Latest / Leaders in Lending / CRO Perspective: Balancing Risk and Innovation in Banking

Transcript

CRO Perspective: Balancing Risk and Innovation in Banking · 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 decision
0:13
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.
0:23
Christina, Welcome to the podcast and thanks for joining me today. Yeah,
0:26
thanks for having me. You know there's an old what is a Chinese curse?
0:31
Say, may you live in interesting times? I think I feel like
0:34
we live in interesting times. So I wanted to start with two categories of
0:39
questions. One, you own risk if that's correct? Yes, risk,
0:42
Yes, risk. The last week or two have seemed like the nature of
0:47
risks have shifted or maybe changed. How is your perspective on risks or risks
0:52
that we're not on your radar come on your radar ar? So you know,
0:54
how is that shifted in the last couple of weeks and specifically, depending
0:58
on when this thing publishes, we're talking about the failure of Signature Bank,
1:00
Silicon Valley Bank, the fear of contagion and run on other banks. But
1:03
it's a pretty big shift or I think it's caused some people to think some
1:07
things are risky. Then maybe they didn't think we're I'm curious your take on
1:11
on how it changes your perspective. Yes, I think that's true. I
1:14
think for a long time, you know, it's it's been since two thousands
1:17
since we had had a bank failure. And I think what this recent failure,
1:21
particularly were Silicon Valley Bank demonstrated, which is the power of quick communication
1:26
that also exists now that didn't historically. We saw the news start to spread
1:30
fast. We also saw the role that good PR and maybe bad PR can
1:37
play and fueling something like that. You know, the timing of the events
1:42
the last week with Silicon Valleys failure, We're just interesting with silver Gate announcing
1:48
they were planning to liquidate, the announcements that were coming out that they were,
1:52
you know, they lost all this money on Silicon Valley and they were
1:55
going to turn out and do a big capital raise. You know, that's
1:59
that's an interesting timing and it just it caused it caused widespread panic. And
2:04
I think, you know, from a bank perspective, I mean, we
2:07
always pay attention to liquidity, but banks have been enjoying being flushed with deposits
2:12
for the last several years, and now as the economy kicks back up,
2:16
you know, people are pulling money out at their deposits because they need it
2:21
to run to run their business, not what And of course you know the
2:24
other issues that maybe were a little bit unique to those two banks in terms
2:28
of what was in their portfolios. Yeah, exactly. And I think concentration
2:32
risk is just going to continue to be critically important as banks look at their
2:38
at their loan portfolio. You know what percentage of your deposits and loan should
2:44
be in which particular industries. And you know we've always looked at that,
2:47
but I think now you're going to pay very close attention to it because that's
2:52
what's catching everybody's attention now. Um, you know they had twenty five percent
2:55
of their depositors in this they had fifty percent of their depositors and that and
3:00
you know that's that's good metrics to know and to know where your bank is
3:02
that we might need to know the percentage of our depositors that follow each other
3:07
on Twitter. What looks like in terms of how that contagient. I think
3:10
it a silicon value. Brank was at least exacerbated in terms of people pulling
3:14
out the funding. You know, the actions over the federal government over the
3:16
weekend, I think we're helpful in some respects because certainly it called the waters
3:23
with all of those people who were tweeting prolifically about their loss, and of
3:28
course I understand why they were. Many of those people were worried about making
3:31
payroll, different things like that because they didn't have access to their funds.
3:35
And if you think about large complex commercial customers to pay your staff, you
3:40
probably have more than two hundred and fifty thousand dollars in anyone bank. So
3:45
I understood the fear and why it ramped up so quickly. But I do
3:47
think the actions over the weekend did calm the waters a bit. You know,
3:53
people didn't think they were losing millions of dollars. So that Monday,
3:57
when when the rest of us opened, you know, we were seeing the
4:00
fallout that I think perhaps we would have seen had they not taken those actions.
