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Adapting to Turbulence through Fintech Innovations · Leaders in Lending

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Speaker 1: You are listening to Leaders in Lending from Upstart, a
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Speaker 1: podcast dedicated to helping consumer lenders grow their programs and
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Speaker 1: improve their product offerings. Each week, here decision makers in
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Speaker 1: the finance industry offer insights into the future of the
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Speaker 1: lending industry, best practices around digital transformation, and more. Let's
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Speaker 1: get into the show.
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Speaker 2: Welcome to another episode of Leaders in Lending. I'm your host,
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Speaker 2: Matt Snow, joined this week by Am Gawler from Cross
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Speaker 2: River Bank. Adam, thanks for joining me.
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Speaker 3: Thank you, Matt. Really great to be here.
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Speaker 2: Yeah, always good to catch up with you. Maybe why
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Speaker 2: don't you start by introducing yourself a little bit and
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Speaker 2: telling everyone what you do across River today.
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Speaker 4: Absolutely so, I have been the Cross River filledness that
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Speaker 4: the better part of sixteen years, since the very beginning,
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Speaker 4: and it's been quite a journey. And my current title
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Speaker 4: today I run all of fintech banking and really what
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Speaker 4: that is is really relevant to this call because we
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Speaker 4: are essentially powering non banks offer banking products. We started
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Speaker 4: with lending many many years ago and they have really
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Speaker 4: transitioned to be a full stack, full product, robust supplier
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Speaker 4: of banking products for non banks and so today what
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Speaker 4: we offer is you know, lending capabilities, card capabilities to
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Speaker 4: pothitic capabilities.
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Speaker 3: As well as a lot of payment capabilities.
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Speaker 2: Great and you know, I've been really interested lately and
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Speaker 2: was thinking about our conversation about companies that started in
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Speaker 2: you know, maybe more tumultuous times in history. So you're
1:26
Speaker 2: part of the founding team back in you know, the
1:28
Speaker 2: wake of the GFC starting Cross River. Maybe talk a
1:31
Speaker 2: little bit about that, like what generated the idea, like, hey,
1:34
Speaker 2: here's a great time to start a bank.
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Speaker 3: That's funny.
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Speaker 4: We actually had a philosophy that our CEO, Jill always
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Speaker 4: talks about is that hire people who have been through
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Speaker 4: some bad times as well. People have only been through
1:43
Speaker 4: positive cycles or good times tend not to know how
1:47
Speaker 4: to react when things don't go well. And so many
1:49
Speaker 4: of us were working in industries or companies that were
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Speaker 4: impacted by the GSC, the Great Financial Crisis, mostly around
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Speaker 4: the mortgage industry. Myself, prior to Across, I came from
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Speaker 4: a rating agency. I was specifically focused on residential mortgage
2:04
Speaker 4: back securities our mbs, and so obviously we were significantly
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Speaker 4: impacted at the time, and so I saw really the
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Speaker 4: peak of the mortgage industry, and also the big downfall
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Speaker 4: from all the CEOs and the creative underwriting that was
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Speaker 4: done over a number of years. So it was a
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Speaker 4: really interesting time of former bank. As you can probably imagine,
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Speaker 4: there were not many banks that were lending at that time,
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Speaker 4: and so what it really brought was an opportunity for
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Speaker 4: us to do something a little different.
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Speaker 3: The initial idea.
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Speaker 4: Was really to raise money to build a bank that
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Speaker 4: was going to have fresh capital, sort of no bad habits,
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Speaker 4: and start anew at a time when banks weren't really
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Speaker 4: lending at all. And so that was the first strategy.
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Speaker 4: It wasn't really a fintech play to begin with. What
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Speaker 4: happened over time as we started to build, we realized
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Speaker 4: that scaling a bank is really tough when you're going
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Speaker 4: only direct to customer, and so we started learning about
2:54
Speaker 4: these partnerships, initially through a company called Queen Sky, where we.
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Speaker 3: Could leverage the expertise of others.
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Speaker 4: To build not only our balance sheet, but also to
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Speaker 4: build programs that would enable banking not only to be
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Speaker 4: direct banking support.
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Speaker 2: Interesting, you know, and I've I don't know if you
3:10
Speaker 2: follow the podcast founders. Dave of our founder and CEO.
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Speaker 2: It's very fond of that one as well, And I
3:15
Speaker 2: think something interesting similar about that. I think, you know,
3:18
Speaker 2: with entrepreneurs or founders, it seems like there's always a
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Speaker 2: really strong idea for a company, but also like the
3:24
Speaker 2: ability to pivot, Like how did you guys find that
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Speaker 2: balance of like, here's something that we're going to go
3:29
Speaker 2: like a you know, full steam ahead against an idea,
3:32
Speaker 2: and then also being nimble enough to pivot when and
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Speaker 2: stay true to that.
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Speaker 3: In my view, that starts with the culture.
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Speaker 4: I think you mentioned Dave, and Dave honestly you know
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Speaker 4: from came from from Google and other companies he worked at.
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Speaker 3: But to me, if the CEO has a culture of.
3:47
Speaker 4: Being an entrepreneur and being open minded to ideas, I
3:50
Speaker 4: think that shriggles down to all the employees. What really
3:54
Speaker 4: we learned from an early you know, our early years,
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Speaker 4: was that if we look at every opportunity, have many
4:00
Speaker 4: opportunities to pursue. And so if we saw ten ideas
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Speaker 4: and only two of them came to fruition, that's absolutely fine.
