Adopting an Entrepreneurial Mindset in Banking

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You're listening to Leaders and Lending from
Upstart, a podcast dedicated to helping consumer

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lenders grow their programs and improve their
product offerings. Each week, here decision

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makers in the finance industry offer insights
into the future of the lending industry,

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best practices around digital transformation, and
more. Let's giving to the show.

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Welcome to Leaders in Lending. I'm
your host, Jeff Keltner. This week's

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episode features my conversation with David Riling, the CEO of Sunrise Banks. We

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dialed into a lot of topics.
I don't know that's delver dive, but

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we did both. We talked about
liquidity and interest rate risk, kind of

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how you think about managing through those
environments. Talked a lot about Sunrise's focus

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on fintech partnerships. How do you
think about finding the right partners managing those

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partnerships for ultimate success through the cycle, through the whole kind of life cycle

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of the environment. We also talked
about cybersecurity and what community banks ought to

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be thinking about when it comes to
dealing with the emerging and evolving threats around

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cybersecurity. And lastly, people will
go into a little bit of one of

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those really interesting topic around what creates
a franchise value for a bank historically,

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what creates it today, and how
you think about really being the most valuable

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bank you can be and leveraging the
assets you have to do that. So

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I think it's a really fascinating conversation. I hope you enjoy it as much

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as I did. This is my
conversation with David Riling of Sunrise Bank.

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David, thanks for making the time
to join us on the podcast today.

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I really appreciate it. Jeff,
great to be with you. So I'm

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looking forward to this conversation. We
got a couple of topics. Maybe we'll

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go maybe we'll go off topic a
little bit too perfect, But let me

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just start with how did you get
into the banking financial services space? I

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always like to ask people as questions. I feel like it's not the childhood

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dreamed career path, and I'm kind
of curious what the route people took to

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bring them into place. Dude,
I was born a banker, right out

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of the womb. I had a
suit in a tie. No, I

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love it, Honestly. I was
a teller one summer, and I loved

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being a teller. Now every other
summer I work construct and so there was

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maybe a little air conditioning might have
played a little bit of a role in

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that, But I really I enjoyed
being a teller the cash and just so

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happens to the bank I was in
got robbed twice that summer, which I

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thought was super exciting. Many event
I went out to college. I started

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a business in college, built it
up, sold it. But once I

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sold it, you know, I
thought I was going to be a banker

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based on my two and a half
month experience, and so I became a

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trainee in a bank and lo and
behold, the first two weeks I was

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on the job in this particular bank
in Los Angeles, it got robbed three

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times, and so I thought this
was just normal for banks. Long story

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short. I quickly got sent to
south central Los Angeles because I seemed to

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be comfortable in a bank robbery,
and of which the time was the bank

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robbery capital world. And so I've
seen my fair share of not only bank

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robberies, but gangs and drugs and
cops and riots and Rodney King in the

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day, so very much an urban
experience there. But I would tell you

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the third time I had a gun
to my head I didn't think my luck

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would hold. So I went on
to work in downtown Los Angeles for City

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Bank for a while. I had
a great experience there as well. And

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my father called me and said,
Hey, there's a bank for sale where

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you grew up in Saint Paul.
It's about to fail. You should come

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and take a look at it.
And so we bought that bank, and

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he's my minority shareholder to this day. Look, I gotta say, do

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you do you keep comfortable in a
bank robbery? And your LinkedIn on your

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skills? I haven't seen that on
the LinkedIn lists of skills, but I

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feel like you ought to cool under
pressure doesn't quite doesn't quite cover that multiple

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bank robbers. It's no, it's
not. It's not the lead on the

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profile on LinkedIn, but it's it
is a characteristic that I do possess.

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So maybe I should drive an ambulance
or something. I don't know. Maybe

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I'm filled for something else. I
gotta say, I've had a lot of

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people who start off as tellers,
but I never had a bank robbery story.

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In the intro to the podcast,
that's pretty perfect diversity and march our

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story base. Let me just start
with this What are the what are the

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kind of key topics you see on
the minds of community bankers? Right?

