Q2 President Kirk Coleman was recently a guest on the Leaders in Payments Podcast hosted by Greg Myers, where they discussed the various services that Q2 provides, the four things that make Q2 unique in the marketplace and where Coleman sees payments and banking heading in the next few years. Q2 is a leading provider of digital transformation solutions for financial services — serving banks, credit unions, alternative finance companies and fintechs in the US and internationally.
The transcript, which follows, has been lightly edited for clarity and length.
Greg Myers: Let's start talking about Q2. Tell our audience what Q2 does.
Kirk Coleman: We're celebrating our 20th anniversary this year. We were founded in 2004 with a goal of building stronger and more diverse communities by strengthening their financial institutions by acknowledging the central role that credit unions and community banks play in supporting their communities in a really special and specific way. We provide digital transformation solutions for financial services, and our customers are banks, credit unions, alternative finance companies and fintechs across the US and internationally.
About 1 in 10 digital banking customers in America are using our single platform for digital banking, which translates to more than 20 million end users and a couple million businesses. We provide comprehensive portfolio solutions that allow our customers to better onboard, grow and serve their customers.
Greg Myers: How big is the company?
Kirk Coleman: We're about 2,300 employees. Our top line revenue is right around $625 million. We serve more than 1,400 customers, so that's institutions and companies of all different sizes. About 42% of the Forbes Best Banks in America are Q2 customers and about the same percentage on the credit union list are our customers as well. We really like it when our customers are doing really well and we're really grateful to be able to serve so many different size customers in so many different kinds of communities.
Greg Myers: I was going to actually ask you a little about the size. So from a bank perspective, obviously there's the very large down to smaller banks, community banks and credit unions. Does the size of the bank really matter?
Kirk Coleman: It's not so much the size. It's what they're trying to do with the bank or the credit union or the fintech or the AltFi [alternative finance] company. Our best customers, whether they're a 150-million-dollar bank or a trillion-dollar bank, are ones that are very forward-leaning in terms of how they think about using technology and digital, specifically. They know who their customers are and why they're banking them and what they need. And we're providing our customers with the capabilities to be able to go to market and really provide a tailored experience to their customers, not a one-size-fits-all approach. And so we believe that leaves lots of room for very good healthy competition amongst many thousands of banks and credit unions who all have their own special strategy, their own special way of serving their customers — and we love supporting them in that pursuit
Q2’s Digital Banking Platform
Greg Myers: Could you maybe break down the platform and the different services that sit on, and if I'm describing that incorrectly you can correct me, but the services that sort of sit on the platform, from payments to all the other digital services?
Kirk Coleman: Platform is a perfect way of describing it. We have a lot of different products, but I'll stick with the digital banking platform. We have a single platform that serves from very simple consumer savings accounts all the way up to very complex commercial banking relationships. And we're actually the only platform ranked number one in all those categories by firms like IDC, Javelin and Datos Insights. So it's something we've worked really hard on because we believe if you're running a bank or a credit union, you'd really prefer just to run a single platform.
And to be able to do that, you have to have a platform that's really functionally dense so you can serve for lots of different use cases, some of which, many of which, are payment-related. So how do you pay your bills, how do you transfer monies to individuals or make payments between businesses and all of the complexities and capabilities that come with that, whether you're using wire or ACH or some of the more newer payment rails? We're doing that at a very large scale for our customers.
For commercial banking relationships, those can be very big, complex and also some of the best relationships inside of financial institutions. They're very valuable, they're hard fought and won. So the kinds of functionality that we're providing to them is really critical to how all—not just the bank, but how the end users actually run their businesses, how they live their best financial lives.
One of the key aspects of our platform, and this is part of what makes it a platform, is our integration with thousands of different cores and ancillary systems in all stripes, varieties and combinations that you might see inside banks and credit unions. But also, through our innovation studio, integrating with 150 different fintechs, allowing those fintechs to provide their solutions in a secure way directly through our platform so that our customers can turn around and make decisions about how they might want to provide those services to their customers. And so it's a way for us to really expand the kind of innovation that we can deliver to our customers in a non-traditional way. You don't have to do the old really long cycles of innovation. You could do it a lot faster, which we think is good for everybody involved.
