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Hank Seale – Outworking the competition, partnership wisdom, and the source of true happiness. | Episode 19
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Welcome to episode nineteen of Builder, Banker, Hacker, Chief! Joining me today is Hank Seale, Founder and CEO of Hapax.
On this show, I’m unpacking the stories, decisions, and influences that make people successful leaders.
As a young boy, Hank Seale fully expected that his destiny was to run the family’s cattle ranch, as generations of Seale men had done, going back before to the Spanish land grant. His only interest in banking came at the direction of his father, who taught Hank how vital it was for the ranch to have a relationship with the bank.
My name is Nathan Baumeister; I am the Co-founder and CEO of ZSuite Tech and the host of this podcast.
Although Hank never took over the family ranch, for reasons you’ll learn in this episode, he also never forgot the role of community banking in supporting local economies. Hank doesn’t present himself as a tech wizard, but he’s certainly a prophetic figure when it comes to banking technology.
His companies have been instrumental in two of the most significant shifts to happen to the banking industry: telephone banking and internet banking. As the leader of Q2 for nearly 20 years, Hank’s influence over how banks serve consumers cannot be overstated.
Today, his latest company, Hapax is poised to complete a hat-trick of transformations, using artificial intelligence.
With all of his success, and the challenges he’s overcome, including betrayal by his first business partner, Hank pulls from a deep well of leadership and life wisdom. Don’t let his humble, self-effacing manner fool you, Hank Seale is far more than meets the eye.
Resources:
Hank’s recommendations:
How to Win Friends and Influence People by Dale Carnegie
Connect:
Recommended
Transcript
00:00:00
Speaker
Don't believe in things. Money is not the source of happiness. You know, what you do with your life, the people that you surround yourself with, the things you choose to do, but that's the source of your happiness and the fulfillment you get from being productive and being able to provide for others, whether that's your family or, you know, if you're lucky enough to be able to take care of your family, then you start taking care of other people. And that's the fun stuff.
Introduction to the Podcast
00:00:34
Speaker
Hi, my name is Nathan Baumeister, and you're listening to Builder, Banker, Hacker, Chief, a podcast where executives from the world of finance and technology share the story of how they got where they are and the decisions that made them who they are.
00:00:48
Speaker
I'm looking for hidden moments of truth and sacrifice, wisdom and folly, and what it's like to navigate the treacherous waters at the helm of a growing company. I want to do all that so that together we can learn from their journey and use that insight personally and professionally.
Meet Hank Seale: A Banking Innovator
00:01:05
Speaker
In episode 19, my guest is Hank Seale, CEO and founder of HapX, a native AI platform for banks and credit unions that offers a fully customized experience tailored to each institution's needs.
00:01:17
Speaker
Born into a Texas ranching dynasty, Hank was expected to put in a hard day's work at an early age, opening and closing cattle gates for a nickel a pot. This trait became the foundation of his success.
00:01:30
Speaker
Thanks to his dogged work ethic and focus on serving others, Hank has ushered in not one, but two major technology transformations for the banking industry. First, through telephone banking, and second, through personal computers and the internet.
00:01:44
Speaker
His latest company is poised to create a third transformation for the industry, but you'll have to listen to the episode to find out exactly how. You might assume that Hank is something of a software or hardware savant, given that he founded Q2 and ran it for nearly 20 years.
00:02:00
Speaker
But tech isn't what drives him. Hank Seal loves helping people. That's what gets him out of bed every morning and working just as hard in his 60s as he did when he was a boy.
00:02:11
Speaker
It's a massive gift to have Hank appear on episode 19 of Builder, Banker, Hacker, Chief. So pull on your work boots and get ready to join Hank Seal as he opens the gates for a whole herd of leadership stories about opportunity, betrayal, and persistence.
00:02:33
Speaker
ah Hank, I am so grateful for you being here on Builder, Banker, Hacker Chief. I can't believe you're having me, so that makes two of us. I can't believe you agreed to be on it, so this is ah this is this is great. ah you know For the longest time, I've i've i've heard that you're ah basically a neighbor in Dripping Springs, Texas. I have um heard a lot of different stories and followed many of the companies that you've worked with, and I'm just really grateful for you taking the time to to to to let us capture some of your stories that help to help you become kind of the the leader that you are and the lessons that you've learned. It's a real honor. Thank you very much, Nathan.
00:03:13
Speaker
So i I would love to start with, especially from our from our previous conversations, I know that you had a really, really interesting growing up story that has influenced your career in a very big way.
00:03:28
Speaker
ah So I'd love to start kind of from the beginning, if you will.
Hank's Career and Early Influences
00:03:33
Speaker
I grew up on a ranch. It had been in our family since the eighteen twenty s ah from spanish before the Spanish land grant.
00:03:42
Speaker
And um it passed down generation to generation. i was the oldest male child, so that's what I was going to be doing when I grew up. There really wasn't any question about it. There was no thinking about what kind of career did you want to do, any any of that it was that. It was all laid out for you. All laid out, and that's what you were to Generations ago. Yeah, it didn't even cross my mind to think of something else.
00:04:06
Speaker
So I grew up, started at five years old, a nickel a gate, opening gates. um Worked on average six, six and and a half days a week.
00:04:19
Speaker
ah yeah 10, 12 hours a day, ah punching cows, driving tractors, welding, building fence, that kind of stuff. All the stuff that you need to prepare you to be a high-tech media tech oligarch kind of person. So um the the after when it was time to go to school, I got told I was going to go to Texas Tech.
00:04:45
Speaker
ah Not A&M. grew up in around Brian. ah They wanted to get me away from Brian for a while because I had grown up on a ranch. I was a social illiterate and they wanted to polish me up a little bit.
