number of different things.

Ken Gavrity (09:28):

As Beth Mooney had just become CEO of the bank, she was really positioning us as a super regional. And we were super sharpening our value proposition, where do we want to be relevant? And Chris Gorman, who's now our CEO ran the business half of Key. And so as we were looking across the portfolio, one of the areas he asked me to take a look at was commercial payments and said, boy, this is... Typically when you're good at lending, you're good at investment banking and payments is a portion of that, that travels along with the lending side out of the business. And we would expect to be doing better there, what's going on in that space? And so with my development corporate strategy hat on it started down a pathway of just understanding where Key was versus the competition. Your typical diagnostic, is it people? Is it value proposition? Is it scale? How are we playing and what are our opportunities?

Ken Gavrity (10:14):

And that really birthed an outside-in view for us early on. And I think it's 2013, 2014 when I was going through that analysis and so like any good strategist, you start with the outside-in view. I started talking to a lot of the investment banks that cover the space, what are you seeing across the other banking landscape? But I also talked to a lot of the venture capital groups that are in there and folks that are well known in the FinTech space. So think Matt Harris over at Bain, Nigel Morris over at QED, Hans Morris over at Nyca. So build some early relationships with folks that were really seeing this trend of software deployment in technology, in the banking space. And so we grabbed onto that early. It seems like Monday morning quarterbacking now to look at and say it was an obvious trend, but back in 2013, 2014, there weren't a lot of banks that were making that.

Ken Gavrity (11:02):

And so that started us down a pathway of saying, okay, we think value transfer in the payment space. I don't want to say is solved, but there was a lot of infrastructure, money was moving well. What wasn't happening was solving all the frictions that surround that payment. So we really started this mantra inside the company of saying, we really need to solve problems before, during, and after the payment. And that's how we're going to differentiate ourselves. And that really born the strategy we had working with FinTechs. I think it was 2014, we started our relationship with a healthcare payments company called InstaMed.

Ken Gavrity (11:34):

Soon thereafter that we started a FinTech partnership with a company called AvidXchange that's focused on AP automation. And we really saw the traction built from there to say, look, you got to solve the basic problems. There are still core capabilities that our customers need, but we want to go in there and we want to start having a workflow conversation because we realized if you're talking to an owner operator on the small business side, it's some of their biggest pain points, they're trying to figure out where in the day they can find the time to solve that problem.

Ken Gavrity (12:01):

Or if you're going to a mid-size company, it's the treasurer saying, yeah, I assume money is going back and forth. But my real problem is, I got all these different purchase orders that aren't captured centrally, or I'm still invoicing in paper or reconciliation is really a problem for me. So that was something that we recognized. We realized there were a lot of conversations our clients wanted to have around that space and started to really drive growth for us. So that was the moment that we said, okay, if we're going to do this, you've got conviction around it, you need to really reposition the business. And so we thought about our business development team and said, boy, we can't just have traditional banks. We can't have a court treasury team, a card team, a merchant team, we need to flip this around.

Ken Gavrity (12:44):

We need to start to think through the lens of the customer. Let's have a working capital discussion. We have to have product agnostic people in the front line and we then have to think all the way through, okay, what do you need to change in the rest of the organization? Well, you got to change training fundamentally. You got to change incentives. You got to think about servicing a little bit differently because you don't own the full product cycle. Some of it's in-house, some of it's through partnership. So that really had us on a journey that probably a good two to three years it took us to really feel like we understood what that needed to look like, how to scale it. And we certainly had our bumps along the way, but we're deep down this pathway now. We've made a lot of mistakes, I'm watching a lot of banks just start down that pathway now. And I really think that's what differentiates us in the marketplace.

Greg Myers (13:28):

Okay. And a lot of the things that you identified are definitely trends we've seen obviously in this industry for many years, removing friction and understanding what's going on before, during and after. So maybe talk about where you see things headed in the industry, say in the next two to three years, kind of your vision of where you think payments is heading.

