How can commercial lenders build and maintain trust with their clients in the face of an uncertain global economic outlook? For financial services CEOs, it starts with refining work processes, managing risk, and maximizing the value of data generated by business and IT ecosystems. In this episode, we delve into the journey of one leading CEO who has mastered the art of creating relentless customer experience excellence and shareholder value through trust-building. Featured experts Rick Bare, CEO and President, Automated Financial Systems Inc. (AFS) Dr. Elena Huff, Director, Consult Partner, Kyndryl Tom Yezzi, Customer Partner, Kyndryl
How can commercial lenders build and maintain trust with their clients in the face of an uncertain global economic outlook? For financial services CEOs, it starts with refining work processes, managing risk, and maximizing the value of data generated by business and IT ecosystems.
In this episode, we delve into the journey of one leading CEO who has mastered the art of creating relentless customer experience excellence and shareholder value through trust-building.
Featured experts
Rick Bare, CEO and President, Automated Financial Systems Inc. (AFS)
Dr. Elena Huff, Director, Consult Partner, Kyndryl
Tom Yezzi, Customer Partner, Kyndryl
Tom Rourke 00:00
Hello, I'm Tom Rourke, Vice President for Design, Insights and Innovation at Kyndryl Consult, and you're welcome to the latest edition of The Progress Report. Building and maintaining a reputation for customer service excellence and beyond that, trust, requires dedication and focus. And that dedication and focus is increasingly mediated by technology and our effective use of data. I'm delighted to be joined today by Rick Bare, the CEO and President of Automated Financial Systems, a company with an unrivaled reputation for customer service excellence in their industry. And also by my colleagues, Tom Yezzi, who's a Customer Partner at Kyndryl, and Dr. Elena Huff, Director and Consult Partner at Kyndryl, who both have been partnering with Rick in terms of how we use technology and technology-driven services to support his pursuit of customer service excellence. Rick, I'll start with you. So, AFS is a leader in commercial lending services, but can you tell us a little bit more about your business and what makes the role you play in your industry unique?
Rick Bare 00:59
I think the best way to answer that Tom is that it's all we do. There's a lot of competition out there for core banking products that maybe have some lending capabilities. There's others that are larger than us, but they offer a different set of suites of products. But our 100% focus from day one, 54 years now, has been on enhancing the credit delivery model. So every penny we invest goes into making the commercial lending delivery. So it's not consumer, it's not mortgage, it's just business lending. And that's what I think makes us most unique. We provide software, and then we also do consulting, much like Kyndryl has a separate consulting arm. During the implementation process, we have to set up all the workflows. We have to convert all the balances over from the previous loan accounting system. It's a relatively labor-intensive effort, and that's where our consulting group comes in, because we're experts in that area.
Tom Rourke 01:54
Excellent. Thank you. And I'm going to just ask, while I have you, as we look into 2025 obviously, there's quite a lot of change globally with changes in administration in the US, not least. What do you see the business outlook for the year ahead?
Rick Bare 02:08
Uncertainty, in a word. Trump has had kind of a stormy relationship with the Fed and the current, you know, head of the Treasury and the head of the Fed. So he's going to bring his own folks in. And my guess is they're going to focus primarily on lowering interest rates, and I think they're going to focus a lot on deregulating what is thought to be a heavily regulated industry now. That all will play well for banks and financial institutions. To date, I haven't seen any negative comments from any of the bankers about the outlook. So we're bullish. The best way to approach that is, I like to approach things as simplistically as possible. So from that aspect, it's, "How do we make their lives better?" Our clients have their extremely large, complex organizations. They're highly regulated. They have capital requirements, so they have to have efficient use of capital. So I look at it and go, "Okay, well, what can we do to make their lives better?" How can we help them de-risk whatever the situation is? So when we think about our products and our service, it's, "How do we make their lives better? How can they take this off of their plate and say, 'Okay, this is one less thing I have to worry about.'" And then they can focus on the things that need more attention.
Tom Rourke 02:57
And I guess Elena and Tom, do you echo that bullish view working with the customers that you also interact with?
Tom Yezzi 03:03
I do. I do, Tom. The commercial lending industry is continuing to be shaped by various trends, influenced by technology, economic factors and regulatory changes. We see the technology both impacting the financial services industry and overall.
Tom Rourke 03:21
And Elena, maybe, if I come to you, and maybe just taking a broader view, rather than necessarily just the Kyndryl one. Do you see the same sort of positive view the outlook for the sector in the year ahead, or do you see see headwinds that we might need to be paying attention to?