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Speaker 4: But for us, it's about being open ninety is going
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Speaker 4: in with a fresh outlook and not turning over every rock.
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Speaker 4: Assuming that everything with possibility, and if you go in
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Speaker 4: with the attitude that everything's possible, you wind up with
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Speaker 4: something great.
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Speaker 2: Yeah. I like that approach. Did you find were there
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Speaker 2: consistent themes are ways that you evaluate those opportunities? Was
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Speaker 2: everyone kind of aligned on that same type of approach
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Speaker 2: or was there a lot of debate around like, no,
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Speaker 2: this is the opportunity and why? Yeah?
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Speaker 3: So I don't think there was a ton of debate.
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Speaker 4: I think you know, as a young institution with a
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Speaker 4: limited capital at the time, we had to be very efficient,
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Speaker 4: and so I think there was a balance between what
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Speaker 4: is the most scalable opportunity, so it has to have
4:43
Speaker 4: a lot of scale because you're not going to invest
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Speaker 4: in it. Did enough scale at the same time, like
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Speaker 4: what is the capital required to turn a profit? Because
4:50
Speaker 4: if a lead time or though the life was you know,
4:53
Speaker 4: three four years out to turn a dollar of profit,
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Speaker 4: it wouldn't make sense to pursue that as well. So
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Speaker 4: it was almost the balance of the fish between cost
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Speaker 4: and profit as well as sort of the you know,
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Speaker 4: heech required and other investments of time that it sort
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Speaker 4: of did not allow us to pursue.
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Speaker 2: Yeah, that makes sense, and actually so I went out
5:13
Speaker 2: and did a little research to see what other companies
5:15
Speaker 2: were founded kind of in the wake of the GFC.
5:17
Speaker 2: I'm sure you've heard of these, but you know, nerd Wallet, Uber, Venmo,
5:21
Speaker 2: groupon Groupon I was surprised to see is actually still around.
5:26
Speaker 2: I think they have like maybe half the customer base
5:28
Speaker 2: that they did at their peak. But you know, those
5:30
Speaker 2: other companies seem to do pretty well starting at that
5:33
Speaker 2: time as well.
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Speaker 4: It's not a coincidence, I think, you know, if you
5:36
Speaker 4: think about zooming out of the business industries, but in
5:40
Speaker 4: banking industries, if you think about life in general, it's
5:44
Speaker 4: not uncommon that many of the best things come out
5:46
Speaker 4: of you know, trials and tribulations, and the best ideas
5:49
Speaker 4: are firmly out of need. You know, when they say that,
5:51
Speaker 4: you know, necessity is the mother of inventioned that's not
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Speaker 4: a lie. Right, When someone has a problem they need
5:56
Speaker 4: to solve, that's the quickest way to get to a solution,
5:59
Speaker 4: because when you're just ideating around the room and throwing
6:02
Speaker 4: ideas out, Okay, we'll pursue this, we'll pursue that, when
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Speaker 4: you're actually in crisis mode, and COVID was a good
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Speaker 4: example of that. When so much came out of COVID
6:11
Speaker 4: and even the GFC. Right when you think about the
6:14
Speaker 4: proliferation of banking and the access to banking that happened
6:17
Speaker 4: post GFC the last ten years, that was accelerated thirty
6:20
Speaker 4: to forty years of banking life.
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Speaker 2: Yeah, I totally agree. And you mentioned, you know, coming
6:25
Speaker 2: out of COVID too. I did a quick search, but
6:27
Speaker 2: didn't find any like meaningful companies maybe that were started
6:31
Speaker 2: are still around since then. I saw one stat that
6:34
Speaker 2: you know, the IRS saw a huge increase of the
6:37
Speaker 2: number of companies started. So I think there's an average
6:39
Speaker 2: of like one hundred to one hundred and twenty five
6:41
Speaker 2: thousand applications a month for new new companies that peaked
6:44
Speaker 2: up over one hundred and fifty thousand, and that trend
6:46
Speaker 2: has seemed to stick around. Any companies that you've seen,
6:51
Speaker 2: like start out of COVID that kind of capitalized on
6:54
Speaker 2: that environment that you were mentioning or think have some
6:57
Speaker 2: staying power or changed even change the landscape for FinTechs
7:01
Speaker 2: and banks.
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Speaker 4: I'm trying to remember the names of companies, but there
7:03
Speaker 4: are definitely products that we saw that came out of COVID.
7:05
Speaker 4: I think I know we were involved, I want to
7:07
Speaker 4: say the name in building a product with a current
7:10
Speaker 4: customer of ours that was a unique spin on an
7:12
Speaker 4: existing product, and it was really almost like came out
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Speaker 4: of the idea that people aren't leaving the house anymore
7:18
Speaker 4: and types of financing maybe that would enable that to
7:22
Speaker 4: be easier for customers who weren't going to the point
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Speaker 4: of sale anymore in one case, and the same thing
7:27
Speaker 4: for other areas of banking, where there were folks who
7:30
Speaker 4: understood some of the core problems that COVID showed us,
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Speaker 4: and whether it be healthcare financing, there were solutions that
7:36
Speaker 4: came about from people realizing that certain things just weren't
7:39
Speaker 4: going to continue to exist the way they were before.