Ken Gavrity (13:48):

Yeah. It's such an interesting time to be in this business because the pace of innovation was high over the last five years. And I only see it growing more rapidly over the next five. And so when I think about the stuff that we're focused on as an organization, continuing to grow out automation is number one on the list. And while I think we've built this very holistic set of partnerships to folks in this space, another one of your guests, Flint Lane, CEO of Billtrust, another good partner of ours. XUP which was a company that was focused on overall client experiences in the digital space, that was a partner of ours. Now it's a company that we acquired. We can talk more about that in a bit, but this focus on automation while awareness is at a fairly high level now with our customer base and it's driven so much growth for us.

Ken Gavrity (14:34):

When we look across the industry, we really see less than 10% penetration in the marketplace. So we think that's going to be an incredible growth lover for us in a place that we're going to put a lot of attention. But I also see the transition to digital payment seems like an obvious statement, but we're finally, the pandemic has pushed us to a place where we're finally moving away from the cash economy and the cheque. However, we're not all the way there yet, right? Depending on whose stats you'll look at, when you think about the number of companies, more than 80% of companies still have some level of cheques going back and forth to different partners. And when you look at the number of cheques in the ecosystem, it's still north of 30% of payments. Again, depending on which industry stat you're looking at, I've seen it as high as 45% still.

Ken Gavrity (15:16):

So that's a place where we've got to make sure that we're helping transition the industry away from these paper based payments. They're costly to our clients and they also have risk associated with them. And we all know of the rise of fraud that the overall industry has seen over the last two to three years. And then I'd say embedded banking, which is the bigger macro trend that we see on the horizon right now. And there were FinTechs playing in this space for quite a while. It then became something a little bit bigger as we started to see the processors moving in there, JP Morgan's made a move in there as well, but it's a place that I still think has a lot of white space.

Ken Gavrity (15:50):

You could see the stats out there that say that 2019 I believe is about 8% of cardible spend was going through software platforms. And the estimate is by 2025, you're going to see 40% of that. And that's actually a slightly outdated number, that was before we went through the pandemic and we saw this inflection point of people starting to use e-commerce. So I think that's a macro trend that is here, it's inevitable at this point and how that's powered and how strategies develop in that space is going to be fascinating.

Greg Myers (16:19):

Okay. Two questions about sort of the future, at least trends that I often hear about and rarely do I have a podcast where it doesn't come up is cryptocurrency. And sort of all the banks are starting to really create their positions if they haven't already around it. And I think we all understand the volatility. We understand crypto from an investment perspective. My interest has always been, when is crypto become a payment method? I've seen people predicting that in the next year to two to three, that it's going to become a relatively common method of payment. There's some folks out there doing it today, as you know, just curious sort of your perspective on crypto from a bank's perspective.

Ken Gavrity (16:59):

Sure. Look, crypto is clearly going to change the financial services landscape. I think there's broad agreement on that. The question of timing, I think, is the right one. And I would say right now, all the real use cases that we see out there that are gaining adoption and have a lot more use case activity around it is really crypto as an asset or a store of value. I think we're going to start to see more use cases that impact our customers and workflow over the next couple of years. But I think before you see it really branching outside of this notion of an asset or store of value, I think you're going to need to start with a customer and work backwards. What pain point are you solving? Is crypto the most efficient way to do it? And when the answer to those two things is yes, it's a high value problem for the customer.

Ken Gavrity (17:45):

And clearly this is the best way to solve it, I think that's when you'll start to see the traction take hold. And all the other, let's say categories that crypto can be impactful. But for now we're staying close to it, we certainly spend plenty of time looking at all the trends, interacting with all the companies or at least a number of the companies that are playing in the space and building products. But we still see it for now as a store of value, we see a lot of activity occurring around that particular focus area. But I think it's got a little bit to go before it starts to embed itself around workflow for clients.