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Is it pretty It's a pretty wild
time in the world in general, but

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in banking in particular. One of
the things you see that are top of

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mind for folks these days. You
know, there are a whole host of

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them, Jeff, I mean,
the laundry list is long, but I

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would say, you know, some
of the critical ones. There's just a

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general sense of anxiety given the bank
failures of SVB and first Republican signature and

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so forth, and so there's a
bit of just on knees there, and

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that I would say is predicated on
liquidity. Right, how much liquidity does

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a bank have can it keep lending? Really important to the lifeblood and growth

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of a bank. And so in
addition to that, there's going to be

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some credit quality issues, as you
know, the talk of recession and interest

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rates are higher, and so all
those are various topics. Then you know,

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one thing community bank is really,
I say, are not very well

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equipped for is do they really have
their cybersecurity tight and in check? And

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and that is always it's a battle
for any business bank or otherwise. But

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it's always in the back of your
mind, are we safe enough? Are

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we doing enough? And obviously the
regulators are in there making sure that banks

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are safe and sound and protected,
but there's always that worry of that type

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of an attack. So a lot
of issues on the forefront of a bank

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these days, particularly, I'd say
maybe one if you're a bank owner as

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a different perspective, is what does
this franchise value look like? And how

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big does a bank need to be
to be sustainable a long term as opposed

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to just a lifestyle business. And
it seems, you know, in these

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days, being in the middle,
if you're not the largest, and if

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you're not the smallest, that middle
is a little risky as well, as

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we've seen. What are you seeing
people do about the liquidity issue immunity it

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is. It's such a striking contrast
to me, because if you came to

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be a two months ago and so
what's the most common thing you hear from

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a bank? Or I go too
much cash, not enough loans, that's

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the most common thing. It's like
the exact opposite of here today. So

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what are you seeing is the response
to that from the community banks or other

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banks, Like how do you deal
with what is a very real liquidity crunch

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that can turn quickly into you know, bigger issues for the bank because we've

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seen i mean bank runs driving the
this with the issues at STP or first

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going not just not just the kind
of deposit round to the liquidity issue certainly

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from the center. What are people
doing to respond to that? Yeah,

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you know, I think the biggest
response is that they're being more cautious with

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their lending, and so maybe the
impact of what the FED is doing and

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so forth, and these recent bank
failures have really put a slowdown or cooling

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in regards to the amount of lending
that banks are looking to do. So

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in regards to liquidity and protecting that
the liquidity that they have, they will

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they only lend of their existing customers
or they'll only selectively take on new customers

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in order to protect their existing book
of business and kind of ride this out.

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But I would say, you know, there's maybe two things to kind

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of gleam from the recent bank failures
and so forth, and that is one

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is when you look at your typical
community bank, I don't think there's going

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to be a run on any of
those deposits for your institutions let's say below

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ten billion. I mean, we
know a lot of the customers. We

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reach out to them if there's anything
maybe we learned in the Great Recession is

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diverse. Deify your deposit base as
well as your loan book of business.

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Right you can't just be concentrated and
let's say construction lending or something. So

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now there's a focus is to can
we keep and maintain and retain our existing

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liquidity, can we grow it in
certain areas, and can we diversify it?

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And so all that I think pertains
to different particular strategies. And in

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some cases, if you're stuck,
and if you're a small bank in a

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small community, you don't have a
lot of options. I mean, you

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can go online, but that opens
up a whole nother plethora of kind of

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risks in terms of gathering liquidity.
But diversification is definitely forefront in terms of

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the quality of liquidity. Yeah,
it's interesting. I do think it's interesting

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question for the community bank because they
do have I would say the online deposits

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are also the scariest to me because
they are the least stable, most likely

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and the most price sensitive. So
though you know, if you're trying to

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restrict lending for liquidity, but also
fighting a battle to maintain deposits that are

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very rate sensitive as many online mean
people are going sayings accounts to stats,

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who's extra twenty five fifts for me
on all my money? Like that's a

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you can't you can't take that money
and to not lend it. That's a

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great way to go bankrupt if you're
taking that money at four or five percent

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and then sitting on it is cash, not put it out the door to

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higher yield, Like that's that's a
good business model. No. And on

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top of that, if you're a
smaller bank, your customers might be moving

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to a large institution, right because
they perceive they're gonna want maybe they don't

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want six different bank accounts with two
hundred and fifty thousand or something of that

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nature. There's going to go to
a too big to fail bank and and

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make it up and put it all
put all on there, put it.

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When you talk about the restriction in
lending, do you see that shifting?

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I mean, like, because we've
near what most people think is something like

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the end of the interest rates rising, it feels like the interest rate risks

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that really hit some of the recent
bank failures hard is on the other end.

