Latest / Leaders in Lending / Clicks To Bricks: Starting the Customer Experience Digitally

Transcript

Clicks To Bricks: Starting the Customer Experience Digitally · Leaders in Lending

0:02
You're listening to Leaders and Lending from Upstart, a podcast dedicated to helping consumer
0:07
lenders grow their programs and improve their product offerings. Each week, here,
0:13
decision makers in the finance industry offer insights into the future of the lending industry,
0:18
best practices around digital transformation, and more. Let's get into the show.
0:26
Welcome to Leaders in Lending. I'm your host, Jeff Keltner. This
0:29
week's episode features my conversation with Jenna Stricker, who's been in her role as
0:34
the SVP and the head of Digital Lending at NBCC for ten weeks, but
0:37
in the consumer lending space for more than ten years, and shares her experience
0:40
from throughout that time. She had a really interesting phase going from clicks to
0:45
bricks and not just bricks to clicks, which I thought was really interesting perspective.
0:50
Shares how that kind of dictates what you need to do in the bricks
0:53
and the clicks environments each I promise that'll make sense if you listen to the
0:56
episode, how you think about online experiences. Her propensity for opening up lots
1:00
of digital accounts as as I often tend to do as well I when comparison
1:03
shopping and trying to find new ideas for how how things are done well by
1:07
others in this space, and also approaches to alternative data how I can increase
1:11
the ability of lenders and financial institutions in general to serve more customers. So
1:17
I thought it was a really fascinating conversation and I hope you enjoy it as
1:19
well. Without further dude, this is my conversation with Jenna Stricker. Jenna,
1:25
thanks for joining us today on the podcast. I really appreciate your making
1:26
the time. Thank you for having me. Yeah, I've been I always
1:30
like to start by asking my guests a little bit about their pathway to their
1:34
current point in their career, because it's usually not our childhood ambition to end
1:38
up in the banking space, at least it wasn't mine. But yet here
1:42
we are. So tell me a little bit about the path that has brought
1:45
you to this place. Yeah, I guess I maybe I did. Maybe
1:48
I was the odd odd man out. I wasn't driving, didn't dream about
1:53
being a banker by any means, but I always did, you know,
1:56
as a kind of a career marketing professional. Started my career actually very early,
2:00
working fifteen sixteen years old, in a call center, and so I
2:04
always was just kind of that connoisseur of the perfect customer experience or the perfect
2:09
customer engagement with, you know, whether it's somebody that's buying a newspaper subscription
2:15
or signing up for some sort of service on the phone. So for me,
2:20
I don't know, I was always really passionate about that, about making
2:22
sure that when I was engaging with someone that we did not have somebody that
2:27
walked away like, oh, what was that experience that just happened. So
2:30
that's really kind of I would say that the fastest way to describe how did
2:35
I get here is I worked, you know, about ten years ago,
2:38
starting in a consumer lending organization, focusing on portfolio growth and acquisition. How
2:44
do we make the biggest impact with our customer engagement, how do we retain
2:47
those customers and continue growing our base of customers of really you know, ecstatically
2:53
happy individuals with the experience that they've had. And so that's that's really led
2:58
me here. I've only worked for a handful of organizations over the last ten
3:00
years, and it's always been focused on just growing that consumer making sure those
3:07
you know, one on one experiences whether it's what's someone in a call center
3:09
or on an email campaign or a display at that they see that it's very
3:14
clear and conspicuous. You know what they're getting into and what their benefit would
3:17
be. All Right. I love that that story and the focus on consumers
3:22
and customers and growth, which I think is so so much a part of
3:25
what every institution now is trying to find a way to do. But I
3:30
want to dive into one of the things you said to me when we talked
3:32
earlier, which was moving from bricks to clicks to clicks to bricks, which
3:38
I thought was this, everybody's got these little one liners that I think,
3:40
but they kind of capture some truth about what we're trying to do, and
3:44
that was an interesting one I hadn't heard before. So you tell me a
3:46
little bit about like, what what do you mean when you say moving from
3:49
bricks to clicks to clicks to bricks. How do you think about what that's
3:52
what you're trying to do in that context? Yeah, I think so a
3:55
little bit about NBKC. We're an organization that's been around for some time,
4:00
but you know, early on had a very heavy focus on the digital world,
4:04
being a fintech partner in bringing and I think you know me from a
4:09
community bank standpoint, not every community bank has our entire team of developers behind
4:14
them that you know, are kind of owned and guided by the direction of
4:17
where the bank is going. And I think that plays a huge role in
4:21
you know that catch phrase of of clicks to bricks and bricks to clicks,
4:25
and well, the majority of banks have you know, I guess typically over
4:30
the course of history, always focused on having a brick and mortar place in
4:34
their community or a brick and mortar place in their market. Um, we
4:38
recognize that that's incredibly important for a very large segment of our borrowers that they
4:44
have that relationship banking with someone who's on the corner of you know, first
4:48
in Maine, and that certainly does still play a huge part in our strategic
4:53
plan. But I would say even bigger than that is that we haven't been
4:57
focused on trying to drive individuals way from a brick and mortar presence over to
5:01
an online presence, which I think does happen organically right now. The bricks
5:06
to clip, Yeah, folks are kind of saying, hey, let's try
5:11
to get people into our online space. And we've actually really been focused on
5:15
the reverse of that, saying we're not trying to force you into this digital
5:18
place, but we're here for that and so many of our online banking relationships
5:24
and partnerships that we have not only with businesses in our community and in our
5:29
Kansas City footprint, but also with borrowers and with deposit customers. Right,
5:32
they actually started out as an online banking customer and are very happy to find
5:36
that they can actually still go into a brick and water place as well.
