3 Puzzles for the Bank Sector

What does the future of banking look like? That question is at the top of bankers' minds today. The rise of the internet is presenting a lot of new puzzles for companies across the board to solve.

In this week's episode of Industry Focus: Financials, Motley Fool analyst Gaby Lapera and contributor John Maxfield talk about three of the biggest problems facing the financials industry in the wake of the internet and big data. Listen in to find out more about crypto-currencies, especially Bitcoin, and what hurdles they'll have to clear before they're adopted by the masses; what API is and how it can both help banks and hurt their businesses in a big way; some of the biggest benefits and drawbacks to cloud banking and third-party app banking; and much more.

Gaby Lapera: Hello, everyone! Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. You're listening to the Financials edition, taped today on Monday, May 1, 2017. My name is Gaby Lapera, and joining me via the phone is John Maxfield, one of our financials analysts here at the Fool. How's it going, Maxfield?

John Maxfield: It's going great, very happy to be with you, as always.

Lapera: Fantastic. I'm excited for today's show, because we're doing a theme week that's separate from the topic of today's show, but I decided to marry them and marinate them a little, and it's just full of flavor for our listeners. I'm going to end that metaphor and move on to what we're actually talking about today. Today's theme is mysteries! But, no, seriously, today we're going to be talking about puzzles, both an actual puzzle for listeners to solve and puzzles that banks are going to need to start solving in the near future. Make sure you listen all the way to the end to hear about our listener puzzle challenge. We're going to put that aside for now and turn to banking puzzles. We have these three big categories were going to talk about. The first is going to be Bitcoin and blockchain technology. We're also going to be talking about big data and cloud, and we're also going to be talking about API stuff. So, Bitcoin. Maxfield and I are going to have a bit of a back and forth with this. This is kind of a new topic for both of us, so we're both learning. Bear with us. If anyone out there is a Bitcoin expert and we get something wrong, please write us a gentle email and we'll make sure to fix it in the next episode. 

What is Bitcoin? Bitcoin is what they call a crypto-currency, which is a digital currency, it's made, mined, actually, by these computers that are basically solving math problems. In order to get one, in the beginning, it was really easy to get a Bitcoin, the problems were easier, but as time goes on, the problems become harder. And what's really interesting is there's a cap on the total number of Bitcoins that can ever exist, which is 21 million. Right now, we're around 16.3 million Bitcoin in circulation, at the moment. Bitcoin, you can buy one whole Bitcoin, and I think the current price on Bitcoin, last I looked, was around $1,300, which is a lot of money for one Bitcoin. I just looked it up. Right now, on May 1 at 12:42 p.m. Eastern time, Bitcoin is equal to $1,446.41. Which is a lot of money, but thankfully you don't have to spend an entire Bitcoin, because that would be pretty excessive to pay that for one pizza. They can be split up to 100-millionth of a Bitcoin, which is called a satoshi, and that's the name of the person or potentially group of people who created the crypto-currency. Much like someone who would create a crypto-currency, this is a very cryptic individual, ha-ha, and no one knows who he or she or they are. So, yeah, Bitcoin, very interesting. Do you have any questions so far, Maxfield?

Maxfield: You know what I think about when I think about Bitcoin and blockchain technology more generally -- I'm not an expert on blockchain technology, I'm much more of an expert on banking as opposed to technology, but my understanding is the way the blockchain works, and this is in the context of Bitcoin, is, to your point, Gaby, each time a transaction happens to create or exchange Bitcoins, there is some sort of large formula, complicated math problem, that is solved, and that ends, and the next transaction that happens, that happens again, and then it happens again. So that's that blockchain, that's what that's referring to. Am I understanding that correctly?