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Speaker 2: Yeah. And I've heard you talk before too about you know,
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Speaker 2: maybe the speed or the accessibility of banking and the
7:47
Speaker 2: innovation that continues to happen. There is that something you
7:51
Speaker 2: continued to see or think it is still a lot
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Speaker 2: of opportunity within financial services.
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Speaker 3: Yeah, it's so interesting. We're still seeing a lot of that.
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Speaker 4: It's a great question, and I think there's almost this
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Speaker 4: balance where on one hand, we're still seeing a ton
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Speaker 4: of creativity in banking, A lot of folks who are
8:08
Speaker 4: trying to do things slightly differently to the next competitor.
8:11
Speaker 4: At the same time, because it's financial services, there's this
8:14
Speaker 4: inherent almost slow slowness to it is regulatory pressure. You know,
8:22
Speaker 4: the rigor of the process to get them something off
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Speaker 4: the ground is so much stronger than perhaps in other industries,
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Speaker 4: So it does balance itself out. There is a lot
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Speaker 4: of like creative you know, ingenuity coming out of companies
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Speaker 4: that we work with. At the same time, there's natural
8:38
Speaker 4: rigor to the process and filtering of the process that's
8:40
Speaker 4: created by the regulatory environment.
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Speaker 2: Yeah, what other things do you think enabled that? I mean,
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Speaker 2: I can think of one just being kind of the
8:47
Speaker 2: digital nature of so much of our currency and how
8:49
Speaker 2: much you know, the reliance on physical currency decreasing over time. Technology,
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Speaker 2: Like what other enablers are maybe newer that are helping
8:59
Speaker 2: companies to advantage of that.
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Speaker 4: It may not be new or you're alluding to almost
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Speaker 4: things like AI as an example, things that are accelerating,
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Speaker 4: maybe some of the banking services. But to me, in
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Speaker 4: my own view, there's just the proliferation of things becoming
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Speaker 4: more commonplace. As an example, the comfort of people who
9:15
Speaker 4: use their phones for everything, right, Whereas in the past,
9:18
Speaker 4: applying for a loan on your phone would have been insane, right,
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Speaker 4: But today people are willing to go into his store,
9:23
Speaker 4: you know, using just their phone and clicking on a
9:26
Speaker 4: button and taking financing for that. Transactions that are happening
9:30
Speaker 4: in real time, like real time payments would have been
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Speaker 4: a real scary thing for people, you know, five ten
9:35
Speaker 4: years ago. But money is moving so quickly and people's
9:38
Speaker 4: willingness to move that money quickly understanding that there are
9:43
Speaker 4: risks involved in the in the lack of friction in
9:47
Speaker 4: the process. That really says a lot about people's trust
9:50
Speaker 4: in the controls, trust in the systems, and the advancement
9:54
Speaker 4: of thought amongst the general population.
9:57
Speaker 2: Yeah, that is a really good point. I hadn't thought
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Speaker 2: of that, you know, the consumer's comfort and using other technology.
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Speaker 2: That maybe paves the way for banking to take advantage
10:07
Speaker 2: of the idea of using a phone as a primary
10:10
Speaker 2: way of transacting. Opening new accounts, moving money definitely couldn't
10:15
Speaker 2: have been led by banking. I don't think until other
10:17
Speaker 2: companies made that much more safe, comfortable, you know technology.
10:22
Speaker 4: It's funny because if you think about it, my kids
10:24
Speaker 4: are this way. I literally with with my kids where
10:26
Speaker 4: my kids. Last week we were going out somewhere and
10:29
Speaker 4: I said to my son, who drives now he's seventeen,
10:33
Speaker 4: I said, do you have your phone? He said yes,
10:37
Speaker 4: And I said you have your wallet? He said no.
10:39
Speaker 4: And can you imagine a world where someone is more
10:43
Speaker 4: likely to take their phone with them their wallet because
10:46
Speaker 4: to him at his age, his generation, the wallet is insignificant,
10:50
Speaker 4: but the phone, that's not insignificant.
10:53
Speaker 2: Yeah, I've noticed that a little bit too in my life.
10:56
Speaker 2: And I know you're a bit of a runner, but
10:58
Speaker 2: like even you know, I used to have like the
11:00
Speaker 2: really thick wallet with all the cards, like everything, like
11:03
Speaker 2: everything in there. And I get to the point where,
11:05
Speaker 2: you know, maybe I can just run with my watch
11:07
Speaker 2: and if I need to pay, like I can, you know,
11:09
Speaker 2: want to just stuff for a cup of coffee afterwards,
11:11
Speaker 2: or I get lost, I can pull up a GPS
11:13
Speaker 2: like even on my watch, and I may not even
11:15
Speaker 2: need the phone.
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Speaker 4: It's funny because when you run a marathon, depending on
11:19
Speaker 4: where you're going to get there can be a challenge,
11:22
Speaker 4: like because you want to drive because it turned to
11:25
Speaker 4: park and then getting a car over at the end
11:26
Speaker 4: of the race, and so what do you take with you?
