Season 2, Episode 21: DJ Seeterlin

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Jack Hubbard: So, as I mentioned February, we kick off Innovation Month, and our industry banking has not been one of those industries that you would relate to innovation. But there is a lot of innovation going on. And in community banks. And today we have a great guest. Dj. Cedarland, who's gonna talk to us about innovation and some of the things he's seeing. Dj. Welcome. Glad to have you.

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DJ Seeterlin, Chesapeake Bank: Thank you, Jack. I appreciate you having me here.

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Jack Hubbard: So let's let's start at the very beginning. Chesapeake Bank has been around.

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Jack Hubbard: Gosh! In 2025 now 125 years. That's an amazing history. Talk about the bank and a little bit of its history and service to the northern neck of Virginia.

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DJ Seeterlin, Chesapeake Bank: Thank you. Yeah, Jack, we are based in in the northern neck of Virginia. We're Chesapeake Bank, named after the bay, the Chesapeake Bay of Virginia, but yes, been around for 125 years, serving the local communities there, in addition to some some national business as we operate.

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DJ Seeterlin, Chesapeake Bank: but in particular, as it relates to innovation, we actually have an old tagline that we've used for years saying we have a history of innovation, because that's been a focus of ours for decades. In fact.

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DJ Seeterlin, Chesapeake Bank: our marketing team has an ad that says we once made a bank float. We created a boat and bank, we created a branch that operated on a boat that moved to support our watermen from from dock to dock, and serve them where they needed to be. And so we like to say, we kind of had launched mobile banking before everybody else. Did. We like to innovate and do different things and solve problems in different ways. We were very early into

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DJ Seeterlin, Chesapeake Bank: national online account opening in the early 2 thousands and have continued to to try to learn and evolve. That's the kind of thing that attracted me to this bank 13 years ago was its experiences. And how innovative they've been. So I try to drive that, and encourage that throughout the organization, and be part of that as well.

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Jack Hubbard: Well that you know it's a great start to the program. I've had a chance to be out with your folks and know how innovative they actually are. And it's incredibly refreshing for a community bank. You're not a huge bank community bank to be able to do some things nationally, and I think that helps you at home as well to be able to do some things

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Jack Hubbard: around the country that you can actually share and bring some best practices back. It's it's it's really exciting. So you're a banker. You've been a banker for a while.

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Jack Hubbard: But you're in this this unique fraternity and sorority that we call accidental banking. You've got a great background in it. And and strategy, talk! Talk about your banking career. How'd you get into this industry?

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DJ Seeterlin, Chesapeake Bank: Well, yeah, I think accidental banker is is a great term, and it's what we often call ourselves. I, I

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DJ Seeterlin, Chesapeake Bank: was a technology person. I thought that I was going to be an engineer by trade and got a job with a local bank in our local community. When I came back from college because I was looking for a place that could support technology. And it was one of the few places in the community that did. There was a paper mill, and then the Community Bank, and short of that, it was, you know, an hour commute, and I was very fortunate

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DJ Seeterlin, Chesapeake Bank: to get an opportunity at that bank that had 2 technology positions at the time, and they just had one of them open up and got my foot in the door, and it was a couple years later that I realized that I had become a banker and hadn't even realized it. So it's been a great opportunity for me to get exposed and be part of the community in ways that I didn't even realize when I applied for that job that day

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DJ Seeterlin, Chesapeake Bank: was that the impact that community banks have like providing those local jobs. And so now that I've gotten involved in it and got an opportunity to grow up through technology 1st with that community bank and then going off to help be part of a De Novo bank

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DJ Seeterlin, Chesapeake Bank: in the later 2 thousands, and gave me access within a smaller organization to do a lot of different things. It reached out beyond technology into security and different type of risk management and learned a lot about that. And then the opportunities became even greater as I came here to Chesapeake Bank and got involved in operations and payments, and then got into the innovation space, and

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DJ Seeterlin, Chesapeake Bank: I got to stretch my legs and strategy, and have really enjoyed the opportunities to to contribute there as well. But,

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DJ Seeterlin, Chesapeake Bank: You know

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DJ Seeterlin, Chesapeake Bank: the the banking field is one of those ones we struggle with trying to recruit people into, because I think it has a reputation among some of being a stodgy place. Not a lot of fun. But once we get folks in here, I think they've they've really had a change of heart. We we really exercise our internship and management trainee programs. We've been intentional about building those

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DJ Seeterlin, Chesapeake Bank: we host dozens of of those folks every year interns into our organization, not only as a way to help them in their career. But a way to help, you know, deliver the message into our community about the opportunities within banks, and and oftentimes we hear from them. I had no idea. Once I got here, and then we we can step them up into our management trainee program. We have. We have several people throughout our organization leadership roles that came to us through those trainee programs.

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Jack Hubbard: Well, you mentioned innovation and strategy, which is really your title. And I want to talk a little bit about your role. I also wanna ask you a little bit about.

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Jack Hubbard: That's a unique title in in banking, especially in community banking. And I'd I'd love to get your take on on when an organization, what size? Maybe it's not size.

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Jack Hubbard: Maybe it's just culture or or philosophy. When does a bank say I need a strategy and innovation officer. But let's let's talk about your your role there. What do you do on a day-to-day basis? What's a what's a day in the life of Dj.

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DJ Seeterlin, Chesapeake Bank: It's a great question, and I'll 1st say, when occasionally I run across other people in the industry, I spend a lot of time in the industry getting to know other folks to learn from them, and I'll run across somebody who's maybe the chief innovation officer or the chief strategy, or every once in a while the chief innovation and strategy officer. And I'll say, what do you do? Because I don't know if I'm doing the same thing as you. And they say I ask the same question. We're all. We're all trying to figure this out

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DJ Seeterlin, Chesapeake Bank: along the way and learn from each other the thing that I would say that the focus for me is to try to help

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DJ Seeterlin, Chesapeake Bank: bridge the gap internally about learning and considering new approaches to problems, I define innovation as solving problems in a different way to get a better result.

