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Transcript

Passing the Mic: 2024 Host Lineup · Leaders in Lending

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You are listening to leaders in lending from Upstart, a podcast dedicated to helping
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consumer lenders grow their programs and improve their product offerings. Each week, here
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decision makers in the finance industry offer insights into the future of the lending industry,
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best practices around digital transformation, and more. Let's get into the show.
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The Consumer Bankers Association is pleased to welcome you to today's webinar how WSFS
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is driving long growth digitally in uncertain times, sponsored by Upstart. My name
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is Isabella. It is my pleasure to facilitate today's event. As a reminder,
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the views expressed in this webinar are those of the presenters and do not
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represent the views of CBA or its numbers. It is now my pleasure to
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introduce our speakers, Candice Caruso, SVP, Chief Retail Lending Officer at the
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WSFS bank and Ed Walters, BP, Accounting Management at Upstart. Candis and
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Ed welcome great. Thank you Asabelle, and to the Consumer Bankers Association for
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hosting us today. So Candace, are you are you ready? I'm ready
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great. Let's let's begin. I think what we should do is let's start
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by giving the attendees a baseline of our organizations to help provide context on how
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we're working together. In Candice, I'll have you go first to kind of
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share who is WISFUS and then describe the markets that you serve. Absolutely so,
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thank you so with this. Bank is a regionally focused institution. Our
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primary regions are Pennsylvania, New Jersey, Delaware, and certainly we do carry
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into other communities for some of our lending teams, but that's primarily where our
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branch footprint exists. So we have as of our June earnings, we had
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ninety four branches scattered throughout that region. WISFUS is also one of the oldest
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institutions banking institutions under the same name. We are almost two hundred years of
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experience in serving customers throughout and we've also grown organically as well as through acquisition,
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so there's been tremendous opportunity, particularly in the last four years for Westus
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Bank. We are a consumer focused as well as commercial and small business focus
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bank. Relative to the commercial and small business we have nine billion in commercial
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loan exposures within our footprint seven hundred million in small business. We also are
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extending mortgages through our mortgage lending team. In twenty twenty one we had one
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billion in loans originated without throughout the mid Atlantic footprint. And then also have
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a private banking team focused within our region. Nationally, we do again have
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some services there. We have Wealth and Trust with our recent acquisition of brin
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Mar Trust that also was a tremendous compliment and growth opportunity for our trust businesses
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and has allowed us to certainly be known as a key player in our region
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but also nationally. UH Cash Connect is a unique business to Wisfis Bank,
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which is all about safe deployment of you know, in house cash shops for
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retail based businesses as well as ATM solutions. Additionally, we have new Lane
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Finance which is a compliment as well to our commercial and small business lending,
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but is focused in the equipment financing space and we can get a decision within
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you know hours and a closing within DEDs for equipment financing with that solution.
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It's vertically focused and is nationwide. And then we do have a complement of
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strategic partnerships. So certainly a deeply rooted bank within our region, a one
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that has grown to this side. So we've also gone through different stages of
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kind of needs and growth, and I'll talk a little bit about that today
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relative to kind of where we're at and what our focus is. So with
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that, ed, I'll hand it back to you. Great, thanks,
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Candace. So let me kind of give you just a quick overview of Upstart.
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So Upstart is a leading artificial intelligence lending marketplace designed to improve access to
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affordable credit while reducing the risks and cost of lending for our bank partners.
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So when you think about it, by lending and leveraging AI, upstarts a
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marketplace, Upstart power banks can offer higher approval rates and experience lower loss rates
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while simultaneously delivering that exceptional digital first lending experience that customers demand. Just with
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the Amazon environment, everyone is expecting kind of instant, fully digital experiences these
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days. And then Upstart's mission is just singlely focused on enabling effortless credit based
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upon true risk. So let me explain quickly how does that work. So
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banks can partner with Upstart on two fronts. There's the Upstart referral network,
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and then they can also partner within a bank's digital infrastructure, sometimes referred to
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as a white label solution The Upstart referral network allows banks to subscribe to the
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marketplace with a desired monthly volume that is matched to core underwriting criteria that the
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bank defines. So when a borrower comes to upstart, they're matched to a
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single lender that is providing them the best rate possible where they meet that lender's
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underwriting criteria. The borrower then is originated on that lender's paper and then becomes
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a customer of the bank or credit union. So that's really important. It's
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not a loan purchase, it's actually a loan origination, and so the relationship
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is you're getting a customer. So it's a very effective tool to drive customer
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acquisition within a bank's economic and risk tolerances. The white label solution is integrating
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upstarts technology in a fully bank branded experience to serve the lending needs generally focused
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on your existing customers or any prospects that may come to your website or walk
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into your branches. Banks have the flexibility to leverage one or both of these
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solutions to meet their business needs. And with this, what we'll talk a
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little bit more later today is is using both so they'll give you kind of
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perspective on both, so we can take kind of the slides down now,
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that was the slide content for today. So moving into today's discussion, we
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all acknowledge that the lending environment in twenty twenty two is much different than it
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was in twenty nineteen pre pandemic. What hasn't changed. Our consumers still have
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expectations for improved digital experiences and lending needs still exist, and quite frankly,
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the banks want to continue to serve the financial needs of these consumers, all
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while staying within a bank's economic and risk tolerances. But what has changed is
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we're in a rising rate environment, so it's making lending more expensive to the
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consumer. And then along with higher inflation recession concerns, these have all added
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to and created additional barriers or challenges in consumer lending, which we'll talk a
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little bit about more today. So what we like is before we actually get
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into some of the discussion questions, we've got two polling questions that we'd like
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to ask the attendees here today to fill out to give us some content.