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I mean, you're unlikely to originate
assets today. They're going to be

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worth substantially less assuming they perform a
year or two than they are today because

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interest rates are probably not going a
whole heck of a lot higher. They's

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really not going five hundred basis points
higher, and they're probably coming down.

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Are you see is as we start
to see some signs of a positive motion

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in the economy and maybe the nearing
of the interest rates heights, some opening

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up of that lending or changing strategies
on that front. Yeah, except that

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I you know, banks are generally
slow learners and they're slow movers. This

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is not the entrepreneurial community. And
so the fact is is that they're slow

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to this game. So they were
slow to raise deposit rates, and they're

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getting there quickly obviously to protect the
liquidity. Now they're going to take up

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they're going to take a pause.
Now. The one thing that I would

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suggest, which I do to all
bankers, but bankers should know this.

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You don't bet on interest rates going
up or down. You're going to manage

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your portfolio within a certain bandwidth.
So you're not. You may not be

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gaining everything you can gain in an
up or down market, but you're not

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going to lose everything in an upper
down market. So you need to be

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prudent in terms of how you manage
that. And maybe SPB is a great

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example of not doing that well.
And that's just fundamental asset liability management and

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protect your up and downside. And
don't bet the charter on you predicting interest

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rates because obviously you can be wrong. And given the way the world is

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today, you know, somebody lobs
a bomb over somebody's border. The game

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changes overnight, and so why we
think we're at the top of the rate

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cycle. And I would agree with
you from a momentum standpoint where we're getting

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there. I wouldn't bet everything on
it. No, I wouldn't bet in

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everything on anything that's not the smart
not the way I play the game anyway.

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Interesting, But I want to hop
to your second topic, this topic

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of cybersecurity. You talked about top
of mind and the investment. I'm curious,

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what are the trends you see,
what are people doing? It certainly

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is I think one of the hardest
problems because it's an evolving landscape it's not.

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I mean, bank robberies occurred in
a certain way, but but cybersecuritys

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have tended to shift approaches much much
more rapidly. And I'm curious how you

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see people dealing with that and what
the trends on the horizon are. Yeah.

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Well, some of the big trends
in banking and community banking particularly is

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if you're going to look at your
core system, are you moving into the

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cloud? That's going to be one
thing. Do you have the right core

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system to start with to meet your
needs? And are you moving into the

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cloud. So, just as a
basic of what that might mean for someone,

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and that is so over let's say
the course of a bank's history and

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so our sunrises like this, Right, we've got applications and things layered on

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top of applications built up over thirty
years. You don't want to patch all

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that. I mean, you really
need to start narrowing everything down. You

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need to simplify and get robust.
But also you need to automate your patching

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and your vulnerabilities that are coming out
weekly. So you really need to stay

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at a You don't only have to
address everything that you have right and get

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a steady state then you just got
to maintain it. So every Tuesday it's

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you know, patch Tuesday or release
Tuesday on what they call it in the

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IT world. You've got to be
able to sustain whatever that number is,

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and you don't know what it is
from week to weeks. So there's definitely

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a pulse to this and it requires
you being on top of it because obviously

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the hackers, the bad guys,
whether it's a government or whether it's some

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other organized group, they're getting better
and better. So making sure that not

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only from an infrastructure standpoint, you're
there, But the hardest part is your

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people. Right what's coming in on
your email server every day? What are

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people clicking on? I have to
tell you our IT department it become masters

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masters at testing us in terms of
phishing, So every email and they're just

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I am brainwashed every email. I'm
suspect though, and so but that's the

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psychology you need to have. It's
a bit like a bank robbery. To

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go back if every morning you go
to the bank and the procedures that you

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follow to get into banks safely,
If you think there's going to be a

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bank robbery and you practice that,
you're good at it. Right, because

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your awareness is there. So that's
the type of culture that you need to

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have, I think in a bank
these days in order to really protect the

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institution. So you need the hard
stuff, but you also need to soften

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the people to be good. That's
challenging. I want to go back because

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you said at the beginning, ask
yourself the question are you in the cloud?