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DJ Seeterlin, Chesapeake Bank: And so specifically, that doesn't necessarily mean that there has to be any kind of technology involved. Sometimes it's just a process change. Sometimes it's a way of thinking about product. But it's just solving problems in different ways.

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DJ Seeterlin, Chesapeake Bank: I try to focus on gathering insight from inside the organization, helping people to think about it, but also spending a lot of time gathering insight from outside of the organization. I meet with a lot of other banks. I meet with a lot of other Fintechs and technology companies to understand where the industry is going. It doesn't mean that we immediately jump on partnering with a lot of these Fintechs. But I get to learn about

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DJ Seeterlin, Chesapeake Bank: what's going on and the opportunities in a way different people have solved problems. And then, when I'm sitting in a conversation internally with a department that says, You know, we're having this struggle. We're really trying to solve this problem. We think we know the answer. I can help them back up, away from their proposed, you know solution that they've come to and say, let's define the problem. Oh, and I think I've seen it solved this way elsewhere. And let's talk about how we can solve the problem in a different way.

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DJ Seeterlin, Chesapeake Bank: So I think you know, really focusing on thinking about how to solve the problem and bringing those those outside insights as I refer to them into our organization. And I try to drive a and encourage our our strategy, which is

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DJ Seeterlin, Chesapeake Bank: iterative learning. So test and learn methodology. We don't need to take giant investments and giant leaps all the time. Sometimes it's about having a theory finding a way to test that theory in a small way and and validating it and then iterating on top of that and iterating on top of that there's a process that Jp. Nichols and Jason Hendricks helped

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DJ Seeterlin, Chesapeake Bank: to define, called their fire method, fast iterative, responsive experiments. And we really try to ascribe to that which is, how can we come up with an experiment to test this validate our theory and then grow and iterate on top of that. So we get to the right answer sooner in the end, even though there might have been several experiments along the way, rather than taking a big guess, finding out a year and a half and $200,000 later. That that was the wrong answer.

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DJ Seeterlin, Chesapeake Bank: So we we feel like it helps us get to the right answer faster by by taking those small leaps. And so I try to encourage that throughout our organization.

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Jack Hubbard: But it's and it's interesting that you bring that up. Because when you, when you think of innovation and banking and strategy, technology just is never far from our thoughts. But, for example, if you can shorten the time, this has always been a big frustration.

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Jack Hubbard: if you can shorten the time to open a new account from a technology perspective and a strategy perspective and a human perspective. The customer experience will be better, and it gives the banker in the branch. A lot more time to have a better conversation versus typing. Those are things that a chief innovation officer can really help do. But and I'm curious as you do. Go around the country.

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Jack Hubbard: What when? When is it? When's the time? Dj, to be able to get to be able to have an internal chief innovation officer. What's the what's the tipping point? There.

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DJ Seeterlin, Chesapeake Bank: Well, I think. I don't think it's size of assets or size of people. I think it's all about the the culture and the focus at the top level of that organization. I think if if the focus internally, is to just keep doing things the same way, and just try to figure out how to increase our returns. That's not an innovation, minded organization necessarily.

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DJ Seeterlin, Chesapeake Bank: And similarly, innovation is not the chief digital transformation officer. And so oftentimes I see those 2 things conflated, they'll hire somebody in, because they say, you know, our online banking is behind. And our online account opening is behind, and I want, you know your 1st 2 jobs are going to be, find 2 new vendors and replace those products.

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DJ Seeterlin, Chesapeake Bank: and those are, you know, valuable efforts. But that's not what that is. That's not innovation. And so if there's an understanding and an embrace at the top level to say, we're willing to develop a strategy and then make some small bets along the way to test and learn, because we want to evolve. And we want to recognize that the world is changing around us, and we need to change.

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DJ Seeterlin, Chesapeake Bank: I think that's where the sweet spot is. No matter the size of the organization. I've seen very small organizations that do it really well, and larger organizations that do it well. And I would say, I think that's 1 of the superpowers that smaller community banks have, that they often don't. Exercise

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DJ Seeterlin, Chesapeake Bank: is their ability to be nimble. We try to to use that capability. You know, we can. We can test things on a small scale and really talk directly to our customers and understand the impact. We can understand what their needs are.

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DJ Seeterlin, Chesapeake Bank: One of the things that we drive internally is is, we get insight from our customers before, during and after. So we can talk to them. To understand. Is this the right track? We're going down? Did we do this kind of the right way? And and did we get the results? And being able to do that quickly.

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DJ Seeterlin, Chesapeake Bank: It's something that we can do oftentimes that other organizations can't do. If we're not focused on just trying to spend a lot of money to solve the problem. If the focus is, I'm going to solve the problem by writing a big check to a big technology company, then you're not going to get the benefits of being able to move really fast. But if it's by validating your theories and making sure you're going the right way and make sure you're meeting the customers where they are and what their needs are. That's the opportunity to exercise those things.

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DJ Seeterlin, Chesapeake Bank: I think strategy is a really key part of this. So we talked a lot about innovation. But understanding your strategy is key, and unfortunately, sometimes I chat with Banks, and and I don't think they have a strong grasp on on what their differentiated strategy is. So if we go back to the online account opening software, for example, if if someone tells me their strategy is to

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DJ Seeterlin, Chesapeake Bank: put in online account opening software. Well, that's a technology goal. But that's not a strategy. So, understanding how you will differentiate in the market, how you will win more than your fair share, how you will be that bank of choice, or that partner of choice, and what makes you the person that will win. What gives you that competitive advantage? That's really the strategy. And then executing towards that strategy which may

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DJ Seeterlin, Chesapeake Bank: not be a 12 month, Roi, but you see it as your 5, 10 year strategy to win. So, having clarity of strategy and being willing to execute against that, recognizing the need for change. So it's a set a lot there. But I think because it's not a simple answer about when you need to really invest in innovation. Recognizing the need for change and being willing to focus on that. I think that's when it fits.