Lapera: That's actually a really good question. Blockchain technology is the other side of the Bitcoin stuff. The blockchain is actually just a public ledger, and on it, it contains a date that a transaction took place and the amount that the transaction was for, but it doesn't contain any personally identifying features for the transaction, so you don't know who the two individuals were in the transaction. The way the blockchain works is, in order to exchange Bitcoins, a computer has to be hooked up to this Bitcoin network, and each computer becomes a node, and each node has a copy of the ledger downloaded to it, and it's updated fairly regularly. That's the price of being able to transact Bitcoin. That way, there's this huge, diffuse public ledger that's really hard to hack, because even if you get to a few computers on this network, you probably can't get to all of them, and eventually the correct ledger will pop back up again, unless you somehow manage to get all of them at once. Bitcoin, as you might be starting to understand, is a very secure way of dealing with money. It's really interesting because it's not exactly like the U.S. dollar. There's no physical stuff backing it. It's one of those amazing things that humans do, where they're like, "We have this thing, you can't touch it, it has value."

Maxfield: If you think about it, when they talk about creating Bitcoins, they talk about mining them. In that respect, it really is very analogous to, say, the gold standard, where the quantity of currency that is in circulation at any one particular time is a function of how much gold they're pulling out of the mine. But what's interesting, to your point about what's different between how a Bitcoin is created and the gold standard is at, there can always be more mines discovered. But in the Bitcoin arena, there is a lifetime cap in terms of the number of Bitcoins that can be created. Is that right?

Lapera: Yeah. I think what you're getting at is that, unlike gold, where we don't know 100% exactly how much gold is in the world in mines that we can dig up, but we do know exactly how many Bitcoins there are, or could possibly be in the world. So, it lends this really hard cap, it gets into this crazy economic theory. Listeners, if you're really interested in Bitcoin, I'm actually hopefully going to do an interview with an author who specializes in Bitcoin in a couple weeks. I'm still working with the publicist to figure out the details, but hopefully it all works out. But, let's turn to why Bitcoin is a puzzle for banks. One of the things about Bitcoin is that it's fast, cheap or free, and frictionless to transfer money, to transfer this currency. And banks and money transmitters especially, people like Western Unions, make a lot of money off fees of shuttling people's money around the world. Do you know what the cap is for Western Union, how much they can charge you for transmitting money for you?

Maxfield: I'm guessing it's high, given Western Union's reputation.

Lapera: 9% of the amount that you sent. That's a lot of money.

Maxfield: And even in the context of banking, if you think about how cumbersome checks and dollar bills are -- you go into an ATM and get dollar bills and then go and use that as a currency to transact with, as opposed to, you could just have this on your phone, and you go to a store and take that whole middle step out of it. The other point about Bitcoin and crypto-currencies of blockchains in the context of payments, because I think that's really where this is going to impact banking significantly, is for checks, somebody writes you a check, you go to your bank to deposit it, and in this day and age with the technology that we have, particularly with a huge, sophisticated bank that pours billions of dollars every year into technology, still, to this day, a check takes overnight to clear. That's so absurd. And the reason it takes so long is it has to go through the Federal Reserve's system. Blockchain and crypto-currencies provide, potentially, an end run around that, because as soon as you make that payment transaction, it's my understanding and it sounds like what you're saying, Gaby, there's an immediate update to that open-source ledger, and then it moves on to that next transaction. It might not happen instantaneously, like, in a nanosecond, but in a couple of minutes, which is significantly faster than, say, overnight.

Lapera: Yeah, definitely. I guess one of the things to know about Bitcoin is the people who originally started it were a group that, I think they described themselves in the particularly endearing term cypherpunks. "Cypher" because they were really into cryptology and "punks" because they were kind of against the system. One of the big things about Bitcoin is everyone is their own bank, and this decentralizes the banks and takes away the power from the governments and the military-industrial complex or whatever. Not to sound dismissive. That's the philosophy behind it, and that's a huge problem for banks, if everyone can be their own bank. If the only thing you need the bank for is lending money, that takes away a lot of their fee income, which for a lot of banks, that's a big chunk of their income.