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How do you see the cloud relating
to this question of cybersecurity? Is

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that something you see as an advantage
a disadvantage, something you recommend doing,

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like you brought that up, and
I really to the end of your thought

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on what the you know, the
pros cons of thoughts around the cloud and

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how it relates the cybersecurity are Yeah, you know, I would say the

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one thing that I probably should say
is as you go to the cloud,

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you're really going to look at all
your applications that you're going to put up

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there, Right, You're going to
scrub everything that you're you're using today,

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even if it's something fairly simple,
you're going to need to do some risk

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assessment on it. So there's you're
just at this place in space that you're

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like, you know, particularly if
you're a bank in the fintech or let's

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just say in the consumer lending space. You know, these are these are

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programs that have scale to them,
So you're going to want to be able

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to scale up your capacity as well
as you're going to need the sophistication in

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terms of the data mining you're going
to want. So you do need,

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in my opinion, the economics and
capabilities of being in the cloud. So

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you have the capacity to do large
volumes of business, but then you also

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have the ability to manage and oversee
the security around that. So I think

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there's a multiple facet to cloud computing
as well. As we were a bank

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that hosted our data center on prem
and so now we're exiting that business.

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We should not be in that business. There's better places that are more economical

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and safer to do it. Interesting. Yeah, I think this shift to

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the cloud is to your point,
about one of the benefits of the cloud

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or else fourcing and somebody is it's
just like that patch Tuesday becomes somebody else's

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job. Yeah, is somebody who's
doing lots of institutions, somebody who's doing

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it at scale. To your point, people who are kind of expert in

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that particular in that particular skill.
That's a pretty pretty valuable capacity for you

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to free up your resource for the
other things that you need to focus on

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exactly. Can I ask you one
other topic I'm really curious about, which

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is you know, I've been following
the emergence of these generative AI tools.

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It's really fascinating time. I'm in
the AI space a little bit, so

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I just like every day I'm on
like five newsletters and I it's I've never

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seen a pace of innovation like this, And recently one of the kind of

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originators of the neural network left Google, and you know, I want to

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speak more freely about the risk in
his most immediate rights. It's not one

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of these existentials. It's the ability
to have much more realistic misinformation, false

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information kind of lying about things online
in a very convincing way. And it

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occurs to me to things like synthetic
identity fraud, how we fool people into

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social engineering kinds of issues become like
really possible in a scalable way, in

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a very scary way with these And
I'm curious that's something you've seen because it's

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it's a little different than the traditional
cybersecurity threat, right, It's a little

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bit more in the social engineering,
you know, either synthetic identity fraud or

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first person fraud, or I've got
somebody who's being fooled into taking some action

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that they're not intending to take with
their bank accountant, wire money to the

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Nigerian prints or whatever. It always
is that it's going to give you your

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nice return. But are you seeing
any emergence as these tools or is that

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something you're watching because it feels like
the capabilities of those tools that have all

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so rapidly and now I'm going,
well, where is it going to pop

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its head up and be a danger
or risk? And how do I think

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about dealing with that? Yeah,
it's a great question, and it's a

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great it's real. It's all a
real threat. And so I would say

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Sunrise, particularly since we are a
bank to FinTechs and act as banking as

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a service, if you will,
in a lot of regards. So we

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do have obviously protocols and procedures and
so forth in which you're going to either

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you're going to try to affirm the
identity of somebody, right, and so

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that is not only at the origination
time when somebody actually gets an account or

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gets a loan, but then look
atting at the characteristics afterwards. So are

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you monitoring alerts? Is the activity
in the account typical of this or is

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it outside? What are your alerts
telling you is are you refining your alerts

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In the case of Oh, I'm
coming online to do a business account,

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Well great, why do you have
all these micro transactions? That's a typical

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And so you need the help of
other AI tools and so forth in which

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to alert you to abnormal behavior that
you can if you miss it on the

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very front end, if you get
fooled by the social engineering, if you

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will that you can identify characteristics that
are not common an account like that,

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and so there's multiple lines of defense. I think when it comes to the

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synthetic identities, and we're going to
have to get better at identifying them,

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and so there's going to have to
be you know that multi factor authentification is

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going to have to become more and
more robust, may have to be biometric

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in some cases, it's going to
be different. And I think that we're

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going to have to implement some of
these new tools quickly because once you open

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the door and something works, it
will be exploited. Significantly and quickly.