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So can we jump to the first poll question Isabelle, So the first question
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here and I'll give everyone a chance and I won't read all the responses,
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but it's really we want to get a chance to hear from you on what
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is your organization's current sentiment on consumer learning, particularly on personal learning. Okay,
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it looks like majority of the group lending but with higher rates. And
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then the second is really hasn't hasn't changed much in the past six months,
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can as any any reaction? Is anything surprising here on this first question,
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I would say not surprising. So community banks lake WISTFISS tend to be a
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bit more customer focus and centric and having more connectivity to the community. So
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we recognize that we're in a rising rate environment, so lending with higher rates
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is natural. I think that's just the environment we're in today, and customers
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need to adjust to that higher rate relative to all the different lending solutions that
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we provide. But we need to continue to lend. And then also,
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whether it be to our board, our shareholders, our stockholders and stakeholders,
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we have an obligation to also have loan growth. So none of this is
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really surprising for me, but is a good confirmation relative to some of the
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conversation we're going to share today. All right, let's show the second pulling
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question. These are the only two audience participation besides Q and A that we'll
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ask you to participate in it. So this next question is, I want
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to get a sense of what is everyone's digital approach right now in consumer lending?
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You trying to trying to get a sense of who's still working through it,
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who is being able to solve it self developed, or who has partnered,
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say for example, with the fintech to deliver a solution to the consumers.
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All right, so almost half the group still requiring a branch visit to
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too close. What's your reaction to that, Candice, Well, I would
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share that certainly that is where customers have been served to historically. However,
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we're very much about channel choice for our customers because I think we're any kind
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of the that transitional state of moving from kind of the branch experience, which
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historically was the only option, and now especially with the acceleration of you know,
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PPP and other things that have gone on in the marketplace that have created
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an expectation by customers that they want to be served through other channels in certain
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instances, particularly through consumer products. That probably is why you're sitting in on
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today's presentation, so all makes sense and affirms that you know, partnership is
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one way to provide that delivery channel back to your customer. Well, and
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I almost think that that kind of leads us right into the first question you
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had mentioned a little bit about, you know, looking at what's the right
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channel, what are the what are the consumer's preferences? So can we start
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the conversation today really talking about what are some of your goals in regards to
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you being the chief lending officer in consumer lending and what you're trying to do
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for your business to serve the consumer. So one of the things that is
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key is we we always are looking for relationships and so they could be their
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new relationships or existing relationships. So certainly that is a strategic focus for us
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is you know, understanding who our existing customers are, how we can deepen
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those relationships, and how we can acquire new customers or new households. With
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that being said, we are also sensitive to the environment and the digital age
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that we now operate in and the highly competitive landscape that we're we have in
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the broader financial service, not just the banking space. So with that,
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we have a multi year delivery transformation that we've been working on and continue to
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work on. Part of that is meeting our customers, as I alluded to
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earlier, where they want to be met, So that could still be in
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a branch, but it could also be by phone. It could also be
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through some of the digital delivery channels, whether that be through partnership or in
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house solutions that we provide back to our customers. Second on the delivery transformation
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front is really looking for those opportunities to create efficiency for our customer and also
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to create better insight relative to our customers needs and also performance of loans.