00:05:01
Speaker
So they sent you to Lubbock, Texas to get polished sent to Lubbock, Texas, big city of Lubbock, Texas compared to Brian. That was really stepping out. Yeah. I was encouraged to be in fraternity, you know, anything that would, uh, give me some kind of polish.
00:05:16
Speaker
And i didn't have to do especially well, uh, school. I was supposed to spend 50% of my effort on academics, 50% on social, uh, just stay in school, which turned out to be almost a big, too big of an ask, uh, because I didn't take to the social rather well.
00:05:35
Speaker
Um, After Texas Tech, I ah got out of Texas Tech with an Ag ECO degree. um After Texas Tech, I was told I needed to go find a bank to work for, to learn how to talk to bankers, to understand bankers.
00:05:52
Speaker
My family being one of the first in that community, maybe the first in that community, we had started two banks, you know, through 100 years or plus 200 years.
00:06:04
Speaker
ah And all the time I'm growing up, my father's explaining to me how having that relationship with your banker and having a trusting relationship and all that is so important. Because when you're raising cattle, we were raising between 10,000 and 15,000 head of cattle a year.
00:06:20
Speaker
And that's a big number when you're buying those. ah you need, ah you know, a good bank. And so that was really instilled in me early, early on. And then I went to Bank of the Hills in Austin, which is the Lyndon Johnson Family Bank, and went into banking, not as a career. i went in there just to learn banking, right? So most of the time, if you're a college graduate and you're you're going in, you're going to take the lending path or the operations path, depending on your education.
00:06:51
Speaker
And I didn't do that. I just went in and said, do with me what you may. And what ends up happening is, uh, they put me in different departments where they need help. And I started out as a loan payments clerk. I was a credit analyst.
00:07:05
Speaker
I was a loan officer. I started the correspondent banking department. I started a credit card department, not me own solely, but, uh, the credit card department. um did an audit at the trust department, found a $2 million, dollars call it discrepancy.
00:07:22
Speaker
um Is that the nice way of saying it? and other And a lot of other things. End up being kind of special a special assistant to the president where he puts me in charge of these workout loans and things like that.
Technology in Banking: Hank's Impact
00:07:40
Speaker
So,
00:07:41
Speaker
It was a really interesting time. And then in the in the early eighty s technology starts coming to banking and the the Johnson family, while everybody else, it's an SNL crisis and and in general, banks are contracting, um ah banks are going out of business.
00:07:58
Speaker
The Johnson family having more money than Carter's got little pills says, we want to expand our market share. And how do we do that? And it was determined that computers might be helpful with that.
00:08:12
Speaker
And this is a period of time where we had a ah fax machine, one of the the first fax machine I'd ever seen and most of our customers have ever seen sat in the in the lobby And if you did a mortgage loan or loan with us, they would one of the features or added benefits for us was you could sign it and then we would fax it to ourselves and you could stand in front of the fax machine and the little roller paper would come out and you could see your signature on that paper that you just did a couple of minutes ago in the other room. And that was that was magic.
00:08:45
Speaker
That's the period of time we're talking about. And ah because I had been in all the the different departments, when they got ready to look at computer systems to grow the bank, buying a computer system was thought of like buying an appliance.
00:09:02
Speaker
Nobody wanted to do it. it's it's It's a trivial job, but it's complicated. So nobody wanted to do it. So they found somebody so they could limit everybody else's amount of time in that project.
00:09:17
Speaker
They found me because I'd been in all these different departments and I could go on that department's behalf and look at the different technologies. And i ended up, me and one other person who was a high school dropout, but read computer manuals for hobby.
00:09:35
Speaker
He was our computer expert. And we went out and we recommended and the bank bought everything to replace and build technology in this bank. It was a fascinating opportunity at the dawn of technology and banking.
00:09:53
Speaker
I essentially got to get a master's in bank technology when it was all brand new. You know, what is a core? What are ancillary systems? How do they work together? And learning that Just because two systems work together, if the people behind those systems don't work together, then they really don't work together. And all of that stuff that goes with that. And they bought every system we recommended except for one, and that was voice response.
00:10:18
Speaker
Because it was so early in the voice voice response tech curve that only a few, very few banks, very large banks used it. And it was considered um impersonal.
00:10:31
Speaker
So we go along, we install this these systems. we have Me and a guy named George install these systems, ah train all the employees, ah do the whole deal. The bank triples in size over the next few years. Hugely successful.
00:10:49
Speaker
um And then because of that growth, the regulators take lots of interest in Bank of the Hills and end up shutting it down. And I neglected to mention that was in not ah in 89.
00:11:05
Speaker
In 86, my family lost everything. So in that cell same SNL crisis, crisis The ranch, the bank, everything? ever that Lost everything. I mean, my parents were living in a borrowed house.
00:11:18
Speaker
um My mother's going back to work as a teacher. She's lost all our tenure, so she's in the worst school in Bryan. And so that was a tough, tough, tough period. um So the bank is going out, not going out of business. It's being beaten out of business by the regulators.
00:11:40
Speaker
And start thinking about what I can do. And because of the the reaction of the voice response, I thought, is there a way that you could make that more friendly, you know, customer friendly?
00:11:53
Speaker
And at the time, back then, the way the big banks had deployed it, it was a 1-800 number and there was no zero in the menu because nobody would call, nobody would ever call that thing during a workday. You would only do it when there was no person to talk to anyway. So just put a 1-800 number in there.
00:12:09
Speaker
And ah so my idea was I'll use a local phone number and put zero in the menu. And it that was Regency Voice Systems. It worked really well.
00:12:20
Speaker
I had started that company with one of the guys that had sold me technology in the bank that worked for Jack Henry. And he was about 15 years older than I was. And so we started Regency Voice Systems.