Maxfield: Yeah. If you talk to the leading bankers, one of those things they'll tell you is that the way that banking is changing right now is, it's transitioning from institutions that store money to institutions that lord over the movement of money. This is the payments space. If you go into that crypto-currency arena, that blockchain arena where the payments structure can occur on the outside of banks, really, potentially could attack the fundamental business purpose of banks in the future. I think that's why, when you hear people talking about things like, "Are banks facing an Uber moment where new technologies will come in and completely disrupt the business model?" I think blockchain plays a very major role in that. 

Lapera: Yeah. One of the things to think about, too, is that Bitcoin isn't this thing that's going to take over overnight, although it has spread very rapidly. Bitcoin is still struggling to figure out who and what it is. I told you a little bit about the history and how it's this decentralized movement and people who are libertarian in nature who are really excited about Bitcoin. But then, of course, there's also people who want to make money off Bitcoin. And then, there's a third party that's involved in any financial interaction ever in the United States, which is the federal government, and we don't really know what regulation is going to do to Bitcoin. Bitcoin might be driven underground, or it might become an actual tool that's easy for people to use in the United States. A lot of that depends on what the federal government decides. And one of the major issues they've run into in the past is the federal government regulations surrounding "know your customer" and anti-money-laundering laws, because one of the things about Bitcoin is you don't need to know anything about the person you're sending money to. You don't need to know their name, you don't need to know their address. So, it becomes very easy for illegal activities, at least in the eyes of the federal government, to occur, the most notable incident being Silk Road, I think that's the one most people are familiar with, which was an underground deep web marketplace where people could buy things like drugs with Bitcoin, because there was no way to trace who it was coming from and where to. That got shut down, and I'm sure a million iterations have sprung up since then. But, it's a really interesting world that is very divorced from the reality that I think most Americans experience from day to day.

Maxfield: Yeah. This is how I see it -- it's not even so much about Bitcoin, but about crypto-currency. Bitcoin could be the first one that gained attraction, but there will be different iterations of crypto-currencies that improve on the ability to, whether it's to know your customer, to track, to determine whether there's money laundering going on, in order for this type of thing to really catch on, those issues are going to have to be addressed. That's why, at the end of the day, something will emerge in this area, whether or not it's Bitcoin itself remains to be seen, although it doesn't look like it, because of those issues you pointed out. But, something will come up in this area, it's only a matter of time.

Lapera: Yeah. Who knows. A lot of the issues the government has with Bitcoin, technically, they have with cash, too. The only difference is that cash is really hard to, if you're in Indiana, send to Hong Kong, especially if it's $1 million.

Maxfield: And if you think about it like, I had this friend who, his parents were libertarian, and they didn't trust banks. So they saved his money for college in cash. They had something like $100,000 in cash. Well, one of their sons got a full-ride scholarship to college, so then they had $100,000 in cash. So then, they started depositing the cash into a bank in increments of $9,999, which is one dollar below that $10,000 threshold at which point the banks have to disclose to the federal government that it's a presumably suspicious transaction going on. In the Bitcoin area, it could be a similar thing, where the government could take care of it by setting a threshold, above that threshold, an amount of Bitcoins or crypto-currency that would trigger the regulatory disclosure requirements. But still, you would need to sort out exactly how that would work.

Lapera: Yeah. Where a lot of these Bitcoin start-ups got caught up was they were considered money transmitters by the federal government, and they were considered to be operating outside the law, so a lot of them got shut down in the United States. But there's one that has been operating for a while where they literally just hold your Bitcoins for you, they just help you create a wallet, and if you forget your password you're pretty much out of luck because they don't know what your password is, they don't know anything about you, they don't even know how many Bitcoins there are in your wallet. They just provide a service to help you do that. That completely falls outside of the existing regulations, no one knows what to do with them. So, we'll see what happens. It's definitely a puzzle for banks to think about and the federal government to think about, and trust me, they are thinking. They actually recently denied the Winklevoss twins application to start a Bitcoin ETF, and it doesn't really sound like they want to let anyone start an ETF because they're worried about fraud. So, we'll see what happens. One big puzzle for people in finance to figure out. Another one is API. Do you want to tell me a little bit about what an API is?