5:40
How does that change how you think about the digital experience. I mean,
5:43
it's a really fascinating kind of shift, but it means in many ways,
5:46
your digital experience could be the first or the primary where I think a lot
5:49
of institutions have thought about building a digital experience as the follow on to the
5:55
in person, the current customer who's got a relationship it wants to check their
5:59
balance or deposit a check or do something simple. But in this case,
6:02
you're saying it maybe the first or the primary interaction somebody has which kind of
6:05
changes the nature of what you need to accomplish or maybe how you think about
6:10
serving that customer. I'm curious how you see that shift, or if I'm
6:13
crazy when I say that, but it seems very interesting to go from clicks
6:15
to bricks. It takes some of you came to you digitally. Now you're
6:17
talking about onboarding and starting a relationship digitally and then having the in person service,
6:23
which makes a ton of sense to me. But I imagine it shifts
6:25
your priorities a little bit on what you're delivering or how you think about the
6:28
digital experience of the role it plays in the customer journey, because you're kind
6:30
of inserting it in some ways at a different point in that journey. I
6:34
think you're absolutely right, Jeff. And the one thing that you said that
6:38
is could not be more important to remember for any organization that's thinking about how
6:43
do we adapt in this fintech space or in you know, kind of a
6:47
Again, I keep saying clicks to bricks, but in this digital revolution that
6:51
I think most banks are having right now, is that does become incredibly important
6:57
that you get off on the right foot with that barrow, that they understand
7:00
the support that they have from your institution, as well as the myriad of
7:03
products and product offering that the bank has. So you know, I would
7:10
never say we're in a time and place where it's not important to be focusing
7:13
on that digital interaction, but us starting that and also having that as a
7:17
primary communication source means that, you know, we always have to get off
7:21
on the right foot with those borrowers and also communicate to them right be very
7:27
thorough in our communications as too. Here's again, here's what you can expect
7:30
from your interaction, and here's what you can benefit from as well. I
7:33
like that knowing so much. I think of life as setting expectations and so
7:39
kind of understanding where to go for what, When when do you use A
7:41
or when do use B As long as people are actually more flexible I think
7:45
than we often understand. As long as they have the expectations set right,
7:47
they know where they're supposed to go, what they're supposed to do. As
7:50
long as you meet those expectations, that's huge. And helping them understand where
7:54
and when and how to communicate with which tools can work, I think can
7:57
make a big difference. I want to dive your your point on customer experience,
8:01
you know you talked about I think opening up lots of one of those
8:05
people I've got, you know, I got a stack of cards and a
8:07
drawer over here. That's all the various digital bank accounts and services. I've
8:13
got one that you could use to spend bitcoin on stuff the credit card,
8:16
and then I bought a cup of coffee on bitcoin in like twenty fourteen,
8:20
and that's a turns out that was a very expensive cup of coffee at the
8:22
car exchange. M But you know, trying out all those services I think
8:28
is really valuable. Talk to a little bit about how you think about the
8:31
value of that, or opening up lots of accounts and how that informs how
8:35
you think about building the right customer experience for your own customer. Absolutely,
8:37
that is um it's a little bit of a passion of mine, and I
8:41
would say that it takes up a fair amount of my mailbox as well.
8:46
But yeah, I think, you know, exploring what in this day and
8:50
age of neo banks, um, you know, banks that sort of this
8:54
this niche of the market, I think it's fascinating and I think it's fascinating
8:58
for us to see how consumers are being spoken to right from the company perspective,
9:05
because what that brand is trying to do, when you know, specific
9:09
to a new bank is talk to that borrower. But you know, the
9:13
individuals at the sponsor bank or at the company that you know put that card
9:16
or bank account out, um, they're likely not in the target audience for
9:20
that barrower. So I think it's fascinating to go out and look at how
9:24
brands have crafted their voice, how they've crafted that experience of what it looks
9:28
like online. How can you engage with the brand? That's a big one
9:33
for me. I love reaching out. You know, if I opened a
9:35
package of fruit stacks for one of my kids the other day and there was
9:37
like this weird, you know, gob of white stuff in there, and
9:41
I'm sure it was just probably where coloring didn't get mixed into the fruit stacks
9:45
all the way. But I love to reach out to the brand and engage
9:48
with them and say, hey, I found this in our box just to
9:50
see what the customer experience is like, and I think we can bring that
9:52
back to our brand to say, you know, what is it that not
9:56
only you know we're talking about like ancillary industry, but our competitors, you
10:01
know, direct community banks in our market or even online banks as well,
10:05
are actually engaging with their consumer base. Because I want to make sure that
10:09
what we're doing at the end of the day, is that we're actually giving
10:13
people what they want and more. It's not about meeting the baseline expectation,
10:20
it's about exceeding that expectation as well. Yeah, that's so true. I'm
10:24
curious do you do this with your own product. One of the things that
10:26
surprised me when I talk to some banking executives is like they actually have never
10:30
been through the onboarding experience for their own institution. They don't. I mean
10:33
I used to. I've got like five thousand email accounts and upstart systems because
10:37
I used to apply for a loan, Like every week they talk and we've
10:41
changed something, I need to go like see it. And then I'd sign
10:43
up for all of our competitors and go through the flow and I'd say,
10:46
hey, they do this and we don't do that, like why don't why
10:50
don't we do that? Or should we? You know? Just so,
10:52
of course they would require a unique email, so I have like a bajillion
10:54
versions of emails that I use for that. But I'm curious if you've got
10:58
if you go through your flow, if your team goes through your flow,
11:01
and if you like what you learn from that because to me it's been such
11:03
a valuable experience, really, but put yourself in the customer's shoes and understand
11:09
the process from the customer's point of view, which can often get lost in
11:13
the kind of internal politics and architecture diagram and checkbox of things that need to
11:18
get done before. And I got my BSA checklist and my am L checklist
11:22
and we do these twelve things. Well, what does it actually feel like?