Greg Myers (18:18):

Sure. I would agree. One other area I wanted to dig a little deeper into, and you mentioned embedded banking, you hear embedded finance, embedded banking, a lot of different terms, sort of for the same thing. But what I hear and people I have on a lot of times they're disintermediating banks in some ways, right? So embedding banking, is there a bank or is it something KeyBank's thinking about that becomes that sort of solution for embedded finance, where I think about these software companies and they're going to a vendor for payment, a vendor for loans, a vendor for cards. And that just doesn't seem like a great strategy. So just kind of curious when you look at that embedded banking space, kind of where do you see that falling out in the next few years?

Ken Gavrity (19:02):

Greg, I love the way you asked that question, because I think, the example that I always give to people in this space is if you're a little bit older like I am, I'm in my mid 40s. I grew up in a world where I still remember the time that ordering a personal computer, you go into the magazine and you think about, I'm going to order this screen from this provider, this hard drive from this provider, speaker somewhere else, maybe the keyboard and mouse somewhere else. And that was a period of time where you were trying to get the best features, functionality, you were trying to optimize price. But ultimately none of us really wanted to do that. It was a period of time that it was sort of interesting, but I think when Apple came along and said, look, we're putting all of it in there.

Ken Gavrity (19:49):

We're going to make it really easy to turn on and do the basic things that you want it to do, that was the aha moment. And that's where you saw the big consumer trend that ultimately affected businesses moving down that pathway as well. And I think that's exactly where embedded banking is going. Right now if a lot of times we think about the very large providers that are thinking about embedded banking, but one of the stats that's been out there in a couple of different places shows that there's about 175,000 software vendors, ISVs or independent software vendors that are out there today. And the estimate is that that's going to be a million by the time that we get to 2027. That's not that far away. That's a five year time horizon for us to have a 5X multiple in the number of companies that are trying to build software solutions in this space.

Ken Gavrity (20:32):

And a lot of it is what people call the hyperverticalization. It used to be, there were healthcare companies and there was going to be software for healthcare. And then it got down to no, dentists need something very specific and then urgent care companies need something very specific. And you're just starting to see that. We used to say real estate, now it's construction, it's permanent built, it's property managers. And as all of these companies start to build out software to solve problems in those spaces, all of them are going to want to embed some level of banking within it. The example, the easiest one to give that we use a lot of times is the dentist, right? So the dentist, you don't walk into any dentist today that isn't running their practice and software, but it's typically practice management software.

Ken Gavrity (21:17):

So they're worried about patient records. They're worried about lab orders that are going out, and that's the most important thing. The payment is then off to the side, it's disconnected. Maybe there's a swipe that's available on the counter at that dentist office. But then the reconciliation, that office manager at night is then reconciling, how many swipes do I have and how do I get it back into the patient record? So we've seen a number of different cases where there are some solutions for companies that are solving that bridge. One of the partners that we work with is a company called Rectangle Health that has done that well. But they're doing it in a way where it's a much broader value proposition. They're saying, okay, not only do I want to make this much more efficient for that office manager, but there's this broader patient engagement strategy that I want to help you with.

Ken Gavrity (22:04):

Because that's not the core capability that you have as a dentist. This is something where we're going to help you think about registration when that customer comes in or text reminders to those individuals that they need to set their six month appointment. And by the way, if I'm interacting with you in that much more mobile way, why don't I just get your card on file? Now I can start to make it one click or SMX click to be able to say, yep, just pay this the way that you typically want to pay it. And that starts to create the Amazon mind. You might not even remember what card you have on file there cause I've created this engagement that's going to make it easy for you to do that. Now you could say, well, who's my client in that scenario? Well, my client is the dentist because I'm distributing Rectangle Health software with them.

