Banking on Community: Meeting the Needs of Underserved Consumers

0:02 You're listening to Leaders in Lending from Upstart, a podcast dedicated to helping consumer lenders grow their programs and improve their product offerings. Each week, here, decision makers in the finance industry offer insights into the future of the lending industry, best practices around digital transformation, and more. Let's get into the show. Welcome to another episode of Leaders in Lending. I'm your host, Matt Snow. This week, I'm joined by Eric Fiala, the Chief Corporate Responsibility Officer for Key Bank and also the CEO of the Key Foundation. Eric, thanks for joining. Yeah, happy to be here. Thanks for having me, Matt, absolutely So, maybe get started by telling me a little bit about how you ended up in those positions. I think some previous guests we talked about, you know, banking isn't the thing you dream up and doing as a kid, and it's kind of an accidental career. But maybe lead me through how you got to those roles at Key Bank.

0:58 Yeah, happy too. So I actually started at Key as an intern, graduated with a finance degree, and spent ten years here in our corporate finance team. I was had a few different positions there, but was the CFO for our consumer banking business, so really our branch based, branch based business, and then ultimately left that role to lead our business analytics function, which was everything from market research to marketing analytics, customer targeting, and ultimately wanted to do something that resonated with me a bit a bit more personally and raised my hand to move into what we called our corporate responsibility function.

1:43 And have been their sentence, and so. I ultimately started leading the function in kind of early twenty twenty one, late twenty twenty and again just feel like I'm doing the right work, the work I was meant to do in the in the place I was meant to do it. And so been a long journey twenty two years now at KEY with a little bit of background that really helps me understand our clients, understand our businesses, but then translate it into how do we leverage that information to bring our purpose and values to life. Great, Yeah, that is quite a journey, and I would imagine the analytics background could help you in this space.

2:27 I want to maybe come back to that an area that can be ambiguous around you know, the cra or how do you help in a community, how do you like, how do you even measure that, like seems like that would be a really interesting combination of skills to bring that role. Yeah. Absolutely, I think you know, we we start as most do, by measuring you know, the activities. So what are the you know, number of dollars we're putting in a market, the number of loans you know, in each of the communities we serve. But I think where. We are focused now is really on the transition to understanding the impact of those and so thinking of it, you know, not just as a loan, but as you know, creating a new homeowner, someone who can build generational wealth over time.

3:17 And what does that look like? You know, as we implement new programs, how does that change you know, the trajectory of our business relative to where it's been before. And I think you know, other things like our philanthropic investments or grants, you know, with with our larger grants, we work with the receiving organizations to really understand the targeted outcomes that they're looking to have, and then we check in with them regularly to understand, you know, are the investments we're making driving the outcomes and that can be you know, through things like food service, financial education, scholarship support, et cetera. There's a number, but then trying to pull that all back in together to really help tell the story and understand how those outcomes should shape our investments going forward.

4:06 I think that's really the next turn for us. Yeah, that's a great point. And I being a data person myself, it's easy to get focused on the number and try to think about the scale or the return or those metrics. But it's I think it's really important to always come back to those stories. Like you were saying, that these are people you're directly impacting and stories you're helping improve. And I think in financial services we have a great opportunity and responsibility to do that in the right way. It's always good to anchor back to that. And you know, it got me think about an earlier conversation we were having and kind of getting ready for this recording about you know, the role of a bank in a community and how that's changed over you know, hundreds and hundreds of years. Even with the what I can remember, it's kind of a Christmas tradition for my wife and I to watch.

4:53 It's a wonderful life. I don't know if that like has a warm spot in your heart as being someone in banking for a long time, but how you know, one of the things that you've seen over your career in terms of how a bank functions in a community, you know, the the role it plays, you know, whether just by the nature of being a bank and being having a physical presence or I get being involved in the financial wellbeing of those community members. Yeah so, so I think nearly every major, if not every major life event or impact has an associated financial implication, whether that's you know, having a child, sending someone off to college, buying your first home, starting a business, There is a financial component to each of those types of events, and I would say, you know, banks have the unique role of helping people through those helping people understand the implications on their you know, long term financial situation, you know, as those life events occur, and to help prepare for those or the course of over the course of time.

6:03 I think. What's perhaps changed about the role of banking, or maybe is more of a focus today than it has been historically, is around really understanding communities from a system's perspective and identifying opportunities that you know, the bank can play in supporting, you know, as stronger kind of more thriving ecosystem for our neighbors and our neighborhoods. I think, you know, whether that's looking at broader based kind of economic or demographic data understanding, you know, local government priorities and initiatives that are really rooted in the needs of the community. I think that's where the role of banking has changed. And how do we come together, often frankly in the industry as partners to support local efforts that are trying to drive some of the systems change to help create the thriving communities that we all want to be a part of.

7:08 Yeah, that's interesting, and I've I've had a couple other guests on and we've talked about maybe at a more national level some of those changes or you know, working with agencies or collaboration and figuring out trade groups or associations and ways to do that. But so, how how do you do that at a local level. That's a good point about the systems and the local governments and kind of the infrastructure that develops to solve those immediate needs. Seems like there could be a lot of nuance in differentiation depending on the size of the community, the earl or urban nature of those communities. How do you get you know, into that the DNA of those local areas. Yeah, so I think it starts first and foremost with listening. You know, uh, first with clients. What are they telling you?

7:52 What are the people you're working with or that are coming into your branches every day saying about the community where they live. I think the other piece of it is, you know, we work to establish community partnerships so people that we know you know, are very focused on serving the needs of the communities, Understanding what they're saying, what they're seeing, and then what they're doing to address some of those issues, and really thinking through that with a lens of where might we be able to play a role to help support I think, you know, whether it's community listening sessions again looking at just some of the demographic trends, those are all helpful. The other thing I would say is really making sure that for us, we're involved with local government, understanding many cities have plans and priorities, they're making investments to address the most critical needs within a community, and so really having a perspective on what's happening there and you know, city council and county councils and others. Helps us understand you know, what do the leaders in a local community see as being the priorities or priority issues within a given community.