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Jack Hubbard: Yeah, you said something really important, and if I'm a banker if this was live and I was a banker, and I could ask you a question. You mentioned

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Jack Hubbard: executive management and the support there?

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Jack Hubbard: If I'm a banker, I'd want to know. Well, how do you interweave yourself into all of these different departments. It would seem to me that when you're talking about innovation strategy, that's a bank wide situation. But there's also micro cultures. There's commercial, and there's

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Jack Hubbard: treasury, and there's certainly retail. And others. How do you? How do you interweave yourself into the all of these different teams? That just sounds like a 24Â HA day job to me.

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DJ Seeterlin, Chesapeake Bank: It's a great question, and honestly, one of the things that I had to really work through. When I shifted from chief information officer to chief innovation and strategy officer as the chief information officer. I was also responsible for all of the bank operate deposit operations, project management work. You know all of the it space. And so I was automatically included in all of those meetings, right? So I knew what was going on throughout the organization, and as I stepped into that more strategic focused role and consultative role.

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DJ Seeterlin, Chesapeake Bank: I define myself oftentimes as an internal consultant with folks. When I stepped into that role

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DJ Seeterlin, Chesapeake Bank: I had to make sure that to bring value. I knew what was going on, and was involved in those meetings.

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DJ Seeterlin, Chesapeake Bank: but it doesn't work to push my way in, at least within our own culture at Chesapeake Bank. So our approach is, you know, to be invited in, and so I had to make sure that I was delivering value every day to those people. And I had to do that through relationships. So we're very focused on on relationship building, both externally and internally within our organization. And so a big focus for me is developing those relationships.

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DJ Seeterlin, Chesapeake Bank: being there to deliver, not what I'm interested in. But I understand exactly what, for example, our chief retail officer is interested in, or I understand what our head of our

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DJ Seeterlin, Chesapeake Bank: factoring business is focused on and what problems he needs to solve, and so spending time with them to understand what problems they need to solve and trying to help them solve their problems.

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DJ Seeterlin, Chesapeake Bank: That builds a trust and confidence, and they know that I'm not there to change them. I'm there to help and support them, and that gets me invited back into those meetings. And then I think that's been that's been really successful for us as we've developed that and and built that trust with the team that I'm there to help them along the way, and that's given us the opportunity to do some really cool stuff

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DJ Seeterlin, Chesapeake Bank: like, for example, our factoring business. We launched instant payments with them earlier in 2024. By working with them to understand their problem of, they thought they needed to send Ach payments at 7 Pm. On the west coast. And we started. Really, you know, taking that apart and saying, Well, how can we solve this in a different way? And we realized we can solve this with instant payments for you.

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DJ Seeterlin, Chesapeake Bank: And, by the way, because I know people in the industry and I spend time getting to know them. I developed relationships there. We had already explored opportunities and said, Here's that answer I've got in my back pocket that I've been sitting on for 6 months waiting for a problem. And and so there's getting invited to those meetings, and being able to bring those outside insights, has built the confidence internally.

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Jack Hubbard: Well, you mentioned internally, but you are, also very involved in lots of different kinds of organizations. And here we are early in 2025, lots of innovation and change going on in our industry. What are you seeing? Dj, in terms of

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Jack Hubbard: technology for? Sure. But other things that are going on in the industry in 2025, and beyond that are gonna affect banking.

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DJ Seeterlin, Chesapeake Bank: Well, I tend to be a little bit biased towards payments. I spend a lot of time in the payment space as well in particular, because we are a very payments Oriented company. In addition to our community bank, we also operate a national payments, business Chesapeake payment systems, and then our national factoring business flexant, which is, you know, making and processing hundreds of payments. And

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DJ Seeterlin, Chesapeake Bank: there's a lot going on when it comes to instant payments. And I think that we'll see a lot of change in in the industry, and how our customers interact with us.

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DJ Seeterlin, Chesapeake Bank: As a result of that, I think there's been some early movers several years ago that got on board and started that going, and I think there's going to be a shift, as banks and customers evolve to take advantage of those opportunities that we're already seeing. AI. Of course, that's the soup du jour of change. But it's obviously going to impact a lot of things.

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DJ Seeterlin, Chesapeake Bank: But I suspect not in the ways that we're often anticipating today. That will impact. I think the greatest value out of things like AI

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DJ Seeterlin, Chesapeake Bank: is focusing the use in ways that amplify our own, our own

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DJ Seeterlin, Chesapeake Bank: advantages, the things that we're already doing well. And so as a community bank, the things we do really well is understand our customers. So I'm not going to use AI to replace the interaction that my person has directly with their customer, and that empathy that we can deliver to understand why we might want to, you know, waive that overdraft fee today because of the challenge that they're experiencing or understand what they're doing with their business.

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DJ Seeterlin, Chesapeake Bank: But I am going to try to utilize that, maybe to speed up the way that we solve a training need internally, you know, as our training team is trying to figure out, how do I deliver training, or how do I improve our intranet? You know, how can we solve some of those problems using some of these advanced technologies? So.

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DJ Seeterlin, Chesapeake Bank: yeah, I think payments and AI are some of the biggest changes. I think there's a lot of opportunity. I tend to think of the opportunities of things to solve. I think there's a lot of opportunity around identity. We need to better understand who our customers are, to be able to better protect them from fraud and scams, and and help them along the way. So I think there's a lot of good work being done, and focus there, and opportunities to help

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DJ Seeterlin, Chesapeake Bank: us better understand who our customers are. More than a a driver's license number or social security, number.