Greg Myers: And you mentioned fintech's there a couple of times. Do you both partner with them, and they're your customers?
Kirk Coleman: That's right. And fintech covers a lot of ground, right? That's a pretty broad term, but that's exactly right. In some cases, we're serving them directly. That might be through our banking as a service solutions or it could be where we're directly integrating their solutions into our platform … It's really great having that position in the fintech ecosystem. It allows us to really be great corporate citizens for our customers, representing them well in terms of helping others drive innovation on their behalf, but also being a good responsible manager of relationships and risk inside this ecosystem for our customers.
Greg Myers: What would you say differentiates you from your competitors out there?
Kirk Coleman: It's probably threefold. One is — one of the things about digital banking, particularly when you have a single platform, which is a differentiator, [is that] it's a very clear differentiator, having a single platform that can do both consumer and commercial and everything in between. But in order to get really good at that, and particularly in the commercial arena, you have to have a lot of implementations, a lot of different types of implementations— implementations for large institutions and small institutions. Every bank might have its own approach to how and who they bank and the use cases that they're trying to solve for. And so it takes a lot of that batch to build up that functional density. And so we see that in our results, and we can see that in what others say about us in terms of how they rank our capabilities. So those two would go together, single platform, highly functionally dense.
The third is that we're kind of agnostic within this financial services technology ecosystem. We're not tied to just one core. We're not tied to just one big company that we only do digital banking for. We'll work with any core, we'll work with any company that's out there in terms of the integrations, and we count many of them as really great partners in terms of working together to deliver great service for our combined customers. The fourth, I might add on top of that if we had a bonus, is that — going back to our mission of building stronger and more diverse communities by strengthening their financial institutions — that anchors very directly to the origin stories for nearly all of our customers. That's why they started their bank or credit union, to serve their community. And so having that strong alignment in terms of why we exist and why they exist I think is also a real strength because over time we always have their best interests in mind and we're aligned in what we're trying to do. So you can do a lot of things if you're aligned with your customers that way.
The future of banking and payments industry
Greg Myers: Let’s talk about your vision of the future of the industry, but I want to make sure if we can, sort of, break it maybe into two parts. One, so what are you seeing on the payment side that affects your business? But I also don't want to ignore what we're seeing in the industry. I mean, just yesterday, the big news across everything is Capital One buying Discover and what's going on in that landscape of mergers and acquisitions. And you talk to people outside the U.S. and they're like, “Oh my gosh, the U.S. has so many banks, it's crazy.” So, curious of your opinion on both sort of what's happening in payments and where you see that headed and then, as well as kind of the whole banking industry as a whole.
Kirk Coleman: Well, let's start with payments. Payments is an interesting space because if you go all the way back to the ’90s and electronic payments were really starting to scale, some of the more traditional electronic payments rails. There was a lot of talk about when checks were going to go away entirely. And here we are in 2024, and there's still a lot of checks out there. I don't know if we'll see it in the course of my career, but at some point maybe the last check will be written — but I think it's a way out there. And so what's happened, what we've seen over time is that, as new payment types and new payment rails are added, that it doesn't necessarily mean that all the old ones go away.
In many cases, they're allowing customers and users to do new types of things with their payments that maybe they couldn't do before. And, of course, now we have the new instant payment rails that are coming online, and it's really the first new core payments infrastructure in the last 50 years since ACH was established, I guess. And I think that there's still a lot to play out in terms of how FedNow and RTP both gain traction. I think there's about 500 customers signed up for each, both RTP and FedNow, out of nearly 10,000 banks and credit unions. So there's still a lot of scaling to be done. A lot of people are starting with receive, not send. And so I heard a great quote the other day. It sort of said everyone has a mailbox but no one's sending any mail. And so I think there's a lot to be done here in terms of how that's going to scale.
But I think what will happen over time is that you and I and people inside the industry, we will care a lot about all these different payment rails and types and how they're changing, how they're being adopted and things like that. But it's our responsibility to turn around and, from a customer experience perspective, the end user, kind of make those payment methods fade away in terms of knowing all the particulars. Because what an end user really just wants to know is like, Hey, I'm paying this person or this business. I'm transferring money for this reason and I want a variety of ways of doing that that fit my specific need, whether I need a special type of speed or I want particular types of information to flow with that payment, I need it real time or I want it scheduled, or any manner of other reasons why someone might be moving money or making a payment.