00:12:36
Speaker
um'm I'm excited to get into the Regency's system, but I did have a couple of questions just on some of the things that you've shared so far. I think one of my questions is, is that some of the some of the guests that we've had um kind of forge their own path and you know choose your own adventure, if you will.
00:12:56
Speaker
And some have kind of followed more of the path that you've had where you know there were certain expectations that you were raised like, hey, this is what you're going to do. Here's the path that you should take and do with it what you will. I'm just curious as you reflect back on on those times,
00:13:14
Speaker
how how How do you think that kind of shaped you and how is how have you taken the learnings of having that path laid out for you and what you've done as you've mentored other young leaders kind of starting their careers?
00:13:28
Speaker
ah The path was irrelevant, except that what I learned in ranching was how to work really, really hard in difficult circumstances, be uncomfortable.
00:13:40
Speaker
ah When we were in a, you know, when I would be in a pasture, an hour away from anybody and have a problem, I had to come up with a solution or walk back.
00:13:54
Speaker
Really think about what Hank just said. Unless you've worked on a ranch or a similar type of manual job, it's hard to imagine facing broken machinery or or other significant issues and your only choice is fix it or walk for hours to get home.
00:14:08
Speaker
But once you adopt the posture that you're gonna find a solution regardless of the setback or challenge, something deep and fundamental shifts, both internally and externally.
00:14:20
Speaker
That doesn't mean that you should keep pouring effort into a lost cause, but it does mean that human ingenuity and effort can accomplish way more than most people think is possible.
00:14:32
Speaker
Maybe you don't make luck, you just outwork it, and luck finally cuts you a break.
00:14:43
Speaker
And so you, you get to where you, whatever you have, you figure out how to make do with what you've got. And that was a key learning that being able to outwork anybody. I mean, I'm 62 years old and I'm I'm just raring to go every morning. I just can't look can't wait to get in here.
00:15:08
Speaker
um So those are the teachings that I think meant something. The path just completely veered off. It was, you know, ah maybe it was God preparing me for all this, but I don't i don't see the relevance of the deep that's kind of prescribed path that I began with and where we ended up.
00:15:31
Speaker
Yeah. Well, I think one one of the things that I love that you just shared is if the path is irrelevant, what is relevant? It's what you can gain from the experience, right? It's decisions you make. I mean, life is the sum of your decisions. And had I not gone through the ranching thing, I don't think I would have seen that as an, ah either of those as an opportunity. I would have been of a mindset of,
00:15:56
Speaker
Well, I just got beat by all this stuff. What's the next path everybody does? Oh, I'll go in to be a regulator or something. Not that there's anything wrong with that, but that that was what everybody else did was, you know, go try to be a regulator, find a job at another bank.
Lessons from Adversity
00:16:12
Speaker
Yeah. Well, and I love the the problem solving aspect that you talked about, like an hour away from anybody, something breaks down, you got to figure it out or, well, you got to figure it out. That mentality of entrepreneurship is super interesting as well. Hey, there's a problem. How could I solve it? Right there.
00:16:30
Speaker
I know that we can solve it. Right. All we need to do is sit and think about it. Exactly. yeah Don't be overwhelmed by the problem. Just spend your time solving it. Yeah, work on it.
00:16:40
Speaker
So my my my next question is, i you know, you threw out there that ah your family lost everything um from, you know, generations of owning the ranch, ah having, you know, owning the bank and all that stuff. I'm i'm curious, what what lessons, if any, did you take away from that? Because that that's got to be a huge shock to the system.
00:17:03
Speaker
Yeah. ah Don't believe in things. Money is not the source of happiness. yeah You know, what you do with your life, the people that you surround yourself with, the things you choose to do, the that's the source of your happiness and the fulfillment you get from Being productive and being able to provide for others, whether that's your family or, but you know, if you're lucky enough to be able to take care of your family, then you start taking care of other people. And that's the fun stuff.
00:17:34
Speaker
Yeah. Yeah. I love that. And I know that just from previous conversations that had that had a deep influence on you. Oh my gosh. Yeah. And so let's jump back into the Regency voice systems, if you will. You were talking a little bit about this relationship that you created with the partner 15 years older. um Yeah. Just pick up the story from there.
00:17:55
Speaker
Yeah, so ah the first the first year we had a deal that whoever sold the most would own 51% of the company because I thought it was important that there was, you know, somebody in lead, you know, to be able to make decisions.
00:18:12
Speaker
Uh, at the end of that year, I had sold $360,000 worth of stuff and he had sold zero. So, um, it was a pretty easy, know, it wasn't a huge swing. It's 2%. It's not a big deal.
00:18:29
Speaker
Uh, he said, great. You know, I i know the accountants and lawyers, I'll go get the paperwork drawn up and all that long story short, two years later, I find out I own nothing.
00:18:40
Speaker
Um, he's, uh, all, all the stocks in his name and his brother's name. Uh, I ended up buying, I can't remember now five or 10% of it, but I know that I'm not going, this is not my deal. Even though I'm making a lot of money, I'm, I'm probably making half a million dollars a year or something because of how much I'm selling.
00:19:04
Speaker
Uh, that's not a salary is not how you create wealth. Uh, and I realized that, and it it's, it was personal to me. I mean, this was my idea My company, ah you know, I felt like it was my company. And then to be robbed of that, ah I'm going to have a hard time being in the same room with this guy and not getting cute.
00:19:26
Speaker
um So, yeah. Eventually cuteness wore thin and he decided to sell the company. Before that happened though, for two years on nights and weekends, I had this idea of what's the next thing gonna be?
00:19:47
Speaker
and voice response had started as balancing last five checks, ah and That was it. in In probably three years, we had grown it. Two or three years, we had grown it from that to it would do everything up to and including call you and remind you to take your medicine. it We had the ability to pay bills in there.