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Particularly with the economics cycle anticipated for next year, we need to be sensitive
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to that and really to have that insight in those predictors is going to be
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helpful. But we're expected to modernize as institutions, so that's really a core
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focus of ours. And the acceleration that happened because of the necessity for adoption
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for digital tools while we were all at home working and kind of pivoting during
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COVID times are not going away. If anything, now they've become more table
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stakes of what's expected of us in the industry. And then also with consumer
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lending, we strategically have decided that a partnership model for specific solutions was a
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way that we could have agility, scaleability and really kind of have the uh,
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the insight their relative to the performance and the focus from the partnership as
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well as a team within the bank to help us get there. From a
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growth perspective, No, it's good and totally aligned with you. On the
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the the expectations have to have evolved and they're they're they're not regressing right because
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the folks have have gotten used to operating in a certain way and it just
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keeps evolving of how they're expecting to be able to do business when and where
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they want to do do the business right. It's not just you have to
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go to one spot. It can be I'm at a I'm at a child's
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sporting event and I want to be able to transact or do do some type
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of business and do I do I have the capabilities to achieve that? Absolutely.
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So then as you as you think about the consumer and I'll and i'll
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actually to kind of so this maybe from two perspectives, One from from your
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your industry view as you as you talk to your peers as well as kind
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of what you're seeing within your own business. How have spending habits of consumers
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changed or any other I'll say their needs changed over the over the past couple
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of years. Like, how have you seen any shifts either from what you've
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learned from your peers or what you're seeing at your own own organization. Sure,
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so from a peer standpoint, if you look across like credit card utilization,
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it's been increasing. There's there's demand there. It's also an indicator that
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some of that liquidity that was you know, out there from different stimulus programs
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or different recovery programs may have already been leveraged or utilized. So with that
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being said, within WISFUS Bank, we've seen credit card applications increase. Certainly
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our upstart demand increase, and we anticipate that that will continue. Also,
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the desire to consolidate, you know, credit card debt is something that also
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we recognize is a key opportunity and we provide some cost savings back to our
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customers. So all of those calls to actions are out there, and if
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you don't provide the solution to your customer, they're going to look for another
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way to meet that need. And you know that's one of the reasons that
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you know, we found it to be a great compliment to leverage up start
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in offers or existing customers as well as for new new customer opportunities. So
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as you as you talk a little bit about you know, understanding the the
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consumer and and and wanting to serve them, let's talk a little bit about
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data and automomation. So can you talk about, you know, how how
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does the need for for using better data about the consumer as well as increased
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automation, How does that like impact your approach? Is is your thinking about
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consumer lending? So I would share that data, clean data is critically important
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in getting insight and intelligence around customers behaviors, needs and also as indicators of
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kind of you know, the next product that may best serve them. So
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there's there are certainly a lot of necessity as a bank today and a lot
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of connectors where we can gather data about our customers to better serve those needs.
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The challenges, especially in the banking community where there's consolidation and things like
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that, is how do we bring those data sources together and then how do
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we create efficiency. So with that, we also have a focus on automation
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and then also, you know, consumer lending specifically is really ripe for the
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opportunity, you know, for partnership models and things like that to help us
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get additional insight on customers that we haven't yet had the opportunity to serve,
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or for underserved communities in our geography. So that has been something we look
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to continue to learn about and you know, find out where there, you
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know, maybe other services that we can even cross sell into our consumer lending
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portfolios. And then also with the CRA modernization and other things like that,
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we as banking organizations are going to have to report on the data. So
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cleanliness and the ability to provide that transparency back to our regular leaders as equally
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as important important as that business intelligence that we're gaining to come up with new
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solutions or better offerings to meet our customers in the way that they want to
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be met and with the services that they are looking to benefit from. Well,
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that's great, thank you for for that that insight. And let's let's
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double click a little bit on partnerships as you've kind of mentioned it, and
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then as you went over your over slide, it shows that the whistis has
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a number of fintech partnerships already, so fintech partnerships is not something new to
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the organization. Can you can you share with the group kind of your approach
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to partnerships, How are you how are you identifying the need we need determining
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it is where we want to partner versus this is where we're trying to develop
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something on our own. Absolutely. I think one is you have to look
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at the resources within your organization and the product suite that you'd like to offer
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there. There are fintech partners out there, such as upstart that can deliver
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and show up in a way that will allow you to serve those needs,
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but you need to have very specific requirements around engaging those partnership opportunities. One
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being is it's a reflection on your brand, So you want to make sure
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that the that there's a mission, a community focus, that all the things
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that are true to your brand as a banking organization align with the partner that
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you're deciding to be out there in the community. Whether it be a weight
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labeled solution, a co branded solution, or whatever the case may be,
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it's a representation of your brand back to that customer. They're also as far
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as product offering. You know you you have to look at you on the
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consumer side your strategy, like what services do you offer efficiently today? Where
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is their ability to optimize and what technology is available that otherwise you wouldn't be
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able to provide to your customer. So does the partnership provide that focus and
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acceleration that you're looking for as well as that agility would be something that you
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know would be key with any partnership opportunity. We have a group of individuals
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within the bank that all they do is manage our partnership relationships. They are
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focused on onboarding, on making sure that there is that ongoing communication of expectations,
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if there's tweaks to the program, if there's feedback from auditor compliance,
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all that is part of the process. I would also share that know what
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you do well and know where a partnership is going to allow you to serve
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your customer best. Again, there's alternatives out there in the first financial service
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space where they can get their needs met elsewhere. If it's going to be
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an impediment for you to try to build something, or if it you know,
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really is a distraction to your core strategic model for you to try to
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do it yourself. A partnership might be a more sensible option, but it
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doesn't come without responsibility, that's for sure. Well, and that's that's where
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I was going to kind of kind of slide into the next question, right
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is particularly lending. Lending is not a set it and forget a business,
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and you can't you can't do that with with partnership. So can you can
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you talk a little more about how And there's I've got a couple of questions
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on oversight and stuff, because I think that's important for folks to understand.