11:24
Right? And how does that And I think that's what you're talking about
11:28
when you talk about finding these brands and going through those experiences, And I'm
11:30
curious if you do the same thing with your own because it's so interesting to
11:35
see it. Absolutely, yeah, absolutely it is. It's so important to
11:39
me. I think that's kind of one of the one of the first things
11:41
I do. It's I call it a it's a it's a base level.
11:45
It's level zero point zero tasks. You know, when when you're actually getting
11:50
either ready to launch a new product or you know, add a new feature.
11:54
Right. I think everyone's in this time and place where we're thinking about
11:56
fraud and what you know KYC does for our business, obviously knowing that that's
12:03
a regulatory requirement but it's definitely something that helps bend off if you're doing it
12:05
correctly, a fair amount of loss right mitigating in some instances millions of dollars
12:11
depending upon what your product offering is. But I do run through that.
12:16
I make it a best practice of mine to do it on a desktop and
12:20
a mobile device. Send it to several people on our team, send it
12:22
to people outside of our our organizations, like, hey, can you step
12:26
through this right at the appropriate place? Hey, mom, you know or
12:30
cousin, I need you to come in here with your device and walk through
12:31
this. But just like you, I'm surprised that there's a lot we get
12:35
caught up in the day to day QA and you know, business acceptance testing
12:41
on some of these digital products. And it never ceases to amaze me some
12:46
things that are very basic that sometimes get overlooked. So absolute firm requirement for
12:50
me to do that and then taking it one step further. As well as
12:54
session recordings seems to be a real hot trend and tech right now that the
13:00
number of things I've seen on a session recording go wrong that you would never
13:03
get in a testing environment is also really important just to set and watch right,
13:07
what are customers doing. What are they looking for? Um? You
13:09
know, are we answering their questions? Are they scrolling up and down on
13:13
the page and reading every single word and maybe not finding what they're looking for
13:16
before they abandon? So, Um, those are all things that are absolutely
13:20
critical requirements. I love that kind of other people in the session record It's
13:24
so true. Like you watch these session recordings and you're like trying to make
13:26
a payment. You go, oh, click that button. Why would you
13:28
click that button? Why no, no, no, don't don't? Why
13:31
no? Why why? And then you got to like learn from that because
13:33
it's especially when you've seen the products so much, you like you have this
13:37
intuitive understanding of what to do or how, and you're a savvy consumer of
13:41
such products being in the industry, and then the average consumer isn't and they
13:43
haven't seen a product, and so it could be shocking what they do.
13:46
And then you go, but that's like great data on we better make this
13:50
more obvious what to do or where to go or how to achieve this objective
13:52
that they have, because it could be stunning what you find in those recordings.
13:56
Um, when you watch people actually doing doing using your product, and
13:58
you go it's not what I thought you would do well. Absolutely, so
14:03
I wanted to dive into something you said earlier because you talked about having your
14:07
own dedicated development team, which is fascinating because a lot of It's one of
14:13
the funny things to me that this kind of idea of bank fintech partnership is
14:16
considered new and I look at like just the core systems providers, and like,
14:20
very few financial institutions really build the majority of their own software, right,
14:24
they're really And so I look at fintech partnerships think a software developer providing
14:28
tools to financial institution is kind of not that new a thing. And in
14:33
many ways you're right that having your own dedicated development team that's building core user
14:35
experiences is somewhat different than others. But obviously, you guys are not of
14:41
a scale to be like building everything from scratch on your own. How do
14:46
you think about where you place your bets on what's the priority for you to
14:50
build versus by where you use the resources of a development team to add the
14:54
most value, Because it feels like like an almost infinite menu of things you
14:58
could do, and yet a resource that clear is an infinite in scale and
15:01
I'm curious how you think about where do we deploy that for the most value.
15:03
How do we think about making that decision. I think every fintech organization
15:09
on the face of the planet right now faces that pench of our resources are
15:15
not unlimited when it comes to you know, software developers and engineers on the
15:20
back end to build things. And I would even challenge the biggest of you
15:24
know, the box fintech companies out there to say, oh, we build
15:28
everything on our own. And I just don't think it's a it's a reasonable
15:31
expectation to think that any company has the centect matter expertise to go out and
15:37
build one hundred percent of their tools. And so it really boils down at
15:41
the end of the day to a really great build buy analysis as well as
15:45
some great cross functional teamwork within your company to say, here's what we're really
15:50
good at and the things that maybe we're not so good at, what makes
15:54
sense for us to bring in house and actually we're in the process of doing
15:58
this for a larger project right now on my team as well of you know,
16:03
we need something to solve a particular problem that is as a result of
16:07
growth and a desire to grow with the amount of time that it's going to
16:11
take and you know, taking up I would say, monopolizing two or three
16:15
team members for the majority of the next six months. You know, we're
16:19
in this process of saying, here's here's how we quantify what this tool costs
16:22
us to build in house, not even to mention the learning curves that this
16:26
system, which is primarily more AI, will have, versus going out and
16:32
saying, Okay, we found the person who's a subject matter expert in the
16:34
marketplace. They're already working with vendors. You know, they can kind of
16:38
model out some statistics of what this would in theory look like in our environment.
