Wells Fargo’s Head of Innovation, Steve Ellis

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The following is an edited transcript of a conversation between Steve Ellis, Head of Innovation for Wells Fargo and Michael Halloran of The FinTech Blog.

MH: Your have a new role as Head of Innovation for Wells Fargo. Given its record as an innovator, in areas like online and mobile banking, why do you think the bank is not as well known as it should be for innovation?

“Creating the Innovation Group puts an even larger focus on creating the products, services, and technologies that will allow us to stay competitive and allow our customers to do their banking when, where, and how they would like.”  – John Stumpf, CEO of Wells Fargo

SE: I’ve seen different waves within the bank and across the broader industry. Right now there’s tremendous interest in innovation.

Innovation has always been there: It’s just sometimes the case that other messages stand out. Take the financial crisis of 2008. During that time, a lot of the energy was put into risk and controls. Or the integration of Wells Fargo and Wachovia. It took a lot of effort. But the innovation story is real.

We have been innovating for a long time. There is remarkable creativity in our organization. There is no lack of ideas. I see our role as to give a voice to ideas, which come from all areas across the bank – as well as outside the bank; it’s so easy to focus on what’s internal and miss what’s going on outside that’s interesting.

MH: How do you see Wells Fargo’s Innovation Group compared with other models? e.g. CitiVentures has a mission, beyond its venture investing, to bring innovation to Citi. Capital One Labs’ mission is to deliver products with big impact, but gets involved in acquisitions (e.g. LevelMoney).

SE: Our team is 150 team members strong. Our initial focus is on 5 areas: R&D; innovation strategies; payment strategies; design & delivery; and analytics.

We want to bring focus to the great ideas within Wells Fargo and serve as a catalyst to foster innovation in areas ranging from business models to user experience. We want to innovate across the entire organization — at a time of increased risk and regulatory focus.

We also want to encourage our team members to sit up and look outside the organization for innovation and ideas.

wfc startup accelerator

An example of this is the new Wells Fargo Startup Accelerator.

Our Startup Accelerator expands our vision of the future of financial services beyond the boundaries of Wells Fargo and banking, and introduces us to innovators who want to shape how our customers handle their financial needs in the future.

MH: When Morgan Stanley’s Technology Business Development Group put on its CTO Summit, our focus was on innovation, as well as team building and business development. Is that true for Wells Fargo?

SE: Yes. There’s an advantage for us to have early interactions with the startups in the space. The accelerator gives us an opportunity to get involved and connect with the brightest startups from around the world.

MH: What innovation areas are critical to you now? Given Wells Fargo’s current focus on growth in credit cards and wealth management, investments and retirement (WIR), is it in areas like analytics?

I can see us going in a direction of offering identity as a service…

SE: Analytics is a great example of an area rich in innovation opportunities. Others are security and identity management. We’re good at security; as a bank, you have to be strong there. It’s fundamental to our business. The Innovation Group also owns initiatives like mobile wallet services to propel innovation in this important area for Wells Fargo.

We have a lot of good ideas. We literally have received hundreds of good ideas from team members across the company since forming this group. I see it as part of our mission to drive focus and execution on a reasonable number of focus areas, so we’re working on five big ideas vs. five hundred.

MH: I know the innovation group at Bank of America struggled with issue of mission creep by expanding its mission from ‘innovation’ to execution in areas, e.g. social media and mobile, that put it in conflict with areas of the bank that owned those efforts. Is that a risk?

SE: We are a small group by design, and we have to clearly understand our mission and purpose for the company. I was invited to speak at Wells Fargo’s companywide Town Hall with our CEO last week. We talked live with team members across the country about the mission of the Innovation Group.

Internal communications is important, and we want to clearly articulate how we will give a voice to innovation and ideas across the wider organization. Our group will stay focused on our customers – and I’m confident the ideas and solutions will follow with rapid execution.


wells fargo 3d

MH: You mention the Innovation Group is a small organization. Do you think you will bring in individuals from outside to help the team?

SE: We have a lot of interest from Wells Fargo team members in joining the group, and we’ll grow. Would we hire some talented technologists or those with other skills who don’t know banking and teach them about banking? Yes.

MH: As someone who’s worked at a startup and a bank, it frustrates me to hear VC’s say ‘Banks haven’t done anything innovative in the last ten years’ and have people believe them. How do you feel about that?