And so maybe over time, while all of those inside the industry, we'll all be talking about all these different iterations of innovation and payments, but for the end users, that'll start to just look like a lot of really great flexibility. We'll be able to build some very different kinds of customer experiences that might be very use-case specific or might be more ubiquitous across all different payment types. So it'll be interesting to sort of see how that plays out and what it does to volumes over time.
I think if we switch gears and talk about the industry, I'll stick with M&A and consolidation to start. We've been at historic lows over the last, certainly through all of ’23, really historic lows for M&A activity in the financial services space, maybe starting to see some of that start to percolate.
It'll be very interesting to see how the regulators approach 2024 and if it's any different than 2023 in terms of the speed of approvals and some of the requirements they put on some of these deals. I think that deal with Capital One and Discover is going to be one worth watching on that front. And it'll be interesting. I think that if you went back 20 years ago, I think a lot of people just assumed it's a foregone conclusion that if you're a 2 billion dollar bank, you want to be a 4 billion dollar bank. If you want to be a 5 billion dollar bank, you want to be a 10 billion dollar bank, and so on and so forth. And then there's this driving, beating the drum of consolidation that was going to happen. And certainly that's still true on a lot of fronts. I do, however, think that a lot of CEOs are really focused on “just run a great institution, know who you are, who are you banking and why, and run a great institution.”
And if an acquisition comes along that's correctly priced, it's got the right risk, it's got the right advantages, it adds to your business in a material and meaningful way, then maybe there's a deal to be done. But you don't have to think of acquisition just as a strategy for growth. And so it'll be interesting to see how that plays out. We'll probably have both models, the serial acquirers and then others who choose to stay, perhaps, smaller but still be really well run, nice profitable institutions. In both cases, they're going to all be looking for “how do I find the customers I want? How do I bank them? How do I get more and more efficient internally,” because none of the costs related to running a bank in the regulatory environment is getting cheaper. There's a lot of cost, particularly as you get larger — that goes with the risk and regulatory investments you have to make.
I do think there's a lot of technology that is available that can help those institutions run more efficiently. It doesn't happen overnight, but I do see a lot of hope, light at the end of the tunnel there in terms of where that may be headed. But we also have some generational changes going on inside these institutions, whether it's the C-suite or the folks in deposit operations or loan operations who know those systems and those processes really, really well. We're reaching a point in the industry where I think a lot of those folks are, as some of the people that are most experienced, that have seen so many different business cycles. As they start to retire, it really is going to make the talent inside these institutions look a lot different. And so I think that's both an opportunity but also a challenge in some ways as well. So it's going to be a very interesting period, I think, over the next five to 10 years to watch all this happen.
Getting to Know Kirk Coleman
Greg Myers: Can you talk about your journey to your role as president at Q2?
Kirk Coleman: I graduated from Baylor with a degree in economics and knew from that time that I wanted to spend my career in and around banks. This was the early 1990s in Texas, though, and there weren't that many banking jobs to be had. There was a lot of consolidation going on, so I went to work at what was then Anderson Consulting and is now Accenture. When I got there I said, I'll do anything you want me to do, just let me do it inside a bank.
I was there for more than two decades, and it was a really wonderful experience. I did a lot of post-merger integration work, which is a great way to learn all about banking because you see everything come out of the woodwork. That eventually led me to Commercial Bank in Dallas. I was hired to help them grow and scale and I ran service, technology, operations and a bunch of risk functions no one else wanted, as well as our digital brand. That was another great experience and I loved it. Commercial is very much a Main Street bank, very close to its customers, the business owners and the community. I really loved the kind of intimacy that we had with our customers and the communities we served.
In my first week at Commercial, I had to go to a meeting for this thing called Q2, which I had no experience with. The bank had already contracted with Q2 but had not yet installed it, so that's how I got introduced to Q2. I got to experience Q2 as a customer. We did a lot of good, interesting and innovative things during my time at the bank. For example, we launched a digital brand called Bask Bank.
