E103: Katie Quilligan: BankTech Ventures

Welcome to another episode of the Female VC Lab Podcast! In today's episode, we're thrilled to host Katie Quilligan, an investor at Bank Tech Ventures. Katie shares her inspiring journey from working on the operator side at companies like American Express to becoming a venture capitalist driven by the passion to support women entrepreneurs. She dives deep into the unique investment thesis of Bank Tech Ventures, a strategic fund backed by over 100 community banks, and their mission to bridge the gap between traditional banking and modern technology. Katie also discusses how AI and innovation are transforming the banking landscape, the importance of balancing innovation with regulatory compliance, and her insights on the future of venture capital. Tune in for an engaging conversation filled with valuable perspectives and actionable insights for aspiring investors and entrepreneurs alike.

Barbara Bickham [00:00:00]:
Welcome to the Female VC Lab Podcast. I have Katie here. Katie, in one line. Give me your name, your title, and the name of your fund.

Katie Quilligan [00:00:09]:
Hi. I'm Katie Quilligan. I am an investor at Bank Tech Ventures.

Barbara Bickham [00:00:13]:
Wonderful. What inspired you to become a venture capitalist or an investor?

Katie Quilligan [00:00:19]:
I started my career on the operator side, helping to launch brands, grow audiences, and drive innovation and revenue at start ups and larger companies like American Express. And really along the way in both my personal and professional life, I kept finding myself pulled to work with these amazing women who had aspirations of starting their own businesses. And during these journeys and working with them and supporting them, I realized that women are just not getting the same funding. And even now, we know that

Barbara Bickham [00:00:49]:
Still true.

Katie Quilligan [00:00:50]:
Still true. Yeah. What is it? 28% of VC funding went to female founded startups, and that decrease is just 2% for female only founded startups. And so looking at those numbers, I really thought about what can I do to make a difference? And thinking about that was we really need more diversity on our cap tables who can then go out and hopefully put more diversity into the founders that are being funded. So I went back, and I got my MBA and really got my financial skills up and started doing internships and had my first opportunity to work in venture, actually with someone local in LA, Petra Griffith, who's the managing director and founder of Wedbush Ventures.

Barbara Bickham [00:01:32]:
Oh. Oh, yes.

Katie Quilligan [00:01:33]:
Yeah. And then yeah, she's wonderful. And then from there, I had the opportunity to work at Bank Tech Ventures, and I was really excited for this opportunity because it was the first time I was able to go through investing and also use that innovation side because I get to work with the start ups that we invest in as well as our community banks limited partners.

Barbara Bickham [00:01:53]:
That's wonderful. What is your thesis? You touched on a little bit about it and the motivation behind the thesis.

Katie Quilligan [00:02:00]:
Yep. So Big Tech Ventures is really we call ourself a strategic fund. We're backed by over a 100 community banks created to help them with their innovation and their growth. So it was started in November 2021 and really by the key leaders in community banking and in the Fintech space who saw this need. And so we really look at ourselves as having the opportunity to bridge the gap between traditional community banking and that more modern technology solutions. And so we say, like, what that means simply is we act as the R and D arm of the bank. And so we provide our limited partner banks with market intelligence and also introduce them to, like, those best in class solutions that will help them with their efficiency, their service offerings, and really help them be more competitive against neobanks and larger banks. And so from, like, a company standpoint, what that attitude looks like is anything that runs the gamut from front office revenue driving solutions, like a loan origination software, to back office cost saving solutions, like a compliance tool.

Katie Quilligan [00:03:04]:
And, typically, we want a company that has some big traction so we can really just add that fuel to the fire, open up the door, introduce them to our over a 100 LPs, and help them get to the next level. And I think that's also, like, what motivates us. Why we're excited about that is that we can do this for community banks, and I think they are just such the backbone of helping our society continue to grow. They help with creating new jobs. Their response for over 60% of our small business loans and over 80% of our agricultural loans, like, that is a huge to help them continue to grow.

Barbara Bickham [00:03:39]:
Yeah. That's really interesting. So what are you currently reading or learning or listening to these days?