Maxfield: Yeah. Here's the best way that I have found to think about API. The acronym stands for application programming interface. All that is, basically, is a tube that connects your bank to, say, a third-party app like the Mint app. And in that tube, Mint can pull pertinent data to its customers from their bank. That's what an API does, it connects those, an outside third-party developer to a bank and allows information to flow over it. Here's the interesting thing about API. If you look at what's going on in Europe right now, they are more advanced on the technological front in terms of financial services than we are, and one of the big movements they are pushing right now is to force banks and other companies in the payment space to use so-called open APIs. Closed APIs, information needs to be exchanged within a bank between, say, the investment banking division and maybe the retail banking division or the corporate banking division, whatever that is, those are called closed APIs. Open APIs, they provided that highway to outside third-party developers. And the regulators in Europe are now starting to force banks and financial services companies to use open APIs in the payments space, the thought process being that that's the beachhead, and then open APIs will be used much more broadly in all areas of financial services. This is a huge benefit, because traditionally, the way that apps like Mint would work is that the customers would have to go in, log into the Mint account, and then give Mint their usernames and their passwords to their banks, and then that app would then log into your bank account and scrape the screen, basically just copy the information from that screen and incorporate it into the Mint app. API allows a much more seamless transfer of data to take place. So, you're not going to have interpretation issues between scraping the data from the screen and translating it into text in the Mint area. 

But, here's the interesting thing about APIs. Companies and banks for a while were opposed to that screen-scraping technology. But now, because of the importance and the growth and proliferation of these third-party apps, banks realize that, "Look, we have to get in on this game." JPMorgan Chase made news last year, starting to use open APIs with Mint and other apps like that in particular. But here's the interesting point about API. If these open APIs really take hold, and everybody starts banking through a third-party app, think about how convenient that would be, if you could have an app that had all of your banking accounts, you mortgage, your car loan on there, all of your retirement funds, your credit card accounts, all these different accounts all aggregated in one single place. Basically, any customer at any one time had a constantly updating balance sheet that they could just pull up on their phone by tapping on an app. It would be revolutionary. But then, if those apps are created -- and, there are some of those, and there will be more and more -- what will happen is, the question will become, will customers then be able to actually do banking, not just see their accounts, actually do conductive banking in these third-party apps, where they can deposit a check into their Chase account through their Mint app, and do all these different things, to where not only are you putting Apple and Samsung's app store thereby between a customer and their bank, but you're also putting that third-party app between the customer and the bank. Which, thereby, means that the bank itself and the bank's brand will erode further and further and further into the distance as these types of things are going. So, the question is, how will that change the relationship between banks and their customers if there's always somebody standing in between the two? 

Lapera: Yeah. That's one of the things that banks are thinking about right now, even just in terms of how many physical locations do they have? Like you said, customers are increasingly moving to online platforms. When you lose that personal touch, you're potentially also losing actual customers. On the other hand, customers really want that convenience. I was telling someone the other day about my experience trying to switch banks. It's hard. It takes a lot of effort, and it takes you going physically into the bank branch in order to get all of your money out all at once, after you systematically, slowly drained your account over months, at least in my case. It's not a pleasant experience. But if someone created an app that let you switch banks super easily, people could do that and banks wouldn't really have a lot of recourse. They would actually maybe have to change the way they operate with customers in order to retain them.