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But can you talk on how you're managing these these partnerships today to ensure that
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they're constantly meeting your business objectives? Because you described there's there was an original
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need that that started that of why you may engage in a partnership, But
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then you're you're having to continue to validate that are you still achieving those business
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objectives? And at times the business objectives are going to continue to evolve,
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So can you can you talk about like what are the what are the mechanisms
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that you have in place to to ensure that the relationship and the partnership is
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hitting the objectives. So one place to start is of course you should have
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that business case so you go through the discovery. You need to have that
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business case to understand the opportunity, the return on investment. Also to have
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clearly defined expectationsations for the partner, not just around originations, but also around
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serving that customer and you know, ensuring that for the length of that lending
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relationship to whatever the tentacles are, the back and forth relative to the service
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piece, they're being met because you as the banking institution still have all the
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same obligations back to your you know, regulating bodies, so that doesn't go
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away. You also still have the internal audit and compliance requirements as well that
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you need to meet. I would also mention that it's really important to kind
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of share that business case across the executive level of your organization. We can
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talk more about the stakeholders that you know should be have seats at the table,
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but that executive sponsorship is really key with partnership model and really understanding the
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appetite of bringing partners into your org and also whether it be a dedicated team
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or your vendor management group, how what what is the process to bring that
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partner into the org. Make sure that they meet all your requirements, make
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sure that the expectations, and then really have a launch strategy to bring it
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out there. And for us, we had been providing on secure loans prior
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to Upstart. We found that for for our selection of Upstart, we found
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that the technology efficiency and the the mechanism of kind of expanding that credit box
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was something that Upstart frankly just offered, you know us a better solution,
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a more proven solution with a you know, a track record that we felt
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confident in. So definitely, do your due diligence on your partner relationship to
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really understand how they're going to show up for you, how they're going to
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you know, really support you throughout that relation and ship. It's like you
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know, any other partnership, marriage, whatever you're going to call it.
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Team, It's definitely about collaboration. No, I'll and I'll add obviously you're
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familiar with this, but I'll kind of give the audience kind of a perspective
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from from from where I sit is when we when we work with our lending
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partners, it is about establishing the main KPIs of the of the program.
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And so we look at it as what are the economicals, what's the risk
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tolerance that that they want the program to be built under, Like what's the
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annualized loss rate target? And then what's the volume that they want to achieve
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both monthly and from a portfolio and all of those metrics. You should be
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monitoring them at the minimum monthly. But then those targets can evolve, and
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so where you may start, particularly as we've seen the macro environment change,
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the economics target of say a program that started two years ago could look quite
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different today because of a rising rate environment. For the lost time tolerance may
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adjust because of the environment we're in, you may not want to take on
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as much as much risk, and so so where we look at it is
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having those define KPIs and then reviewing them on a regular basis so you can
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make adjustments of what does success look like because it's in this environment, particularly
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in the past six months. I think you'd agree the KPIs continuously be reviewed
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and adjusted as the as the market kind of drives those changes. Yeah,
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and I think loan volume, you're acceptable, loss ratio, your yield,
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all of that are factors and the best part of the partnership model is that
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you have levers that you can adjust along the way if appropriate, but you
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also don't want to keep changing things too often where you can't get enough data,
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so you know there is a science to it as well. Yeah,
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that's a great point. So you mentioned a little bit about the stakeholders,
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because I think that's also for anybody that's that's that's getting into a partnership,
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particularly in consumer lending, it's for the for the CLO to be successful.