Katie Quilligan [00:03:47]:
Yeah. So with our investment focus, I'm sure you can imagine. I listen to anything I can, podcasts, webinars, newsletters, to just help me stay up to date on the banking and fintech industry. Think about what are the customers that they're serving so that we can be smarter about helping our banks stay ahead of the curve. And, actually, over the past year, I've been spending a lot of time with how our banks can think about approaching AI. I've been going to different bank conferences and Yeah.

Barbara Bickham [00:04:11]:
Banks. Yeah. A lot of data sitting there.

Katie Quilligan [00:04:14]:
A lot of data sitting there.

Barbara Bickham [00:04:15]:
Be used in multiple ways, like what products are being what products are useful, what products are not useful, how do you retire a product. Because you're also doing front office and not only back office. Clearly, AI can be used for efficiencies in back office. Right? Like you said, loan origination or if you're a small business, right, the application processes and things of that nature. But that front office of we're offering this product and it's not really successful. So let's see, like, how we can replace it or how we can efficient make an efficiency on that side. Because I'm assuming, like, a bank has a hard time retiring a product. Right?

Katie Quilligan [00:04:53]:
Definitely have

Barbara Bickham [00:04:54]:
a hard time retiring a product, I'd say. Like a bank specifically, though. Right? When the like, Microsoft can just say, we're not gonna support this anymore. Sorry. Like, Google, they they got rid of their podcast. They said, we're not gonna support this more. Sorry. Right? You migrate all your stuff.

Barbara Bickham [00:05:05]:
If you have a bank product and you've been using the bank product and you're one of the people and they feel like it's not that successful, I still feel like it's harder for them to say, sorry. We're not gonna do this anymore.

Katie Quilligan [00:05:15]:
No. Definitely. And I think particularly for our community banks who are so focused on that relationship driven part Mhmm.

Barbara Bickham [00:05:21]:
And

Katie Quilligan [00:05:21]:
that they wanna make sure they're delivering on that. And so if they have a customer who wants to do it, they wanna fulfill on that. I think some of our job then is to help them. Okay. You have this product, and maybe it's not as good or it's not getting as much traction. What can we give you that's a better solution that can even take that to the next level? So maybe it's not a do we have to stick with something bad, but finding even something better that will answer more problems.

Barbara Bickham [00:05:43]:
Yes. And AI AI can help with that as well.

Katie Quilligan [00:05:46]:
Yeah. And so I think, like, a lot of what we actually spend time on when I talk to these things is, like, real use cases. But I think there's so many Yes. Objects that are like, oh, this is so cool. We could do that. We could do that. Instead of what can you do? And also the banks are in such a tough regulatory environment. Yeah.

Barbara Bickham [00:06:02]:
And it's

Katie Quilligan [00:06:03]:
not clear what they are and are not allowed to do at this time. Like, it's just it's evolving and we're keeping an eye on the space. And so thinking about we really tell them about, let's think about using AI solutions that is almost like an intern to you, where it is not your ability to do things just an intern would, but also at the end of the day, you're still ultimately responsible for anything that comes out of that product and anything that you're doing. If you know that it might not do something that it's supposed to, you're gonna stop it and have that human in the loop I think. So that's a lot of, like, just like real world use cases, things like creating marketing copy and and other things. Like, create some easy efficiency wins and get those small wins, get everyone excited about it, and then you can test it in small environments and then move it out to the larger bank and then think about taking on bigger projects that might be a little bit more of a stretch.

Barbara Bickham [00:06:53]:
You know what? The compliance issue is a good point. Right? Because if there were marketing copy can easily be fixed, corrected, right, readjusted by human. Right?

Katie Quilligan [00:07:04]:
Yes.

Barbara Bickham [00:07:05]:
And some of it is how you ask AI, just like how you ask Google. Right? How do you search? It's similar. How do you ask the AI to do x y z a b c? And you still need a human to intervene now because it's semi smart. I'll call it semi smart. It's not super smart. But Yeah. The reality is you still need a person to review things. Even, I guess, copy because at the bank, if somebody's read it and then, like, it got it went out Mhmm.