SE: I’ve been around long enough to recognize that a lot of people who are driving the conversation are pushing an agenda. I’m accustomed to it. We maintain a good relationship with the venture world along with startups.

We think we can innovate with the best. For instance: biometrics. There’s a lot of seriously cool stuff that’s happening in that area.

If you think about it the area of identity management and authentication is one in which the banks are really exceptional. I can see us going in a direction of offering identity as a service, for example.

I think the predictions about what is going to happen in 3-5 years are not as interesting as what’s going to happen in 20 years.

MH: Despite the success of Bloomberg ‒launched with Merrill Lynch as a minority owner – there hasn’t been a lot of consortium offerings from  banks. Why is that?

SE: To drive a program through a large institution, you quickly need to get a lot of specific people in meetings who have decision-making power. A consortium, to me, makes the whole process much more difficult. With the right idea, of course, anything is possible.

MH: What do you see when you look ahead?

SE: I think the predictions about what is going to happen in 3-5 years are not as interesting as what’s going to happen in 20 years. There are things we can do using APIs, however, that will be interesting to watch unfold.

In terms of the big picture, I think change happens slowly and steadily. It’s easy to miss, including changes that can have tremendous impact on the industry. I’m not a big believer in Bitcoin or the related technologies. They seem more like solutions looking for a problem.

MH: Wells Fargo has been a leader in online and mobile banking on both the retail side, as well as wholesale banking side. Wells Fargo’s Virtual Channels Group has done great things, yet many startup pundits seem to say that big banks ‘don’t get it.’ How are you proving them wrong?

SE: We do not want to become an Innovation Group that publishes white papers and just does R&D. We are about being a catalyst for rapid execution.

One example is a California-based corporate client that asked if we could build a new technology solution for its customers. They were considering working with a startup. Wells Fargo built a custom solution within the timeline and exceeded their expectations. That’s what it’s all about: delivering benefits for your customers.


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Q&A with LendUp’s CEO


LendUp is a licensed, socially responsible direct lender offering credit, financial education and services to promote responsible borrowing in the underserved market. In 2012, the company went through Y Combinator, and later received funding from Google Ventures, Kleiner Perkins and Andreessen Horowitz.

Michael Halloran sat down recently with Sasha Orloff, Co-Founder and CEO of LendUp at its offices in San Francisco.

MH: It’s been a couple of months since we spoke. How are things going at LendUp?

SO: We’re growing. As you can see, we’re getting ready to move to bigger offices and are hiring employees as we expand LendUp into more states around the U.S, and grow the business.

MH: Let’s start with journey that led to the founding of LendUp.

s orloffSO: Sure. I graduated in 1999, during the dot-com boom period when the Bay Area, like today, was an exciting place with a lot of startups. I worked at a place called Ingenio.com that was acquired by AT&T.

Around that time, I read Banker to the Poor and got in touch with the author and founder of The Grameen Foundation. I was asked to spend six months in Honduras, but ended up working three years in Honduras, Mexico & D.C. creating software to help microfinance institutions. Later, after grad school, I joined Citi in New York.

MH: What was your experience like at Citi?

SO: I was in a rotation program. I worked in risk management, online acquisitions, finance and customer insights. It was a great experience, but I was frustrated. Each time I’d want to ask questions and develop predictive analytics, or test the user experience, or identify product innovation I was told what I wanted to do couldn’t be done. My brother, who later co-founded LendUp with me, and who was an early software developer at Yahoo, kept telling me that I had a software problem.

I went on to join Citi Ventures where I worked with Debby Hopkins, its founder and others, where I got exposure to a lot of entrepreneurs and businesses in FinTech.

MH: It was around then you decided to found LendUp, wasn’t it?

sasha jakeSO: That’s right. My brother, who was now at Zynga, and I were talking about expanding access to financial services. To take what I’d learned at Grameen and seen was hard to do at places like Citi. Jake again told me I had a software problem. So we decided right then to start LendUp.

MH: I remember from our first meeting that you explained that you “architected” the business so that LendUp cannot make money from people who fall into a cycle of debt. But it’s got to be a hard to operate in a segment that’s garnered a lot of controversy, i.e. just saying payday lending gets people up in arms.

My brother kept telling me that I had a software problem.