Maxfield: Yeah, I'm so glad you brought that up, I had forgotten about it, that switching element. That's one of the most important elements in the context of API. Banks traditionally have benefited from the fact that there are high switching costs. Let's say you have a bank account and you set up your direct deposit, you know how when you set up accounts, the bank is all over you about setting up direct deposit and reminding you about automatic bill pay and all those kinds of things, and trying to get you to rollover your IRA at another bank into an IRA at your current bank, and get your car loan there. The reason they do that is, the more and more tentacles or strings they put between the customer and the bank, the harder it is for them to switch, because you have to detached all of those things and it would be a nightmare. I don't know if this statistic is accurate or not, but I heard this statistic from a board member of a major bank. He told me that, at their bank, approximately 40% of customers lived paycheck to paycheck. If you're living paycheck to paycheck and you have direct deposit and automatic bill pay connected to your account, it becomes a very delicate dance to detach all of those things, go to a different bank, and not accrue an overdraft charge. The switching costs are really high. But if they come up with an app where you can just go in there and say, "Just switch all my accounts over to this other bank, because I'm tired of this bank charging me overdraft fees or doing this or that, all these things that banks have been doing for all these years against customers," it will completely erode that switching cost, which would dramatically change the competitive dynamic in the banking industry. Banks pretend and talk about treating their customers well today, but they would actually have to back that up with really substantial actions in the future in order to combat the impact that open APIs could have on lowering the switching costs.

Lapera: Yeah, definitely. Like you mentioned, the other thing is, when you have someone in person, it is way easier to just sell them something. It's way harder to sell someone a mortgage online, because they have time to sit back and think about all their different options with mortgages. But if you have them in the bank, it's way easier to be like, "You know what you really mean? Another credit card." 

Maxfield: Right. That's such a good point. Cross-selling has gotten a bad name because of the Wells Fargo bank account scandal last year, which is understandable, that it got a bad name from that. But, there's only a couple ways to grow a bank, and one of them is to cross-sell customers. You have to be able to do that, but you have to be able to do it appropriately. But if you don't have those interactions, you're not going to have the opportunity to cross-sell. So, it's a major conundrum.

Lapera: Yeah. This is another puzzle for the banks. People are moving increasingly online. They also need to move increasingly online. They've started to embrace this API technology, because that's the way the tide is turning. But how do they balance that with making sure that they're able to grow their businesses and retain customers? Something for them to think about.

Let's talk about big data and banks, something that you wouldn't initially think would be a puzzle for banks, but could be. Big data, just in case you're not familiar with this, is this thing that's emerged now that we live basically our entire lives online and with easily accessible data, it's companies basically using it, mining through it, to figure out trends and patterns, both for consumer groups like on a general level and also for consumers on an individual level. One of the things you might see are, "We saw you look at this outdoor brands company, you might also be interested in this other outdoor brands company," and those ads follow you around the internet, or, you're suddenly getting emails when you don't remember signing up for something, stuff like that.

Maxfield: Yeah. If you think about big data, there are few institutions that have more data at their disposal than banks. In fact, a lot of bankers will talk about the fact that the future of banking is not in money, it's in information. Google obviously has a lot of information, Amazon has a lot of information about your purchase history, Google about your search history. But banks know what you spend money on. They know what everybody spends money on. They know what people are spending money on on Amazon. And while people might be doing searches on Google, they're actually making the purchases via their banks. That information is incredibly valuable. But the problem that banks have had is just because of the way the bank industry has developed in the United States. First, banks weren't allowed to operate multiple branches in those states, then they also were not allowed to bank across state lines, what happened was, you had thousands and thousands of banks, small little banks all over the United States.

And then, when those regulations around banks getting together and banking and offering services over interstate lines and through branches, etc., once that opened up, then you had this huge consolidation movement. So, banks buying other banks, and pretty soon you have your big four banks -- Bank of America, Wells Fargo, JPMorgan Chase, and Citigroup -- that are, excluding Citigroup, hundreds of banks that have been rolled up into one. The problem with that is that each of those individual banks that were acquired or merged into these huge organizations had data, and they used different systems, different software to record and analyze data, they stored it in different places, they stored it on antiquated mainframes and things like that. So, you think, a person at a bank should just be able to go on the computer and type in, "What accounts does John Maxfield have?" and it shows all the different accounts that I have across that banking company. But, the fact of the matter is, because of that situation with all that data dispersed all over the place, it's taking a long time for banks to wrangle all the data that they have at their disposal. So, that's where they're at right now. 