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You know, obviously you're you're owning the business, You're you're accountable for the
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results, but it does take the support of stakeholders across the bank in order
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to make a program like this successful. And so can you share a little
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bit about those critical stakeholders and and what are you doing to keep them engaged
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in supportive of the program. Absolutely, so, one I would share is
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that the stakeholder management is a key priority and making any partnership of success,
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it's these decisions should not be a decision of one it's it's something that we
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need to have the right seats at the table, especially in the early stages
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of a new partnership, to really again pull the right leavers, determine really
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what our goals and objectives are you do define a model to start with,
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but you know the there's different perspectives relative to those those executive sponsorship opportunities.
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So we I would suggest, of course your chief credit officer, your risk
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officer, your financial your chief financial officer, chief retail banking officer, of
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applicable fair lending officer, all really important people to have in that room and
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get support around and get comfortable around supporting any partnership, but particularly uh,
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you know, in the consumer lending space. Those individuals will have valuable feedback,
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they may have good questions, you can work them through the model.
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It's all about kind of building out a model that makes sense for your organization
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and what your goals are and also what you know a successful loan growth looks
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like for you. And then part of that is balanced with you know,
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engaging committees, providing quarterly business reviews, monthly KPIs providing out monthly report.
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So it's not just the initial executive sponsorship, it's also that continued engagement so
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that they feel connected with this, just like as if you were originating these
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loans within your own organization. Yeah, and I think the business reviews where
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we find those valuable and to kind of give everybody context. With each of
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our lenders, we let them determine do they want business reviews to be quarterly
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semi annually, And really that's an opportunity to bring the extended stakeholders together and
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everyone from both sides for the partnership can kind of come together and assess,
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hey, where is the program and then where are the business is going and
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to make sure your partnerships are aligned. So that is something that I have
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found both from my seat when I was in on your side of the table
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and then now on this side of the table of when you can have those
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periodic checkpoints of bring it up a level and just just look at kind of
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the macro relationship. It's also it's helpful to keep everybody uh all pointing to
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the to the true north right. Absolutely, So let's talk specifically about the
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Upstart partnership. And then you know I mentioned earlier that you're you're kind of
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using uh, you're using both products. You're both using the Upstart referral network
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for for for the client acquisition as well as the white label to serve your
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your existing client base. Can you can you talk a little bit about the
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the reasoning behind the two. How how you've used the two to complement your
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consumer lending program. Absolutely, so it goes back to kind of our strategical
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So one is we want to grow households, we want to grow new customer
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relationships. So part of that is done, you know, uh, through
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the upstart channel of originating new business for us, bringing those to Whistles Bank,
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having them get an introduction potentially to wists Bank through their upstart loan,
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and with that then we can we have marketing campaigns that then offer other solutions
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to the customer, whether it be depository relationships because they are regionally aligned with
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primarily where the branches are located within our network, so that we can have
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that customer grow with us and mature with us. So certainly that has been
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a great tool in reaching customers that in many cases have did not have an
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existing relationship with with with this bank historically or WSFS Bank, depending on where
30:30
you're regionally located. And with that, we also are have just begun doing
30:37
a lot of earn or cross sell campaigns to our existing customers as well,
30:44
which allows us to pre qualify the customer based on different data points that we
30:48
have with the partnership with Upstart, do direct mail, digital campaigns as well,
30:53
whatever works best within your organization, and then you know digitally, given
30:57
this is digitally offered digital campaign I would suggest as most efficient to reach those
31:03
but you know that is all something that is we can then benefit from that
31:08
relationship with Upstart in really kind of not only engaging you households, but deepening
31:17
those customer relationship. And we're also really excited about our pilot which we're working
31:22
for offering this more strategically through the branches. So the branches were so excited
31:27
about the Upstart program they already began referring it. So we have seen some
31:33
organic activity that we've we recognize as with existing customers, and that's just through
31:37
word of mouth advertising. But we do have a salesforce strategic initiative that will
31:44
be layered into our delivery where it will be branded wisk fist go out to
31:48
our customers through and Upstart app, and that will enable our branches to then
31:55
offer a unique application link back to the customer to app by real time.
32:00
So there there's a lot of opportunity and connectivity to these customers. Although you're
32:06
doing it through a partner it doesn't disconnect you from building a rapport and a
32:10
relationship and really also of course presenting other solutions back to that customer, whether
32:17
it be depository or other lending tools or even wealth if appropriate, that you
32:23
know may be a great compliment. No, that's great. And and you're
32:30
is, you're is, you're looking at the both both aspects, right you
32:34
You have you have both levers available to you to to drive growth, whether
32:40
it's with your existing client base, so you're deepening relationships as well as bringing
32:45
in then new new customers to the bank, which then starts a new relationship.