SO: Definitely. It’s an ongoing challenge. You have individuals ranging from financial journalists to television personalities saying don’t ever take a payday loan, but they’re really not speaking from deep knowledge of this market. The alternative is not a low-cost home equity loan. The alternative is often a far worse choice.

We lend to the people who the bank can’t or won’t approve. But in order to compete and build a huge business, you have to be faster, smarter, and have a better understanding of the customers problems to not make revenue through the “debt traps” of our competitors.

That is where software and advanced statistical analytics come into play. We built our entire platform from scratch, with every competitive advantage Silicon Valley has to offer.

LendupUXMH: What are the goals of LendUp?

SO: We set up LendUp to do three things. First, we set out to improve people’s lives. We are the only lender in our segment that reports to the credit agencies so we can help borrowers build a credit history. Second, we want to be safe and transparent. We don’t hide what we charge. We put it out there. Third, we want to be convenient – to help save people’s time.

MH: I think of saving time as something people who can afford it are willing to pay for, i.e. convenience. Why time?

SO: You can make a huge social impact just by saving people time. A lot of people get a payday loan to help them through a situation like paying for a car repair. By saving them time through being online and mobile, we make a big difference to people, allowing people to not take time off work or be able to pick up their children at school.

MH: Let’s talk about the product and the platform. How does it save people time and how was it built?

Real-time decision-making is critical for us…

SO: As I mentioned, real-time decision-making is critical for us. We built our platform to enable much faster decisions for people to save them time and provide convenience. You can apply in 5 minutes, and get an instant decision. Customers can get money in their account in 15 minutes. We’re also a direct lender and are 100% transparent.

It’s all a custom build solution. Our code is written in Java, partly due to make it easier to connect to other systems and partly for the ability to find good engineers.

I’m passionate about analytics and we spend a lot of time thinking about creating predictive models, as well as making our systems easy to use from a UX standpoint and mobile optimized.

MH: Can you summarize the concept of the Ladder at LendUp?

SO: Sure. We lend small amounts of money to high risk borrowers – those that banks don’t approve. And as they build a credit history, we automatically allow them to borrow more money at lower rates for longer periods of time. That is the ladder:  there are currently 4 levels – silver, gold, platinum and prime.

does it work

We know how important financial education is. It’s too bad that many banks don’t focus on this. In exchange for watching videos on topics like managing your finances and paying on time, the APR is automatically lowered for customers.

MH: So, it’s gamification?

SO: That’s right. Beyond education, we use behavior to reward people for doing the right thing. We have great analytics and can see that banks are not able to meet needs of the communities, and payday stores have popped up to meet those in certain geographies. But that still doesn’t help reach everyone in the community, not to mention payday lenders don’t help borrowers improve their credit and lower their APR’s.

CA Map

With the near universality of smart phones, almost everyone is now connected, even in the most remote areas.  With our own customer built technology, we’re able to unlock safe capital for everyone, regardless of branch coverage.

And what we have seen proves just that – a mobile first lender is not just more convenient for busy, urban communities, but expands the reach to unlock new populations who have not had access to credit before, which is significant.

Credit Invisible

MH: So what’ the vision for LendUp looking ahead?

SO: Going back to my time at Grameen, I know that credit is not the only solution to people’s problems, we have to include education, general health and empowerment.

At LendUp, credit is just our first product. Right now we’re focused on expanding geographic coverage to more states. We’re licensed today in 17 states; the steps for getting licenses for lending and money transfer state by state, which are separate approvals, are not trivial.

Beyond geographic growth, LendUp wants to create a path to better, safer, financial products through credit building and other products. We have a partnership today with Moneygram; a local bank; and a few non-profits. We will be adding products and services over time to serve our mission of using software to get people to a better financial place. We call it Ladders, Not Chutes.

MH: To wrap up, coming up this week is the Center for Financial Services Innovation’s EMERGE forum in Austin, TX. You mentioned that you’ll be on stage this week. Do you have any message you’ll like to convey to the attendees?

SO: I’m a huge fan of CFSI and what they’re trying to do within the financial services industry.

If I had to say anything it would be to encourage institutions to take action. Do not just see the event as an opportunity to learn what others are doing: Focus on actions that make an impact and measuring results, so that we can see success in serving the market.

I like what CSFI is doing with its partnership with JPMorgan Chase, but we could do even more. We need an incubator like Y-Combinator for the financially underserved.

