Q2 Chronicle – February 2022

Message from Matt Flake

We are excited to bring you the first installment of the Q2 customer newsletter, Q2 Chronicle. The goal of this newsletter is to provide timely information that is interesting and useful to you, as you navigate through the challenges and opportunities in 2022.

As we start the year, we want to be thoughtful about how we communicate with you. With so much noise in the world and market today, we’ve designed this newsletter to provide a single spot for only the most timely, relevant Q2 information.

This letter will go out quarterly; in the meantime, we’ll continue to update the Q2 Customer News in the Q2 Customer Portal with the latest information. The goal is to provide plenty of opportunities for you to learn about Q2 and how to get the most out of our partnership.

To ensure we are providing you with the information that is of interest to you, we have set up a short survey for you to complete should you want to contribute an idea or write an article yourself. We welcome this opportunity to highlight our customers and your perspective. Should you have any questions regarding the Q2 Customer News, you can email our team at Q2CustomerNews@Q2.com for feedback, topics, or if you wish to be a guest contributor.

Thank you for taking the time to read this and most of all for being a Q2 customer. Stay safe and let’s make it a great year.

DIGITAL INNOVATION

Q2 Innovation Studio: Enabling FIs to Serve SMBs in New and Meaningful Ways

By Jody McCrary, Director, GTM Strategy & Programs

Q2 is fanatically focused on building strong and diverse communities by strengthening their financial institutions (FIs). Developing best-in-class products and services to enable FIs to serve their small- to mid-size business (SMB) and retail account holders is a key tactic. And we don’t stop there. We continuously search for third-party fintechs and other technology providers who are doing exceptional work to meet the needs of SMBs and consumers and working to enable our FI customers to power those services to support their account holder base!

These organizations include Homebase, which works every day to serve SMB and micro-businesses through an array of HR and payroll-related functions. To honor its end users, Homebase has teamed up with Matthew McConaughey on a video series called Grit & Greenlights. It showcases the unique challenges and triumphs of small businesses throughout the US. In one episode, McConaughey chats with business owner Cadence Kidwell about what she gained when she gave up her comfortable career in academia to start Fuzzy Goat, a yarn shop in rural Georgia.

New to small business ownership, Cadence uses Homebase to track staff hours, run payroll, and offer paid time off benefits to her team. “Before I had Homebase, we had Excel spreadsheets, and people would come in, have to find the spreadsheet and log in,” Cadence said. “With Homebase, they use it on their phone, and I've also got it set up on the computers and the iPads in the shop if they need those to log in on, so there are lots of different ways for them to access it. And it's easy for me to use.”

“Homebase makes my business run more smoothly because this is not what I got into business for — to do these sorts of things,” Cadence continued. “And Homebase takes care of those little necessary details, so I don't have to pay attention. What I love about Homebase is that it does have those extra features like paid time off in there, but it also allows the flexibility for people to clock in at home if they're doing work there or offsite. It also lets me run effective timesheets and payroll.”

Watch the video: Turning the Page with Fuzzy Goat || Grit & Greenlights

Homebase is available through the Q2 Innovation Studio’s Partner Marketplace. Banks and credit unions can offer Homebase to their account holders at no cost to the FI. Want to learn more about Homebase and the other great partners available through Q2 Innovation Studio? Check out the catalog or ask your relationship manager for more information.

Q2 to Release Real-Time Payments in 2022

by Richard Maddox, Senior Marketing Content Writer and Debbie Smart, Senior Product Marketer

As you’re probably aware, Q2 has been working on our Real-time payments (RTP) offering and will be releasing it in 2022. The focus of this first offering will be on B2B (business-to-business) payments.

As part of our offering, we’ve partnered with Volante Technologies to provide the necessary RTP connectivity to The Clearing House (TCH) network. You’ll be able to purchase our RTP package with both the Q2 user interface and Volante VolPay back-office processing components. However, if you’ve already connected to the RTP network using a different provider or are considering other providers, we’ll connect to them as well.

Q2 guidance on RTP connectivity
There’s been some confusion in the market regarding what is actually necessary to purchase in order to engage in RTP. Some of our customers have been approached by their core providers about purchasing their RTP processing system, and they’ve come to us asking if that purchase is necessary. We advise that unless you plan to use your core provider for RTP network connectivity, this purchase is not necessary.

Effective, cost-friendly third-party options are available for connectivity. In our assessment, Volante is the best partner to provide connectivity to the RTP network and connectivity to the core providers for transaction posting. Among the reasons why we’ve chose this partner are as follows:

• Volante’s channel-agnostic, cloud-managed approach to payments is easier to implement and has an established reputation for working well.
• Volante has ISO 27001:2013 certification combined with SOC 1/SOC 2 and PCI DSS compliance.
• VolPay supports all of the RTP message types.
• Besides TCH, Volante is participating in the pilot program for the FedNow Service, which is expected to be launched in 2023.

For more information, please reach out to your Q2 relationship manager.

MARKET TRENDS

Q2 Unveils 2022 State of Commercial Banking Market Analysis Report

by Tonya Lambert and Carly Baker

Q2 Holdings, Inc, a leading provider of digital transformation solutions for banking and lending, released its 2022 State of Commercial Banking Market Analysis Report today.

Learn More

Global Industry Study Reveals Fintech Lenders are Evolving Fast and Moving Up Market

by Tim Finkenstaedt, Senior Product Marketer

Q2 recently released a global research study conducted by Economist Impact in collaboration with Q2 partner Salesforce. Entitled “What is shaping the ecosystem of small business lending?”, the study reveals a rapidly shifting landscape in small business lending where “partnership thinking” is increasingly the norm, enabling small business lenders to move more quickly, effectively and at scale with the help of technology.