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Jack Hubbard: Yeah. And and I, I think that comment leads to a question about core processors. You know, when you talk about fraud and payments, and and you know, I'll even throw in. Crm there core processors are.

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Jack Hubbard: I gotta believe they're struggling to stay ahead of things, let alone keep their heads, you know, even you served on the Jack Henry National User Group for 5 years. So you're close to this and and you see it every day with your own core systems. What are you seeing from core providers in terms of? They're trying to innovate and create new opportunities to make banking more efficient and effective.

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DJ Seeterlin, Chesapeake Bank: Yeah, I think it varies significantly. One of the my least favorite things I hear is when somebody tells me they're all the same. It's, you know, choosing the the lesser of the evils. I think there are significant differences between them.

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DJ Seeterlin, Chesapeake Bank: You mentioned my work on the Silver Lake National User board. I also served as part of the founding group for the Aba Core Platforms Committee and chaired that group for a while, and and that group is doing great work, partnering, working directly with rather partnering with the banks, but working directly and engaging with the core providers. And one thing I learned along that way is that there's more than 3 or 4 of them. We interviewed and met with

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DJ Seeterlin, Chesapeake Bank: 28 different core providers. And there's this, there are that many. And I think it's often overlooked. There is a concentration within the top 3 or the largest 3 or 4. But there's a lot of opportunity and a lot of innovation in that space, but they are handling them differently. And that's what we get when we when we sit down and work with them. When I was in DC. A few weeks ago. We met with directly with some of the largest core providers, executive Committee, executive

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DJ Seeterlin, Chesapeake Bank: management about what they're doing and where they're focused on on innovation, and it does vary. So some of them are really invested heavily in cloud and cloud. Native development, which is, I believe, where we all have to eventually get to for scale and opportunity and to be able to take advantage of some of the new technology. And there's others that are more focused on on solving problems within their own core systems.

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DJ Seeterlin, Chesapeake Bank: One key thing, though, is that there's different cores for different banks. And so if

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DJ Seeterlin, Chesapeake Bank: it depends on what problem they are trying to solve. And so

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DJ Seeterlin, Chesapeake Bank: I do encourage Banks. If you're frustrated with their core, then you may not be with the right one. Or you may not really understand the opportunities that exist with that core. Because, although there are challenges with different cores, I think there are significant differences between them. I'm excited to see some of the things that we're coming out of folks like Jack, Henry and Csi as they. They lean into cloud native environments. And some of the investments they're making there. There's also new providers

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DJ Seeterlin, Chesapeake Bank: in the space like thought machine that are leaning into kind of the the core centric model, which is, they don't deliver the other applications. That's super new tech. But you gotta have a development team at your bank to really take advantage of that. And there's a few out there like Mass Coma Bank doing that. But that may not be the right core for everybody. So finding the right one, that's the right fit for the bank is very important.

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DJ Seeterlin, Chesapeake Bank: But we are seeing some of them actually make shifts and advances, to, to better understand how to solve those problems and be able to move faster.

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Jack Hubbard: Well, one of the things that core processors can do is to facilitate. When a bank starts

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Jack Hubbard: our launches. A new product.

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Jack Hubbard: Innovation around productization is is powerful. And you're doing a lot of that talk about talk about productization testing methodology, how? How I'm gonna launch a new product.

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Jack Hubbard: How do I? Where do I start?

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DJ Seeterlin, Chesapeake Bank: Right? Well, so I think a lot about productization is is different than

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DJ Seeterlin, Chesapeake Bank: Well, I'll provide an example. Productization being like, how are you bundling this solution, the this collection of services we're providing to our customers along the way. How are we delivering, how we messaging about it? And how are we making it easy for them to access it?

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DJ Seeterlin, Chesapeake Bank: go back to my online account opening example. Oftentimes I'll hear Banks say, well, there's a new one out there. I've got to invest in the newest, latest, greatest online account opening software to solve my problems, to be competitive. And oftentimes it's just the way we're productizing is the way we're we're bundling that solution and making it easier. And we can do that oftentimes with just a better process and the better, better way we communicate to our customers how to solve those problems. I've seen a lot of

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DJ Seeterlin, Chesapeake Bank: things happen in the background that can be a lot easier.

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DJ Seeterlin, Chesapeake Bank: Several years ago there was a bank that I'm good friends with Bank Independent out of Alabama. And they were using the same software. We were to text message with our customers. We thought we were pretty cool because our customers could text us. We could text them. This was 5, 6 years ago using an mea platform. But what I saw to them is they really focused on.

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DJ Seeterlin, Chesapeake Bank: As soon as the customer started their application they were getting messages very personalized, saying, Hey, we're really glad that you started opening your account. If you have any questions along the way, please let us know.

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DJ Seeterlin, Chesapeake Bank: You know, when they completed the application, they said, we got your application. Really appreciate it, you know. You should expect to see the funding information come soon. When I didn't fund the account. 2 days later they shot me a message, say, just as a friendly reminder, it's there. If you're having trouble, please let us know. And they really personalized the use of that technology. And it didn't require extensive automation. It was really about how they delivered and how they created process around that.

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DJ Seeterlin, Chesapeake Bank: So I think there's so much opportunity for us to think about how our customers experience interacting with us separate from the actual technology. There's oftentimes we've got the tech lying around, or we don't even need fancy new tech to solve problems. If we just think about how our customers want to interact with us and how we can make them feel like we are solving the problem for them, even if we might have to be spending on the hamster wheel in the background for a while.