11:28
Speaker 4: So usually the starry lander's already food, there's drinks, you
11:31
Speaker 4: do need anything like that. But for me, it's it's
11:33
Speaker 4: obviously my phone, so I can listen to something, so
11:35
Speaker 4: I can reach people. And then it's as little as possible,
11:38
Speaker 4: so you have something like the little pockets in your
11:40
Speaker 4: shorts you can fit a credit card in or an
11:41
Speaker 4: ID in, but essentially your phone is the only thing
11:44
Speaker 4: you're really taking with you and you're carrying on you
11:46
Speaker 4: other than a few bucks in case you want to
11:48
Speaker 4: buy something. But so to me, like that whole process,
11:52
Speaker 4: you know, just reinforces the fact that, like we're realizing
11:55
Speaker 4: more and more that like our digital footprint, our identity footprint,
11:59
Speaker 4: our banking foot print, everything we do is really embedded
12:02
Speaker 4: in that device. And the more that the banking financial
12:06
Speaker 4: services are enabling their product to be offered and engaged
12:11
Speaker 4: through that device, I think the more prolific the adoption
12:15
Speaker 4: will be.
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Speaker 2: Yeah, and that's probably enabled a little more consumer choice
12:20
Speaker 2: or have you seen that in terms of who they
12:21
Speaker 2: choose to bank with and the types of products and
12:23
Speaker 2: services and versus having to go to like your local
12:26
Speaker 2: branch and talk to a banker and kind of you know,
12:30
Speaker 2: interact with the financial industry through through a person or
12:33
Speaker 2: a physical location. Now I could download an app, I
12:35
Speaker 2: can search for loans, I can figure out who has
12:38
Speaker 2: the best deposit rates, and you know, move that money
12:40
Speaker 2: around pretty easily just on that device.
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Speaker 4: The best example of like like my kids, that kids
12:45
Speaker 4: today have so little patience to talk to anyone for
12:47
Speaker 4: a long period of time. Their attention spend is a
12:49
Speaker 4: lot shorter, and so the less they have to talk
12:51
Speaker 4: to someone and get something done, the better. They'd rather
12:53
Speaker 4: interact on their phone, have maybe a short conversation. So yeah,
12:56
Speaker 4: the more you can do to reduce friction in the process.
12:59
Speaker 4: It's interesting saying that what I see a lot here
13:01
Speaker 4: in the companies we work with is that there's so
13:04
Speaker 4: much energy expanded and dollars expended on improving the UX.
13:08
Speaker 4: And you think about it, like, if a product is
13:10
Speaker 4: the same, why does the UX matter so much? And
13:12
Speaker 4: it's exactly what you pointed out, which is that if
13:14
Speaker 4: the friction is even one iota less and conversion is
13:18
Speaker 4: a second shorter, you.
13:20
Speaker 3: Will get a far higher adoption rate and conversion rate.
13:23
Speaker 4: And it's really meaningful again without naming names, that there's
13:27
Speaker 4: a company we work with who we're talking about a
13:29
Speaker 4: certain change we want them to make to a disclosure
13:31
Speaker 4: in an online form and they were somehow able to
13:34
Speaker 4: run stats and they thought there would be up to
13:36
Speaker 4: a seventy percent reduction and conversion from one change in
13:40
Speaker 4: the UX and that that was about a year ago.
13:43
Speaker 4: That was the eye opening for me because they have
13:46
Speaker 4: it down to a science where they can actually tell
13:47
Speaker 4: you if you change this one feature or one part
13:53
Speaker 4: of the experience, you actually will see a meaningful change
13:56
Speaker 4: and adoption conversion, whatever you want to call it, and
13:58
Speaker 4: therefore revenue and profit.
14:01
Speaker 2: Yeah, I think that you know, data driven approach is
14:04
Speaker 2: so important where every interaction can interaction can have such
14:08
Speaker 2: a dramatic impact. So knowing and testing and learning those
14:11
Speaker 2: things is critical to say ahead.
14:12
Speaker 4: Absolutely, I mean I think that you know that that
14:15
Speaker 4: will become even more important over time the more we
14:17
Speaker 4: moved to a completely digital environment. It's funny because even
14:21
Speaker 4: I'll call it like a older generations or adopting some
14:24
Speaker 4: of the technology and they're getting more comfortable interacting online.
14:27
Speaker 4: I mean, I have my my father's a good example
14:29
Speaker 4: where like you know, I'll buy something for the whole family.
14:32
Speaker 4: The don't want to pay me back. And he used
14:34
Speaker 4: to write a check and leave it an m O
14:35
Speaker 4: bit my door, and I said, Dad, that's it's kind
14:37
Speaker 4: of its kind of it's kind of annoying. And so
14:39
Speaker 4: one day I was at his house. This goes back
14:41
Speaker 4: probably a year and a half ago, and I went
14:43
Speaker 4: to his phone. I downloaded Zell to the Chase app.
14:46
Speaker 4: I'm like, you can send money this way to me.
14:48
Speaker 4: And he's done it now twice successfully over the last year,
14:52
Speaker 4: and our lives have changed forever for the better.
14:54
Speaker 2: Right, Yeah, you've converted him to that that way of
14:57
Speaker 2: our awesome.
14:59
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Speaker 2: Thanks and now back to the show. So what other
15:44
Speaker 2: things are you seeing partners do to innovate, Like, is
15:47
Speaker 2: the use of API or the idea of open banking
15:49
Speaker 2: continuing to be something that people are adopting.
15:53
Speaker 3: Yeah, I think so.
15:54
Speaker 4: I think that having a centralized location for controlling all
15:58
Speaker 4: of your financial services, I think is really important to people.