32:51
And the exciting thing is from being this digital first, right, So
32:55
these are these are individuals that are going through a fully digital experience and so
33:02
now they're more apt to continue engaging with you as you make investments across other
33:08
digital capabilities just can continue to add on to that experience, which is which
33:14
is exciting. Absolutely. So, So let's talk about the controls you have
33:20
in the program, because I think that's we've talked about kind of lending in
33:24
difficult times, and we've talked about rising rates and and and we've talked about
33:29
the reviews that that that we're doing. You know periodically and the KPIs so
33:36
so specifically the when you're working with a partner, and particularly in consumer lending.
33:42
And I always use this phrase, it's not a set it and forget
33:45
it. You just don't say, Okay, Upstart or whoever you're working with,
33:47
just go originate loans. There's there's there's oversight, there's controls, there's
33:52
adjustments that you can make. So can you talk a little bit about of
33:55
the parameters you can control and how you give the guide rail to UH to
34:00
originate. Sure. So one of the best parts about working with upstart is
34:07
it's highly configurable. So we have leveraged that and have gleaned in sight,
34:13
particularly as you know, we have different levels of production that we're looking for
34:19
on a monthly basis, things like that. It gives us the ability to
34:23
really take that marketplace approach and look across not just within our organization how our
34:30
portfolio is doing, but learn from kind of you know, the behaviors of
34:34
the customers, what they're looking for, figuring out like how we should be
34:38
priced within the market to get the types of responses that we need. Also
34:44
an important leaver, at least from our chief credit officer's point of view and
34:49
chief risk officer is really what is that acceptable loss ratio? And like kind
34:52
of as our as our portfolio matures, how does that all layer in?
34:59
So you know, certainly the configurability gives you real time to say, you
35:05
know, within a week's time that I want to make some changes and then
35:09
you know in a short period of time you'll see that impact. It also
35:15
goes back to kind of the connectivity, so you really need somebody that's going
35:20
to own the partnership programs and as someone that is whether it be yourself,
35:24
whether it be you know, someone that is a director or fintech partner,
35:29
whatever that you know, right position is within your organization. But it really
35:35
is important to leverage the fact that you're getting kind of that that real time
35:40
feedback on what the customers want, what your team wants internally, get that
35:45
out there and then also from a risk talent perspective, you define that yeah,
35:52
and I think that's that's great to highlight, right, is you have
35:58
individuals on your team of individuals and our team that are working hand at hand
36:02
on really a daily basis of looking at the program, looking at the results,
36:07
understanding what the different lovers do and then can make assessments together all based
36:15
upon data and then make recommendations to to you and and the rest of your
36:20
uh your support committee on what what adjustments need to be made so you stay
36:23
within the that i'll say, the foundation of the of your your business goals.
36:28
So especially thank you for sharing. So a couple more questions, then
36:34
we'll open up to see if the if the audience has UH, the attendees
36:37
have anything is so, if if a bank's considering a fintech partnership today,
36:44
why is now a good time to move forward? So I would one on
36:52
the fintech partnership side, these customers have a need, they're out there in
36:58
the community. Likely are your existing customers, So one to make sure that
37:02
you are continuing to show up for that existing customer base is equally as important.
37:09
Is important as those new acquisition opportunities. But if you you know,
37:15
you want to kind of know that if you're going to go into the space
37:20
that you're working with a team that experience is knowledgeable, has the the the
37:25
bench to kind of deliver on the originations, but also has a credible risk
37:31
profile. And what we were really impressed with was the the the ability to
37:38
kind of measure risk in it a more unique way, a more inclusive way,
37:45
and then also just the the the intelligence of kind of knowing you know
37:53
what what that would produce from a yield perspective. All of that, but
37:57
even with the economic cycle that is out there, as community banks, we
38:01
need to show up for our communities. So we need to continue to lend,
38:05
and we have to find ways even though it might be at a higher
38:08
cost given the rising rate environment. We have to find ways to show up
38:15
for our customers, provide solutions, and do them in a way that allows
38:22
us to continue to learn and continue to monitor that risk because we won't stay
38:27
in that cycle forever. And to get ahead of that curve relative to the
38:30
adoption of this technology is key and it will take your time to get it
38:35
through your vendor management team or whatever the appropriate level of due diligence. You
38:39
also set to complement that in onboarding a partnership relationship now, thank you,
38:45
And where we would to add is going back to the theme of hey,
38:50
we're in kind of choppy waters, unknown unknown waters for a period of time,
38:57
and I will by no means try to be an economy or predict the
39:00
future. There's there's smarter people that are trying to do that every day.
39:04
But when you look at of when is the when is the right time to
39:10
maybe start looking at at partnerships is where where I think sometimes when these environments
39:16
are good, is I kind of equated to you're you're not looking If you
39:22
have a boat, you don't want to try to fix the boat in the
39:25
summertime. In the summertime, you want to be out on the lake.