00:20:07
Speaker
ah ATM locations, all the stuff you're used to. But the point is there was this huge tree of information where before it was just balancing the last five checks. yeah So my thought was, wouldn't it be much easier if you could see all that information on the screen and it's faster to look to a different part of the screen than it is to press one, then four, and then two, and then three, and, you know, get to the information you want.
00:20:30
Speaker
um And had it developed over the nights and weekends, I think, know, it's PC banking. Um, the problem was I noticed that we were dealing with bankers who were not technology literate.
00:20:44
Speaker
So I'm going to hand them a stack of floppies and they're, you know, floppy disk is, Oh, I know floppy disks. right Um, so, and then they're going to turn around and, you know, turn, give it to a customer and explain to them how to use it to get their balance and account information. And that's not going to work very well. And I can i can see that.
00:21:09
Speaker
And somebody calls me and says, hey, have you, a friend, a banker friend, have you ever seen Uh, the internet. And I went, I don't think so. And, uh, tell me more. till Yeah.
00:21:21
Speaker
So he said, you need to come down to this show in, in San Antonio. They're showing things that use the internet. And I went down there, immediately recognized how these things would go together, bought a book called internet for dummies.
00:21:39
Speaker
My wife drove me back to Austin. I read that in the car home. ah probably took me a couple hours at home to finish it. But worked, I don't remember how many hours that night, not a terribly long time. But before I quit, I had my name and a balance on the screen and went, this is easy.
00:22:00
Speaker
And just trying to get this you know, podcast production started, you see my technical literacy. So that's how easy it was. Um, but I hired a guy to start converting the PC banking to internet banking.
00:22:19
Speaker
And we ah had the first system I'm aware of that was up and operational.
Innovation in Internet Banking
00:22:24
Speaker
Uh, and I think it was at state. I think it was state national. Um,
00:22:30
Speaker
um or a bank in Brownwood, I'm not sure, but a small bank. And i showed, this is, again, still during kind of the end of Regency, and I showed it to, and Steve was his name, this gentleman, not gentleman, but showed it to him, and I explained to him how we could take the same interface used from voice response, and we could, i think we called it,
00:23:01
Speaker
We called it something else, not internet banking, online banking, or something different. But showed him that you could you we do this, and we could own this market because there was nothing else like it out there.
00:23:15
Speaker
And his response, he said, you know, great, let me, comes comes back the next day, and he says, you know, I've been thinking about it. You developed this while you were an employee of Regency, so I own that.
00:23:26
Speaker
And I went, well, I developed it on nights and weekends, and you can go.
00:23:33
Speaker
enjoy yourself. um So that's when Regency ends up getting sold. But, you know, was trying to explain, you'll be a billionaire. just you know You can, I can't remember if he had, I was going to offer him 40% of it, I think, but he chose to fight.
00:23:50
Speaker
Anyway, so that's where QUP comes from. Yeah. And just real quick, if I could ask a question about that. So I don't think that it is uncommon through anyone's professional or personal journey in life that they are ah disappointed by someone's actions, um betrayed in some sort of way. Yeah.
00:24:14
Speaker
There's usually two paths to that. There's one where you move on and there's one that you never forgive and become bitter. um um i know that this isn't the last partnership that you created and that you were right you did go out and trust people again, even after you had this ah ah this bad experience with um with Regency voice systems.
00:24:36
Speaker
I'm just curious if you have any thoughts as you reflect back on you know how to move past those types of things, how to how to think about dealing with you know bad actors throughout our lives?
00:24:49
Speaker
I think part of that is a little what we talked about before is the lessons learned about don't excuse me don't focus too much on money or things.
00:25:01
Speaker
So it becomes, it it it was a betrayal, but it was just just an obstacle to overcome. It wasn't, any I obviously wouldn't trust him again.
00:25:14
Speaker
ah but it didn't apply to all people. And um i would say I'm overall a very, very trusting person still. i mean, no difference. in In that sense, it didn't affect me like you might expect that it would where you shut everything down and I learned a lot of lessons from ah Steve and how not to manage a company and how not to treat people.
00:25:40
Speaker
So when I first started QUP, I sat down with a notepad and a pen and what kind of company do I want to run?
00:25:52
Speaker
Personally, think that working for poor leaders is highly underrated. It's easy to complain about a bad boss or a dysfunctional manager. But those people could teach you more about being a great leader or building a strong company than anything else.
00:26:07
Speaker
Sometimes you have to see something breaking or broken to truly understand how to fix it. Otherwise, you'll just assume that healthy communication, strong values, and integrity are the default for every person.
00:26:20
Speaker
They aren't. Bad bosses can be some of the best teachers if you let them.
00:26:29
Speaker
And one of those, the first one is do unto others as you would have them do unto you. You know these these are all simple things. um And one of them is you know, pay attention to the details. the The devil or angel is in the details.
00:26:45
Speaker
ah I'm not a detailed person, so but you if you look, typically i almost always have a president or COO that is a very detail-oriented person.
00:26:58
Speaker
And, you know, I throw massive amounts of stuff over fence, and accounting counts the bodies, and operation person stacks them.
00:27:09
Speaker
And, you know, they're the organized people. Yeah. Yeah. Put it in context. Don't let it get jaded. Just to overcome the obstacle and keep trusting in people. Again, you can get wrapped around the the axle of what's happened to you, or you can just move on and go fix it. It's wasted time, though, worrying about things in the past.
00:27:31
Speaker
Yeah. I do. i I love the, that, um, queue up systems that you had an idea, which was important, but it sounds like the next most important thing that you wanted to write down was what was the type of company you wanted to be as well.