16:44
You know, which path do we want to go? And I think
16:45
everyone at the table agrees that we have to leverage again our areas of subject
16:52
matter expertise when and if it applies, and if it doesn't apply, then
16:56
there's no shame in going outside of that team, because that's that team actually
17:00
will be integral in an implementation as well. Do you I'm curious one of
17:06
the areas that I often think is underinvested in is the unification of the customer
17:14
experience across maybe different systems or protocols or partners you've got, because you know,
17:18
when you talk about the kind of clicks to bricks, one of the
17:22
things that it curs me's kind of like the customer experience almost. I won't
17:25
say it replaces the relationship, but it's playing the same role that we used
17:27
to think of the relationship, like a thing that brings me back, that
17:30
feels like I'm dealing with an institution that understands me. Really comes together in
17:33
the clicks world and that customer experience, and yet so often it can be
17:37
disjointed. I mean I went through a I've told the story a couple of
17:41
times that I went through a mortgage. I got a mortgage from my bank
17:44
shall remain nameless, you know, witness protection kind of thing, and then
17:47
I said, well, can I get a heloc at the same time,
17:49
I said absolutely? And then I got like a different experience that ask me
17:52
all the same and I was like, that should have been just a little
17:56
like would you like fries with that kind of question to originate a heal at
18:00
the same time as a mortgage with a good LTV, And instead it was
18:02
an entirely new process. And I feel like those seams between the systems and
18:06
processes are often places where things break down and delivering that experience, and so
18:10
I'm curious how you think about that kind of the integration and the you know,
18:15
kind of surfacing of these things. Is a place to put development resources
18:18
versus deeper into an individual product, because it don't. I always think it's
18:22
an area that somewhat underinvested in by many institutions because it just, you know,
18:26
all the best individual experience. When when I went to the next helock
18:30
thing, I stopped the process. I'm not filling out my address. I
18:33
just got a mortgage by me my address in And that's a simple thing to
18:38
fix, but it makes such a difference. So I'm curious how you think
18:41
about that kind of like that the glue element, so to speak, or
18:44
the consistency and unification of experiences for the customer. Yeah, I think that's
18:48
a great question because if you if you can imagine this, if you step
18:52
back from the fifty thousandth of view, is that many times when we're developing
18:56
I say this, we like universally, you know, when we're developing a
19:00
product, it is you know it's going to be the best product out there.
19:03
We're going to launch it it's going to have all these features, the
19:06
customers are going to love it, and then we think about implementing it,
19:10
but not to your point of how do these things cross functionally work together.
19:14
And so I think that's really where leadership is a key play. You know,
19:18
at NBCC, we're very lucky in the fact that all of our chiefs
19:22
and our leadership team have been around for a long time. They've worked together
19:25
for ten, fifteen, twenty and up years, and they they communicate,
19:30
and so I think, really, you know, boiling down that challenge with
19:33
one solution is it's it's communication, right because those departments a lot of times
19:37
when you're talking about mortgage in a hulock, they seem to be so you
19:42
know, kind of similar, if you will, But at the end of
19:45
the day, they probably have different internal ownerships or or stake owners or you
19:49
know, it's stablers if you will, at the bank, and you know,
19:53
those two people may not be talking, they may not be using the
19:56
same databases and making the same queries. And so ultimately, I think in
20:00
order to achieve this harmony at a brand or at a bank specifically, is
20:07
it comes down to the communication of us saying hey, we're rolling out this
20:10
great product, should we be offering it in conjunction with a mortgage? And
20:14
we're doing something very similar right now actually with the helock product at NBCC where
20:18
we're talking about you know, customers coming in and getting a helock. Doesn't
20:22
it make sense for them to have an online banking account so they can instantaneously
20:26
transfer money versus waiting on that you know, check to clear or wire ah,
20:30
you know, to go to an external institution. We're really you know,
20:34
not necessarily thinking about it from you know, a financial perspective, but
20:38
this is a this is what's best for the consumer. This is what makes
20:41
the most sense to get customers access to those funds right away. Yeah.
20:47
I think that one of the hard parts of this. There's a whole saying
20:48
in Silicon Valley that you organizations often shift their org chart, which is,
20:52
would you know, you get the two stakeholders h do their thing, and
20:56
then the customer sees two separate things as opposed to unified experience. And I
21:02
find that sometimes it's that who plays the role of the consumer. How do
21:06
you put you know, you know, if you go back to the you
21:07
trying it out, like if you went through that process, you would you
21:10
would see the gap pretty clearly. But how do you I'm curious how you
21:14
think about aligning those groups or getting everybody in the same page. Because it
21:18
is communication, but it's also setting up the right incentives within the organization or
21:21
the right culture that prioritizes that customers experience over that individual business business units,
21:27
maybe not performance but kind of self contained, you know, objectives and vision.
21:33
Do you have advice for how you kind of foster that kind of culture
21:36
of communication, leadership, shared objectives, because I feel like that's so often
21:40
it's incentives or culture where that breaks down. Everybody everybody believes it should be
21:44
true, and yet we fail to deliver on that vision so often. How
21:48
do you actually, you know, achieve that kind of result. I think
21:52
you hit the nail on the head as it comes to culture, right,
21:53
this isn't this isn't about me, This isn't about my division. This is
21:59
about the bank and the banks greater success. And um that's I'll say this.
22:03
I've worked at many organizations that you know, I've been working actively on
22:07
getting there with that culture and it doesn't happen overnight, but it has to
22:11
be something that from the top down that individuals care about the overall success and
22:15
they have to be very passionate about their customers and about that customer experience.
22:21
And so I say, you know, get every single person on board with
22:25
understanding. And this goes all the way down to your UM you know,
22:27
tellers at your bank and your brick and mortar locations, your CX and customer
22:32
experience specialists that that do you know, instant messaging that do email response,
22:38
phone calls, things like that, of understanding that this is a product that's
22:41
coming out. This is a benefit to the customer. This is you know,
22:45
the reason that they bank with us, right, they do it for
22:48
a very specific reason, not because you know, they drove buy our branch
22:52
and just happen to walk in one day. It doesn't happen by accident.