Ken Gavrity (22:46):

But my client's also Rectangle Health. And Rectangle Health doesn't want to go out and have a separate card provider, a separate cash management account, separate liquidity strategy, and then a separate risk strategy. And I think that's really where we see ourselves competing in this space is you had the FinTechs out there, the Finex, the Fin SAPs, stripes the world that are providing modern technology. But it's really this combination of the modern technology, the ability to offer the banking services behind it, because ultimately it's still going through the banking system. So there's risk protocols, there are reserve requirements, there are a lot of these things that you can help the customer begin to understand and say, how do you want to play in the payments landscape or the lending landscape? Do you want to have a referral? So there's little risk on your side, very little monitoring, but you can still send something over to KeyBank and we're going to help you make sure that you can onboard your customers.

Ken Gavrity (23:41):

Do you want to start to own the customer experience yourself, but still not have the risk? Or do you want to be fully integrated where it's your set of capabilities, your ability to use the rails, you're going to take the risk on the boarding of that customer. And any of the chargebacks that might be associated with helping advise a customer, which pathway to pick, what level of maturity are they at today that they'd be able to handle that. And then trying to find the right pathway for them. Once they pick their spot on it, how do we help mature them along the way? I think that's our point of differentiation. So in summary, it's the bundling of those capabilities cause I think that's where the world is going. And then expertise, because this is a very complicated space and we find that more and more is these software companies are trying to quickly scale through looking for that advice.

Greg Myers (24:26):

Yeah, no, I love it. You mentioned XUP payments earlier and we did have the leaders of XUP on this podcast back in March of last year. And obviously since then you guys have acquired them. So maybe talk about what was interesting about XUP, why you acquired them and sort of what's the future of the XUP and KeyBank relationship?

Ken Gavrity (24:47):

Yeah. The XUP team is just an absolutely fantastic team. And when I think about partnership or acquisition, because we've been in this model now since again, back to 2013, 2014, and we've learned a lot along the way. So the qualifying criteria for us starts with value proposition and capability, right? Do they solve a customer pain point? How valuable is that customer pain point to solve both to key, but then also to the customer, right? We're trying to say, is this really driving a relationship or a purchase decision? And then the second thing that you have to get to very quickly is quality of the management team. And we will not pick the best mousetrap in the marketplace just on capability and value prop alone, because ultimately whether it's a partnership where we're going to be managing something outside our four walls together or ultimately if it gets to acquisition over time, the quality of the management team is really what makes this work.

Ken Gavrity (25:40):

And so their experience, their ability to scale, generally their recognition of the challenges ahead because it's hard to build partnerships. And having people that sit in those seats that understand whatever we ink in our first contract here while you're in the honeymoon phase and we're whiteboarding together and we're looking at potential penetration of customers over the first two to three years that evolves over time. There are customer pain points and there's servicing pain points and there's tech slowdowns that occur along the way. Sometimes on the bank side, sometimes on the FinTech side. So the ability to navigate those types of challenges is absolutely critical. And so when you think about the quality of the XUP management team, it's just absolutely first rate. Chris May the president, Kyle Bridges the head of engineering, Craig Sobol the head of business development, they're just experienced executives and the talent and the culture that they built inside that organization is just absolutely outstanding.

Ken Gavrity (26:34):

It certainly doesn't hurt for us that those are great feeder systems that they've built in Charlotte and Atlanta, where there's a lot of that talent as well. Similar to other partnerships we've had and really, I wouldn't say that this is the only model for us, but it really is starting to demonstrate something that we like. We partnered with them for about 18 months before the acquisition. So you get the opportunity to see through that investment process, through working on solving a problem together, is there a cultural fit? Are we able to solve problems the way that we want to solve them? And we started on the merchant side of Key and they were able to help us build a digital origination and servicing capability in four months. And it was absolutely extraordinary. Key made the decision I'd actually say and modestly before a lot of the big banks, we had a merchant joint venture, like a lot of banks had put in place 20 years ago.