16:00
Speaker 4: So when you think about these apps that will allow
16:02
Speaker 4: you to have all your accounts sort of routed visible
16:07
Speaker 4: from one place, that's super important. Just as one example,
16:11
Speaker 4: last week, I was realizing that, you know, I've been
16:14
Speaker 4: at now called three and a half companies over my career,
16:17
Speaker 4: and you have your four one K from the first
16:19
Speaker 4: one and the second one and keep rolling them over.
16:21
Speaker 4: But sometimes you also want that like diversity of like
16:23
Speaker 4: you know who's the vendor on that account and they
16:25
Speaker 4: perform differently, and so an app now that they can
16:28
Speaker 4: you could basically consolidate and centralize all of your retirement
16:32
Speaker 4: accounts into one place in your broader portfolio and see
16:35
Speaker 4: everything in one place. That's really powerful for a customer
16:38
Speaker 4: because again, time is important to them, efficiency is important
16:41
Speaker 4: to them, and control is important to them.
16:44
Speaker 2: Yeah, I think the control is the key point that
16:46
Speaker 2: you mentioned in that diversity. I think a little bit
16:49
Speaker 2: about maybe this isn't a perfect analogy, but you know,
16:52
Speaker 2: like an entertainment where we had the cable industry that
16:55
Speaker 2: no one loved and you're paying these huge fees for
16:57
Speaker 2: all these channels you never watch, and then we start
16:59
Speaker 2: to get streaming services and now everyone's like, I've got
17:02
Speaker 2: you know, twenty different apps. I don't know where to
17:04
Speaker 2: go to find the show I want. So how do
17:05
Speaker 2: you like balance that control? Yes, you know, it's great
17:08
Speaker 2: that we have all these new players creating really interesting
17:11
Speaker 2: content and you've got a lot more control over what
17:14
Speaker 2: maybe what you can watch and what you want to
17:17
Speaker 2: pay for. But now there's such a diversity of providers, Like,
17:22
Speaker 2: I just want things simpler again.
17:24
Speaker 3: Yeah, simple, it's hard to come by. I would say.
17:27
Speaker 4: Banking has become simplified, Like even if I go into
17:29
Speaker 4: my own banking, I bank with Chase personally, and for
17:31
Speaker 4: most things that I do, I can do most things
17:34
Speaker 4: from that one app, not going externally. So I think
17:36
Speaker 4: that even the bigger banks have adopted, have adapted and adopted,
17:40
Speaker 4: you know, I guess, uh internal capabilities for allowing people
17:44
Speaker 4: to do things in one centralized location. I think, unlike
17:47
Speaker 4: maybe entertainment, which is someone's driven by like you know, okay,
17:51
Speaker 4: I have one person in the family who wants to
17:53
Speaker 4: watch this, and one party want to here, there's really
17:56
Speaker 4: generally one person's controlling sort of all the accounts for
17:59
Speaker 4: the family in many cases, and so it's easier to
18:02
Speaker 4: be centralized.
18:03
Speaker 3: There's not lots of yelling at you to get different apps.
18:06
Speaker 2: Yeah, yeah, that's fair. And maybe I want to circle
18:09
Speaker 2: back to something you alluded to earlier around you know,
18:12
Speaker 2: the starting of cross River and the idea of culture,
18:15
Speaker 2: Like when you think about building a team, you know,
18:18
Speaker 2: how do you quantify something that maybe is harder to
18:20
Speaker 2: pin down, like culture? What makes a good founding team,
18:23
Speaker 2: a good you know, start up, a good company that
18:26
Speaker 2: really can operate efficiently together?
18:29
Speaker 3: Great point. Actually, this is actually a great question. I
18:32
Speaker 3: thought about this a lot.
18:34
Speaker 4: One of the things I think it's important to understand
18:36
Speaker 4: is that at different stages of life of the company,
18:39
Speaker 4: it requires different people and what I mean by that
18:41
Speaker 4: is that we were starting a new company. You need
18:44
Speaker 4: a couple of things. People who are creative because you're
18:47
Speaker 4: building from the ground up. People who have patience because
18:51
Speaker 4: it takes time to build something. It takes time to
18:53
Speaker 4: get to the public offering, it takes time to build
18:57
Speaker 4: the product build a company. And then in addition to that,
19:01
Speaker 4: I think you need people who are less stuck in
19:04
Speaker 4: their ways, people who are flexible. As you as the
19:08
Speaker 4: company matures, you start, you start having this need for
19:11
Speaker 4: people who have a lot more rigor and have a
19:14
Speaker 4: lot more process focused, you know, ideals, and have have
19:18
Speaker 4: backgrounds that enable them to create those controls to make
19:21
Speaker 4: sure that as you're growing, you have the right controls
19:24
Speaker 4: in place. And so there is like this like life
19:27
Speaker 4: cycle where you need different skill sets at different points
19:29
Speaker 4: of the company's history. But overall, I think when you're
19:32
Speaker 4: interviewing people, you have to ask a very diverse set
19:35
Speaker 4: of questions. I know, I remember interviewing for a company
19:37
Speaker 4: for a job on Wall Street one time and they
19:39
Speaker 4: asked you like this, like a riddle, and it was
19:41
Speaker 4: the first time I had heard it was like a
19:43
Speaker 4: there's one apple and a hat, and then you leave
19:45
Speaker 4: these two apples and you come back.
19:46
Speaker 3: I don't know there are riddle exactly, but it was
19:47
Speaker 3: something where I.