4:04
I think the other interesting thing about the run here was just how wrapping
4:09
me twenty five percent of deposits coming out in one day. Yeah, I
4:14
feel like that's exacerbating a concern. I'd heard from some institutions, which was
4:17
this increasing rate sensitivity on the side of depositors, that like people were pulling
4:21
their money out because they're I'm getting emails all the time from so Far or
4:25
whoever else at three and a half percent on a checking account, which is
4:29
I mean, I'm not that young, but getting more than a percent just
4:31
feels absurd to me on a checking account. Now you have people offering three
4:34
percent something like that, in the sense of this is kind of combining in
4:39
a world where the safety of deposits just isn't maybe what it used to be,
4:42
both in terms of how much I have to compete for them, but
4:44
then how quickly they could shift a different direction for whatever reason, whether it's
4:48
fears about the bank or the banking industry, or it's you know, some
4:51
sense of like, hey, there's some guy every here offen me a little
4:54
bit more money. I'm going to go go take advantage. I think I
4:57
think that's absolutely true. You know, technology and the ability to open accounts
5:00
online as well as well as email marketing just makes the market more sensitive to
5:06
people being able to pull their deposits more easy maybe a better way to say
5:12
it. You know, when I first took on my checking account, I
5:15
would have had to walk into the bank give them all my information. And
5:18
now you can click a couple of buttons and transfer the money, transfer the
5:23
money out, so that you know with an issue, I think most recently.
5:27
The other thing is people are not as sticky as they used to be,
5:31
and some of that does does you know people just they will go somewhere
5:35
for a better rate. They might leave some money at your bank. But
5:39
people do rate shop. But it's a lot easier to rate shop now because
5:44
there's information everywhere. You're either getting an email or you can look online and
5:47
compare rates big billboards and whatnot too. But it's just very easy to compare
5:53
rates right now. And then as a bank, to you match everybody's rate,
5:57
what do you do in that situation? It's yeah, competition for deposits
6:00
is suddenly very very fierce. Yeah, it's good. It's going to be
6:04
kind of a new world. It's not been our I think, our normal.
6:06
Let me let me shift topics a little bit. I know your governor
6:11
recently vetoed the ucc A memos. I think tell me a little bit about
6:15
the background on that. For anybody who's not as familiar and then you your
6:19
perspective on the change there. Sure, So every so many years the Uniform
6:25
Law Commission comes out with suggested revisions to the UCC, the Uniform Commercial Code,
6:30
and they recently came out with revisions in twenty twenty two that are out
6:34
in many state legislatures now I think twenty or thirty something like that, you
6:39
know, just depending on your legislative cycle. And a lot of the updates
6:43
were to address things like emerging technologies and so one of one of the main
6:47
things that this bill did is people had a hard time lending against bitcoin,
6:56
about taking bitcoin as security for particular loan, just because of the nature of
7:01
bitcoin. A lot of people don't you know right now, bitcoin is a
7:05
general and tangible from a UCC perspective, and the way you perfect your security
7:10
interests on in general and tangible is you file a financing statement. Well,
7:14
people who have bitcoin, they don't. They don't want a filing statement out
7:17
there saying that they own this bitcoin for a number of reasons. And the
7:21
only other way to do it is to take control that which that's a little
7:25
bit difficult for a bank to take control of this. So one of the
7:29
major updates to the UCC was defining things like bitcoin and cryptocurrency as cr CR
7:40
no make me sound smart as I can't remember. Oh yeah, cear,
7:43
I have to stop and think about what it sounds. Because they wanted to
7:46
improve the negotiation negotiability of bitcoin. The other issue that was happening with bitcoin
7:53
is as someone would have encumbered your bitcoin, there wasn't a great way to
7:57
track it. So it also under a current UCC was more difficult for there
8:03
to be a market. There was a market barrier to the transfer bitcoins.
8:05
So that's, you know, the main thing that came out of these amendments.
8:11
There's some other things that were updated. You know, just like several
8:13
years ago, we talked about faxes, then we talked about email. You
8:18
know, a lot of the UCC still talks about paper, and there's there's
8:20
not much paper anymore. But what has come out now is there's a certain
8:28
segment of the population that actually believes that as a result of this, that
8:33
the government will have more information on your records. There's a there's a very
8:37
big segment of the population that believes this is some kind of way for the
8:43
federal government to understand everything that you're doing. The other thing that happened with
8:48
this UCC amendment is it defines it defines money, and it does talk about
8:54
central bank digital currency. It contemplates that, but we don't have one other
9:00
countries do. Until there's a federal digital central bank digital currency, that doesn't
9:05
really matter. You know, a state can't start their whole central bank digital
9:09
currency. But I think there I think these people also believe that these amendments
9:15
will create this central bik digital currency, which is problematic for a number of
9:18
reasons, and it's just not true. I think people are worried about the
9:24
definition of money. Who thought we'd be arguing about that, But money for
9:31
purposes of the UCC has a specific definition. I think people just maybe and
9:39
don't understand what the UCC is and what it isn't. You know, the
9:43
definitions used in the UCC are really about, you know, how banks make
9:48
loans, how commerce transfers. It doesn't change the definition of money across the
9:52
nation for being secrecy purposes, for anything else. It's just about commercial transactions.