Ken Gavrity (27:26):

And back in 2017, we said we were going to unwind it because we didn't own the customer experience. It was a referral over to our processing partner and that had a lot of pain associated with it. So when we unwound that joint venture and brought it in house, we said, we're going to own the product roadmap. We're going to own the client journey, whether it's in person or through digital channels. And as we started to build that out, we realized the complexity of it. We looked for a partner in XUP to help us really modernize that and really connect a lot of our legacy platforms. And they just did an extraordinary job. Our NPS went through the roof, our growth in the merchant channel has far out paced the industry. And so when you start to both see what the team was able to build, but then most importantly, the market impact, is the customer excited about it? Is it driving value? We saw both of those and we knew we had something really successful here and that's what ultimately led to the acquisition.

Greg Myers (28:20):

Okay, awesome. So let's switch gears a little bit and talk about you. If you don't mind fill in the gap between Carnegie Mellon and your starting there at Key, kind of your different roles you had in between.

Ken Gavrity (28:34):

Yeah, sure. So actually right out of Allegheny, I was at Federated Investors for a few years, I think four, five years. And I was actually on the fixed income research side. And so really I got my CFA designation. I expected to go down that path of running a big mutual fund or maybe a hedge fund someday. And that's really where I started. I sort of built this appreciation for technical expertise in depth, but it then was when I went to Carnegie Mellon, and I'll actually give Carnegie Mellon some real credit here. They've been saying for 20 years that this intersection of strategy and technology is really where the world was going. And they really imprinted that on my brain while I was there. And so I'd say I've got this technical bias, how do I start to widen this out? And I jumped over to National City in Cleveland, that's how I started my first time in Cleveland. And at National City, I was in the corporate development group.

Ken Gavrity (29:22):

And, and so spent a lot of time looking across the financial services landscape, looking at the various businesses that we were in, the depth of the value proposition, how we were positioned in the marketplace versus competitors. And that's also the part of the bank that was focused on deal activity, so buying and selling business. So that really was a big part of my professional history. And then from there National City, right before they sold themselves to PNC, I actually did some time as an entrepreneur for a little over two years working on some consulting and with financial services firms that were starting to invest in the space. You saw a lot of private equity and hedge funds that wanted to buy financial assets, that wanted to get portions of financial services business and get exposure to it.

Ken Gavrity (30:06):

So I was doing consulting there for a while and then spent some time at Ernst & Young for about three years as well, helping build that corporate development mindset. And really going from what Ernst & Young I think did really well, which is quality of earnings and financial analysis to how do we start to advise customers on strategy side? So really this well rounded, how do I have the technical side? How do I build out a little bit of strategy? And then how do you start to own the operational execution that I got in my last job? And that's what then led me to Key and the jobs that I've talked about so far.

Greg Myers (30:40):

Okay. What are some things that you're passionate about? So maybe one work related passion and one non-work related passion.

Ken Gavrity (30:48):

I'll start with the non-work related one. And I would just say, at this point in my life, really making sure getting that work life balance in place. And so I have family here with me in Cleveland. My wife I've been with for north of 20 years and a six and nine year old, both boys that keep me quite active and coach a number of their sports. And it's just one of the most rewarding things in life. And it's also the reason that with one of my colleagues here at Key, we started a community group inside Key, the parenting community group that has hundreds and hundreds of members. And we really try to drive own that message of striking the right balance between work life and personal life.

Ken Gavrity (31:27):

And we think that makes for really excited, energized employees. And we see it in how people show up every day. What I would say on the professional side connected to that point, just the biggest believer that culture is the most important thing that you can build. It's the competitive advantage that is sustained over time. I think whatever business strategy you have can ultimately be eroded and usually will, but when you create the right culture and it attracts the right people, you have this enduring ability to continue to look forward and find the points of competitive advantage. So I'm just very passionate around build the right culture, you'll bring the right team together, the right team will figure out the next move.

Greg Myers (32:09):

I can't remember exactly who it was, you may know, but they said culture eats strategy, right?

Ken Gavrity (32:13):

That's right. Absolutely, and it's just very true. When you add execution to the back end, get the culture right, then focus on execution.