22:55
But it needs to be very intentional top down from your CEO or your banks
22:59
president to make sure that everyone knows. Again I've mentioned communication earlier, this
23:04
is the benefit. This is absolutely something that we all have to be passionate
23:08
about. Yeah, I love your story with the helock and the digital the
23:14
digital bank account, because so often you've got like I get the marks,
23:17
Well, we'll give you twenty basis points off. If you open a checking
23:18
account and you go, okay, you gotta put one hundred bucks and you
23:22
go okay, and then you like, why are one hundred bucks? How
23:25
long do I have to leave the hundred bucks to keep the twenty five basis
23:27
points? And then you like, you know, but that was that That
23:30
decision came from the point of view, if we want more deposits, right,
23:33
so what can we do to like take this person and put them into
23:37
a deposit product and what you're talking about as a version, We went,
23:38
hey, if you've got a helock, you can use it more quickly if
23:42
you have a digital bank account. So I'm starting not from the what the
23:45
bank wants to get out of it, but what's the value to the consumer
23:48
of the customer. That's just such a different starting point to ask the question,
23:51
how do we make the consumers experience better? Hey, you can access
23:53
your helock funds instantaneously, not a three day ACG transfer window or whatever,
24:00
but like instantaneously. That's a very different mindset than like, you know,
24:03
the thing that results in fraud at larger institution. We go, oh,
24:06
we need more deposits. Let's just see how many accounts we can get people
24:08
to open up when they're taking out a mortgage, to just drive up our
24:11
number of customers to hit some sales objective. That gets me a bonus.
24:15
Absolutely, and that's actually one of the reasons why our NBCC Everything account we
24:19
offer a singular type of checking account is it is straight to the point.
24:25
There are zero fees, no fees whatsoever. We're trying to offer this as
24:30
a convenience to those customers. I've been into many financial institutions going back to
24:36
that comment about opening accounts and seeing what that's like, and they present a
24:38
menu of account types. Right, if you're going to have four or more
24:41
transactions every month that you know you saved this fee, or if you have
24:45
three direct deposits, or if you have blonde hair and blue eyes, you
24:48
can have this type of an account. And so really, you know,
24:52
at the end of the day, we boil it down, we make it
24:52
simple. We're not going to overcomplicate this. We want you to have a
24:56
simple and easy transaction that you know what you're getting into when you get that
25:02
account. Yeah, that's so true. I feel like we live in an
25:07
age not just in your final stories, where like we offer people too many
25:11
choices, and I'm so often send they're going, I want to pair of
25:14
shoes. Why are there? Like you go to the running shoes store and
25:15
there's like five thousand pairs from the same brand. You go, I don't
25:19
know which one do I need? And often those choices are not really you
25:25
know, not really important for most people like you really just would prefer to
25:29
have the right thing given to you and not a thousand options presented that you
25:32
don't really know how to choose them. One absolutely. Hey, Sarah buch
25:37
Here, the VP of Consumer Lending at First Federal Bank of Kansas City.
25:41
A few years back, our executive team knew we needed to grow or unsecured
25:47
personal loan portfolio, so we turned to Upstart. Three years later, I
25:51
am proud to share that we've scaled our loan volume target from five hundred thousand
25:53
a month to twelve million a month and acquired over a thousand new customers.
25:59
If you want to keep are more about our partnership, check out the full
26:02
case study on Upstart dot com forward slash Lenders. Once again, that's Upstart
26:07
dot Com forward slash Lenders. All right, let's get back to the show.
26:15
So I wanted to talk about one more topic that came up in our
26:18
earlier conversation, which was the kind of emerging use of alternative data to improve
26:23
underwriting. Maybe I should ask more specific question, but I think you had
26:26
you had some thoughts on that and whether that's like a real direction and what
26:30
the value of that is. And then we talk about some other stuff that
26:33
I'm curious because it's an important topic to us. But I think it's a
26:37
very much an emerging trend in the space overall. What are the kind of
26:38
new ways we can improve our ability to understand and predict risk? Absolutely,
26:44
I don't know that it's it's maybe it's an emerging trend. I feel like
26:47
it's been around forever. I've been using alternative data for more than a decade
26:49
now. I think that it has I would say, an incredibly important place
26:55
in any financial institution. Regardless of what audience you're serving, you can certainly
27:00
see some of the things that aren't on the radar. If you're a traditional
27:03
bank customer and you're evaluating DTI from someone and they appear to be you know,
27:07
I would say maybe a midprime or near prime customer, don't you want
27:11
the full picture of what it is that they're doing with their finances. Don't
27:15
you want to know if they went down to a rent to own store to
27:18
know by now pay later loans? I mean, those are things that are
27:21
really important to look at the whole financial picture in its entirety, versus just
27:25
saying here's what's traditionally reported on bureau, so bureau important. Bureau data is
27:30
always going to be incredibly important. The bureaus also offer this alternative data that
27:36
really does bring us full picture. When we're talking about, especially online lending,
27:41
making quick decisions evaluating a person's kind of financial wellness online, we need
27:47
to pull those things in because we don't get to have the luxury of a
27:49
one on one conversation with a borrow. We're setting face to face in our
27:52
brick and mortar branch, right We're taking data in microseconds and evaluating does this
27:59
customer the credit box that I'm trying to fill? And so whether it's a
28:03
business or a consumer, there's very relevant data that comes out of that alternative
28:07
data that helps us understand, you know, again, bring more of that
28:11
picture forward. Maybe they look like they had a thin credit file, but
28:15
you know they've performed really well on some of these alternative products, or maybe
28:18
they're a business and they've only been in business for twelve months, so I
28:23
have very little kind of cash flow projections on hand. I can actually go
28:27
and see what are they doing? Are they paying their utility bills? You
28:30
know, do they own their building, do they rent their building? What's
28:33
happening on that side of the business that you're not typically going to get out
28:37
of traditional data. So that is, whether it's new or not new to
28:41
you. I'm always minding new ways to pull that data in and really get
28:47
this kind of robust picture of what this barrow's doing and you know what the
28:52
trends are. How do you think about leveraging the data? I mean there's
28:56
this kind of like more data is better kind of an intuitive sense, right,
29:00
But then there's like what do I do with all this? And in
29:02
the traditional world, like a human being read these things and kind of made
29:04
a judgment call if like the rent, the rent and utilities payments, was
29:08
you know, sufficient enough evidence of financial um you know, savviness and responsibility
29:14
to outweigh maybe a low credit score or a low cash flow in a business
29:18
or something like this. How do I weigh those up. How do you
29:21
think about in the in the context of microseconds and online and maybe automated decisioning,
29:26
how do you think about how do we take advantage of this? In
29:27
some ways, broader set of data is like more debilitating in terms of how
29:30
do I make a set of rules that actually you can leverage all these things
29:34
and know how to weigh things off. So I'm curious how you think about
29:37
taking those things and actually making the best use of them in terms of making
29:40
good credit decisions. I think it's layering. So you know, your your
29:45
core data is always going to be key, right you always you know,
29:49
for certain types of lending, you're always going to want to know what that
29:52
FICO is and does this kind of pit my mimax threshold for a specific product.