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DJ Seeterlin, Chesapeake Bank: and that kind of goes back to the test and learn methodology. I think a common mistake is to feel like I need to build

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DJ Seeterlin, Chesapeake Bank: for the largest use case for the highest volume. Because I'm gonna turn this thing on and and boom! What happens if 10,000 customers hit it on day one. And I say, Well, if that happens, that's a great problem to have, I would love to have that problem. What I'm gonna do is, I'm gonna 1st stand it up and see what happens. And build it for a small scale. Test it, put it out there, see what happens? Can we learn from that? And if that goes well, then you know what I'll start automating some of those

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DJ Seeterlin, Chesapeake Bank: pieces in the background so that we can improve the process for our customers, we can make it even faster, even better. But 1st let's test our way through this, and then demonstrate the value

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DJ Seeterlin, Chesapeake Bank: and the Roi in continuing to invest in. In some of these efforts.

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Jack Hubbard: Well, and and you have the unique skill

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Jack Hubbard: to be able to do this. But I've always kind of thought, you know, only you can do it, but you can never do it alone. And for a lot of banks, I think 90 of them alloy labs is is a great way to to innovate together. I think it really speeds up the innovation process. You. You were a Co. Founder of alloy payment

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Jack Hubbard: founder.

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DJ Seeterlin, Chesapeake Bank: Founders,

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Jack Hubbard: Yeah, and and that involved chuck.

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Jack Hubbard: I would love to talk about chuck, talk about alloy labs and what you're seeing that they're working on now to help Banks innovate.

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DJ Seeterlin, Chesapeake Bank: Well, I love. I'm a big fan of alloy labs for a lot of reasons, but in most particularly the thing that you mentioned, which is innovating together. We did help launch allo payment founders and and the chuck product, and for those that are not familiar with it. This was our effort to create an alternative. P. 2, p. Approach a person to person payment solution.

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DJ Seeterlin, Chesapeake Bank: We did get that live at another bank before we we determined strategically to pivot in a different direction, and I'll share more about that. But what was exciting about that was that gave us confidence. As we we kind of leaned on the confidence of each other to solve problems.

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DJ Seeterlin, Chesapeake Bank: And then we were trying to figure out how to solve another problem one day, and I said, well, you know we already saw that we can do this over here with what we did with those other banks with Chuck. I think that we could actually, you know, make this change as innovative as a bank as we were. We didn't have the internal confidence necessarily to create something new.

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DJ Seeterlin, Chesapeake Bank: And after having me been involved in chuck and partnering with a handful of banks to create something new there. We had the confidence, then, internally to create digital debit card issuance. That's not something I would have ever tackled years before, but working together with other people, learning how we can solve these problems, gave the internal confidence to us to continue to innovate even on our own.

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DJ Seeterlin, Chesapeake Bank: But now we continue to innovate with other banks.

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DJ Seeterlin, Chesapeake Bank: We've, as I mentioned, we've pivoted from chuck where we've now leaned into a business disbursements, focused payments, technology company rebolt financial technologies.

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DJ Seeterlin, Chesapeake Bank: We hired Peter Davey, former head of innovation from the Clearinghouse as a CEO who's leading that effort. And we're really leaning into solving the problems of businesses, needing to make payments in an integrated way. We think the future of that is things like integration with a company's Erp or their accounting systems. But there's also the day one problems of we need to provide access to instant payments

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DJ Seeterlin, Chesapeake Bank: fed now through a bank's digital platform or through an Api call. So those are problems we're trying to solve right now and excited about some of those things that we could not do on our own. But we can do that with a partnership of currently over 20 banks working together to invest together, and that gives us a lot more scale, I think alloy labs combined.

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DJ Seeterlin, Chesapeake Bank: If you combine the assets of all the 90 banks or so, Jason Hendricks likes to say, I think we would be the same as like a 20 largest banks, one of the top 20 banks, because we can bring a lot of resources to bear both.

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DJ Seeterlin, Chesapeake Bank: not just the financial resources, but the mind share of all the great people. You know, we had our marketing director on a call with the marketing director from somewhere else, and we've got the, you know, the chief people officer somewhere else, and we can really collaborate in a way that you can't do in a small organization, and and bringing that mind share together has brought a lot of value for us, and I think the other banks, and we hope for the the industry.

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Jack Hubbard: Yeah, it's you talk about great minds. I mean yourself.

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Jack Hubbard: Chris Nichols is very involved in that from South State Bank. Jp. Nichols, you mentioned a little bit earlier, Jason Hendricks, I mean, these are just absolutely brilliant people, and joining alloy labs. I think it for me, is a no brainer, not just because of what you talked about.

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Jack Hubbard: you know, in a kind of a vertical way around products. But their 8 centers of excellence are, are involved in marketing and sales and innovation in other kinds of ways. You talked about fed. Now.

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Jack Hubbard: what are some of the other issues around payments

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Jack Hubbard: that banks are facing as we roll into here in the 2025 early.

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DJ Seeterlin, Chesapeake Bank: Well, I think

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DJ Seeterlin, Chesapeake Bank: fednow, for those that are not familiar with it and Rtp are entirely new payment rails. So they're not. They're not the next generation of Ach, for example, they're not a replacement for wire. They're an entirely new payment system that's built and designed to be modern modern payment processing with a lot of thoughtful people sitting in rooms over a couple of years. I was in part of those groups, got to learn from them about. If we were going to create an entirely new better

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DJ Seeterlin, Chesapeake Bank: payment system, what would it look like? And so that was work that came out of the fed Payments Task Force work in the late 20 teens.

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DJ Seeterlin, Chesapeake Bank: and and so Fednow and Rtp. Both came out of that Rtp. In 2017 and Fednow in 2023,

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DJ Seeterlin, Chesapeake Bank: I think what we will see in a shift there.

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DJ Seeterlin, Chesapeake Bank: one of the examples is is, we imagine, that there will be a change in the mix of card payments. So right now, card payments is the is the largest wallet share for consumers. When they go to make a payment they're much more likely to make a card payment than anything else

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DJ Seeterlin, Chesapeake Bank: than cash or check check continues to trend down. Cash is still holding steady but lower.