39:28
You want to be on the boat enjoying it. And then the winter is
39:30
when you want to be cleaning it up, fixing it up, getting it
39:35
ready for summer. And so the environment we're on now, although folks are
39:39
are much more cautious, as you said, there's there's still there's still a
39:43
need for consumer lending. And so to me is this is where it's advantageous
39:49
for a bank to be exploring these relationships, starting the groundwork, getting the
39:54
stakeholder engagement, doing the due diligence, and then potentially even getting some type
40:01
of a program installed in ramping up kind of a controlled ramp up so that
40:06
when when it's sunny skies again and it's the lake is calm, Uh,
40:12
you're out there enjoying the boat versus then you're deciding, oh, wait,
40:15
I want to catch up. Because I think what we saw during during COVID
40:19
is our partners that were already on the program once things you understood a little
40:25
bit about what was happening after that initial shock, those were the lenders that
40:30
were able to take advantage and really serve the needs of the consumers while the
40:36
rest of i'll say partners were evaluating what they should do, right, should
40:40
they should they establish a relationship with us or another lender or partner or somebody
40:45
else. And so that's where that's where I kind of see a time like
40:46
this is always good because you can take it slow, you can monitor,
40:51
and as you talked about, getting the clean data so that you can learn.
40:53
So definitely there's there's never there's never a bad time, I think,
41:00
to be to be exploring partnerships. And so before we've got some we've got
41:04
some good questions which we'll come back to. And I think one of the
41:07
questions kind of leads to my last one, which is just what's what's next
41:12
for the organization. As you're as you're looking at other things you want to
41:15
do and and I'll kind of kind of tied into one of the questions from
41:21
an attendee was was kind of asking a little bit about goals for the rest
41:24
of twenty two and and as you're heading into twenty three, what's uh,
41:28
what's what's on your radar? Well, So I did touch on this earlier.
41:32
So we definitely are continuing to focus on delivery transformation digital transformation client experience.
41:39
So we recognize that our customers want the optionality of, you know,
41:49
getting their transaction need transaction needs as well as their lending needs met through digital
41:55
channels as well as through branch or other needs. So certainly we're investing in
42:00
that, whether it be through partnership or whether it be through internal delivery of
42:06
those solutions. So you just have to decide where what the right place for
42:12
you to focus relative to your own version of that might be. But I
42:15
think the expectation is that we as financial institutions need to show up for our
42:22
customers in that way. So certainly our foot's not off the guests relative to
42:28
that in partnering, but we are being selective. So we decided Upstart solution
42:32
for unsecured lending was the right delivery mechanism for us and the right tool for
42:37
us to engage those new customer relationships as well as deep in those existing that
42:43
we've been speaking about. I would also share that you need to be continuing
42:49
to look for opportunities, whether that be for other compliments and deepening partnership relationships
42:57
or also finding new partners that maybe maybe enable you to reach those delivery channels
43:05
more efficiently. So that's always something we're looking at. And then we also,
43:09
you know, want to make sure that we're learning more about our customer
43:14
and leveraging those business intelligence. We are salesforce organization. We use a lot
43:20
of the tools that many of you may be familiar with, and so we're
43:23
really trying to be thoughtful around centralizing customer data, reaching our customers in the
43:30
way that they want to be met. And although that big picture may seem
43:37
flashy, there's a lot of hard work that goes into achieving all of those
43:39
goals. Yeah, now it's it's uh. We unfortunately don't have unlimited time
43:45
or unlimited resource, right, So a lot of it is is is prioritization
43:50
and and and really assessing the impacts. So as we jump to some of
43:55
the Q and A. One of the questions here was just around staffing to
44:02
support a program like this, Are you open to sharing at least you don't
44:07
have to go into specifics, but kind of a ballpark of the type of
44:12
FT structure that one would need to support a program, Yeah, if you
44:19
have a So for we do have multiple partnerships, We do have some individuals
44:23
that are kind of shared roles as well. Related to kind of the accountability
44:30
to partnership, we had decided that it made sense to have a director level
44:37
position to kind of lead the strategy and lead the charge relative to kind of
44:44
keeping those stakeholders at the table informed. So we did make the investment in
44:49
a director of Fintech partnership and digital delivery. And so that is something that
44:55
may or may not make sense for your organization. You have to go through
44:59
your own discovery based on your size. We also do have other data analysts
45:05
that support that role as well, and that also includes collaboration with some of
45:12
the business lines depending on the partnership model. So for Upstart, you know
45:17
we have retail loan servicing. There's other pieces of our bank that do touch
45:22
this relationship and there's connectivity there too. So I would anticipate at least to
45:29
start one dedicated FT is necessary, and then it depends on the size,