00:27:48
Speaker
Queue up. It just crystallized uh, pared down to what was important and that was people and how you treat them and this is one of the bigger aspects is in all the companies i've been involved in we always give uh people yeah fair compensation and equity that's commiserate with the value they're creating and it's it's uh just core with me because
00:28:20
Speaker
it's makes a difference how people trust you when you treat them fairly from the very beginning. Yeah. I love that. And that's, that's another piece is, is how can you take bad things that happen to you and turn it to good things that you can do with many people? So stop the, stop the negative, start the positive and create a whole new chain.
00:28:42
Speaker
Absolutely. And it, at least with my experience, the The fork in the road after ah major but catastrophe, the bigger the bigger the catastrophe, the bigger the fork, the more the opportunity.
00:29:01
Speaker
yeah My family lost everything. that could have easily I could have been you know curled up, balled up in a corner, um but the opportunity that opened up was massive.
00:29:12
Speaker
I had an opportunity to go back and buy that ranch. and chose not to because this life is better than that life.
00:29:24
Speaker
I love that.
00:29:26
Speaker
All right, let's get back into the queue up system. So, uh, wrote wrote down your your founding principles that you're going to build the company on. And first one is internet banking.
00:29:37
Speaker
yeah Yeah, we built ah an internet banking product. It was very successful. We were the first profitable internet banking company. And it keep in mind that we're entering into this business phase where dot-com is just going nuts.
00:29:59
Speaker
Yeah. And if you've got an internet company, you are something special. Um, we got a pro because we're profitable. We got approached by all the other companies who had taken money, grown faster.
00:30:15
Speaker
um in some cases had gone public and now they're coming to us and they're wanted buy the company. And the nature of the conversation goes something, like this this is in 1998 1999 uh they would come in they would say hey we're going to give you two three four hundred million dollars for your company and it's this four-year-old company at this point which is pretty good um And ah but well, what do you want to do with it?
00:30:43
Speaker
What do you want to accomplish with it? And usually it was some version, whether they would come out and write out and tell you or not, it was some version of, well, we want to ah migrate all your customers to our product and we'll fire your employees.
00:30:59
Speaker
And, and and you know, again, they don't come out and tell you that, but over a couple hours you get that. and so i would That sounds like a fun pitch to hear. Yeah, I would decline that. And there was a company called S1 that came in, a a guy named Chip Mahan, super, super, ah one of the people you would most want to go have a drink with. I mean... Yeah, absolutely. He's a great guy. He's a fun, fun, fun guy. ah Came in and and by this time i had...
00:31:30
Speaker
ah had a vision for how to change the financial industry. And the motivation for that was all the articles that were in newspapers ah about how the the percentage of market share for community and regional banks was declining. And these banks like Bank of America and so on and so forth were gaining in market share.
00:31:53
Speaker
And I became concerned that we were going to end up with you know a few banks on the coast and then all of middle America, would be reliant on them. And I've seen how that works when you don't have a whole lot of choices. So it became my mission and my passion to help ensure that ah consumers of banking product, be they individuals or businesses, had as many choices as they could.
00:32:19
Speaker
And I believe that the the strength of our The economy in the U.S. is derived from 30,000 different communities stitched together, those economies.
00:32:31
Speaker
And that's the diversity. this You get strength of diversity from things like that. And um so that's my passion. And I've devised this plan on how to do it.
00:32:44
Speaker
And so when, when Chip comes in and he wants to buy the company and, you know, at that, at that time, you're talking about three or $400 million dollars for something you've been messing with for three or four years.
00:32:59
Speaker
Everybody thinks you're an absolute nut if you don't just, you know, say yes, cash check and run. And, but I said, no, I want, what I want to do Chip is, ah and I've draw out this vision.
00:33:13
Speaker
And he said, that's what S1 needs. That's the soul of our company we're missing. That's what we need. How about if we merge and I'll give you $40 million dollars a year to accomplish that vision. You just make it where we can offer it to the bigger banks too.
00:33:28
Speaker
And So I took that deal and I learned a lesson that um you don't merge. You either are acquired and controlled or you acquire and control.
Q2 and the Dot-Com Era
00:33:41
Speaker
And that's when the dot-com bubble burst, S1.com got hit like every other internet banking company. We had refused at QUP. We had refused to change our name to QUP.com because we said we are software developers.
00:33:59
Speaker
company that uses the internet to provide banking services. We're not an internet company. What we did was we started a Trojan horse that would give us the ability to build out a system that could eliminate community and regional banks having to be tethered to branches. Because at that time, Bank of America had 10,000 branches, 17,000 ATMs, and we might be talking about a community bank that has one branch and one ATM.
00:34:29
Speaker
How is that bank going to grow if the only way for them to grow is to keep adding real estate and branches? And so the goal was to develop the system that would untether them from that business model.
00:34:43
Speaker
ah The second goal for them was to open up the data because community and regional banks, their relationship with their cores is not like Bank of America and they're not able to pick up the phone and call their core and say, hey, we'd like these sets of data and exposed and Bank of America can. So open up that data. And then the third thing was create with that open data now create other revenue sources that have not ever existed before and so you'll see over q2's existence uh those are the things the primary things they've done they've done a lot of other stuff in addition to that but those were the key business goals of q2 and in uh june of 2024 uh
00:35:31
Speaker
ah Marketplace has been out for two or three years at that at that time. And there are financial institutions on Q2 using Marketplace who are generating 400% more than they're paying Q2 in either revenue or saving.
00:35:53
Speaker
And at that point, I said, check the box that Q2... That was that last thing you were looking for. was the last thing I was looking for. you know... I have to hand it to Jonathan Price and Matt Flake and those teams.
00:36:09
Speaker
that Most of the components of that vision were considered ah in ah not obtainable 20 years ago. Open data, that's crazy. Not going to a branch, that's crazy.