19:48
Speaker 4: Was like, like, is this an interview for a banking
19:52
Speaker 4: like product or a company or this is like something else,
19:55
Speaker 4: And so it's it's coming with the question that can
19:57
Speaker 4: test you know, almost personality along with skill set real scenarios,
20:03
Speaker 4: asking them questions that force them to provide real life
20:08
Speaker 4: examples of situations where they're able to be able to
20:11
Speaker 4: solve problems and deal with things that have come up.
20:14
Speaker 4: So you got to test for like how they deal
20:16
Speaker 4: with adversity and how they deal with you know, you
20:19
Speaker 4: mentioned before change in direction, right to be very nimble,
20:23
Speaker 4: So those are all important things and that's the skill.
20:25
Speaker 2: Yeah, yeah, I totally agree. I think you mentioned translating
20:29
Speaker 2: the interview to back to reality how these people going
20:32
Speaker 2: to operate in an in the actual job can be
20:34
Speaker 2: kind of hard because interviewing itself can be a bit
20:37
Speaker 2: of a skill that people can get really good at
20:38
Speaker 2: answering those riddles or stereotypical interview questions. Do you have
20:44
Speaker 2: like a go to set of questions or a way
20:46
Speaker 2: that you like to assess folks ability to handle adversity
20:50
Speaker 2: or change in direction.
20:52
Speaker 4: Well, I always ask questions like tell me something you
20:54
Speaker 4: feel that, and they're always like caught off guard, like,
20:57
Speaker 4: you know, because everyone suspin it to a positive, you
21:00
Speaker 4: know direction, And so it's like they start telling you
21:03
Speaker 4: what they failed at, and then you want to drill
21:04
Speaker 4: down further. Okay, why did you fail? How would you
21:07
Speaker 4: do it differently the next time you were in the
21:09
Speaker 4: same situation? So to me, it's like and they oftentimes
21:12
Speaker 4: take it as like I told them they fail, but
21:15
Speaker 4: I'm really asking them, like show me that you're a
21:17
Speaker 4: you know, humble enough to meet you failed, b you
21:21
Speaker 4: are thoughtful enough to understand why it failed. And then
21:25
Speaker 4: three you've actually cared enough to look at for the
21:28
Speaker 4: fact and say, I know how I do this next
21:31
Speaker 4: time better?
21:33
Speaker 2: Yeah? I like that. I think that's key. I look
21:35
Speaker 2: for things like that too around you know, self awareness
21:38
Speaker 2: or you know, nothing ever goes perfectly. So what did
21:40
Speaker 2: you learn from the situation? Were you overwhelmed by it
21:43
Speaker 2: or were you able to actually reflect, adapt and learn
21:47
Speaker 2: from it from the next time.
21:49
Speaker 4: I think those are key, exactly right, And I think
21:51
Speaker 4: that that willingness alone, I think tell a lot about
21:53
Speaker 4: a person and so those are good questions for me.
21:56
Speaker 3: Some of my go to questions, gotcha, Yeah, I.
22:00
Speaker 2: Had leaders very early on as I was starting managing
22:03
Speaker 2: in my career in part upon me that you know,
22:06
Speaker 2: hiring is one of the most important responsibilities within a company.
22:10
Speaker 2: Getting it right is very important. So taking the time,
22:13
Speaker 2: I think is also important when you're screening interview with
22:17
Speaker 2: people to make sure you're not making rash judgments because
22:20
Speaker 2: it can be very painful when you get it wrong.
22:22
Speaker 4: Well, I agree, and the hardest thing as you become
22:24
Speaker 4: more senior in an organization, you often have a media
22:27
Speaker 4: and candidate if they've already been screened by HR, and
22:31
Speaker 4: then the direct report and then the senior manager. And
22:33
Speaker 4: so if you're the person of significance and they're coming
22:36
Speaker 4: to you and you're the fifth person that they're meeting,
22:39
Speaker 4: to go through the regular interview questions almost as silly
22:41
Speaker 4: and pointless. You want to do some of it to
22:43
Speaker 4: make your own assessment, but at the same time, you've
22:45
Speaker 4: got to find a way to be more thoughtful about
22:47
Speaker 4: what are like the key questions to differentiate yours from
22:50
Speaker 4: others who already asked that question.
22:52
Speaker 2: Yeah, and well, so then how do you balance that,
22:55
Speaker 2: you know, the more approach or the mentality standpoint, and
22:58
Speaker 2: just the technical especially you know with things like you
23:02
Speaker 2: guys are trying to do maybe haven't been done yet,
23:04
Speaker 2: So you can't evaluate someone's track record, like how do
23:06
Speaker 2: you do something that maybe hasn't been done? How do
23:10
Speaker 2: you evaluate just that technical ability?
23:14
Speaker 4: Here's the good news. And this also speaks to things
23:17
Speaker 4: that have changed in our system. So in the education system,
23:19
Speaker 4: as an example, everyone who's in school today, it used
23:23
Speaker 4: to be, you know, if you were on a track
23:25
Speaker 4: for financial services call it accounting finance, right, you were
23:29
Speaker 4: learning a specific skill set, some idea of general education,
23:32
Speaker 4: but a certain skill set. And if you're you know,
23:35
Speaker 4: in the you know, going for a law degree, you're
23:37
Speaker 4: learning a certain skill set. I think that the baseline
23:39
Speaker 4: has expanded, Like there isn't a skill set you're targeting
23:43
Speaker 4: today or that you're going for it today that wouldn't
23:45
Speaker 4: provide you with a solid foundation in things like computer usage,
23:49
Speaker 4: like basic technical skills.