Dr. Elena Huff 03:35
When we explore the next six months or two years, business needs to be more responsive than ever. And at Kyndryl, we provide the kind of IT infrastructure services that enables our partners to adapt quickly while also maintaining this operational excellence. There are multiple examples, one of the recent ones we leveraged IT-driven insights that help identify trends early, allow businesses to pivot strategically rather than reactively.
Tom Rourke 04:04
So Rick, can I come back to you? Elena used the word excellence there, and one of the things that I noted about about your business is that you talk about this idea about creating value through excellence, right? And I'm really interested in what that means in practical terms, as you've built the business. How is it that commitment to excellence really does create value for your customers and for your shareholders? In terms then of how you use technology to basically apply yourself to how you're making their lives better. I mean, how does that work for you? How active of a process is that?
Rick Bare 05:17
It's very active with our clients. We don't have, you know, 5000 clients, the way a lot of others do. We have a relatively small number of clients, so we're completely engaged with them on an ongoing basis. So, you know, we have quarterly calls with them. We meet with them on site at least once or twice a year, trying to find out what their challenges are. And then what we do is we take that back, and a lot of it is just listening skills, hearing what they're looking for, and how we can help them. So then what we do is we come back and we say, "Okay, well, how can we put that into a business process and then to an application that can help them with the challenge that they're facing?" So it could be something like, "Well, I've got this, this client who's headquartered in the United States, but they have businesses in 52 different countries or geographic regions, and I want to have a loan in a separate language, in a separate currency in each one of those places that rolls up to one exposure, so I know what my aggregate exposure is." Those are the type of things that that we take from that and try to put into an application and consulting.
Tom Rourke 06:18
Now it's interesting, because that sounds like a relatively modest number of customers, but perhaps a huge volume of data. To what extent has your ability to actually understand the data separately through those conversations with the customers? Has that become more important? Are there new capabilities you're using there, or how does that work?
Rick Bare 06:38
You know, at the end of the day, you can have all the data in the world. But if it's massive and you can't cull through it, and you don't know what to do with it, I shouldn't say it's worthless, but it's not as valuable as if you can help them drill down onto the data points to say, "Here's how you can change and here's how you can make money off of this. Here's how you can improve processes. Here's how you can improve customer attention." Those type of things.
Tom Rourke 07:02
Inevitably, I'm going to think about Elena as I was thinking about data and understanding its value. I know we spoke in the past about dark data. I mean, Elena, what are you seeing AFS and others do in terms of having like that richer understanding of the data that they have and what's valuable and what's not?
Dr. Elena Huff 07:17
So, dark data, it refers to vast amounts of information that organizations collect but most likely fail to process and use. The dark data is stored, but it's not actively rationalized for decision-making, analysis, improving operations and things of that nature. This is often unstructured data, untagged, siloed, makes it difficult to access and interpret it. But despite its name, dark data is not inherently negative. It can represent actually untapped potential. So some of the examples of dark data could be customer interactions like emails, chat logs or call recordings. Another example of dark data could be operational data, like logs from IoT devices or server activity, again, really strong opportunities there to interpret that server activity for improved performance for an organization. And unlocking that value of dark data requires structuring and analyzing it to discover insights, mitigate those risks, drive innovation. So definitely lots of opportunity there on what seemingly might come through as negative connotation with dark data, but definitely a lot of potential.
Tom Rourke 07:17
I mean, Rick, to what extent is AI beginning to be a factor in your industry? I mean, I think I spoke earlier to another colleague of mine, and, you know, there's quite a spectrum about the industries where there's a level of understanding about how AI is going to play out. You know, in yours, in commercial lending, has it already emerged as a factor? What's the outlook?
Rick Bare 09:00
Definitely it has emerged as a factor. The challenge is, how do you define it, and what are you trying to achieve? The way we approach it is, again, how does it impact the customers, the clients and their customers? And so we look at three variables: better, cheaper, faster. And again, you'll hear that a lot in business. But does it make for a better customer experience? Is it a better process? Do you get turnaround times with customer interaction faster by using a bot or, you know, artificial intelligence? You know, those type of things. But there always has to be, from our perspective, a fallback, that if it's not working, how do I get to the next level so that I'm not frustrated in my customer experience? And that gets back to, again, the customer excellence, customer success and customer experience. They're all kind of interwound from our perspective.
Tom Rourke 09:50
Yeah, and it's interesting. I spoke to a banking leader this week who said their work at the moment is very much about thinking through what exactly the problems are you're looking to try and solve, and what the prepartions are you need in your organization. I mean, are you guys experimenting at this point? Or how have you begun to prepare yourselves for this?