I’d like to see: 1) VC’s getting more involved; 2) government policies to enable innovation; and 3) more startups in this space,  since there’s not only a market, it’s a real opportunity to make a difference.

Ideas Are Commodities


As I was speaking with a partner of a venture capital firm waiting for the start of the pitches to start, he explained: ‘Ideas are commodities – it’s all about execution, it’s all about the team.’

As someone who embraces new ideas, it hit me like a punch to the gut, but I knew the core of the statement to be correct. As a strategy consultant, I’d come to learn that strategies most often fail due to execution.

The partner went on to say, “everything has to go right,” to be successful, noting his firm passes on 99% of pitches. Beyond this, since few bets pay off, and most value is created by just a few firms, the math of VC investing can be sobering.

a16zDespite this, my mood lifted as I watched the enthusiasm with which founders pitched ideas at Plug and Play TechCenter and as I recalled a story on Marc Andreessen in this week’s New Yorker: “Tomorrow’s Advance Man.”

It’s worthwhile to read how VC’s think (e.g. pattern matching). It rang true, since a fellow advisor to a fintech startup, Trevor Healy, explained to me last week he’s found that pitching often involves answering the same list of questions.

Yet VC’s can transport you from the everyday and to think bigger about the future – just as Elon Musk did recently, in response to a question on what problems to solve: “Solar energy, global warming, and making humans multi-planetary.”

A16Z is a well-known backer of Bitcoin, a topic that came up when I met today with Debbie Brackeen, Head of Innovation Networks at Citi Ventures.


She recently ran a workshop on Blockchain with 30 executives from Citi from around the world. Her take was that, while people tend to hold firms views on its importance, the debate is valuable within Citi – and to how Bitcoin and Blockchain will unfold.

Debbie pointed out how in theory Blockchain offers the potential to revolutionize the way stocks clear, in addition to the more commonly cited potential to change how we pay for things. Although looking ahead, she said her team still finds it helpful to return to Andreeseen’s article “Why Bitcoin Matters.”

In fact, Bitcoin startup Bitwage, a startup focused on helping firms pay contractors in Bitcoin, stood out at the FinTech Expo today. A quote from Jon Chester of Bitwage resonated with attendees at the event:

Screen Shot 2015-05-22 at 12.16.07 AM

But the highlight of the day for me was the chance to see Renauld LaPlanche, CEO of Lending Club, speak up close. Although we were unable to schedule a 1:1, key takeaways from him – who drew a big laugh from crowd as he began his presentation with a dense page of legal disclaimers – included:

  • LendingClub has no intention of ever taking deposits
  • Key partners include community banks and credit unions (that collectively would be the #4 bank in the U.S.)
  • Banks will struggle to create their own lending marketplace, given higher operating costs, IT challenges & their ‘DNA’

Renauld cited the importance of accelerators – like Plug and Play TechCenter, where LendingClub began as a small company – and had a clear rapport with Saeed Amidi, founder of Plug and Play.


Lastly, Renauld advised startups seeking funding to focus on the person, and not firm, when choosing an investor. He cited the value created by Jeff Crowe of Norwest (venture capital arm of Wells Fargo) in building relationships with the Bank, and helping to build out their business.

So, while ideas may be commodities (to a degree), the role of relationships was driven home by the more upbeat camaraderie of the leaders at today’s FinTech event, who came together to celebrate successes and share words of wisdom with the next generation.

If you’re looking for some advice for your startup, join an upcoming FinTech Meetup (e.g. SF FinTech Meetup, FinTech Startups Meetup in NYC; NewFinance or Innovate Finance in London).

Build relationships and try to get in front of an angel (following advice of Joe Lonsdale from Formation 8). Refining your story will help refine your ideas. Ideas won’t get you funded – especially in a red hot area of  FinTech – but the dialogue can lead to relationships that make all the difference.

FinTech investments

Jon Lehr, Venture Director of Work-Bench, recently gave some terrific advice on role of relationship building in his last article in TechCrunch.

So while the concept that ‘ideas are commodities’ may sound deflating, it just means ideas are only the start –  you need to assemble the right team, and develop the right relationships with partners who can help you grow.

Finally, a big thank you to Scott Robinson, Director of the FinTech Accelerator program at Plug and Play TechCenter, Saeed Amidi, Founder of Plug and Play, and the whole team for putting on a great event in Sunnyvale.