To tie this into that API conversation, where big data is so valuable outside of the risk and compliance area, which is extremely valuable, to track customers, making sure they're not doing inappropriate things with money, the other area where it comes in really handy is that cross-selling area. The reason is because, once a bank gets its arms around its data, it can then determine not only which products each customer has, but they can look at the transaction history of that customer and determine, say, if this customer would really benefit from a brokerage account, or a specific retirement account or another credit card. And then, they can see which customers have those needs, and pitch those specific products to those customers, which really dramatically increases your cross-sell ratio and the revenue you derive from your customer.

Lapera: And it's not just that. If they get organized enough, and if this is legal, which, it might not be in the future, there aren't really laws around it right now, banks could sell packages of data or make some sort of agreement with outside retailers, and say, "I know that Gaby Lapera really likes swimming, why don't you sell her a pool or swimsuits," or whatever it is, and they can do integrated ads in the bank app, which is on the API. Those are all things they could potentially do, and that could be a major source of money for them. That's how Facebook makes a lot of its money, it tracks you around and lets businesses serve ads of websites that you recently visited. That could be huge.

Maxfield: Yeah. Credit card companies, they've already made a significant amount of progress. If you look at Bank of America's rewards for their credit card, the BankAmericard, they have individualized rewards programs for customers that can be tailored based on a customer's transaction history. The benefit there would be, if a bank, like we were talking about before the show, Gaby, let's say they know you love Chipotle. They have 10 million customers who go to Chipotle once a week -- because one of the things Chipotle is trying to do right now is get people to come more frequently to their stores after that whole issue they had last year with food-borne illnesses -- Bank of America could go to Chipotle and say, "We have 10 million customer who go to your restaurants once a week. Why don't we send a coupon to them and see if we can get them to go more frequently?" The benefit to banks would be, that more transactions are processed. If I get a coupon for Chipotle, rest assured I'm going to use it. You know what I mean? That would probably encourage me to go to Chipotle more frequently, which means I would conduct another transaction, and banks make money on those transactions from interchange fees.

Lapera: Some do. It depends.

Maxfield: So, there's a number of different ways they could use it to generate revenue.

Lapera: Yeah, that's definitely really interesting. Side note, you're saying Chipotle wrong.

Maxfield: [groans] I know! God, I've only been going there for, like, 20 years. [laughs] 

Lapera: Yeah, they got you on that one last time, too. Listeners, it's not his fault. If you say it one way for years and years, it's really hard to break out of that habit. So, don't get mad. Don't write us emails about it. But, yeah, I 100% agree with you. It has boundless potential. But then, if they do figure out how to do this and the federal government OKs it, they have a puzzle before them, which is figuring out a way to do this without alienating people. And also, even if they do figure out a way to do it, if the federal government hasn't caught up with them, figuring out a way to do it without breaking the law, because there are a lot of laws surrounding what banks can do with your personal information. I don't think they could sell your name to a different company. But if they could figure out a way to protect your information and sell you the ads, there's a lot of potential challenges for them here. And I don't know about you, Maxfield, but sometimes I get really annoyed when ads follow me around the internet, and I'm like, I'm just not going to get on Facebook for three days because I don't want to see these fuzzy Gucci loafers anymore. I'll send you a picture, I swear to God, if you email me [email protected], they're hideous. I warn you, you will be followed around the internet for days by them. Not to make it personal or anything. [laughs] 

Maxfield: Buy Gaby's shoes, you'll be trailed by Gaby's shoes.