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Hey there, Sarah butch here,
VP of Consumer Lending at First Federal Bank

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of Kansas City. Three years ago, we had plans to improve our lending

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to load to modern income communities.
Fast forward three years, we've grown our

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lending distribution to LAMI communities by over
ten percent thanks to Upstart. If you'd

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like to learn more about fb case's
journey with Upstart, check out the free

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case study at upstart Forward slash Lenders. That's upstart dot com Forward slash Lenders.

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All right. Back to the show. And I think that we're going

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to have to implement some of these
new tools quickly because once you open the

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door and something works, it will
be exploited significantly and quickly. Interesting,

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and how do you think as a
bank that supports FinTechs? How does that

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you think change your risk profile?
Because you've got kind of different brands,

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different acquisition sources, different partners doing
different things, Like how do you how

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do you think about how that changes? I mean, in some ways you're

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maybe more cognizant of it, but
also more at risk and differing ways than

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maybe a more traditional bank that doesn't
have those kind of partnerships. How do

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you think about managing that risk as
it comes not just in the customers with

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the direct relationship with your institution,
with those coming through some of the fintech

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partnerships you have. Yeah, you
know, the way that we think about

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it is really from the very beginning
of the relationship that you're looking to develop

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with a particular fintech, if you
will, are we values aligned? Like

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are we trying to be a hero
the same consumer? Let's say, is

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our goal to provide some value and
have the return to be reasonable. It's

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not just extraction of value. I
think coming at things from at the very

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beginning of what is good for the
consumer or the ultimate user of the product

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is a very intentional type of screening
that we're going to look for At the

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beginning, it's really kind of a
values based screening. It really leads into

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the next I would say, big
filter as we take a look at our

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risk, and that is how does
that particular fintech think about compliance? I

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mean, I can give you some
examples of whether it's Blue Ridge or most

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recently across River, there are others
that are likely to find out soon that

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are under regulatory restrictions or compliance restrictions. So compliance will win the day in

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the long term of a partnership.
But it also that compliance mindset not only

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needs to be at the bank,
it needs to be in the fintech partner

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and the two teams have to work
together. It's not the physic compat of

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relationship about every little detail that's not
going to work. The idea is to

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run a safe and secure product or
financial service or offering, and in that

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particular space both have you have a
sustainable business as a result. And so

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I do think compliance is one of
the aspects where the intentionality and integration of

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it between the two partnerships ultimately is
the long term benefit. It may seem

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like it's a bit more from a
financial burden upfront, but the long term

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tail certainly pays off because you'll win
the day, you'll be the one in

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the marketplace, and you'll have a
business that is sustainable. Got it like

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it? So, if you were
going to give advice to any bank looking

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at fintech partnerships and being effective in
that space outside of the compliance is key.

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How do you think about, you
know, finding the right partners finding

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that alignment, Like, how do
you measure that thing? That feels like

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the kind of thing that people you
know. It's like, it's like the

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thing when I ask my kids if
you you know the question, they know

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the answer, they know what I
want to hear. That may not be

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the truth answer, but anyway,
And then you got to figure out the

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like, how do I really understand
if I'm comfortable with that answer, if

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I believe what's being said there,
or I want to ask the questions?

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How do you think about finding the
right partners and managing through that challenge in

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your space? Yeah, you know, I'll put it this way. Everything

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up until right now in this moment
was just practice. It was just practice

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for what's going to come at you
tomorrow. You might get the greatest opportunity,

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or you may find one of your
partners did something horribly wrong and you're

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going to have to adapt and adjust
and you're going to learn. And so

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every day is game day, but
it's a learning day in which to take

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it to the next one, to
say what opportunities and what threats are being

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presented to me? And I think
of Sunrise as an opportunistic bank that wants

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to do good. So we're looking
for people that obviously share the value component.

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We're also looking for ones that have
an abundant mindset that want to scale

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and do and have the ability to
do that really well. That is just

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a great combination for us. That
is when we dive in all in,

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because we know that there's kind of
a win win way scenario to be had

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here, and it's going to be
sustainable from the regulatory side, from the

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financial side, and you're gonna have
great stories to tell about consumer customer impact.

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And as a result, he got
a good gig. All right,

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So one more question on this topic, which is you know you earlier describe

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banks as not the most entrepreneurial,
fast moving cultures, and then you gave

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me an answer right here, this
like every day is a learning gay.