10:00
And our governor believes some of those arguments and has indicated that, you
10:05
know, she believes it's a freedom issue, and we just I disagree.
10:11
I don't think it is our governor has always taken a lot of pride in
10:15
being a business first state, and you know, we want to make things
10:18
easy in South Dakota for people to do business. And if we're one of
10:24
the only banks that doesn't end up adopting the UCC amendments, I think the
10:28
exact opposite will be true. In fact, I think had we had we
10:33
passed or had she not been told the UCC amendments, I think it would
10:37
have been a good thing because it would have permitted us to take security interests
10:41
in bitcoin and eliminated all those barriers. So here here we say I never
10:46
you would have asked me last year what issue I would be talking about from
10:50
South Dakota's legislative session if we not have been whether we should pass the UCC
10:56
No. And it's it's like a bank lawyer geek moment for me because this
11:01
is you know, this is combination or my legal background and my bank background.
11:05
But I think I think that is a little bit of a disadvantage because
11:09
it allows misinformation to be circulated very quickly. People just don't understand that.
11:16
Interesting, Yeah, tell me a little bit. You talked a lot about
11:18
bitcoin and cryptocurrency in there. Are you guys doing things in crypto. Where
11:22
do you think community banks ought to be when it comes to engaging with crypto?
11:26
Such an interesting space. Obviously we talk a lot about Silicon Valley Bank
11:30
because it was the larger of the two banks hell, but the other was
11:33
Signal Tamago is really closely aligned with crypto and being the back end for a
11:37
lot of crypto services. What's your sense of where banks are on where what
11:43
you guys are doing or what you think is interesting in the crypto space for
11:45
banks these days? Well, there's a lot of regulatory guidance out there,
11:48
and I think some banks don't know whether they should do it. I mean
11:52
there's I think there's a lot of fear surrounding the crypto industry just in general.
11:56
What risk does it actually pose to the bank? But I think a
11:58
lot out of that depends on how a community bank might be using it.
12:03
Maybe cryptocurrency is an asset that someone can have as part of their furrow one
12:07
K or in um, you know, sometimes a crypto maybe a crypto mutual
12:13
fund, things like that. I think the custody of crypto assets is probably
12:18
the actual issue that most community banks, frankly, just from a technology standpoint
12:24
are capable of doing right now. But if if most, if most community
12:28
banks were to pull their records their customers are buying and selling cryptocurrency, they
12:35
probably have customers. We have in South Dakota, we have bitcoin miners.
12:39
Um, we have people who are I don't know if energy is cheap here,
12:43
but you know, we have we have those businesses and in fact,
12:46
in some of our communities they love it because they're like making all sorts of
12:50
money on the electrical bills. Um, you know, a rural country because
12:54
of these bitcoin miners. So you know, I think it's going to be
12:58
a slow adopt in many of the community banks, and if if they do,
13:03
I have heard of some of the core providers linking up with a way
13:07
for customers to buy crypto. So you're linking through the bank, but it
13:11
doesn't actually really impact the bank. It's just a way for people to buy
13:15
crypto. Yeah. Yeah, it's the whole crypto custody. I mean that
13:20
the real crypto hardcore folks are like, if you're not self customing with like
13:24
a hardware wallet in the year, then you're not really doing crypto. And
13:26
I go, well, then the average consumer is probably never doing crypto.