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DJ Seeterlin, Chesapeake Bank: But there's a push from the merchant side of the business who are feeling those those percentage fees on those transactions to find alternate methods, and they would love to process those payments directly with the banks, through a method called pay by bank kind of broadly referred to as pay by bank. We see that happen internationally places like Brazil. More than 50% of their payments are pay by bank. They don't go through the card rails.

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DJ Seeterlin, Chesapeake Bank: I don't think that we'll see an end to visa and mastercard by any means. We're highly invested in those networks with our Chesapeake payment Systems division. But we do see that there will be a shift there, and a lot of banks, if they're not paying attention, may not realize that a significant portion of their non-interest income comes from the interchange on their debit card portfolio. It can be in the millions of dollars depending on the size of the Community bank. How much money they're making from those programs. And

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DJ Seeterlin, Chesapeake Bank: I think we'll start to see a shift in that. As as businesses find ways to process payments through other means. So because we care about and support our businesses. We're trying to find ways to help them solve problems and process payments through that. So I think there'll be a shift in the mix there, and we won't see as strong a growth in those areas as we see as strong in card payments as we will see in things like instant payments.

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DJ Seeterlin, Chesapeake Bank: Request for pay is something that if folks are familiar with Zelle or Venmo have seen where I send you a request, Jack says, Hey, you owe me 5 bucks for the pizza, and you click, approve, and it sends me back the money that is not as common within the banking space for other types of payments, certainly not in business payments, but I think we'll see a rapid growth with that, as that fleshes out over the future.

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DJ Seeterlin, Chesapeake Bank: and that shifts that really changes the whole fraud model for payments processing. And so I think we'll see a big shift with that, and how our customers expect to interact with those things. There's also things like Pays PAZE. That's new in the space that's being launched by the same owners of Zelle

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DJ Seeterlin, Chesapeake Bank: that. It's supposed to make it a simpler method for customers to select and use a card payment without having to type in their card number, knowing it's secure along the way. I was buying my tickets to go see wicked with my wife on Broadway when I got to go to New York recently, and it popped up and says, Do you want to pay with card or pays? So it's already in the wild

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DJ Seeterlin, Chesapeake Bank: and you know if Banks will need to get enrolled in pays to be able to take advantage of that, because what will end up otherwise is that somebody else is going to be top of wallet.

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DJ Seeterlin, Chesapeake Bank: because if I have my account at one of those large owner banks like capital one and my account at a community bank, and I click the pays button and cap. One is the only one that's listed there. Then I'm likely to move that payment to cap one. So I think those are. There's gonna be several changes in this space over the next 5 plus years, and I hope Banks are engaged in staying relevant in their role in payments.

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Jack Hubbard: Yeah, me, too.

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Jack Hubbard: Let me be a bank, CEO. Now.

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Jack Hubbard: I've listened to this. This all sounds great to me.

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Jack Hubbard: There sounds like a lot of software, hardware humans.

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Jack Hubbard: how will all of this innovation? How has it affected profitability in our industry?

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DJ Seeterlin, Chesapeake Bank: I think. So I'm I'm not the the economics expert on this, you know. You need another.

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Jack Hubbard: Just for that.

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DJ Seeterlin, Chesapeake Bank: But if we look across the industry, you know, nim net interest to margin, you know those banks that relied exclusively on that 30 years ago they were doing much better than they are now, you know, if you're exclusively nim focused.

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DJ Seeterlin, Chesapeake Bank: we've been very fortunate at Chesapeake Bank to have a diverse mix of income I mentioned, our other lines of business bring us a strong non-interest income mix, and our focus is to continue to grow. That I think if Banks, you know, smaller banks look at the larger banks, they'll see that they've got a much bigger spread between their nim and their non-interest income. They've got a greater percentage of non-interest income.

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DJ Seeterlin, Chesapeake Bank: And so I think they're going to need to find ways to get that and to serve their customers in other ways. It's not just rely exclusively on the non-interest income, I mean on the interest income. Rather.

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DJ Seeterlin, Chesapeake Bank: So, finding other ways to solve that and being relevant to their customers. We believe that change is constant. It's ongoing. It's going to happen without us. And so if we want to stay relevant, we have to change, at least as fast as everything going on around us to continue to remain relevant. So the impact on profitability, I'd say it varies depending on the bank and their approach.

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DJ Seeterlin, Chesapeake Bank: We've been very focused at Chesapeake Bank and trying to stay ahead of the curve and be relevant along the way. And it's had a positive impact on our profitability. And I think there are other banks doing a great job. With that, I think if

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DJ Seeterlin, Chesapeake Bank: these things that are changing, we see them exclusively as challenges and not opportunities. Then it will have a negative impact on profitability. But

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DJ Seeterlin, Chesapeake Bank: all of these things that I see coming down the pipe. They're they're great opportunities for banks to be further engaged, further inculcated with their customers and ways to solve problems for their customers in other ways. But it's going to require that focus of of the opportunity. And how do we take advantage of it?

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Jack Hubbard: Yeah. And you you mentioned that, you know forward thinking you are a very forward thinking bank. And you know, last Thanksgiving I was talking to my wife, I said, do you know that this is around the 1st anniversary of Chat Gpt? And she said, I don't care. We do in the industry. And so, as as an innovative bank, how have you proacted

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Jack Hubbard: to things like AI, and allowing your bankers to use Chat Gpt. What's going on at Chesapeake Bank, around AI.

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DJ Seeterlin, Chesapeake Bank: Sure well, so in

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DJ Seeterlin, Chesapeake Bank: in early 24 I presented to a group of bankers, and I asked them all to raise their hand, if they allowed their banks, their bank employees, to use generative AI in their organization that was part of their internal processes and policy, and maybe 10% raise their hand. And I said, Now raise your hand. If you've ever actually used this yourself, and they all raise their hand.