00:36:22
Speaker
um You know, having ah a stream of revenue that can exceed your ah you income from loans, that would that seems crazy, but isn't absolutely possible with the marketplace as it grows.
00:36:37
Speaker
And so it in June of 2024, I left being chairman of Q2. There had been a sister company that was started alongside of Q2 way back then to accomplish another set of goals to change the financial industry.
00:36:55
Speaker
I'd been focusing on Q2. That's done. I can go now focus on this other stuff. The company was CBank Network was the name of the company. um It's about 15 years old.
00:37:08
Speaker
And here's an interesting it the The ramp-up of CBank taken a fair amount of time, but there are 8,600 financial institutions, 70,000 bank and credit union professionals on it.
00:37:24
Speaker
ah Well... and $21 trillion dollars worth of total combined assets when you add those banks together. The reason that's significant is one of the key things that CBank's supposed to accomplish is create synthetic scale equal to or greater than the largest bank out there.
00:37:45
Speaker
Take JP Morgan, they're probably $3.8 trillion, and you're looking at CBank total combined assets at $21 trillion. Again, 20 years ago, if I said we can create an entity that has more assets, you know, that's bigger than ah JP Morgan or a Bank of America. You'd have thought that was crazy.
00:38:03
Speaker
But the CBank people did that. But there was nothing, we weren't doing anything interesting with that scale yet. And so You know, as fate would have it, I've subsidized every bank's membership into CBank and never charged them a thing because my whole thing is about helping banks, right?
00:38:25
Speaker
Yeah. Well, somebody in CBank, because we were giving it away, had the brilliant idea of, well, the terms of service agreement should say that we own the data.
00:38:37
Speaker
So for 15 years, we've been collecting data on 90% of the banks in the u banks and credit unions in the U.S., hundreds and hundreds of thousands of of conversations back and forth with banks that are solving problems with and for each other, and ah training videos and webinars and just, I mean, just tons and tons of data.
00:39:04
Speaker
And the C-Bank people, when AI starts coming out, says, well, we need to, AI is going to put C-Bank out of business because one of the big features in C-Bank is you can ask a banker to help you with a problem and they can help you.
AI and the Future of Banking
00:39:17
Speaker
ah AI is going to be able to do that same thing. So we need to put ourselves out of business, not wait till somebody else does it. They start working on AI.
00:39:26
Speaker
And here we have banking industry transformation number three. Imagine taking 15 years of highly specific banking intelligence and troubleshooting conversations and turning it into an artificially intelligent tool that anyone can use.
00:39:42
Speaker
Now, there's a huge amount of hype around how AI is going to remake the economy and transform society. I'm not in the business of speculating on that stuff. But sometimes a new tool or technology comes along and you can see a glimmer of what it can do.
00:39:58
Speaker
Hank did it with telephone and internet banking. That's two for two. I'm excited to see what happens next.
00:40:14
Speaker
They come up with something more much more significant than just chat, and that is HapX, which is a ah native generative AI platform that that is trained on this oodles and oodles of data ah from CBank.
00:40:33
Speaker
And the the data, what you what we end up with is just a super smart banking-oriented system. And so where ChatGPT or Gemini some of those other systems can achieve an 80% accuracy, we can achieve an excess of 99.5%.
00:40:53
Speaker
Yeah. so Wow. it's it And it is astounding. it's It's going to be the most transformational technology that I've ever been involved with. The company is well set up.
00:41:09
Speaker
Because of the blessings of prior companies, it's not for want of any funding. um And we have this gulf that exists because of the data that the the data that we've we have through CBank.
00:41:27
Speaker
ah So that's what we're doing right now. in we rolled it out in June of last year, kind of beta, tested it with about 100 bankers. They liked it. They wanted an enterprise version of it. We had already been working on an enterprise version. We rolled that out. We've had 10 banks that have been ah testing that for the last, call it,
00:41:53
Speaker
four to six months, and we're about to start charging for it. So we have a tremendous demand for it for such a young company. And then so I'm really excited about all that.
00:42:09
Speaker
Yeah, that's amazing. what is One of the things that struck me as you talked about your journey from Q2, CBank, now HAPEX, that it really seems like there was a big shift.
00:42:23
Speaker
Like QUP Systems, you made the big shift of being very people-oriented, great culture. Let's make sure people are taken care of. Give everyone um some equity or options or something like that.
00:42:36
Speaker
And then it almost seemed like another level up from a leadership perspective that you then also found kind of this mission or passion, like a reason to be. actually like what Chip Mahan said, you know, it it could become the soul of S1. I know it didn't work out that way.
00:42:51
Speaker
um But i i I felt that strongly that every company that actually has a soul, that has a mission, that it does make a difference for everyone involved. difference.
00:43:02
Speaker
Yeah. My question is that I would love to hear is is as you move to being a mission-based company from Q2 onward, ah what were some of the learnings on figuring out how to take that that mission and that passion and get your team members excited about it, get your clients, the banks and the credit unions excited about it?
00:43:25
Speaker
I mean, it's a difficult thing to do. And so I'm just curious what lessons and and and stories you might have ah particularly with that. So and with, we did it at QUP, but we were a lot more organized in Q2. You know, after you've done a few of these, you start getting better and better and better.
00:43:45
Speaker
ah In q two every employee, new employee, ah goes through an onboarding process. And for the first probably thousand employees, they're myself, Matt Flake, all the senior execs met with every one of those new employees. It starts with you're meeting with one employee.
00:44:08
Speaker
It ends with you're doing it once every couple weeks with maybe 50 or a hundred people. and Yeah. Just depending on what their growth rate is. Right. Right. at given time Every one of those heard that story and saw the drawing of here's our mission. Here's why it's important. Understand that your mother, your father, your neighbors, your cousins, all of them depend on access to capital, to start businesses, to buy homes, to buy cars, all that stuff.