23:51
Speaker 3: And so I think when you're meeting selling today, even someone.
23:53
Speaker 4: Who has a law degree is going to be a
23:54
Speaker 4: lawyer for your firm or in compliance, they're coming with
23:57
Speaker 4: a knowledge of Excel, and they know how to use
23:59
Speaker 4: certain like a system that they would use in the past,
24:01
Speaker 4: and it's almost like taking you through granted, whereas in
24:04
Speaker 4: the past, perhaps if you were in pursuing a technical.
24:06
Speaker 3: Area, you were in train in an area.
24:08
Speaker 4: And that's why you're seeing, in my view, between LinkedIn
24:12
Speaker 4: learning and other forms of education are what I call
24:15
Speaker 4: continuing education.
24:16
Speaker 3: You're seeing a.
24:16
Speaker 4: Lot of people upskill themselves in later years of their
24:20
Speaker 4: career because they realize that some of the folks that
24:22
Speaker 4: they're competing with are folks who are quote quote unquote
24:25
Speaker 4: cross trained and dual trained, whereas they have a specific
24:28
Speaker 4: skill set. And so you're seeing a lot of folks
24:30
Speaker 4: educate themselves further along in their career to sort of
24:34
Speaker 4: help bridge the knowledge gap they had previously with some
24:37
Speaker 4: of the more technical areas of banking and other other areas.
24:41
Speaker 2: Yeah, I like that. I think that's so true. And
24:43
Speaker 2: that's usually something I ask in interviews as well as
24:46
Speaker 2: you know, I'll see from their resume maybe they list
24:48
Speaker 2: a software package or something they use, or ask how
24:51
Speaker 2: did you learn that, what's your favorite hack or like
24:53
Speaker 2: shortcut you found that becomes part of it, just to
24:55
Speaker 2: see like are they happy with the status quo? How
24:58
Speaker 2: do they continue evolve use tools maybe a new and
25:01
Speaker 2: novel way.
25:02
Speaker 3: Absolutely, I mean I think it's kind of like the
25:04
Speaker 3: basics today.
25:05
Speaker 4: And if you're coming into a company in any industry
25:08
Speaker 4: and you have no technical knowledge of the of the
25:10
Speaker 4: tools that are going to use in that industry, you're
25:12
Speaker 4: obviously you know, you're your chance of being hired a
25:16
Speaker 4: far less.
25:17
Speaker 2: Yeah, definitely, And I think Ai you mentioned earlier, you know,
25:21
Speaker 2: one of those areas that does continue to change. There's
25:23
Speaker 2: tons of thought leadership out there, YouTube videos, cours erara courses,
25:28
Speaker 2: whatever to stay educated. What are where the adoption you're
25:33
Speaker 2: seeing within your partners or you know, maybe just your
25:35
Speaker 2: general observations. Where where are we in the hype cycle,
25:38
Speaker 2: Like are there real applications that are starting to take
25:42
Speaker 2: hold or is there still a lot of experimentation?
25:44
Speaker 3: You know what your perspective, there's a lot of experimentation.
25:47
Speaker 4: I feel like it's like everyone has to have access
25:49
Speaker 4: to something, so I know, right right away when when
25:52
Speaker 4: it first came out, like we had a lot of
25:53
Speaker 4: demand internally, I think forty five requests for like chat
25:56
Speaker 4: ebt right, but a lot of it was wasn't because
25:59
Speaker 4: they were like, you know, insisting on AI. It's more like, Hey,
26:02
Speaker 4: if they can prepare my PowerPoint for me for my
26:04
Speaker 4: meeting next week, I'm all in. And so I think
26:07
Speaker 4: in different use cases, it's not in the case that
26:08
Speaker 4: people are like it's about AI. It's about like, what
26:10
Speaker 4: can AI do to make me more efficient, allow me
26:14
Speaker 4: to focus on the things that I know I'm good at,
26:16
Speaker 4: and then take some of the burden off of me
26:18
Speaker 4: for things that I'm not good at or don't want
26:19
Speaker 4: to spend time on. And so I think there's a
26:21
Speaker 4: lot of experimentation going on even today. That said, there
26:25
Speaker 4: are a fair number of companies, including Upstart as you
26:27
Speaker 4: well know, who've been using really some form of AI
26:30
Speaker 4: for a really long time. And so now it got
26:32
Speaker 4: like a buzzword name. But at the end of the day,
26:34
Speaker 4: when you're using alternative variables and you're able to provide
26:38
Speaker 4: scenarios that are more predictive of performance in lending as
26:42
Speaker 4: an example, that's essentially AI. And so it's almost like
26:46
Speaker 4: it got a formal name. There are more people using
26:48
Speaker 4: it today, but really it's not something that's actually truly new.
26:52
Speaker 4: It's just become more ubiquitous.
26:54
Speaker 2: Yeah, I think you're right, and maybe using the phones
26:56
Speaker 2: as the analogy again, I'm sure we'll look back like
26:59
Speaker 2: twenty thirty years from now and it will be so
27:01
Speaker 2: commonplace it almost seems silly that we were thinking about
27:04
Speaker 2: it and the way we do some sometimes today. But
27:07
Speaker 2: I'm sure other spaces will pave the way and then
27:11
Speaker 2: banking will catch up and find the use cases once
27:14
Speaker 2: it's kind of been sorted out.