In 2021, Q2 CEO Matt Flake asked if I would join the executive team and I enthusiastically signed on as chief banking officer. Now, the big joke around here is that no one knows what a chief banking officer does inside of a software company, and I was actually running product and strategy and marketing. Then in May of 2023, I was extremely honored to be promoted to president and Matt has been a fantastic partner in that transition.
Greg Myers: When you were thinking about joining Q2, what attracted you the most to it?
Kirk Coleman: When I think about what most attracted me to joining Q2, a few things come to mind. One is that, since I had some direct experience with the company, I knew what they were like culturally and knew a little bit about how they thought about strategy and how they were going to serve their customers. And so that was a big leg up. I also had hands-on practical experience sitting across the table from them as a customer, and I understood how they represented themselves.
On the personal side, I was entering a phase of my career where I really wanted to make sure I was doing meaningful work with people I liked. For me, meaningful work has both purpose and scale, and I've got a particular skill set that helps on the scale front. If I could be friends with people I work with, that's great, but that wasn't really what I was after. It was more that I wanted to work with people I respected who have a lot of integrity and that I could learn from. I’ve found that at Q2, and I've been really pleased to learn that the company is very true to its mission and to the culture that it's built up over 20 years.
Greg Myers: What are some things you're passionate about? Maybe one personal passion and one business passion.
Kirk Coleman: One of the things I’m passionate about is mentoring others. Whether they're new in their job, new in the workforce, or taking their first significant leadership position, it’s important that I pass on my experience to those coming up behind me. This could be folks inside or outside Q2. Mentoring can take place one person or one conversation at a time, and you have to make that time, you have to be deliberate about it. I'm just so grateful for all the people in my career who took a lunch, a moment, a meeting to pour their knowledge into me and I want to pay it forward.
On the personal side, family has been incredibly important for my wife, Christy, and me. We're a two-career household and we've got three boys, two of whom are out of college now and starting their careers and their families. So we all have busy lives and busy schedules, but we are very mindful of making sure that we have time for each other, whether that's a meal, a visit, a vacation or just getting on the phone or communicating via text. It looks a little bit different every month depending on schedules. The foundation of this really wonderful life I've been able to live is my family, so I make sure I'm always making time for them.
Greg Myers: Let's say someone is coming to you and they say, “Kirk Coleman, I want to get into payments or I want to get into financial services,” and maybe they're right out of college and maybe they're even looking at going to work at Q2 and they say, “Hey, what do I need to do to be successful?” What advice would you give them?
Kirk Coleman: I would say, Don’t try to overplan your career trajectory right out of the gate because whatever you think it's going to be, it's going to look different. Follow your curiosity, put in the work and learn as much as you can. And that means sometimes doing things that might feel mundane or super difficult or just uncomfortable, but all that experience is good. Experience is like compound interest. It just keeps building and it helps guide you to the skills that you're going to be best at and the aptitudes that are individual and specific to you. So I would say, Get started and follow your curiosity, but don't be too precious about the plan you made when you started your career because lots of wonderful opportunities are going to come along that you could never have expected.
Final Thoughts
Greg Myers: Well, Kirk, we've covered a lot of ground, obviously, about the company and the industry. Is there anything else you'd like to add before we wrap up the show?
Kirk Coleman: Thank you, Greg. This has been a wonderful conversation, and there's certainly a lot of ground left untouched. I think the one thing that I would probably just add, as an industry, I'm going to say the financial services industry, we're just more complex than we need to be. And I think as practitioners, as leaders, we need to continue to figure out how we can work together to reduce the complexity of our industry so that we could be high functioning organizations.w We can provide the best service and capabilities to our customers in ways that are easy for them to use, and we can also do it in a way that's as safe and secure as possible — and complexity gets in the way of those three things.
And so I just think that'd be my one plea: for all of us to continue to work on that. It's fight the good fight. One of those things that only happens over a long period of time is us all working together.
Greg Myers: Well, Kirk Coleman, thanks for sharing that. I think that's a great way to wrap up the show. So thank you so much for being on the show. I really appreciate it. I know your time is very valuable, so thank you so much for being here.
Kirk Coleman: Greg, thanks so much for having me on.