00:44:41
Speaker
This is to help them. And draw those dots out where anybody can follow that line of reasoning. And like you said, just brings a whole different level.
00:44:56
Speaker
You're working for your family and your neighbors and people you haven't, you know, maybe homeless people or anything. That's where you get your passion or that's where I get my passion.
00:45:09
Speaker
You know, the money is not the thing. It's what can you do? Who can you help with that money? And that's what I think about. That's what gets me excited.
00:45:22
Speaker
And helping community banks and credit unions, I've just been around those people my entire life, and you just can't find, you know, on average, better people anywhere.
00:45:35
Speaker
They believe the same thing that I'm telling you right now, that their job is to help people. That's what they believe in. The good ones, that's what they believe in.
00:45:46
Speaker
Yeah, I always laugh when I talk to my friends who are running companies in different industries. They have all these horror stories of how horrible their clients treat them and how they're not really great people and stuff like that.
00:45:58
Speaker
And I just sit back and think how grateful I am to be working with bankers and folks at credit unions because they really are, generally speaking, very oriented towards helping, which is great.
00:46:12
Speaker
Yeah, and I think we're about to, looking forward, what we're going to get into now is period in banking where bankers can get back to their roots because with the things, and I know specifically what HAPEX does, but I mean, everybody's aware of the impact that AI is going to have.
00:46:35
Speaker
They may not know exactly how, but I can see With the new technologies coming out, that so much of their job that is taken up in, know, adhering to regulatory issues, you know, manipulating spreadsheets and trying to figure out what the right answer is to customers question or how to price something or any of those kind of things, all that monotonous work is going to go away.
00:47:07
Speaker
And you're going to be left with the human side of banking again, where it's about helping people and for the first time in a long time, having the necessary tools at their disposal to accomplish the job without spending all their time doing that stuff.
The Future of Banking with AI
00:47:27
Speaker
And it is really exciting. think that you'll see the impact in maybe as little as two years, certainly within five.
00:47:39
Speaker
And it's just really exciting me. If we can just keep them, I used to say, if we could keep the community and regional banks in business until figure out a way to eliminate the regulatory overburden that they have to deal with, then we'll make it.
00:47:56
Speaker
Well, HAPEX has done that already. So all that,
00:48:04
Speaker
1% of our system just completely eliminates all that for banks. So past that point, now it's how great can we make them? Yeah, that's awesome.
00:48:17
Speaker
The other thing, and I know, so hindsight 2020, right? So I'm going to ask you use your hindsight with perfect vision. But you have been in the banking industry and have been right at pivotal times of huge technology shifts.
00:48:35
Speaker
Starting with voice response, phone banking right there when the Internet came in and figuring out, yeah, this is going to be the next thing for banking to right now sitting on the the cusp application of AI to huge data sets to be able to help out the specific industry.
00:48:54
Speaker
You've been there and you've been doing things helping at each of these pivotal time points. So what's the secret? I know hindsight's 20-20, but I'm just curious, like you have been there for each of these things and you've been able to capitalize on that to help this industry.
00:49:14
Speaker
I think I have passion for, deep passion for helping our customers. So, you know, I have that desire to help them coupled with the capacity for hard work that my mother and father instilled with me, to me, and not having fixation on money.
00:49:41
Speaker
So even though I've been part of teams that have been very successful and made a lot of money, don't stop because you reach a certain amount of wealth and you can retire.
00:49:54
Speaker
That passion to help
00:49:57
Speaker
community and regional financial institutions is what's driving me. So we keep working to continue to help them. And the fact that, you know, our teams tend to work harder than our competitors, we end up being successful at it.
00:50:18
Speaker
Hank's deep love for community banking and the power it has to sustain local economies and families is obvious and inspiring. It goes all the way back to his days on the ranch, hearing his father talk about how critical banking was to the success of their farm.
00:50:36
Speaker
When people have access to resources and a competitive marketplace, everyone wins. I think that the next era of banking will be led by people who understand how to fully leverage technology without sacrificing the humanity of the experience.
00:50:51
Speaker
Money in spreadsheets may not have feelings, but people do. And like Hank said, without people, money is meaningless.
00:51:01
Speaker
Yeah, you find someone that you want to serve and care about, and you just, you work at it. How can I help and care about them? And what's the way that I could do it next?
00:51:11
Speaker
What's the way I could do it When do you stop caring about your kids? You never stop caring about your kids. You never stop trying to help them. And I don't think of bankers as my kids, but that same kind of thing
00:51:25
Speaker
that's what I live for is to help people specifically through the, the channel of community and regional banks, um, right now.
00:51:37
Speaker
And it's just, it's, it's fun and it's rewarding and it's fulfilling. And love having conversations still with banks and you show them something and they just go, Oh my God, that's, that's going to change our life.
00:51:51
Speaker
That's amazing. And that, mean, when that stops happening, I guess I'll quit.
00:52:00
Speaker
Or my wife tells me you're going to quit. It's time. It's time, Hank. Yeah. So, so Hank, uh, You know, as you look at the people that you've worked with throughout your whole career, in some cases you were burned through some of the stories.
00:52:17
Speaker
In other cases, you've really built some great partnerships. So I'm curious if there's some lessons learned that you have in your life or some frameworks or ideas that you use to help you now kind of evaluate who are those people that you want to partner with?
00:52:29
Speaker
Who are those people that you want to bring onto the team?
00:52:35
Speaker
You're absolutely right. And it makes such a huge difference. The first thing, given of my past history, is I'm more interested in somebody's heart than their head.
00:52:48
Speaker
I'm not the brightest bulb in the box. So if you are smart, a very smart, dishonest person, you're probably going to get the better of me.