27:16
Speaker 1: Yeah.
27:16
Speaker 4: And the reason why I think, and again a personal opinion,
27:19
Speaker 4: the banking is generally often behind is because again you
27:22
Speaker 4: have that rigor you can't. It's a very heavily regulated industry.
27:26
Speaker 4: You can just jump in and start using new tools
27:28
Speaker 4: without some concern of what those tools will do from
27:31
Speaker 4: a security standpoint, from a predictability standpoint, from a fair
27:35
Speaker 4: lending and government standpoint. So there's so many unintended consequences
27:39
Speaker 4: of that technology, but adoption can happen as fast. At
27:42
Speaker 4: the same time, I think over time you'll see adoption
27:45
Speaker 4: become more ubiquitous. You'll see banking services leverage AI. You're
27:48
Speaker 4: seeing it already in part today, and I think removing
27:52
Speaker 4: the friction for banking transactions, we'll use the I as well.
27:56
Speaker 2: Yeah, I think that's true, and I think you're right,
27:58
Speaker 2: like the pace of change is necessarily maybe slower in
28:01
Speaker 2: some spaces, But it's a matter of sorting out where
28:05
Speaker 2: are the safe applications, where maybe are we getting it
28:07
Speaker 2: wrong today in a manual way that AI can actually increase,
28:11
Speaker 2: you know, for lending, compliance, ability to manage risk insecurity,
28:16
Speaker 2: and how do you insert it into those places where
28:18
Speaker 2: it's beneficial.
28:19
Speaker 4: Yeah, I mean in some ways, I know, like one
28:21
Speaker 4: of the big folks is today, you know, in financial
28:23
Speaker 4: services certainly fraud, right, it could be fun lending, certainly,
28:26
Speaker 4: fund and payments. That's where the I think the most
28:28
Speaker 4: amount of fraud potentially is. But you think about what
28:31
Speaker 4: a I could do for fraud in terms of, you know,
28:33
Speaker 4: weeding out on the front end, you know, weeding out
28:37
Speaker 4: folks who are trying to use your identity and providing
28:39
Speaker 4: better questioning upfront or better verifications upfront. On the back end,
28:44
Speaker 4: for banks who are reviewing transactions, it can provide ways
28:49
Speaker 4: to make sure that they have you know, keywords you
28:52
Speaker 4: know that are coming up in different searches to flag
28:55
Speaker 4: certain transactions. There's so many things that I can do
28:58
Speaker 4: to help make banks more effa get them to look
29:01
Speaker 4: at more transactions, the right transactions that made false positives.
29:04
Speaker 3: That's an example.
29:05
Speaker 4: And so there's so much that the technology can do
29:07
Speaker 4: to help really proliferate banking and make it more efficiently.
29:10
Speaker 2: Yeah, I totally agree. Well, maybe it's a good time
29:14
Speaker 2: to pivot into a final question we can give in
29:16
Speaker 2: like the landscape of AI the ever changing landscape in banking.
29:21
Speaker 2: Is there someone you follow, like a thought leader, journalist,
29:25
Speaker 2: podcast authors, maybe some bit of thought leadership you can
29:29
Speaker 2: leave us with, like who should we add to our
29:31
Speaker 2: library or podcast subscriptions.
29:34
Speaker 3: So I'm not a big podcast guy.
29:35
Speaker 4: I listened to most of my podcasts and I'm running
29:37
Speaker 4: on Sunday mornings, and they're very I listened to the
29:40
Speaker 4: things I used to listen to to Peter Renn's podcast
29:42
Speaker 4: all the time. But there's folks who send like weekly
29:46
Speaker 4: or semi weekly emails. Alex Johnson and the Museum comes
29:50
Speaker 4: to mind. There are others who I think send out
29:51
Speaker 4: really helpful. There's one called money Stuff that I get
29:55
Speaker 4: every Wednesday. If focused on credit cards and other other
29:58
Speaker 4: similar products. So there's some good ones out there that
30:01
Speaker 4: are industry focused that I like a lot. That said,
30:04
Speaker 4: as you can imagine, I'm sure you're the same way.
30:07
Speaker 4: I'm inundated with emails in my inbox and different things
30:10
Speaker 4: to read, and so it's almost like you click open
30:13
Speaker 4: and then you hope that by Friday afternoon, over the weekend,
30:15
Speaker 4: you have time to catch up and all the things
30:16
Speaker 4: you've opened over the course of the week. If I
30:18
Speaker 4: tee doesn't make your computer restart, right, so hopefully still
30:20
Speaker 4: there at the end of the week.
30:22
Speaker 2: Yeah. Yeah, the number of tabs open. Maybe there's an
30:24
Speaker 2: AI app out there to like take and consolidate all
30:27
Speaker 2: the tabs I open into some digest.
30:29
Speaker 4: Real or read them for you and summarize them, like, hey,
30:32
Speaker 4: can you read these twenty articles and summarize the most
30:36
Speaker 4: salient points so I can look out over the weekend.
30:38
Speaker 2: That's right, well, Adam, always good to catch up. I
30:41
Speaker 2: appreciate the time today and thanks again as well, Thanks
30:44
Speaker 2: so much.
30:44
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