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DJ Seeterlin, Chesapeake Bank: That's the answer your bankers are already using this stuff. They're finding ways to solve problems. And so our job is to recognize that. So our focus of late has been, let's at least get in front of our folks and help them understand safe ways to do this. These tools are out there.

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DJ Seeterlin, Chesapeake Bank: We didn't provide it for them, you know. Necessarily we didn't give them chat. Gpt, they found it, and they started using it right away. Sometimes it's for the use cases we love. And sometimes it's ones that we don't and so our focus

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DJ Seeterlin, Chesapeake Bank: in late 24 was to help them understand safe ways and responsible ways to use generative AI. We delivered copilot from Microsoft, which is a much more secure approach than Chat gpt, we said, use this, not that, and here are good, use cases, use it to accelerate your search, use it to try to find, you know, to brainstorm in solutions, maybe use it to proofread things, use it

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DJ Seeterlin, Chesapeake Bank: to track minutes. This is a starting place, and then we'll iterate on top of that. I think there's going to be future use cases we build out.

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DJ Seeterlin, Chesapeake Bank: But just like our test and learn methodology, we're taking steps along the way because we're never going to get there if we don't start walking. And we started walking. We started with.

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DJ Seeterlin, Chesapeake Bank: Hey, we know this is out here. This is the safe way to do it. Here's a good way to do it. And and we love to you to start learning and us to start learning together in a safe way. And so that's that's where we started, and we'll have more steps ahead as we lean into things like internal knowledge bases, and we kind of reinvent the idea of an intranet and other solutions like that.

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Jack Hubbard: Yeah. And late in 2024 there was a great book that came out called the AI Edge Anthony and Arino Jeb Blunt, both bestselling authors, focused a lot on sales.

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Jack Hubbard: and I think that you know last Christmas season I always do a post what I call Santa banker, which is what one bank is doing to add value to their clients and prospects around the holiday time. And so I wanted a graphic

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Jack Hubbard: for it, and so I went out to chat. Gpt, Dolly, and I told it what I wanted to look like a Santa banker in a blue pinstripe suit with a beard, handing a book to a business owner.

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Jack Hubbard: and it took me 5 iterations. But I finally got what I wanted. Now I'm 75 years old here as we speak. I'm not young, but it's very intuitive, and it's very simple to use, and I would guess

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Jack Hubbard: if you're not careful. It's very simple to abuse, and as you know, and you're part of this risk and compliance and all that is really important. But I think that you'd probably agree that to ignore it

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Jack Hubbard: is to is to have a a real challenge down the road. I think we need to figure out a way to make it happen, and I think your answer was really good. 1 1 more question. I was recently in the I'll call it the War Room of a bank.

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Jack Hubbard: and I was watching, and they must have had 15 screens.

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Jack Hubbard: and I was watching as cyber threats came across the oceans and they were hitting us cities.

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Jack Hubbard: And I said, Oh, my God, look at all those. And I said, Yeah, those those were blocked that was blocked that was blocked

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Jack Hubbard: millions every day as part of your role in strategy and innovation. Because we are a bank.

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Jack Hubbard: we have to be concerned about cyber security. So here we are in 2025.

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Jack Hubbard: What are some of the challenges? What are you seeing around cyber security?

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DJ Seeterlin, Chesapeake Bank: You know that graphic you described. It's a fun graphic to look at. I've used it sometimes internally, if nothing else, to scare folks a little bit, because it can be a little intimidating. But the the key with that graphic is it only shows you the stuff that you know about, and the stuff really, that's being blocked. And it's the things you don't know about that are the scary ones. And I would say the most successful cyber attacks on banks involve

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DJ Seeterlin, Chesapeake Bank: targeting humans. And so it involves things like phishing emails and social engineering. But the shift, especially as it relates to generative AI is that overcomes a lot of the hurdles. So if maybe 10 years ago, one of the red flags was, you know, this is a non. This English isn't their 1st language, and I can tell that by reading this

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DJ Seeterlin, Chesapeake Bank: well, that red flag doesn't exist anymore. Or this is a hyper focused spear phishing attack where they've really understood their target. You can automate all of those things now with Gen. AI. And so the ability to interact in that way is much harder for a bank to detect. And I think that's going to be the challenge along the ways.

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DJ Seeterlin, Chesapeake Bank: how they evolve to those attacks, whether it's the deep fakes or the identity theft. But using those generative AI tools to falsify the audio or the video or understand. And those interactions with the people along the way. I think those are some of the biggest challenges that we'll face in the near term, and the challenges. The opportunity for us is to try to figure out how we can get ahead of that and give the insight to our customers about how to protect themselves.

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DJ Seeterlin, Chesapeake Bank: The thing overwhelmingly that our customers buy from us is trust.

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DJ Seeterlin, Chesapeake Bank: They trust banks, and we have to make sure that we continue to deliver on that and find ways to help them trust us and and solve those problems for them because they're worried about it, too.

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DJ Seeterlin, Chesapeake Bank: I think that's 1 of the biggest challenges in the near term longer term. What I've encouraged is we look at the long term strategy is to be aware of quantum computing threats we anticipate mathematically. I just saw a presentation from Ibm that mathematically. We know that we will be at post quantum encryption within 7 to 10 years. They can look at that. That's within. If things, if there's an innovation or advancement along the way, then it'll be faster, which means

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DJ Seeterlin, Chesapeake Bank: quantum technology will be able to break traditional cryptography. The things that we've relied on for so many years, so essentially things that have been sent

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DJ Seeterlin, Chesapeake Bank: in an encrypted format in the past, if it was ever stored off site by, say, an attacker who intercepted it over the Internet. Then we have to assume that information has been breached. And so we're thinking already about how can we reimagine Kyc

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DJ Seeterlin, Chesapeake Bank: and customer identification programs. If

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DJ Seeterlin, Chesapeake Bank: you know that all of that information is in the wild, there's so much of it already in the wild. So it's a good practice for us, but those are some of the things that our team is thinking of is, how can we think about that now, so that we're not caught off guard several years from now trying to think about, how do I solve this problem when the only thing I knew to identify a customer is information that's in the wild.