Rick Bare 10:08
We kind of take, the best way to say would be, manageable bytes. So when you're in an application and you're in a workflow application, if you don't know what you're doing, you have to sometimes go to procedure documents and things like that. So what we've created is, and it's still in the early stages, is a chat bot that says, "How do I route this work package to Rick Bare?" And it would say and it would give you all the things you have to do. You know, in my perfect world, the next step would be where the AI would say, "Would you like me to route that for you?" And then you go, "Yes." You know, there's ups and downs to that, because it makes it much more efficient. But then now, do you have workers who don't really know what the process is? So there is a balancing act there. A lot of the problems you hear from banks is it takes too long to make a decision. It takes too long to get an approval on the loan. So we've been experimenting with some AI to say, "Approved, approved with conditions, declined or declined with conditions." And so those are the two main areas that we're focused on at the moment.
Tom Rourke 11:08
And Tom, if I can turn to you, maybe you know, looking again broadly across the industry, are you seeing consistency in how financial services organizations are approaching this, or are there key differences? And what are those differences?
Tom Yezzi 11:21
Right. I do see AI really being embraced across the board from the financial services industry, and it's playing a key role. It's really enabling smarter decision-making in the financial services industry. It's allowing faster responses to emerging financial risks, and it's also allowing more robust security protocols in the face of a lot of cyber threats. So it also improves the end user customer experience as well that you're seeing a lot in the commercial banking space. So I've seen basically AI and machine learning really revolutionizing the decision-making and customer experience by enabling real-time analysis of large data volumes, which leads to better understanding and customer needs and behavior.
Dr. Elena Huff 12:06
AI's role in financial services must grow exponentially. And one of the most promising areas, in our opinion, is Generative AI. Gen AI can assist in credit scoring, pricing models, even customer engagement. For instance, Tom and I are exploring AI models that enable banks to create personalized lending options that are tailored to individual customer needs at one of our other clients. One big challenge, of course, is implementing AI responsibly. At Kyndryl we work with all of our clients to ensure that all of the AI initiatives that we're working on are ethical, aligned with both business and objectives and customer expectations, and ultimately driving shareholder value.
Tom Rourke 12:46
We've had other conversations about AI. Conversations about ethics, responsibility, but bias in particular, right? And certainly in interactions with the individual consumer, one of the concerns is about models that are around making decisions around individuals. I mean, you see this even in things like the advertising industry, is that, essentially bias creeps in. And so, for example, particular populations get over or underrepresented, and then people can act against that. But I'm just curious, are there risks that somehow bias has crept in?
Tom Yezzi 13:16
I really think that human oversight and explainability and transparency is really key in the use of AI, especially in the financial services. So final decisions are really supervised by employees, even when using automated analysis, and this does help prevent the bias and support the ethical decision making. And then all the AI processes must be explainable to the end users, so they can understand the decisions that are made by the algorithms, and then that transparency, in turn, builds trust and accountability within those AI systems.
Tom Rourke 13:50
If I can just come back in Rick to your business. I mean, in almost every conversation that we've had with guests here, cyber security and cyber risk has become a dimension to this, and it's interesting just how active bad actors have been in terms of finding ways of exploiting models. Are you uniquely removed from the frontier of that kind of problem or is that something that you have to be super vigilant about in terms of people gaming your your business?
Rick Bare 14:19
Super vigilant for sure. You know, we have a very large hosted private cloud, somewhere in the neighborhood of 400 billion, and with new clients coming on by 2027, we'll be closer to a trillion dollars in assets being processed on our hosted private cloud. We have all that data for our customers. So absolutely, is cyber security huge for us. In every one of our banks, it's one of the biggest challenges they face as well. Because if you got into any of these banks and you hack their data or held it's hostage, it just wreaks havoc. It is nonstop. And it's massive amounts of investments. I would say, from a technology side and certainly on the people side, it's our biggest investment as of late, and probably on the technology side, it's in the top three.
Tom Rourke 15:05
One of the things that's emerging as a theme for discussion in 2025 first is around this concept of trust and how you build and establish trust. And I guess a thought that I had as I listened to you talk at the beginning of the conversation about your interaction with your customers, the pursuit of excellence, and being very mindful about how you make their lives easier: it strikes me that a really essential component of the value, and maybe not one that you put dollar number on, but it's actually that trust that you've established with your customers. I'm just curious about your views on that, about the importance of trust as a differentiating currency now in business, and what companies need to do to actually focus on that and invest in us.