Barbara Bickham [00:07:36]:
I guess it could the the bank could be held responsible for that at some levels. And, therefore, you need to be careful with kind of all the everything you're doing in an AI. And even though it's an efficiency Mhmm. Right? So maybe instead of you taking 8 hours, it takes 20 minutes. Mhmm. But you still need to have the review of the compliance. Yeah. So that's interesting that the banking is going through the same thing, like, for the blockchain space.

Barbara Bickham [00:08:01]:
So I'm in the blockchain space, and we've been going up to congress many years in a row, many years in a row, trying to get the regulatory clear around what is a blockchain? What is a digital currency? What is a digital asset? And the banks were having the same issues with that as well. Right? What is the real world use cases of these things? And and how does it fit into the heavy compliance areas? Same thing in health care, right, as well. Right? If you're these are all heavily complianced areas. So how do you really utilize these technologies Mhmm. Where if if a mistake happens, it could be catastrophic. I'll put it that way.

Katie Quilligan [00:08:38]:
Yes. I agree. And but and there's also the other hand of if you stymie innovation too much and you don't allow them to try some of these technologies, then you're really hurting them from doing things. In particular with community banks where we know that we have a large generation of people retiring. They need this technology to help them to overcome that hurdle and to even one of the solutions we were looking at is documenting someone's processes and making sure that exactly what they were doing in their role before they and typically, you're doing that by hand. That's multi days or hours or you hire very expensive consulting companies. This one is utilizing AI to actually do that faster. And that's really not, like, having any customer facing issues, but that's just gonna the bank with those efficiencies.

Katie Quilligan [00:09:26]:
And so if you company who comes in and just sees AI in the name and then starts pushing on something as simple as that, you're holding them back from actually being able to innovate and spend time on what really matters for pushing the bank forward.

Barbara Bickham [00:09:39]:
No. And like you said, I like how you said it's more like an intern. Yeah. You would use it like an intern. How would you use an intern? So that's a perfect example. Right? An intern would probably map. Right. That's how I would use an intern.

Barbara Bickham [00:09:51]:
Okay. I need for you to map these processes and so replacing that with the AI makes sense. And so I I think it it's similar to to some of these other areas that AI's all these questions are happening in all these areas where it's heavily complianced or even just not heavily complianced. And it's okay. AI is great. How do we balance innovation with human intervention, with benevolence or friendliness, or or how it should work in a positive way. It's all three balances. Right? Because it could be a catastrophic and I'll just say a catastrophic event because you use AI and it didn't and you depended on it.

Katie Quilligan [00:10:34]:
Yes.

Barbara Bickham [00:10:35]:
And and this is the other thing from the human intervention side. It's it's not it's still early in the game of AI. And so it still doesn't understand, like, human intervention still has to happen so that the innovation does occur. Because the thing that AI also helps you do, and I do some work with some high net worth people around this, is it does help with the it does move the innovation forward, but it's always constant because pea the people because people are the ones that kind of are resistant to it, really.

Katie Quilligan [00:11:10]:
Yes. I think that's also multiple shift, and that's a little bit weak about you. And when I do these presentations of how do we help teams be open or see where it is and particularly where you might feel like it could take your job. And a lot of what we talk about is let's have this shift of it's not gonna take your job. It's gonna take away the tasks you don't wanna do.

Barbara Bickham [00:11:28]:
Let's

Katie Quilligan [00:11:29]:
think about it from that mindset and that these are tasks too that maybe no one's gonna wanna do in the future, so it'll be hard for you to hire these positions. So let's help you with those. And it's not it doesn't have to be scary. It can be really an exciting piece. And as long as you're thinking about it smart and you're pulling in data that is relevant to it, then you can have positive outcomes.

Barbara Bickham [00:11:51]:
And it it can make you more strategic as a like, more strategic in a company in general, even in the bank. Right? So that that actually ends up becoming a powerful piece of it.

Katie Quilligan [00:12:02]:
Yes.

Barbara Bickham [00:12:02]:
Okay. Bonus question.

Katie Quilligan [00:12:04]:
Okay.

Barbara Bickham [00:12:05]:
Everyone gets it. In 2 years, how do you see venture capital or investing having changed or evolved?