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So how do you think about shifting
or at least building a culture that is

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accepting of that in an industry where
typically, you know, there's a little

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bit more of the Hey, we
can go slow as long as we get

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it right. And there's here I
think a little balance like we need to

356
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learn how to do it right,
but also move quickly and to adapt and

357
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to learn and adjust on the fly. And I feel like that's culturally different

358
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than most of these financial institutions are
used to operating, and I'm curious how

359
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you build a culture or a set
of incentives that empower people to do that,

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because it doesn't feel like the natural
outcome for an institution, for a

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bank, for a credit union to
behave that way. And yet I think

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you're right. There's probably critical for
the future that they learn to do it.

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So you are correct, And so
you're taking bankers who, yes,

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I think the profile of being more
conservative and slow and careful and deliberate and

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wanting to be right over taking some
risk. I don't think that luxury exists

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really anymore from a strategic risk standpoint, and I would tell you that the

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regulators are very focused on smaller community
banks as to what is your strategic plan

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because the plan of not doing anything
isn't a plan. That's a plan to

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either go out of business or to
ultimately sell the organization and maybe not at

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it's high its value. And so
as a result of this, bankers are

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going to need to think more progressively
an entrepreneurial and they're going to have to

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quite frankly, the person sitting in
the leadership chair, as well as the

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leadership team, including the board of
directors, and we can talk about that

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dynamic. They have got to encourage
and live that entrepreneurial the ability to take

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risk, the right risk, the
risk that you have an appetite for,

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get rid of stuff that you don't. But you're going to need to take

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risk. You're going to need to
experiment and invest in what your future is.

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If you don't do that, I
just don't think you have a franchise

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anymore. You stop growing and as
a result, costs keep going up,

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compliance becomes more. You will not
have the ability to sustain yourself and obviously

381
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you're losing franchise value. Whether you
make some money a little bit or not,

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you really whether that charter retains itself
in time is very suspect. And

383
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so the world of banking has changed, the economics of it has changed,

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00:24:26.799 --> 00:24:30.640
and so do bankers and the way
that they're managed and run. And it's

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00:24:30.720 --> 00:24:34.279
I'll give you one tip where I've
done some consulting work. Sometimes you have

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a management team that is very excited
about trying new things, but you don't

387
00:24:37.279 --> 00:24:41.160
have a board of directors. That
doesn't work. Sometimes you have a board

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of directors that's very excited about doing
things, but you don't have a management

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00:24:42.759 --> 00:24:45.559
team, and that doesn't go anywhere. In fact, is you need both

390
00:24:45.559 --> 00:24:48.960
of those to run in parallel,
to change the culture of the bank,

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to hire the right people, to
fire the wrong people, and move the

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organization forward. Not easy, but
it's necessary. It's necessary. I just

393
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want to love You've used a phrase
franchise value a few times, and I'm

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curious how you think about where a
banks franchise value derives from. Days said,

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00:25:07.039 --> 00:25:08.480
you know, I think you used
to have a sense of like physical

396
00:25:08.480 --> 00:25:14.880
footprint of retail branches equal coverage of
some consumer base, equal some durable advantage,

397
00:25:14.880 --> 00:25:17.480
and that I think in the current
world, like it's clearly not the

398
00:25:18.200 --> 00:25:21.039
not the bottom though, right,
it's not your branch footprint. And how

399
00:25:21.039 --> 00:25:23.839
many people are within how many miles
of a branch? And how do you

400
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think about what really drives the franchise
value of a financial institution today? What

401
00:25:30.359 --> 00:25:32.960
is it somebody should be focused on
to drive up their franchise value? Where

402
00:25:32.960 --> 00:25:37.039
does it really derive from? You
know, it's probably as relevant today as

403
00:25:37.079 --> 00:25:40.640
ever it ever has been. We
lost sight of this in the past number

404
00:25:40.640 --> 00:25:42.839
of years, but a huge portion
of the franchise value of a bank is

405
00:25:42.880 --> 00:25:47.599
in the deposits. The deposits always
sell at a premium. The loans always

406
00:25:47.640 --> 00:25:49.319
sell at a discount. Right,
You're gonna look at your loan book and

407
00:25:49.319 --> 00:25:52.200
then people are gonna go that it's
a bad loan, that's a bad loan.