The new research shows traditional banks’ competitive strategies have evolved away from rivalries with fintechs, such as payment players, peer-to-peer lenders and crowdfunding platforms. More than three quarters (76%) of survey respondents see collaboration among traditional banks and fintechs as the future.

“Traditional lenders are realizing that collaboration with fintechs is accelerating the speed of innovation and driving a better user experience,” said Q2’s Chief Strategy Officer Will Furrer. “Q2 is committed to enabling these emerging partnerships and is excited by the faster, easier application and funding experience for borrowers, as well as the increased profitability for the bank and fintech participants.”

Today, fintech lenders are most active in the smaller loan space (under US$50,000), but are gaining traction in the larger-dollar realms. Although 50% of alternative funders have an average loan size of US$50,000 or less; 41% are issuing loans between US$50,000 - $500,000; and 7% are focusing on loans of US$500,000+, which has been the domain of traditional banks. The size of the global lending industry is large and growing. Data from the Bank of International Settlements (BIS) reveals that the global average of total credit to non-financial corporations stood at 110% of GDP at the end of 2020, up from 95% a year earlier. With the arrival of fintechs on the small business lending scene, new battle lines have been drawn between traditional lenders and challenger banks.

According to the study, alternative funders are seizing the opportunity to serve the unmet needs of small business borrowers, and they’ve started to gain market share. Faster and nimbler fintechs are leveraging automation, artificial intelligence, cloud and APIs to issue more small business loans, particularly as Covid-19 exacerbated the need for liquidity among small businesses at the very time that traditional banks were shying away from increased risk.

Additional insights from the global Economist Impact report include the following:

• Megatrends Constraining Worldwide Growth - Global lenders report three significant constraints hindering their growth: fallout from the pandemic, scalability of technologies and pressure on margins.
• Near-Term Impacts – 43% say new technologies, such as automated decision making, will have the biggest impact on their businesses over the next 12 - 24 months. This scored well ahead of the pandemic’s economic recovery, which ranked second at 36 percent.
• Personalization is Vital – 71% say personalization and individualization is vital for building customer loyalty, with more mature digital banking adopters in North America and Europe strongly agreeing at 92% and 94% respectively. Newer adopters in Australia/New Zealand strongly agreed at just 28%.
• Environmental, Social and Governance (ESG) – 73% say ESG is playing a role to better address the needs of the underserved and underbanked individuals. As investors increasingly apply these non-financial factors in their analysis process to identify material risks and growth opportunities, they’re in alignment with global trends toward considering community-building, non-financial factors in lending.

Download the full report: What is shaping the ecosystem of small business lending?

INDUSTRY PERSPECTIVE

Data Is Worthless Without Context

Early in my career, I had a boss who used to size up employees by how we parked our cars in the company lot. Those who pulled in were deemed hard workers, but those who backed in were assumed to be in a hurry to leave work at night...

Do You Know Where Your Data Is? Securing Your Multicloud Environment

By Lou Senko, Chief Availability Officer

Unless you started your company in the last 24 hours, there’s a good chance you’re operating in a multicloud environment. According to the results of one study, in 2020, a whopping 93% of organizations in the cloud used multicloud...

Partner & Thrive Why Fintechs and Financial Institutions Need to Unite

By Jonathan Price, EVP, Emerging Businesses, Corporate & Business Dev

In today’s financial services landscape, financial technology (fintech) companies and financial institutions (FIs) are often competing for customers, market share and relevance. It’s no wonder that, generally speaking, fintechs are posed as threats...

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COMMUNITY & CULTURE

Kim Rutledge Shares Q-mmunity Gives Grant Program on “We Are Austin”

On Monday, Kim Rutledge, Q2’s EVP of People, was featured on the “We Are Austin” television program on KEYE, Austin’s CBS affiliate. In the segment, Kim highlighted the Q-mmunity Gives Grant Program and the three beneficiary non-profit organizations making a difference in the Austin community...

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Austin FC and Q2 Announce Inaugural Q-mmunity Gives Program Grant Recipients

Austin FC and Q2 Holdings Inc. announced on Monday this year’s three (3) recipients of the new Q-mmunity Gives grant program. Local nonprofits Con Mi MADRE, Urban Roots, and Science Mill will each receive a $50,000 grant to focus...

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Q2ers Launch Spark in India

Q2ers in India are celebrating the launch of Spark, our new corporate social responsibility initiative, by making a huge impact in their community! Q2 has donated ₹45,000 to each organization listed below for a total of ₹225,000 to impact the community in a variety of ways.

Shout out to Q2 employees who have volunteered countless hours with these organizations, serving those community members who are most needy and vulnerable, including the following organizations. Stay tuned to future Q2 News articles where we plan to delve into these stories and highlight Q2ers who are making a difference.

• Mithra Jyothi | Donation - ₹45,000: Serving people with disabilities in general and visually impaired
• Srishti Special Academy | Donation - ₹45,000: Education and training to develop skills in persons with disabilities, including Autism Spectrum Disorders, Intellectual Disabilities, Cerebral Palsy, and multiple disabilities
• Narayana Hrudayalaya Charitable Trust | Donation - ₹45,000: Healthcare treatment for needy patients from four major departments, including cancer and cardiac treatment, kidney ailments, and children with hearing impairments
• Sahrudaya Old Age Home | Donation - ₹45,000: Residence serving senior citizens in the sunset years of their lives
• Awake Vishwa Seva Foundation | Donation - ₹45,000: Serving visually challenged members of society