Lapera: Oh my gosh, I just don't understand, someone sent them to me, and be like, "Haha, look at these shoes!" And I clicked on them and now they won't leave me alone. But, anyway, there's a lot of things to chew on there. And then the last thing I want to hit on super quick because we're running way over is cloud banking, which is basically the banks letting other services like Amazon or Google to host their data centers, which is cheaper for the banks, then the banks have all their own data easily at their disposal. But there are potential problems with it. For example, Amazon Web Services went down, was it this year or last year? I can't remember, but it was down for a whole day. That's no good.

Maxfield: Yeah. And the big benefit -- cloud banking, it's good that we left this for last and won't spend a lot of time on it because it's kind of boring. But, basically, what it allows banks to do is allows banks to shut down their data centers and outsource that to a larger company like Amazon, Microsoft, IBM. It's a huge way to save money. And when you consider how much data banks have, it's something that, a bank like JPMorgan Chase, if they eventually shut down the majority of their data centers to go over to an Amazon Web Services, it's hard to say how much they could save, but hundreds of millions of dollars, maybe even billions of dollars, over a stretch of time.

Lapera: Yeah. But the puzzle for them to think on is security there, because they're letting other people run their security. So, it's something they really need to think about, and something they need to make sure they keep, because that's why customers stay with them, because they feel banks are doing a good job of protecting their data and their money. If they don't, it's no good. Anyway, we don't have all the time in the world, and we definitely don't have all the answers in the world, but these are all things we think you guys should watch in this space. That's really it for the analysis part of the show. 

But, as I mentioned in the beginning, we have a special thing for our listeners this week. We love games at Fool HQ, puzzles and challenges are a really big part of how we team-build and spark collaboration at the Fool. We love them so much that we have a chief collaboration officer, which is really hippy dippy but super cool, we have our own resident puzzle master named Todd Etter. This week, we wanted to let listeners in on some of the fun that we have in the office and give them a taste of one of Todd's challenges, so we asked him to put together a puzzle for you guys. Every day this week each host will wrap up the show with a clue, and the answer to that clue is a company name, and the company names from Monday to Friday will all fit into a final puzzle that will be revealed on the Friday Tech show. So, if you want to solve the whole thing, you need to listen to every episode this week. What do you get for jumping through all of our clue hoops? The first 10 listeners to shoot us an email after Friday's show with the five company names and the final answer will get Fool swag. So, just the company names, we don't need any other answers to the clue. Five company names and the final answer.

If you're ready, here is today's Financials clue: Take the common name of a financial company. Add a letter to the front to get something you might get at KFC. Add another letter in front to get a word to describe someone in debt. Add one more letter to the beginning to get an activity a homeowner might do on the weekend. What is the financial company?

Starting Friday, if you solve every clue, write in to [email protected] with the email subject line "Puzzle" and the answers. Also, make sure to tell us your T-shirt size. If you're stumped and want the reveal, on May 12, we'll post them to The Motley Fool podcasts Facebook group and the Industry Focus Twitter account. To enter this contest, there's no purchase necessary, and the contest is open to all legal residents of the United States and Canada, excepting residents of the province of Quebec over the age of 18. Employees, affiliates, and contractors and their families at The Motley Fool LLC or any of their affiliates are not eligible. Void where prohibited by law. For a complete list of contest rules, visit puzzle.fool.com. 

As usual, people on the program may have interests in the stocks they talk about, and The Motley Fool may have recommendations for or against, so don't buy or sell stocks based solely on what you hear. Super glad we're done with the legal language, because now I can slow down. Contact us at [email protected], or by tweeting us @MFIndustryFocus. Thank you to Austin Morgan. Have you solved the puzzle yet, Austin?

Austin Morgan: I have not.

Lapera: [laughs] Why not? You've had 30 whole seconds. And, thank you to everyone else all for joining us. Everyone have a great week!