13:31
That's the requirement to really be in the game. And I think a lot
13:35
of it is you make it accessible. So one thing coin base has done,
13:39
I feel like it's like, hey, I can like just you know,
13:41
you can go through the MetaMask route and get and you have a wallet
13:43
and do that. But you know, you can go to coin basins,
13:46
go click and I oh and some ethereum, I bitcom own whatever, and
13:52
it feels much more accessible. I feel like that's, I want to say,
13:54
necessarily underappreciated. Many crypto do appreciate it, but I certainly when I
13:58
hear that, like, do you don't have your own you know, self
14:01
custody. I'm in self custody in my cash either, you know. You
14:05
know. I think one of the interesting things about crypto is people generally,
14:09
although some people are both camps fall into two paymps. One is it's a
14:13
useful investment tool, it's an asset. You know, you buy it because
14:16
you hope that it will appreciate in value. And then there's another camp who
14:20
really things that they should be able to pay for everything with cryptocurrency. They
14:26
focus more on it being used as a as a payment mechanism, and I
14:30
think sometimes the goals of what you're using cryptocurrency for differ, and so how
14:35
banks would approach it would be different, you know. I Yeah, there's
14:39
probably the third group too right to think of it as a stable store of
14:43
value to replace currency, which is kind of counter to the asset. I
14:48
mean, at some point it's that for that to be true, the hey,
14:50
this is a great asset, they keeps going up in value, Like,
14:54
it's not a stable store of value that's going up a lot, And
14:56
as long as it's going up a lot, it's going to be subject to
14:58
also coming back down a similar amounts. So what do you think of it
15:01
as a replacement for the dollar? Is a stable store of value, You've
15:05
got to get to a place where the price isn't accelerating or desolarity in dramatic
15:11
And so that's the other thing. I definitely hear the like payments. I
15:15
hear the hey, I'm buying it because it's going up and people made a
15:18
bunch of money. And the real I think the real hardcore people who think
15:20
this is the future really view it is like a better replacement, something will
15:24
be more stable than the dollar. Eventually it's obviously not where it's at today,
15:28
but that conceptually it should have a framework that is not subject to inflation,
15:31
to central bank you know, changing interest rates as we've seen that shifts
15:35
the value of your money and dramatic ways outside of your control. That it's
15:39
a it should be a more stable store of value if it works the way
15:43
it's whether or not it's there now is a different puation. But that's like,
15:46
I think a third camp of people who really believe in this is the
15:48
future of you know, the way we store value. In fact, as
15:52
we've been debating this ucc information in South Dakota, a lot of the people
15:58
on social media and whatnot are talking about the fact they're saying, you know,
16:00
I am a bank, um, and this is this is going to
16:03
make sure that I still have my money when you know kind of the world
16:07
crumbles or the banks all fail, and it's a it's an interesting again,
16:11
it's an interesting approach for those hardcore, hardcore booth. Yeah, well I'm
16:17
not I own a bitcoin, but not enough to have thought that it's a
16:19
better store of value at least not yet. Um. Anyway, we're going
16:25
to shift totally to a different area, which is you have an interesting role
16:27
and that you are in charge of risk, but also HRUM, which is,
16:33
you know, I think, a sightly different area. But you did
16:34
describe to me when when we were speaking earlier that in some ways view people
16:37
in HR not HR like activities, but like the human capital is one of
16:41
the greatest areas of risk in the organization. So I'd love for you to
16:45
dive into what you mean by that and how you think about the importance of
16:48
people and how you manage the kind of risks around that and how you manage
16:52
them well. We do out at our bank say often people are most valuable
16:56
asset and as a result of your asset a subject to risk. Um you
17:00
have to take care of your asset, and I think we've seen that particularly
17:06
COVID accelerated it certainly a lot where people can work everywhere basically for most for
17:11
most companies, and so as an organization we are competing for the best and
17:15
the rightest people from not just banks down the street or a talent over,
17:19
you know, across across the country. And so not only do we have
17:23
to constantly be thinking about attracting new talent, but I think a lot of
17:29
times people miss retention. Talent retention. You can you can attract people sometimes,
17:34
but you need to make with attractive benefits or you know, good interviews
17:38
and a good sense of community. But you need to make sure that you're
17:42
attaining people too. And one of the things that I think has been interesting
17:47
is we've watched kind of the shift in employee warrants and employee needs. Is
17:52
you know, some some sort of benefits will appeal to some people, but
17:56
if you, you know, maternitily, for example, if you have no
18:00
plans to have children, is that an attractive benefit? And if not,
18:03
what's comparable? What's important in your life? And what is your employer doing
18:07
to support your interests there? You know, whether it's maybe pet insurance or
18:12
financial support for you to take care of getting an advanced degree, or maybe
18:17
leave to take care of an aging parent. So I think you just have
18:21
to be constantly thinking about people because at the end of the day, we
18:25
can't do any of the other things we've just been talking about without people,
18:30
at least not yet. I mean, I know there's AI and whatnot,
18:32
but we still need people to do the majority of things in a bank.