408
00:25:52.240 --> 00:25:53.720
They're going to pick things out or
they're going to discount. Now,

409
00:25:55.079 --> 00:25:59.279
the better quality of portfolio that you
have on the loan side and investment side,

410
00:25:59.519 --> 00:26:03.680
the few the discount, the higher
quality of your deposit portfolio. It's

411
00:26:03.680 --> 00:26:10.480
diversification, it's characteristics in terms of
both stability and diversification and growth. That

412
00:26:10.680 --> 00:26:14.680
is a key. So if you
take Sunrise, we have one of the

413
00:26:14.720 --> 00:26:18.400
component of our deposit portfolios certainly local, but it's also in the payments business

414
00:26:18.680 --> 00:26:22.920
as well as fintech. But let's
just pick apart prepaid cards for a second.

415
00:26:22.279 --> 00:26:26.400
So I don't know, we have
fifty million prepaid cards. Those are

416
00:26:26.400 --> 00:26:33.000
contractually in the bank, and they're
in you anywhere from five dollars to maybe

417
00:26:33.119 --> 00:26:37.359
five hundred dollars on the high end, and there's millions and millions of them.

418
00:26:37.480 --> 00:26:41.200
Those deposits aren't going anywhere, so
it's a very stable base. And

419
00:26:41.240 --> 00:26:44.799
so but it just adds to the
diversification of the local deposits that we take

420
00:26:44.799 --> 00:26:48.880
in from businesses and consumers and so
forth, and so again, different models

421
00:26:48.880 --> 00:26:52.799
in which to get that liquidity.
But in that base, the franchise value

422
00:26:52.839 --> 00:26:56.839
I think is centered really on that. The next thing I think that we

423
00:26:56.880 --> 00:27:00.480
will see in the future in terms
of franchise value is where you alluded to

424
00:27:00.519 --> 00:27:03.599
do. There is there's some type
of IP that the bank has in terms

425
00:27:03.599 --> 00:27:07.039
of a business model. I think
more and more, whether it's the use

426
00:27:07.079 --> 00:27:11.240
of AI in some type of way
to assess credit risk, or to move

427
00:27:11.279 --> 00:27:15.960
payments faster and more accurately identify someone
all of that, I think IP will

428
00:27:17.000 --> 00:27:21.200
become more and more of a component
of the value of a bank. Interesting,

429
00:27:21.440 --> 00:27:22.839
Dabe, this has been a fascinating
conversation. We've we've ranged a lot

430
00:27:22.839 --> 00:27:26.279
of different places. I got three
questions I'd like to ask everybody at the

431
00:27:26.440 --> 00:27:30.720
end of the podcast I'm going to
throw into you now. The first one

432
00:27:30.799 --> 00:27:33.720
is what's the best piece of career
advice you've ever got? The first one?

433
00:27:33.200 --> 00:27:36.960
Show up to show up. If
you show up, great things happen.

434
00:27:37.319 --> 00:27:40.559
But I don't know what I personally, professionally volunteer. Do you name

435
00:27:40.599 --> 00:27:42.960
it? Show up good, great
things happen. I love that. I'm

436
00:27:44.000 --> 00:27:48.359
reminded so often when I get good
advice and advice the best advice isn't hard.

437
00:27:48.559 --> 00:27:51.519
It's just not easy. It's not
complicated, it's not sophisticated, it's

438
00:27:51.559 --> 00:27:55.599
not difficult. It's just not easy
to execute. It's simple yet challenging.

439
00:27:55.599 --> 00:27:57.279
And I think that's a good example
of advice. It is. I mean,

440
00:27:57.400 --> 00:28:00.640
i'd have to tell you. My
board would always question me. They're

441
00:28:00.640 --> 00:28:03.839
like, Dave, why are you
going on so many trips? Like why

442
00:28:03.880 --> 00:28:04.720
are you out in DC? Why
are you in Chicago? Why are you

443
00:28:04.799 --> 00:28:08.000
that? I'm like, I learned
something every time in a trip. I

444
00:28:08.039 --> 00:28:12.640
meet new people every trip. Trips
equal deals, and I go it's not

445
00:28:12.759 --> 00:28:15.440
easy. I got to do the
full time job, but I also got

446
00:28:15.440 --> 00:28:18.160
to travel. But I'm telling you, show up, good things happen.

447
00:28:18.440 --> 00:28:22.279
When you show up, good things
happen. All right. Second question,

448
00:28:22.279 --> 00:28:25.519
what's the best advice you've ever gotten
about that kind of consumer banking space in

449
00:28:25.559 --> 00:28:30.119
general? You know, I would
have to say compliance wins the day.