Rick Bare 15:43
That is an outstanding point. And absolutely, that's one of the things we compete on is trust. Trust that we will not take you down a path that won't work. Trust that when we say we're going to deliver something, we deliver on time and on budget, trust that our products have been tested and work as advertised. Of all of my clients and the executive teams, I think all of them trust me, and more importantly, trust my team, our team. If clients won't trust you, they're not going to do business with you. Most of our contracts, again, Tom, are 10 years, and their significant hour. Somebody's not going to sign a 10-year contract if they don't trust you. So that's big. We play on that, and we we make sure that that trust never goes away.
Tom Rourke 16:32
If I could actually just turn to Elena and Tom. I mean, obviously we need to be super mindful of what it means to work with a highly trusted organization like AFS, right? So you've both had long careers in IT. What does that demand look like when you work with a highly trusted customer in a high-trust environment, like what does that require of a consult partner? What does that require of a customer partner?
Tom Yezzi 16:56
We've been able to build trust through an investment of time, resources, and then open communication on shared goals. So we have strived to bring expertise and thought leadership. One of my favorite days is when we come on site each month at a minimum, and on our team, we have a series of scheduled meetings, but it's the walking the halls and building both personal and professional relationships, we continue to bring solutions and build that trust.
Dr. Elena Huff 17:26
Rick talks about his clients and how we feel about our clients, and it's all about active listening to customers, understanding their pain points, and empowering our internal teams to develop tailored solutions that deliver measurable outcomes in the way that create meaningful progress for our customers. So all of that is really what drives Tom and I to continue to deliver with excellence. And one of the other things that I remember, Rick you were saying is this value through excellence. It's about the way we work. It's about how we communicate and build relationships with our partners, and it also is about the value of the platforms we create, or in the case of Kyndryl, we support.
Tom Rourke 18:13
So we're coming close to the end of a recording, but we always like to focus as we close on this idea of progress. And Rick, I'm really interested in your industry and in the company, as you've just kind of relentlessly focused on making life better for your customers. As you look forward,what does progress look like for you? Like, what are either the challenges that are emerging for those customers that you think are going to be the things you want to focus on for the future, or the things that, for you, would represent the next step of just making life better for those customers you've served for so long?
Rick Bare 18:43
How, at the end of the day, are you gonna just make things more efficient for them? What we try to do is say, "If you use this tool the way we have it, or this platform the way we have it, that turns into tangible net worth." Or you can say, "Well, you do realize now that you can offer these types of loans that you couldn't before. So now you can go to your clients and say, 'Hey, there's not a loan that you can't come up with, that we can't do for you.'" So there's new revenue sources. So if you look at it and go, "Okay, well, I can help you with the revenue. I can help you with the expenses." And all that ties to better customer experience, better outcomes, then you're going to drive shareholder value, not just for their organization, but for ours as well, and whoever's organization that has that same kind of mentality.
Tom Rourke 19:30
So if I can put my two colleagues on the spot here, having heard how Rick focuses on making his customers lives easier, what does that demand of Kyndryl in terms of making Rick's life easier? And how do we go about approaching that?
Dr. Elena Huff 19:45
I remember Rick you said that AFS wins due to your relentless focus on nothing but commercial lending. Of course, in addition to customer service being the top priority. And progress, from my perspective, happens when we, Kyndryl, bring that focus to life by delivering tailored solutions, innovative strategies, and measurable results. We don't just support your success. We hopefully amplify it, help you lead the industry and redefine what is possible in commercial lending.
Tom Yezzi 20:18
In Kyndryl, we have a motto that we always internally are being asked, "How are you showing up to your customer?" And that's kind of the approach that Elena and I take. It's not only physically being there, but really being aware. And I look at it as, "How do we bring all the expertise that we have to bear and really just show our commitment?"
Tom Rourke 20:37
It's interesting, as we prepared for today's recording, we had been talking about customer service excellence, or the focus on on customer needs and on essentially how we were going to use technology in that space. As we talked some real fundamentals about getting to know your customer, really understanding their issues, and a relentless focus on helping them with those issues, but also building an enduring reputation for trust remain fundamentals regardless of the pace of technology change. So, Rick, Elena, Tom, thank you for joining us on today's episode of The Progress Report. Fascinating discussion and your insights are very much appreciated. Thank you.
Rick Bare 21:13
Thank you, Tom, we've enjoyed it as well.
Tom Yezzi 21:14
Thank you, Tom.
Tom Rourke 21:17
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