18:37
So you need people, and I think a lot of times because of our
18:41
focus on technology and whatnot, you start to lose sight of the people that
18:45
are needed to run an organization. I want to ask you a slight shift
18:49
on that, because I love to focus on people retention. But one of
18:52
the things I was told my first job was at IBM, and I was
18:56
told by somebody when I joined that I says people often joined a company but
19:00
they leave a manager or a team, meaning that those benefits. A four
19:03
oh one K looks good, the salary is good, But then, like
19:07
Mike, real experience at the company is mostly about the person who manages me,
19:11
the team I work with, the day to day experience of it's it's
19:15
not the kind of the general benefits, and that often it's that kind of
19:19
individual experience that matters the most in terms of retention. So I'm curious how
19:22
you think about the risk on that level, because there's the kind of benefits
19:26
or that which often can be important, like having a kid. I don't
19:30
have maternity leave that I like like, which may not come back or I
19:33
may it does. But on the flip side, I think, how do
19:37
you manage training, training employees, managing culture so that people are enjoying their
19:41
day to day experiences often equally if not more important in terms of retention and
19:45
employee morale and satisfaction. I'm curious how you think about that on that level.
19:49
I think that's absolutely true. I think company culture is also just as
19:53
important as your managers, but maybe that your managers are embracing company culture.
19:59
Somebody said it doesn't matter, it doesn't matter what's on the wall owners,
20:03
what's happening in the halls, and I think that's true. A lot of
20:07
organizations have very great culture statements, very great. You need to make sure
20:12
that you're living them, otherwise there's no point in having a culture statement.
20:18
I think that the role of a manager is increasingly important because there's just not
20:23
that loyalty. You know, you don't hear about people working at the same
20:26
place for forty years, So people will eat their manager. And so as
20:30
a manager, you're going to have to learn to manage different If you have
20:33
teams that are fully remote or primarily remote, that's a different style of management
20:38
than we've been used to in the past. I think the other thing that
20:44
we find is people genuinely want to feel valued, and for a long time
20:49
that was money, and I think there's there's still a role that money does
20:53
make an employee feel valued, but they want to feel seen and they want
20:56
to feel heard. And you know, previously a lot of managers, you
21:02
know, this is your job. You will show up, you will do
21:03
it, you will do it well, and you like your manager. But
21:07
now I think it's more about listening to your people, even if you don't
21:11
agree with what they're saying, but making sure that they feel heard and that
21:15
they feel like they have an input into the company. And that's that's just
21:18
a definite shift even from from what I first started in banking in order to
21:23
be successful, because if people feel like your manager doesn't care about you and
21:26
they're treating you as a cog in the wheel, what's what what uses it
21:30
to stay there? You want to feel like you're bringing value to the organization
21:37
and the community. You know. I think we've also seen, particularly with
21:40
this next generation, is you know, they care about the community, they
21:44
care about the world that they're living in, and they want to know what
21:48
the corporation or what the bank is doing to support the community, whether that's
21:52
your volunteer or donations, reducing you know, recycling, even are you recycling
21:57
at your bank. That's just increasingly important to people as well. And I
22:03
think sometimes it's easy for people to what we work Immunity Bank. We've always
22:07
done that, you know, which is true. But you need to toot
22:11
your own horn a little bit in terms of making sure that everyone understands the
22:15
good work that you're doing. I think a lot of banks are kind of
22:18
humble that way. I think we have to be more articulate. I mean,
22:21
don't go out and break about it, but you can be articulate about
22:23
the good work that you are doing, because that is very important. A
22:27
lot of people entering the workforce, they want to know they're working for a
22:30
company that does good. I love that, and I love that phrase what's
22:33
happening in the halls versus what's happening on the walls. That's a great description
22:37
of the I mean the inspiration poster that's on the wall that tells you it
22:41
was supposed to be like, that's not I was talking to our r HR
22:44
leader the other day and she was making the comment that like, you can
22:45
write whatever you want on a sheet of paper, but ultimately culture is like
22:48
what you do and you write on a sheet of paper, does not that
22:52