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DJ Seeterlin, Chesapeake Bank: So we have to think about solving those problems today.

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Jack Hubbard: Yeah, today. And today is really important. And I, you know, as a board member of a bank I always take my e-learning or virtual learning around my all of my board responsibilities, and one of them is cyber security and the phishing and and all the rest of it, and so I I can't emphasize enough to the bankers that are out there that also have to take this training.

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Jack Hubbard: Take it seriously because you let your guard down one time, and it's gonna cost the bank a lot of money and potentially you as well. So thanks for that. This has been great this this time is just flown by. I I would love it if you could give out information where people could get a hold of you? Dj, that'd be great.

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DJ Seeterlin, Chesapeake Bank: Well, thanks, Jack. Yeah. The easiest way is is on Linkedin. I'd love for people to connect with me there and reach out to me on Linkedin, Dj. Cedarling, SEET. ERLI, n, and our website's chez dot bank, and I hope people do reach out.

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Jack Hubbard: Dj, thanks so much for your time today. I really appreciate it, and all the best for a wonderful 2025.

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DJ Seeterlin, Chesapeake Bank: Thanks, Jack.

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Jack Hubbard: Okay, thank you so much. That was awesome. That was just awesome.

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Jack Hubbard: I don't know how, and this is none of my damn business, but I I don't know how you're not in consulting. My God!

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Jack Hubbard: It's you've got so much knowledge.

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DJ Seeterlin, Chesapeake Bank: It's I I have benefited from so many other folks teaching me, and being willing to let me be the idiot in the room

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DJ Seeterlin, Chesapeake Bank: that I just try to help when I can. I learned early on that. There's other people that will help you learn. So when I, as I progressed in my career. It's been through, you know, joining other groups. So you know, early in my career I joined, like the State Banking Association's Technology committee and I sat in a room and I learned a whole lot of things. And then I went to the De Novo bank and they said, Okay, you're in charge of security today, and I said, I don't know how to do security. Let me go find a Security group.

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DJ Seeterlin, Chesapeake Bank: So I sat in a room with a bunch of security people, and I learned a lot about mail, fraud and theft and things like that, and how to do investigations because they were all willing to learn, you know. I went and spent a day at another bank with a guy who taught me all about how to rethink bill traps, you know things I never would have considered. And then, when I got to Chesapeake Bank and they put me in charge of operations and payments, I said, Well, I better go learn something about

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DJ Seeterlin, Chesapeake Bank: payments. And so I literally went to the Aba Payments Conference that they were hosting and having been involved in a lot of those committees before I saw a conference going on. I thought that there's a committee behind this. I found the people sitting at the front of the room that looked like they were paying attention. And I said, Is there a committee? And they said, Yeah, do you want to be on it? And so I joined the Aba Payments Committee, and that got me connected in with other groups. And so

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DJ Seeterlin, Chesapeake Bank: I've learned so much by being in the room with those people that I try to make sure I give back as much as possible to help share some of the things that I've learned along the way.

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Jack Hubbard: Well, the industry needs people like you, man. We we do. You know, I I interviewed Alice Fraser, who is the president of Bct. Bank of Charlestown.

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DJ Seeterlin, Chesapeake Bank: I heard that that was a good podcast. I shared that around internally.

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Jack Hubbard: She's a great lady, and you know we talk a lot about the death of community banking people like Alice. People like you gives me a lot of confidence that we're going to be fine. We're going to be okay. The challenge is that there are 4,000 banks in America, and most of them are under a billion dollars, and most of them don't have Djs around. And that's what concerns me is the cost of doing what you do.

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Jack Hubbard: whether it's internally or externally, and that's no offense at all. You're just not a revenue producer, you. You avoid losses, for sure, and you're very important. But if I'm a CEO, I don't see you building revenue like a commercial banker, which is very short sighted. But my margins are killing me. I can't do overdrafts anymore. When where do I go? If I'm a plain vanilla bank, it's it's tough. And that's why

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Jack Hubbard: you guys with your factoring and things like that do you do? Abl nationally.

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Jack Hubbard: Have you ever heard of a company called Lendovative.

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DJ Seeterlin, Chesapeake Bank: I'm not familiar with them myself. No.

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Jack Hubbard: Okay. So let one of the reasons that community banks don't do. Abl

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Jack Hubbard: is because of the record keeping. And they've developed a really slick system you. You really ought to take at least take a look at it. And the the company is lendovitiv. So it's a Fintech.

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Jack Hubbard: and the guy that I always talk to is Pat. True, he's the president, and Pat's a great guy, former banker, former former core processor Guy. I don't think Jack Henry, but maybe and

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Jack Hubbard: but those are the kind of

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Jack Hubbard: those are the kind of relationships like an alloy labs like lendovative, like the Aba that can really help a community bank thrive, etc. So

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Jack Hubbard: thank you for your time. This will be out in February. In the meantime, what I'm gonna do as soon as I'm done with with getting off the air here, I'm gonna forward you through a Linkedin message.

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Jack Hubbard: the invitation to the webinar. I don't know if this will be of any value to you down the road even. It's not. It's sales very, very specifically sales, but sure fat. Pass it around to anybody you want, and we'd love to. We'd love to see you. And I'd love to get your comments after the programs over.

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DJ Seeterlin, Chesapeake Bank: Great. Yeah, please send it over, and and I'll likely distribute it out to some to some folks here.

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Jack Hubbard: Great. Dj. Well, thanks again for your time. All the best for a wonderful holiday, and I appreciate I appreciate it very much.

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DJ Seeterlin, Chesapeake Bank: Thank you, Jack. It was great to talk to you.

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Jack Hubbard: Good to see you bye. Now.