29:56
But it's really taking individual data attributes and laying on top, right,
30:00
So what am I looking for? What's the objective with this data? You
30:03
know, we can specifically talk about the customer that's in the kind of fine
30:07
outpay later space as well, that's maybe made really great progress on improving their
30:12
credit stance and coming up into a place where maybe I was subcrime, but
30:17
I'm no longer subcrime of bringing that in and saying what are those current outstanding
30:22
debts that they have so we have a better picture of their DTI. If
30:26
it's a business and we're looking at a business again that maybe has been in
30:29
business for a short period of time, and we're pulling in alternative data points
30:33
on what's the financial health of this business long term, there really needs to
30:37
be some I'm not making a definitive decision only on that data. I'm actually
30:41
saying what I take this barrower at their current FICO and with their file.
30:48
If yes, then I'm going to start layering on additional parts of that data.
30:52
You know, if I wouldn't take them with their existing data, there's
30:56
not going to be a ton of alternative data that's going to help me support
30:59
that except for we're you know where we're talking about a finophile so um,
31:03
I think you have to think of it as you know, instead of it
31:04
being in an ice cream Sunday, the scoop of ice cream, it's the
31:08
sprinkles and the cherry and all the other things that come on top that make
31:12
that ice cream taste better. But you could easily have it, you know,
31:17
with or without sprinkles all right. That's uh, now I'm hungry.
31:21
I had to go to have an ice cream Sunday. It's not an analogy
31:25
I've heard before, but I like it. Jim, was there anything else
31:27
you wanted to cover it? I feel like we've we've covered things. Um,
31:32
I've covered a lot of ground. But you know, I've got a
31:33
couple questions. I always ask at the end, but I like to ask
31:36
my guests if there's anything else I wanted to talk about or felt like we
31:38
missed from our earlier conversations. I don't think so. I mean, I
31:41
think this really covers the you know, the majority of the things that I'm
31:45
really passionate about. I think, um, you know, the one thing
31:48
that we did talk about, and you have to decide if this serves the
31:52
audience well, is the importance of a fintech relationship at the community bank level.
31:57
Is that there's a lot of fintech out there that are just creating kind
32:00
of bills and whistles. They're not really supporting an institution. I think,
32:07
you know, one of your questions on the PDF that Alison had shared was
32:10
is you know, what are some of the bold predictions or what are some
32:14
of the trends that are happening, and I strongly feel passionate that in order
32:20
for fintech to be wildly successful and vice versa, community banks to be wildly
32:24
successful as well, as we have to find this intersection where fintech is supporting
32:30
a bank in a local community, where those you know, individuals in the
32:36
community have a strong relationship with the bank. This is definitely a generational conversation
32:40
because I think that there are some generations, future generations that won't know a
32:45
relationship with a community bank. But those individuals who have that strong family tie
32:51
to a community into a bank will only benefit from our actual banks having fintech
32:57
legs underneath them to support them to have this online, robust presence. It's
33:02
challenging, right, It's challenging for community banks who have, you know,
33:06
maybe they have a smaller community around them to say, yeah, we've got
33:09
an app, we've got online banking, or competing with the you know,
33:14
the larger big boxes in the marketplace. But with the fintech partnership and having
33:19
those you know, those relationships behind them, it really helps them get to
33:22
that kind of um, I've got my technology behind me place. If you
33:28
think of that fintech and community bank partnership being so critical. How do you
33:32
know you talk about the FinTechs that support the community bank and those that are
33:37
building bells and whistles are not, as you know, focused on delivering value.
33:40
How do you find the right partner? I feel like there's this kind
33:43
of multi stage thing to an effective community bank fintech partnership, which is like
33:47
finding the right partner that's a good fit, which can go wrong, um,
33:51
you know, doing diligence, getting implementation and then actually like getting technically
33:54
integrated and then actually delivering value to customers. And I think these things can
33:59
fall down any any step along there. You can you know, not you
34:02
find a partner that doesn't add value. You can have a partner that doesn't
34:06
make it through diligence, it isn't really going to support you. You have
34:07
a partner that's got software that doesn't really deliver value in the end or can't
34:12
get implement. How do you think about finding the right partners and managing those
34:15
relationships for success? Because I feel like it's true. I think there's a
34:17
ton of opportunity for FinTechs to add value to community banks and really strengthen the
34:22
position of those kind of pillars of the community quite literally, UM, but
34:25
how do you find the partners that are going to be value add that way
34:28
and those that are going to be more of a bells and whistles distraction and
34:30
not a real value add Because it doesn't doesn't seem obvious to me how you
34:34
do that. I think that's what probably one of the biggest challenges, so
34:37
that you know, smaller or community regional banks are going to try and come
34:43
up against UM. I never want to downplay the due diligence. I think
34:45
that's one of the biggest areas where some of those flaws come out is in
34:50
that due diligence. And so I would definitely encourage anyone who says I want
34:53
to bring on this cool piece of tech and they rush past that due diligence
34:59
of like I've got to have an now now. The due diligence is incredibly
35:01
important. The other piece of it, and I've always had really great success
35:05
with this UM is really leaning into your network and leaning into your relationships with
35:10
the other institutions in your area or in your region, to say, how
35:15
are you solving for this? You know, this is kind of maybe an
35:17
objective of our banks or you know, kind of a real pain point for
35:21
our customers. What is it that you're doing to solve for that, and
35:24
using your network and using your peers to help, you know, kind of
35:28
identify what they're doing, because it certainly isn't going to be a pain point
35:34
just for you, It's largely going to be a pain point for many of
35:37
your peers as well. So I think between a combination of doing the right
35:40
due diligence taking your time to find it, even though it may be something
35:45
that seems, you know, so cool that you have to get it out
35:46
to market asap, is make sure that you walk yourself through that due diligence.