Katie Quilligan [00:12:12]:
Great question. I think that it's continued. Obviously, we've seen such a shift of incredibly high blown out valuations and then swinging the other way, and I think it will continue come more in the middle. And I continue to be excited for companies that are both pushing forward and taking swings on innovation and doing those, but also are more balanced with their approach of let's look at the fundamentals. Let's look at the margins. Does this business actually scale? We can't just throw money at this to continue this issue. It needs to be more. And so I I think that balance is what I'm excited about as we think about these new companies and what that can mean and that I really see, like, right now, it seems like solutions are going out as an AI solution.

Katie Quilligan [00:13:00]:
In the future, everything is just going to have AI in it. Yeah.

Barbara Bickham [00:13:03]:
It's a complete digitized infrastructure. That's how I look at AI or blockchain or any of these kind of advanced technologies. They're gonna be all digit they're all infrastructure, really.

Katie Quilligan [00:13:12]:
Exactly.

Barbara Bickham [00:13:12]:
Digital infrastructure.

Katie Quilligan [00:13:14]:
So I think about that. Like, how are these companies I'm excited for what the efficiencies they're going to be able to do with this technology and how they're gonna be able to scale faster and smarter utilizing what's coming out now.

Barbara Bickham [00:13:26]:
I like your point about the revenue. The business fundamentals, I'll call them business 101. Right? Basic blocking and tackling. What are your margins? What are your revenues? How are you scaling the revenues? How are you looking at scaling revenues? How are you looking at customer acquisition? How are you looking like, that's critical. And I think too, there like, there's been a shift on the money side. I think there also has to be a slight shift on the startup side because I'm sure as I see, companies that still say I have no revenues. Okay. So what do you you built some.

Barbara Bickham [00:13:58]:
That's great.

Katie Quilligan [00:13:59]:
Yeah.

Barbara Bickham [00:14:00]:
So then how do you really prove that somebody wants what you have?

Katie Quilligan [00:14:04]:
Yes. A 100%.

Barbara Bickham [00:14:05]:
You gotta get the external revenue. You have to that's the validation.

Katie Quilligan [00:14:08]:
Yeah. Like, if you

Barbara Bickham [00:14:09]:
have a software, that's the validation. Hardware is a little different. But

Katie Quilligan [00:14:12]:
And and even more of that focus on, do you just have a nice solution with no problem that someone's willing to pay for? I think it's exactly what it is. Just, like, really getting back to that fundamental of the research ahead of time. And that's particular where we spend so much time with our banks and validating something before we do it. Is this actually something that's gonna solve our bank's problem, or do you just think it's going to solve the bank's problem?

Barbara Bickham [00:14:34]:
And you know what? That's a good point since you have so many banks. Right? If it if you're guessing, I'll just say guessing. Sure. Then what homework did you really do? How did you really evaluate that this is a problem with a bank at all? Yeah. Is it your personal problem? Tim, if every time I go to the bank, x half the right. Did you is it your personal what? Because theoretically, that could be across multiple people and across multiple banks. Or are you just saying, I built this thing for banks, and therefore, I think it'll work. It's like, where how did you come about creating imagining what that problem was, and what's the real problem you're solving?

Katie Quilligan [00:15:11]:
Yes. And I think that's particularly where I find our job so exciting because we get to sit in between. These entrepreneurs have amazing ideas and are pushing the envelopes and banks who do have the regulatory pressures. And so I have to be a little bit slower to innovate and helping to find that middle ground of what is a good piece of innovation, where can we push this forward, and where can we help our entrepreneurs realize maybe you need to put this in chunks. Like, perhaps stage 1 of this, the bank can accept this now, and in the future, you can help grow to this bigger vision is a big part of that as well.

Barbara Bickham [00:15:45]:
Yeah. That's super important. Alright. So how do people contact you?

Katie Quilligan [00:15:53]:
Yeah. LinkedIn is always great or at my email address: katie@banctechventures.com.

Barbara Bickham [00:15:59]:
Alright. So thank you so much, Katie Quilligan from Bank Tech Ventures for being our guest on the female VC Lab podcast.

Katie Quilligan [00:16:09]:
Thank you so much for having