doesn't change the incentives, what's rewarded, what's punished, what's accepted, what's
22:56
not accepted. Then you can't change by writing a memo unless you're actually going
23:03
to live live those values in some way and change the structure of how you
23:06
do things. I think that's a great point. And the other thing I
23:10
wanted to riff on was you made the comment about like your involvement in the
23:12
community and helping your employee that I've also found that it's super helpful to help
23:18
employee, see, you know, stay connected with how their job helps your
23:22
customers, because sometimes you can be in this kind of back office or even
23:26
your customer face you're saying, I got to take some calls. I've got
23:27
you know, your que and your satisfaction scores and your wait time and whatever
23:33
and these kind of metrics, and you can lose the connection of how your
23:37
job helps the institution serve a customer a member of the community in a real
23:41
way. And I feel like that connection is equally important to feeling value and
23:45
purpose in your role as saying like, how do you how does what I'm
23:48
doing connect to I see. It's a lot for our machine learning people are
23:52
data science is going, but you know it's a numbers game. Well,
23:53
now you're like, you're helping people get access to credit, that's what you're
23:56
that's what you're doing, and you're helping manage the investment assets. Like those
24:00
things are important, but it can be easy to lose sight of that connection
24:03
between your day to day and the customers that are being helped by the services
24:07
the institution offers. I would agree with that one hundred and ten percent.
24:11
I think particularly if we think about banks. You know, thirty years ago,
24:15
almost everybody was touching cash or you know, running checks through and talking
24:21
to customers. Now, if you think about how banks operate, a large
24:26
portion of you know, how the bank actually runs is not done. You
24:30
know their positions that nobody frankly outside of the banking industry knows that exist.
24:34
They're not aware that there's you know, a huge IT departments or large compliance
24:40
departments. You know, my role is difficult and then I do you know
24:45
risk You have to be deliberate about understanding and sometimes connecting the dots for people
24:51
because you know, the compliance team is reviewing truth and savings disclosure. Okay,
24:56
but what does that mean? You know, how does that tie into
25:00
the bank's growth goals. You know, I'm drafting the loan document. I
25:04
think one of the easiest ways though, to kind of combat that back office
25:10
versus you know, frontline customer facing role is to just be deliberate and communicating
25:15
and to bring the people along with you in the bank successes. You know,
25:19
if you have a big loan closing or loan growth, make sure that
25:23
you're also being communism of the people loan operations, or that you review the
25:29
documents or helped you with the closing, ordered the appraisal, because sometimes I
25:33
think people lose sight of that connection to the bigger purpose. And then I
25:37
think as an organization, you have to be deliberate about why banks are good
25:42
for the community because otherwise people just see it as yeah, we do loans,
25:47
we do deposits, right, but in many communities without a bank,
25:51
small businesses one start, people won't buy their first homes. You know,
25:53
people can say for college, you can plan for retirement, like banking is
25:57
one of the few curs that impact X people on almost every point in their
26:03
lives, and so you have to be very deliberate in helping the connect the
26:07
work that these people are doing on a daily basis to that simple fact.
26:11
A very few industries can say that banking, banking, and you know,
26:15
lending can. But it's sometimes it's just easy to lose sight of that.
26:21
When you're, like you said, answering seventy five fold calls, or you're
26:26
reviewing seventeen different marketing ads, you have to really stop and if someone doesn't
26:30
understand it pointed out to them, or let themselves celebrate the success of the
26:36
ultimate customer result. So I'm about to right after this, I'm going to
26:41
go to our all hands meeting. And one of the things we do here
26:42
at Upstart that I think is really helpless as they read a a borrower written
26:47
review every week to the entire company, and we kind of pull them out
26:51
because you know, we get reviews written good and good and bad. But
26:53
I think oftentimes it's you know, I'm getting this loan to help me X
26:57
pay off a bill in the expect or pay for this thing, or I'm
27:00
getting out of credit card debt. You know that connection to that's a really
27:04
human being whose life was impacted by the services that you're offered. I think
27:08
is really important to help us stay aligned to not just like what you're trying
27:12
to do, but the purpose and the why I'm behind what you're trying to
27:15
do and how you're helping people, and that's I enjoy that every week.
