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Pierre Naudé, nCino CEO, joins the Yahoo Finance Live panel to discuss the future of cloud banking and what's driving M&A in the banking sector.
ADAM SHAPIRO: Remember that old advertisement where BASF said we don't make it, we make it better? Well, that's what nCino does when it comes to banking. They do the operating systems that a lot of major banks use, and they also help those banks do this in the cloud.
Let's bring in to talk about where we're headed with the cloud and banking as we go forward Pierre Naudé, nCino's CEO, and it's good to have you here.
And what do you see coming down the pike? For instance, I was thinking Bank of America is one of your clients. I mean major institutions as everything is now moving to more digitally enhanced banking, and it's all going up to the cloud.
PIERRE NAUDÉ: Adam, thanks for having me. Yes, nCino's now 10 years old, and we introduced the cloud to banking as a whole. 10 years ago, people didn't believe banks would embrace the cloud.
What we're seeing now is in the old days it was, why would we do that? Now the banks are focused on how can we get there faster?
And so we've got a platform that actually scales from the smallest community banks in the US all the way to the big, large international banks like Bank of America, TD Bank, Barclays in the UK, et cetera.
What we are seeing is acceleration of digital transformation, number one, and number two, along with that, the adoption of intelligence at every stage of production. And by that I mean AI, machine learning, analytics where you actually help people to do a better job to onboard their customers, open up any loan product, or actually open any account. And that is accelerating, and we see a need for that in the market on a continuous basis.
BRIAN CHEUNG: Pierre, it's Brian Cheung here. Now, can you just give us, I guess, maybe a tangible example of what this looks like? For example, a client comes in and wants to strike up a relationship for a small-business loan, for example. So the banker knows that this person needs a loan and figures out the numbers for how they want to price it and what the capital is going to be. What then happens, and how does nCino get involved with helping the bank process that application?
PIERRE NAUDÉ: Yes, in the old days, you had to do two things. The first one is to onboard the customer-- in other words, go through KYC, make sure you understand if you could do business with this client from a compliance perspective.
And then the second, it's like herding cats-- collecting all this information, work with lawyers. You work with appraisers, with accountants to collect all the financial information about that small business.
In the cloud-based environment, we actually connect with all those players in the system, and they will actually work in the same ecosystem as the bankers only had access to in the old days. And we can take processes and loan time down by 40% to 50% by actually put all of this in a single ecosystem and then collaborate along the process. It's almost like a social network for banking.
All of this is very secure. It's in a controlled environment, but you understand exactly where the bottlenecks are, how you can improve those and fine tune your credit policies to align with your risk.
Then finally we do the pricing for them. We do the underwriting, and we make that loan just go so much faster because realize one thing. The borrower only has two things in mind. Am I approved? and when can I get the money? And nCino accelerates that whole process, and it makes banks operate like fintechs.
ADAM SHAPIRO: I am curious as we're going through the DeFi revolution how that might impact what you do with the operating systems you designed for these institutions because we're still in a kind of automated clearinghouse world, and yet with DeFi, you get the efficiency of real-time clearing. Is that having an impact yet on what you provide to the institutions?
PIERRE NAUDÉ: Yes. You know, so dilemma for banks is if you look at all of these regulations and these changes is the agility to actually get there and be more efficient and more client focused while staying compliant. That is our biggest challenge.
The cloud-based solutions actually allow them to configure and adjust their processes to align with customer expectations while staying compliant. So all of those things are linked. We provide them the open APIs, the flexibility to actually get there in a much faster time than they could with their old, archaic infrastructures.
BRIAN CHEUNG: And, Pierre, last question here. I mean, M&A is very important for all of this as well because, especially for small banks when they consolidate-- and there's been a lot of consolidation in 2021-- one of the biggest costs for them is incorporating their KYC and other types of compliance systems together. How does your company kind of play a role in that?
PIERRE NAUDÉ: Yeah, we've had a great track record of smaller banks-- our customers being acquired by larger banks, and then nCino actually get deployed across the new entity. So we've been very helpful in helping these bigger banks adopt these new processes. And because of that speed and complexity that we relieve, banks embrace the technology, the software, the processes, and the cultural changes we bring, and we've seen tremendous success with that.
So M&A is a good thing for us. It's a good thing for the industry, and we help banks to actually adjust to that new environment.
ADAM SHAPIRO: Pierre Naudé is the CEO at nCino. We appreciate you joining us today, and have a happy, healthy new year.