Greg Myers (32:21):

Yep. Love it. so what advice would you give, you mentioned going back nine years or so in payments, I've been in payments for going on 15, 16 years. And certainly back then, I don't even think the word FinTech existed. Today kids go to college, they can take FinTech courses. I'm sure at some point they'll be, if there's not already a FinTech degree that you can get and payments and FinTech, it's a hot, sexy industry to be in. There's so much money being invested in it. It's so important to our daily lives. So what advice would you give someone coming right out of school? They want to go into payments. They want to go into FinTech. What would you tell them they need to do to be successful?

Ken Gavrity (32:57):

Yeah. Look, I think even though there's much more information in school, around product management and what's going on in the FinTech space, it's still fairly abstract. So when I spend time talking to interns or going on college campuses and talking about what we do in our group, the eyes in the audience, getting wider, okay, I sort of knew from The Wall Street Journal, what I thought was occurring in this industry, but I don't understand what daily life is all about. And so I still think there's a huge opportunity for education. And so if you're coming out of school today, what I can tell you is you may think you know exactly what it is that you want to do. But I would push you toward, start with finding the right culture. If you join the right team and you join the right culture, you're going to find people that are going to open doors for you that you don't know are out there today.

Ken Gavrity (33:46):

And jobs that you've never heard of because they don't teach all the different jobs that are out there in school. And in a fast-paced industry, that's evolving so quickly, there are new jobs being created every couple of months. And I can tell you, we see it and we feel it here. We're creating new job categories with new names that didn't exist 12 months ago. So start with finding the right culture, the right group of people that are going to really challenge you and be inclusive. And when you do that, you're going to find yourself having a lot of opportunities that you don't even know about. I think okay, once you get into that environment, what are you going to do? Well, I always tell people make an impact any way that you can, because there are a lot of people who are ready to change the world in the first three months.

Ken Gavrity (34:28):

But my point to people is just make an impact. If it's being the person, if you're the lowest man on the totem pole or the lowest person on totem pole, in a meeting, take the notes, follow the leaders afterwards. And in that moment, it creates even just a reason for networking and connection with the people to say, okay, we've got three follows coming out of this. Did I get the right three? By the way, number one, I'd love to work on with you. How can I be impactful here? And the moment that you start to show impact, then again, you're starting to be asked into the room in the moments that matter. And that gets you into the projects you want to be a part of. It helps you connect the bigger picture. Why are we working on this?

Ken Gavrity (35:06):

What's the opportunity? But I think this notion of making an impact is huge. And you've got to show it fast because the people above you only have so much time and to be able to offer mentorship and they're going to pick the people that are having an impact. And then number three, last one I promise is just get close to the customer. You got to truly understand the pain points and the opportunities and any way you can get close to the customer I think you start to really get a feel for that. And that's where you start to understand differentiation of value profit strategy.

Greg Myers (35:34):

Yep. I think that's all great advice. Well, Ken, we've covered a lot of ground today on KeyBank itself. What you do, the value props, how it makes you different. We've covered you and your background and we've talked about the industry. So is there anything else you'd want to talk about before we wrap up?

Ken Gavrity (35:48):

No, Greg, I think we've covered a lot of ground, as you said. I would just say that the final count would just be at Key, we have an exciting path ahead. I think the industry has a really exciting path ahead. There's so much innovation occurring and so many talented people are now joining this space. It's just really exciting.

Greg Myers (36:05):

Yeah. I completely agree with you there. So Ken, thank you so much for being on the show today. I know your time's very valuable, so I really appreciate you being on.

Ken Gavrity (36:13):

Thanks for the time, Greg.

Greg Myers (36:15):

Absolutely. And to all you listeners out there, I thank you for your time as well. And until the next story.

Speaker 1 (36:20):

Thank you for joining us this week on the Leaders in Payments Podcast. Make sure you visit our website @leadersinpayments.com, where you can subscribe to the show and where you'll find our show notes. If you enjoyed listening, please share on your social channels as well.