27:18
I look forward to listener to that being right. It's a fun way to
27:21
stay connected to the mission. And as we had a fun experience recently.
27:25
We're a member of our fraud team, which is normally kind of a back
27:27
office and I hate using that term, but non customer facing role sort of
27:33
position. They went out and did training in one of our communities and we
27:37
were talking about scams. Well, a couple days later, this customer comes
27:41
in and they have somebody on speaker phone. They walk into a lobby,
27:45
they're like, this is what this is what this employee was telling us about.
27:49
Like it's actually happening to me right now. It was amazing, right
27:55
because that real example when like literally a couple of days later, this customer,
28:00
I mean, we're not happy to customer encountered the scam, but it
28:03
just really allowed that person and fraud to see what a difference they're training made.
28:07
As this person walks into the bank with the with the scammer on speaker
28:10
and we're like, yeah, I've got the scammer here trying to take my
28:15
money and I'm not going to let them. Oh that's great. Um,
28:18
so I we're running short on time. But I did want to ask one
28:22
other category for you. It's something I love to ask people in the risk
28:26
role generally, which is how you think about your role in relation to the
28:32
lines of business the other parts of the organization, because I feel like sometimes
28:37
risk and it kind of sits like with legal can get a bad name where
28:40
it's like well as the guys who say no and make it hard to do
28:41
all the stuff we know we need to do and want to do, and
28:44
the kind of like the obstructionists to to to innovation sometimes. And I'm not
28:48
trying to put that on you, but I think that can be the perception
28:51
people have of risk. And so I'm curious how you think about, uh,
28:55
you know, your role and engaging with the other parts of the organization,
28:57
um to keep a positive and be a good partner to them versus you
29:00
know, being an obstruction to things getting done the department of No. Yes,
29:06
I am familiar with that with that characterization, you know, I approach
29:11
it in two separate ways. One in order for an organization to be successful,
29:15
you have to have asset generators and asset protectors, because if you're just
29:19
generating assets and no one's coming along the back end to make sure that you've
29:22
got appropriate controls or reviews and whatnot in place, your organization is not going
29:27
to be successful. So you really do need both just to counterbalance each other.
29:33
I always say that if people think that you know the compliance team,
29:37
if everything they're sending is getting it approved, that's probably not great. There
29:41
should be some natural tension there, and that tension should exist because you have
29:45
different overall goals. But the top goal is protecting the company, and that's
29:51
the goal we're all working towards, is to have a successful company. Some
29:55
of us do it by generating revenue, some of us do it by protecting
29:57
it the other. The other approach I try to take is really to be
30:03
a partner and explain the why. I think a lot of times where people
30:07
at risk sometimes get that attitude is there's just like, well, no,
30:11
would I understand. But if you're there and you're like, well, have
30:15
you considered this would this work for you know this particular customer situation? Could
30:19
you say it this way? In this particular ad. If you give people
30:23
options or ways to help them problem solve, then they're going to see you
30:29
as more of a partner than just saying, you know, that's not a
30:32
proved you can't do it that way. I think the other thing that is
30:34
helpful is honestly sometimes I think people think that like you made up that particular
30:40
rule that you're citing, like you did not write your congressman or woman.
30:44
You know, I think that's also helpful, Like if you just empathize with
30:47
them. I know this is a pain, I'm sorry, this is what
30:52
the law says. We're going to have to just work through this together.
30:55
You know. People just again want to be heard and they want to understand
30:57
the why behind you're taking the position that you are. Yeah, I love
31:02
the why, and it is the the You're not the rule maker, just
31:06
the one there to When we started the business, we had this rule for
31:08
a while, this goal of like keeping our CEO out of jail, which
31:11
is a bit tongue in cheek, nobody really thought he was going to jail.
31:14
Was like, let's not screw up so bad. We're you know,
31:15
we had a regulator knock on the door about what the hell are you guys
31:18
thinking, or you know, somebody knocking on the door from the federal government
31:22
or a state agency, gone, what on earth are you guys thinking?