35:52
All right, I like it. Yeah, I will say, having
35:55
worked with a lot of financial incisions point, I've never found any that skimped
35:59
on the dug doesn't feel like took place admitting skimp um, at least not
36:02
from the technical side, although I think maybe the customer experience part of that
36:07
is an area where you know, there's so much focus on just like building
36:10
your product internally, the BSA, the AML, the you know, the
36:14
enterprise viability for a startup like God, these guys have enough money, are
36:17
they going to be around? Or we can be compliance bars, and then
36:20
there's a question like how do we actually turn this thing into value for our
36:23
customers that sometimes is not is not as fully vetted at the time as maybe
36:30
the like technical diligence pieces can be, because those all parts always have felt
36:35
i want say, overly burdensome, but never have felt like they were being
36:37
skimped upon. In my experience, I think that's a good thing. I
36:42
know it's it's kind of frustrated from a partner, but you know, there's
36:45
the things that come out in the wash when you're going through those process um,
36:51
you know internally as I think they're incredibly important. I actually and I
36:54
will say for any of the fintech's listening as someone who's been through the process
36:59
a lot um, I felt like it made us stronger as an institution is
37:02
an organization like they were. It's kind of like going through SoCs compliance or
37:07
even to be honest, some of the preparations for an IPO, it's like
37:09
they're they're painful, but they're they're good controls, are good oversight, and
37:13
you go, oh, we do need to be better on this or that
37:15
or the other, and typically you're stronger for it on the other side,
37:17
and it gets easier over time because you've you know, the diligenous processes are
37:22
not that different. Everybody has their own unique question. But once you've get
37:24
to the place where you're ready for it and you go, hey, we're
37:28
confident that we have the information you need and we have the controls and the
37:30
processes and it would be good answers um, then it becomes a little more
37:34
straightforward to do. But it's if you can't do it, then you don't
37:37
belong in the in the financial services space in my opinion. Definitely know the
37:42
things that also come out on sides of you know, when your vendors asking
37:45
questions of how you know, what do you do in these scenarios or how
37:49
would you handle X, y Z, And you're like, oh yeah,
37:52
like went straight through my heart because we do need to be thinking about that.
37:54
And so I think that challenge, both from a good vendor and a
37:58
good partner, makes everybody longer. All right, I got three closing questions
38:02
I ask everybody at the end of the podcast, So here we go.
38:07
I actually love the answers to these Sometimes are my favorites. Um, what
38:09
is the best piece of career advice you've ever got? If you don't like
38:14
the view, keep driving. If you don't like the view, I've never
38:16
had a driving analogy for career advice. Something it'll, it'll. I've got
38:19
of all kinds of analogies for you, Jack ice cream, I've got the
38:22
driving. If you don't like the view, if you don't like where you're
38:25
at, you don't like, Um, you know the outcome of the you
38:29
know the project that you just ran, Um, there will be another project.
38:32
Um if you you know, got maybe some CSAT results back on your
38:36
team and it wasn't great. Um, you know, go through some improvements,
38:40
go through some training, because nothing is ever permanent. So just keep
38:45
going. I like it. Keep going. You don't like the view,
38:49
keep driving? All right. Second question, what's the best piece of advice
38:52
you've ever gotten about the consumer banking space. It's been it's been a number
38:54
of years in consumer lending. I imagine you've gotten some good advice. I
38:58
have gotten some good advice. And I think about this one probably at least
39:01
once a week. It is don't ever assume that you are your target audience.
39:06
Oh, I love that we love to think about. This is what
39:09
I would want, This is you know, this is the way that I
39:13
would talk to a customer. But it's because it comes from you, know,
39:16
your perspective and the privilege that you have. So don't assume that you're
39:20
a part of your audience. Oh I love that, and I think it's
39:22
especially true in in financial services because even the savvy audience usually doesn't understand our
39:30
products as well as I mean, you know, like before I got into
39:34
this space and say like helock helan credit card, debit card charge, I
39:39
didn't understand you different products. And there's so much as just underlying knowledge that
39:45
you forget that you even have when you're in the business that you bring to
39:49
bear in those things, and not not just like are you the insame financial
39:52
stratis? You know category, do you have the same kind of income band,
39:55
you have the same kind of credit score that somebody that your customer might
39:58
have, but just a like knowledge of the products. It's maybe an industry
40:01
more than any others where there's this real gap and knowledge between the insiders and
40:05
the average consumer. And it is a huge mistake. You're right to to
40:08
assume that everybody is you or has your knowledge or background or desires or wants.
40:14
And that is a lot of a lot of startup companies do like to
40:17
like they build for themselves. And there's maybe no industry where it's a bigger
40:22
mistake than this one. That's a that's a fabulous piece of advice. All
40:24
right, last question, what's one bold prediction for the future. I think
40:30
that we're going to be more and more disjointed when it comes to tech with
40:32
our consumer bases. I think that businesses have gotten really comfortable with having a
40:39
large amount of wallet share, especially in the financial services place, you know,
40:44
where they just expect that because someone has an auto loan or a mortgage,
40:46
that's where they're going to keep your checking account. So I think that
40:51
banks will need to be more proactive about keeping that wallet share. Right,
40:54
What do I need to do to not only earn that but keep it?