450
00:28:30.279 --> 00:28:34.240
It really if you have compliance programs, you will have a business model.

451
00:28:34.279 --> 00:28:38.640
If you don't you really don't have
a business compliance wins. Compliance fins a

452
00:28:38.640 --> 00:28:42.200
lot of chief compliance officers cheering about
how to answer you up and compliance is

453
00:28:42.240 --> 00:28:45.799
sexy at Sunrise side. It's kind
of plant anyway. Well, but I

454
00:28:45.799 --> 00:28:49.599
think it speaks to the desire.
That's an interesting comment because I think if

455
00:28:49.599 --> 00:28:52.480
compliance wins the day, then there's
a lot of advantage of being good at

456
00:28:52.519 --> 00:28:56.559
compliance making compliance. You know.
I remember when I was first getting into

457
00:28:56.599 --> 00:29:00.279
my career, somebody's told me I
was I was a technologist. I said,

458
00:29:00.480 --> 00:29:02.640
you want to be in a technology
business, and this guy wasn't,

459
00:29:02.960 --> 00:29:06.000
but he kind of said, when
you're not, you're cost center, and

460
00:29:06.000 --> 00:29:07.400
when you are, you're a profit
center, and you want to be on

461
00:29:07.440 --> 00:29:11.599
the value add side, not the
hurdles and cost side of the business.

462
00:29:12.039 --> 00:29:15.440
I think very often compliance is seen
on the hurdles and costs side, and

463
00:29:15.480 --> 00:29:18.480
if you can turn it into a
value side, make compliance sexy something that's

464
00:29:18.480 --> 00:29:21.920
like a value add for the business. It's a very different way to think

465
00:29:21.960 --> 00:29:23.519
about it. But if you think
compliance wins the day in the end,

466
00:29:23.559 --> 00:29:26.480
and it's a pretty strategic thing for
you to do as an institution to turn

467
00:29:26.519 --> 00:29:30.400
compliance into that kind of function,
yeah. One ass and test for that

468
00:29:30.519 --> 00:29:34.440
is do you bring your compliance team
to the sales to the sales process because

469
00:29:34.720 --> 00:29:38.519
a lot of the hardest questions are
going to be around compliance with the partners

470
00:29:38.519 --> 00:29:42.960
sitting across from you, and if
your compliance team can answer it accurately with

471
00:29:44.599 --> 00:29:48.319
potential solutions, then it's a big
key to selling. It's a big key

472
00:29:48.359 --> 00:29:52.440
to the sale because generally it's seen
as that obstacle. But you can see

473
00:29:52.440 --> 00:29:56.480
those options and pathways to do things
compliantly, but get it done. That's

474
00:29:56.519 --> 00:30:00.799
the key. I love it.
And my last question, what's one bold

475
00:30:00.799 --> 00:30:03.440
prediction for the future? Sweking,
we can bring it back and compare notes

476
00:30:03.480 --> 00:30:07.119
on how this one turned out.
Fantastic. My bold prediction for the future

477
00:30:07.400 --> 00:30:11.440
is, I think AI is going
to be awesome for good. I think

478
00:30:11.440 --> 00:30:15.880
people are there's so much focused on
the negative. I see so much opportunity

479
00:30:15.920 --> 00:30:21.920
for AI to do great things from
an inclusionary standpoint, providing access to credit

480
00:30:21.920 --> 00:30:26.799
where it wasn't before, marginalized groups
getting into the financial institution, helping people

481
00:30:26.839 --> 00:30:32.240
save avoid predatory products. I think
AI for good is way underrated. I

482
00:30:32.240 --> 00:30:34.640
think it's going to be fantastic.
All right, that's a nice optimistic note

483
00:30:34.680 --> 00:30:37.039
to end it on. David,
thanks for joining us today. I really

484
00:30:37.039 --> 00:30:42.000
appreciate you making the time. Upstart
partners with banks and credit unions to help

485
00:30:42.039 --> 00:30:47.920
grow their consumer loan portfolios and deliver
a modern, all digital lending experience.

486
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As the average consumer becomes more digitally
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487
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bank does too. Upstarts AI lending
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near zero, Upstarts all digital experience
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business by visiting upstart dot com Slash
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497
00:31:45.599 --> 00:31:51.160
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