Centana’s Eric Byunn: The cloud is new territory for many banks

For Eric Byunn, partner at Centana Growth Partners, tech innovation that supports an intuitive and personalized banking experience of the future has room to grow.

Eric Byunn, partner, Centana Growth Partners

Byunn will speak at Bank Innovation Ignite in Seattle on March 2-3, on a panel entitled “Embedded Finance: The Automation of Everything Financial.” He will explore the evolution of product journeys enabled by automation, the future of back-office technology and the role of cloud infrastructure.

Byunn co-founded Centana in 2015. The New York and Palo Alto, Calif.-based growth equity firm recently closed its second fintech fund valued at $375 million.

Centana has invested in nine firms, including digital identity companies Jumio and SheerID, workplace benefits platform Ease and alternative investment solution Alaia Capital.

Bank Innovation spoke with Byunn on the evolution of the industry in 2020. The following has been edited for length and clarity.

How can investors tell when an idea has the potential to be successful?
I’d say solving real problems. Sometimes there isn’t [a problem] that anyone has ever [experienced]. 

Another question is that if the idea matches up with the incentives of all the relevant players. Whoever is pushing the innovation needs to have a business model around it, whether it’s an established financial services company, business, financial institution, or if it’s a new startup — there needs to be a business proposition.

What industry trend surprised you during the past year?
In financial services, the cloud is still a new thing. There have been some announcements from a couple of big public companies around what they’re doing in the cloud for financial services.

The vast majority of banks are not using the cloud for critical loads, and are just now really thinking about making some of those transitions. It’s crazy that we’re still talking about it. But in financial services, it is still a new and exciting trend, and sometimes in the technology community, we forget that the cloud hasn’t had much penetration yet. 

Is there anything that you feel is over hyped?
There are so many things that have been over hyped! The really big ones have tended to be things like marketplace lending, direct-to-consumer — we’re less excited about those sorts of things.

What about the “great rebundling” of services?
We were in the midst of a bit of a boomerang where these standalone fintechs were getting all the hype. There were some high-profile articles and quotes around how the banks were being unbundled and disintermediated. What we see now is that having unified solutions for customers — whether they’re consumers or businesses — actually has a lot of advantages. It could be done through partnerships, or pulling two things together in a bundle, or consolidating [offerings] into a single institution.

Why are some customers still considered underserved?
The underserved are typically not underserved because they are forgotten. They’re underserved because it’s often not profitable to serve them with a traditional model. The positive note from all the innovation happening is that a decent part of it is going to lower the cost to serve previously difficult-to-serve groups. If fintech companies show that they can serve those groups profitably, then the large financial institutions will come in. 

What’s the biggest mistake that companies make make when pitching you?
Most entrepreneurs are actually good at pitching. There’s enough of a community of them both online and offline, so that the blatant mistakes of 15 or 20 years ago are gone. I’d say that it’s important to cover all aspects of a business within a relatively limited amount of time. Entrepreneurs can get caught up or excited about describing one particular part of their business and they don’t describe it holistically. 

What’s a lesson you’ve learned from a failed venture?
We’re always watching the market and watching which businesses are doing well and not doing well. There are several examples where folks had a very good idea about how they could better solve a need of a particular group of customers, but failed to think about how the incumbents that play adjacent or even directly in that space would respond. 

Join Eric Byunn and other noteworthy speakers at Bank Innovation Ignite, which will take place on March 2-3 in Seattle. Ignite is a must-attend industry event for professionals overseeing financial technologies, product experiences and services. This is an exclusive, invitation-only event for executives eager to learn about the latest innovations. Request your invitation.