41:00
Because we're in this instant gratification I can open an account anywhere, I can
41:04
get a loan online anywhere. So I think that we're going to see a
41:07
continued spread of wallet share. And I guess I think that we're going to
41:13
have to I say we universally as banks really have to fight for that and
41:16
make sure that you know, we're honoring our consumers and servicing them to the
41:21
levels that they expect. I think it's such a fascinating piece of advice.
41:25
I've seen this, you know, with the number of neo banks and the
41:29
savings accounts. I mean there's lots of whereas the places that this happens.
41:32
But you know, I used to talk to banks about there what they called
41:36
the alpha and their beta, like how much their deposit base was actually sensitive
41:38
to changes in interest rates, and like the big banks was like a zero
41:42
man, it doesn't matter what happened interest rates. I don't pay any interests,
41:45
and nobody leaves. And now when there's like fifteen neo banks offering me
41:47
four point four percent and interest rates ever so much in the last you know,
41:52
eighteen months, that you go, huh, yeah, four points is
41:54
like it's not like somebody's offering me point seven five and you're offering me zero,
42:00
Like somebody's offering me four and a half. And I think there,
42:01
you know, you're actually seen in the latest results that deposits are leaving some
42:06
of the big banks for the first time substantially in many, many years.
42:08
In that kind of sense that you have to keep earning it and there are
42:12
competitors and what are you going to do? I think is maybe more real
42:15
even to the big guys now that it has been in a long time.
42:17
But let me ask the fall up question to that, which is how do
42:21
you do that? Like? What is do you have advice on when you
42:23
see that and go, hey, well, I've got to not only earn
42:24
it once but continually earned the right to maintain wallet share and the next product
42:30
and to keep your business. What's your advice on how you actually go about
42:32
achieving that? Because it's a I think you're right, But then the question
42:35
actually is like, Okay, I need to do that, but what do
42:37
I do to achieve such an outcome? Yeah? I think if you're not
42:40
doing a competitive analysis on a routine basis, I challenge my team to look
42:45
at this on a weekly basis. What are your direct competitors doing today?
42:50
What rates are they offering, what products are they offering? What term are
42:52
they offering? Right, let's let's get really down into the nitty gritty,
42:57
because I want to make sure that we're the best at what we're offering.
43:00
But it goes back to what we talked about earlier, is that we have
43:01
these emphatic, you know, customer interactions and engagements where we're meeting their needs.
43:07
So I like to think about, you know, competition in two different
43:12
ways, right, active and reactive. Are we being reactive when a customer
43:15
says I'm going to pull my deposit business out of your account, and then
43:19
we say, okay, okay, okay, well you know we're going to
43:22
meet the terms that you want. Are we even proactive and actively increasing our
43:27
interest rate on a high yield savings or on a CD or on an auto
43:31
product? Right? I think that we have to look at all of those
43:34
things and say meet and exceed the bar, but also know what everyone else
43:38
is doing. It seems pretty basic at a high level, but you'd be
43:43
surprised at the number of people who don't know what their competitors in that market
43:46
are doing. Well, it's not it's not a lot of transparency, like
43:50
to understand like what rates are really being offered some of them there are.
43:52
You can go like high yield savings, like what interest rates being offered on
43:54
an auto loan to a particular consumer, Like people aren't publishing the rate cards.
43:59
You really have an easy way to know that. We certainly have seen
44:02
the same thing struggling with finding information and it's crucial, right because there it
44:06
is a consumers are. If anything is driving the you know, the kind
44:12
of diversification of services and relationships that customers have, it's probably the simple ability
44:16
to comparison shop and say, hey, I've got a product. I'm going
44:21
to go look and see if I can get a better rate somewhere else and
44:23
if I can, Like that used to be hard to do and it's now
44:24
easy to do and people do it and so they know pretty quickly, and
44:29
so you got to find a way to have the knowledge about what that market
44:30
looks like. Otherwise you can't compete with something if you don't know what it
44:34
is. And that's just kind of the quality. I think that also helps
44:37
too when we talk about secret shopping and going out and you know, applying
44:39
for things. And I wouldn't encourage you or anyone else to go and apply
44:44
for an auto loan every week, but I think you can kind of get
44:46
downstream in that online application journey or call the bank and say hey, I'm
44:52
interested in this product. You know, what are you guys offering and have
44:54
some educated conversations absolutely well to This was a fascinating conversation. I think we
44:59
covered a pre wide writed topics. Thank you again for making the time and
45:01
joining us today. Thank you so much for having me. Upstart partners with
45:06
banks and credit unions to help grow their consumer loan portfolios and deliver a modern
45:10
all digital lending experience. As the average consumer becomes more digitally savvy, it
45:15
only makes sense that their bank does too. Upstarts AI lending platform uses sophisticated
45:22
machine learning models to more accurately identify risk and approve more applicants than traditional credit
45:28
models. With fraud rates near zero, upstarts all digital experience reduces manual processing
45:34
for banks and offers a simple and convenient experience for consumers. Whether you're looking
45:38
to grow and enhance your existing personal and auto lending programs or you're just getting
45:44
started, Upstart can help. Upstart offers an end to end solution that can
45:49
help you find more credit worthy borrowers within your risk profile. With all digital
45:52
underwriting, onboarding, loan closing, and servicing, It's all possible with Upstart
45:59
in your quarter. Learn more about finding new borrowers enhancing your credit decisioning process
46:05
and growing your business by visiting upstart dot com slash foward dash Banks. That's
46:09
upstart dot com slash foward dash Banks. You've been listening to Leaders and lending
46:15
from Upstart. Make sure you never missed an episode. Subscribe to Leaders in
46:19
Lending in your favorite podcast player using Apple Podcasts. Leave us a quick rating
46:22
by tapping the number of stars you think the show deserves. Thanks for listening,
46:27
until next time,