45:35
scale and scope of how many partners you're looking to manage and how you kind
45:39
of grow that within your organization. But you know it is something you want
45:46
to stay connected with. It also maybe something you need to think about the
45:52
level of loan volume and growth you look to have from the portfolio before you
45:57
make that investment as well. Starting with the business case would probably be a
46:02
great place to start, so then you can really figure out what the right
46:07
structure might be for your organization. Oh good, that's very helpful. There
46:14
was a question about the referral network and really what differentiates this from marketing with
46:21
say financial hubs, and so I kind of explained just just a high level
46:24
is the advantage of the Upstart referral network is it allows Upstart to utilize nationwide
46:34
multiple marketing channels. So that is we're doing direct mail, digital mail,
46:38
social media, we're doing our own kind of pre screening campaigns. We'll also
46:44
have partnerships with aggregators and so we're able to cast this wide net that really
46:50
allows us to i'll say, manage a cost to acquire that, then we're
46:54
able to then bring all our partners together and just amass the share amount of
47:01
volume and it bats for for our partners. And the advantage is is if
47:07
you're an individual lender that's trying to go out and do all of this type
47:12
of marketing A it's it's it's very expensive and just the conversion rates aren't is
47:19
high. And part of it is because what we're doing is we're bringing just
47:22
a number of lenders and a number of scale. It's it's allowing us to
47:25
actually aggregate all of this and then align it up to our lending partners.
47:30
So that's it's we're we don't just use a single source. We use multiple
47:35
channels in order in order to drive the volume based upon the capital that we
47:38
have available. So hopefully that I answered your question. And then the last
47:43
question we have here is just observations on customer satisfaction between the digital deliveries and
47:51
compared to the branch Do you want to share a little bit on you know,
47:53
I know you and I talk MPs scores, but if you talk kind
47:58
of just sad like, how do you guys look at it and how do
48:00
you guys compare it? So customer satisfaction is key. So the way we
48:07
represent our brand in our communities is that w s f S stands for we
48:12
stand for Service. So that's really important to our brand and that was something
48:16
that we spend a lot of effort and time on in vetting partnerships and making
48:22
sure that they are going to represent us in the same way that we would
48:28
present to our customer or better, you know, whether that be on the
48:31
digital delivery channel. So with that being said, we did a lot of
48:37
due diligence and research relative to upstarts reputation and selecting them and kind of identifying
48:45
that that you know, they would show up in a way that you know,
48:51
really aligned with our desire to you know, have that service, truth
48:54
and community first. And what I would also share related to that is that
49:04
we've had tremendous feedback through trust Pilot and other means that it has really shown
49:10
up in that way that that individuals that have used and been exposed to the
49:15
wisfis brand through you know, the entry point of upstart, that it has
49:22
reflected in a way that it was really positive. We got tremendous feedback.
49:24
So certainly one that we've been satisfied and we've gotten good information that it does
49:31
aligned with kind of how we're positioned within the community and provides that continuity around
49:38
service and experience that we were looking for. And I think that's really critical
49:43
with determining, you know, any partner relationship that they're going to show up
49:46
for your customer and the way that you would no. Thank you, and
49:52
I think we I mean, we've seen from our end is from a net
49:55
promoter score as we look at, I mean, on average on the upstart
50:00
platform, it's it's generally in the high seventies, low eighties. Our lending
50:04
partners tend to be tend to be higher, and it's just they because of
50:07
some of the competitive rates that they're able to offer and just experience. If
50:13
we didn't get a chance to answer your question, we'll we'll at least try
50:16
to either follow up with you or you can reach out to lenders at upstart
50:22
dot com and we'd be happy to do a follow up outside of the session.
50:27
First off, Candice, thank you the session. I always I always
50:31
enjoy talking to you because you and I get to get to talk a lot.
50:35
But it was just great kind of riffing with you for this hour talking
50:37
a little bit about the business, and I'm sure our attendees really got a
50:42
lot of value out of hearing your thoughts and insights today. So thank you.
50:45
Thank you for the opportunity, and you know, happy to support other
50:49
community banks as well. That's one of the great things is because we are
50:53
regionally focused, we have the ability to help and kind of share and collaborate.
50:59
So appreciate the chance to share. Thank you. Upstart partners with banks
51:04
and credit unions to help grow their consumer loan portfolios and deliver a modern,
51:07
all digital lending experience. As the average consumer becomes more digitally savvy, it
51:14
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51:24
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51:40
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51:45
help you find more credit worthy borrowers within your risk profile. With all digital
51:51
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