00:53:03
Speaker
So first thing is, do I think I can trust them? And what's their background? Ask them stories about themselves.
00:53:15
Speaker
Are they very me focused? Are they other people focused? You just pick up little cues about where somebody's heart is.
00:53:26
Speaker
And so that's the first thing. If you can add an intelligent person, know, that the smart head on top of that good heart, then man, you've got a winner, but I would,
00:53:40
Speaker
Q2 was built with that philosophy. insisted, the senior management insisted on talking to every single employee, like I said, for probably the first thousand.
00:53:52
Speaker
And the only regrets I have are when we started to loosen that because the volume of the people we were hiring, we just could not get, spend enough time with each person to get a good read on that.
00:54:09
Speaker
And,
00:54:11
Speaker
That's it for me. It's about somebody's heart. Start with the heart. Start with the heart. Because bad person is a bad person.
00:54:22
Speaker
doesn't matter how smart they are. As a matter of fact, the smarter they are, the more dangerous they are. So as we wrap up, I always like to ask our guests a couple of questions.
00:54:36
Speaker
So the first one is, there's tons of places you can go to, to like, hey, what's the next cool business book I should read and all that stuff. But I feel like that's covered pretty well.
00:54:46
Speaker
So I always like to ask my guests, if you had a recommendation for a book that's not a business book, what would it be?
00:54:56
Speaker
The first one that I read probably in high school that really changed my life, because again, I was an introvert. could barely carry on a conversation with somebody.
00:55:08
Speaker
But as you've pointed out several times, I've got a gray beard and false teeth and bald head and all kind stuff. I'm old. But it would be- Hey, I didn't talk about your hairline once.
00:55:19
Speaker
I wouldn't even know you're wearing a hat. do you think I'm wearing a cap? Um, so that would be, how to win friends and influence people, Dale Carnegie. I mean, it's just an old classic, but the, uh, the foundations laid in that book are as applicable today as they ever were.
00:55:37
Speaker
People enjoy hearing their name. they want to at least think you're interested in them and all the, you know, all the things that that And that was kind of the first step for me.
00:55:52
Speaker
And it's just in my head that that's, I've made every one of my kids read it.
00:56:01
Speaker
So that would be it. Yeah. Well, what's interesting is I personally know several people who grew up their entire lives having very difficult time at connecting to people.
00:56:15
Speaker
And every single one of them, because now they're great at it, point to that same book. Oh, really? The principles that actually helped them to overcome that. So I'm not surprised that, you know, I know you had mentioned several times that they sent you off to tech so that you could work on your social skills.
00:56:31
Speaker
Exactly. Yeah, but the principles in that book definitely are timeless. They do have an updated version where they share some of the principles more for the digital age too, which has been pretty good.
00:56:43
Speaker
But following the same principles. All right, the next question is this. From your perspective, is a leader born or is a leader made?
00:56:54
Speaker
think in my case, it was made. There was nothing, you know, I can remember hiding underneath a big bush in my front yard crying because none of the neighborhood kids, you know, I wasn't cool, but, you know, just...
00:57:14
Speaker
So I don't think there was anything to indicate that I was going to amount to much. As a matter of fact, fun story about, oh, probably 10 years ago, group people sitting around living room, my mother's there, and one of them asked her, you know, hey, Mrs. Seal, did you know that Hank was going to be so successful?
00:57:39
Speaker
And I guess she's forgotten. gotten I was sitting there whatever, but she's, she's looking at that person. She goes, you know, no, I didn't think he was ever even going to get off the couch.
00:57:52
Speaker
Um, yeah. Maid, not born in my case. Yeah. Well, love that. And it's a wonderful story. Curiosity, service, hard work, picking the right people to work with.
00:58:09
Speaker
Kind of like what you said, you always have that COO or president. 100%. You really, absolutely. That's a very good observation. Yeah. I mean, just all that stuff from the stories that have you shared are just great examples for me.
00:58:21
Speaker
I learned so much talking to you about it. So I really appreciate your time, Hank. Thank you so much, Nathan. I've really enjoyed it and appreciate the opportunity. Thank you.
00:58:35
Speaker
The 33rd President of the United States, Harry S. Truman, famously said, It's amazing what you can accomplish if you don't care who gets the credit. You could see the evidence for this sentiment running all the way through Hank Seal's journey.
00:58:48
Speaker
He doesn't claim to be smarter, more talented, or more charismatic than his partners or employees. Hank Seal understands that his success is built on working harder than anyone else and finding the right people to work alongside.
00:59:03
Speaker
And even when partnerships don't pan out, like at Regency Systems or when his family literally lost the farm that his ancestors had lived on for more than 150 years, he didn't give up or wait for somebody to ride in and fix the situation.
00:59:18
Speaker
Real leadership means taking stock of the capabilities and resources in front of you and focusing on creating solutions. You lead yourself first. Then you can lead others, regardless of who gets the credit.
00:59:32
Speaker
Thanks again for listening to my discussion with Hank Seal. We've got more amazing guests and interviews coming soon. Subscribe in your favorite podcast app for notifications when new episodes are released.
00:59:44
Speaker
You'll find the link to Hank's book recommendation in the show notes. You've been listening to Builder, Banker, Hacker, Chief, a podcast produced and distributed by ZSuite Technologies Incorporated, all rights reserved.
00:59:56
Speaker
I'm your host, Nathan Baumeister, the CEO and co-founder of ZSuite Tech. This show is co-produced, written, and edited by Zach Garver. Sound engineering was done by Nathan Butler at Nimblewit Productions.
01:00:08
Speaker
If you enjoyed the episode, please take a moment to leave us a review or share the episode. This helps other people to find our show. You can also listen on all major podcast platforms, including Apple Podcasts, YouTube Music, and Spotify.