31:26
Uh? So you need those people to protect it, you know they early
31:27
It feels like very personal protection when you're scratch um, but it is an
31:34
important role. Well, this has been a great conversation. I get three
31:37
questions I ask everybody at the end of the podcast, so ask your current.
31:41
Here we go three questions. Number one, what's the best piece of
31:45
career advice you've ever gotten? Um? You know, just to show up
31:49
as the best version of yourself. Um. Every day. Just show up
31:52
as the best version of yourself. Um. It's easy to get distracted.
31:56
Um. And then take them on, you know, every days a new
31:59
day, to show up the best version of yourself that day. Could I
32:01
give that advice to my kids every day? I hope, I hope it
32:04
sticks every now and then. All right, Segod, question, what's the
32:06
best piece of advice you've gotten about the banking space in general? You know,
32:09
it's a marathon, not a sprint. I think it's it's very easily
32:14
to get discouraged or to focus on one particular problem, But you know,
32:19
my bank has been around since a great depression. It's it's a marathon.
32:23
We make decisions every day. Some of them are based on right and what's
32:28
good right in that moment, but most of all it's it's a long term.
32:30
It's a long term play. Yeah. I like that. It's a
32:34
marathon on a sprint. The last question, what's one bold prediction for the
32:37
future. I see, um. I think we're going to see more banks
32:43
partnering with FinTechs, and more banks looking outside of their core providers for solutions,
32:51
and in banks looking to solve problems by additional relationships instead of relying so
32:55
heavily on their course just to solve their problem. That's an interesting that's an
33:01
interesting statement, and it always runds me whenever people talk about the fintech bank
33:07
relationship being like this was a new trend, and I go, well,
33:08
the cores are kind of like the original fintech. It's been around for as
33:13
long as there's been technology and banking. There have been financial technology providers provide
33:19
solutions to banks and credit unions. But it is interesting to think that it's
33:23
been a somewhat for I mean, not super recently but for a long time
33:28
as a relatively stagnant set of players that were broadening and now you've got a
33:30
lot of I don't mean that in a negative way to the course, but
33:32
it was a small group that was kind of pretty stable maybe a better word.
33:37
And you're seeing a lot of entrants in that and that's an interesting will
33:39
be an interesting space to see evolved because there's I think a lot of opportunity
33:42
and maybe no faster pace of innovation than we've seen in the last handful of
33:45
years. Yeah. Somebody said last year or two years ago at ABA convention,
33:50
you know, the pace of banking has never been this fast and it
33:53
will never be the slow again. And I think that is one hundred percent
33:57
true, particularly as you look at just solving problems. How are you going
34:01
to solve this problem? Are you going to partner of the fintech to do
34:04
it? Are you going to wait for your core provider? And is frankly
34:07
that the best product for your bank? I think that's what we're going to
34:10
see in the next the next year or two. Excellent. I love it,
34:14
Christia. Thank you so much for your time today. This this is
34:15
a great talk. Yeah, thank you. Upstart partners with banks and credit
34:20
unions to help grow their consumer loan portfolios and deliver a modern, all digital
34:24
lending experience. As the average consumer becomes more digitally savvy, it only makes
34:30
sense that their bank does too. Upstarts AI lending platform uses sophisticated machine learning
34:36
models to more accurately identify risk and approve more applicants than traditional credit models.
34:42
With fraud rates near zero, Upstarts all digital experience reduces manual processing for banks
34:47
and offers a simple and convenient experience for consumers. Whether you're looking to grow
34:52
and enhance your existing personal and auto lending programs or you're just getting started,
34:58
Upstart can help. Upstart offers an end to end solution that can help you
35:02
find more credit worthy borrowers within your risk profile. With all digital underwriting,
35:07
onboarding, loan closing, and servicing, It's all possible with Upstart in your
35:13
corner. Learn more about finding new borrowers, enhancing your credit decisioning process,
35:17
and growing your business by visiting upstart dot com slash foward dash Banks. That's
35:22
upstart dot com slash foward dash Banks. You've been listening to leaders and lending
35:29
from Upstart, make sure you never missed an episode. Subscribe to Leaders in
35:32
Lending in your favorite podcast player using Apple Podcasts. Leave us a quick rating
35:37
by tapping the number of stars you think the show deserves. Thanks for listening,
35:40
until next time.