9:12 Yeah, and you mentioned, you know, using kind of the branch as a channel for gathering some of that feedback. That's interesting. Have you seen that change or the way consumers are using branches now versus you know, even pre COVID. Was there a dramatic shift for you guys in that perspective? And how do you think about like digital channels and keeping in touch with customers. Yeah, so I think, you know, our trends are similar to others. I think we're seeing in branch transactions decline. That said, I would go back to my earlier point, which is when the life events happen. I think people still desire to have. An in person interaction, to sit kind of shoulder to shoulder with someone and talk through what they're facing, what their questions are, what they're thinking about, and so in the those most pivotal moments in someone's life, I still think people are coming into branches to have those conversations.

10:07 It's funny because I was reading an article recently about where do people go for financial advice again, thinking about how the role of a bank or a branch has changed and evolved over the course of time. It was about half of the people that were surveyed this was a bank great survey from last year had sought some kind of financial advice in the past year. The number one area was friends and family where they got that advice. But then I thought what was kind of crazy was similar ratio sought advice from financial advisors versus social media. I would argue, maybe there's more veracity in one of those channels. Versus the other. But you know, does that resonate with what you've seen or what kind of things are people coming to the bank for advice for?

10:53 How are they solving these problems? Yeah, I think it's you know, it runs the gamut. Really, you know, I would like to buy, you know, my first home, but I don't know, you know, if I'm prepared to do that financially, I don't know, you know, do I have enough of a doubt payment saved, or what's the monthly payment going to be or sending my you know, kids to college and how am I going to support them over time? Or you know, having a baby and and want to start saving or I think, you know, the other thing we hear and see is just how do I withstand some sort of financial emergency or shock, you know, unexpectedly need a new car or medical expenses are another big one, are caring for aging parents.

11:41 And I think so there's definitely no you know, one size fits all solution. I think it's how do you make people, in particular people that have not necessarily had that kind of history of trust with financial institutions. How do you welcome them in in a way you know that feels good to them, where you can start to build trust and you know, help them work through those problems or you know, questions. Over the course of time. Gotcha any thing innovative that you guys are working on or trying to use new technology or even a I know that seems to be a big topic lately, whether it's large you know, language models, kind of those learning from your data, anything you guys are working on in that space.

12:29 I'm not well versed in our AI capabilities, but I think some of the things that we're doing around building trust in communities are finding new ways to bring the bank to the community. And so historically you know, I think. We may have relied more heavily on foot traffic people coming in or calling in with questions, and now we're looking at ways we can help people understand what our capabilities are and build those relationships before they ever set foot in a branch. And so I think one of those is we're working with a company called Mokafi to bring kind of banking clinics to different parts of the neighborhood, to historically underserved neighborhoods. And they are in places, you know, that are central to a community, generally community gathering spots, and we're saying here's a topic. For example, we're going to talk to uh, We're going to host a session that's focused on the black beauty industry and you know, help people understand that are running salons or other things, you know, potentially out of their home. You know, what opportunities exist for them to grow their business, What are some of the basics you'd want to put in place, and and you know, we have products and services that can help with that. The partner we're working with, Mogaphi, does as well. And then we also bring to those conversations other community organizations that can help those participants understand

14:05 what are some of the other services and capabilities available to them within a market. In certain cases, we've brought our branch managers to conduct individual financial wellness reviews, where someone can do that without ever having to step foot in a branch. They get to go to a place where they're comfortable with, They get to be with people that they're comfortable with and really start to build that relationship over time. Wow, that sounds like a really interesting approach, kind of meeting people where they are and you guys playing facilitator or a hub for other services they maybe wouldn't have otherwise known. Is that something you have rolled out widely or just kind of testing now, I would say more in the test phases. So we've hosted three or four events so far, but they've been really successful. People have been very pleased with the outcomes.

14:57 And I think what we sound is that in certain cases, the more targeted topics are really well received. People want to know that they're going to come and hear information that's relevant to their specific situation. Okay, great, well I'd be curious to hear how that goes. Hey, there, former host Jeff Kellner here to let you know about an exciting opportunity to strengthen your understanding of artificial intelligence and financial services. If you want to better understand the fundamentals of how AI models work and how they will impact the financial services industry, your in luck. Upstart is launched an online course and certification designed to do just that. This course will give you the knowledge you need to leave the conversation about how your organization can best leverage and manage this revolutionary technology. If that sounds interesting, check out the course as it's currently free for a limited time. You can learn more at upstart dot com slash AI Certification. Again, that's upstart dot com slash ai Certification. Thanks, and now back to the show.

16:00 Maybe pivoting a little bit because I know, when we've talked before more about the Community Reinvestment Act, some changes to that last year that are you know rolling out this year hopefully brings more transparency and ease of kind of managing that system. How's that been for you guys in terms of managing that transition? Good. I think what we are looking at early on is any major technology changes we would have to make to track information and data differently. But beyond that, I. Think outside of the administration of it. There are some really exciting changes to what qualifies this community development I think some more specificity and so ultimately, you know, we're really pleased to see, you know that a set of activities you know will count if you will, towards the CRA in places that are you know, that are really needed.

16:59 So the addition of you know, climate resilience initiatives and low low income communities, I think more specific callouts for support of minority depository institutions or community development financial institutions. Are places where you know, we have. Been investing over time, and that that clarity of you know, the community development purpose should help to expand investments you know that are needed across the country. Yeah, I totally agree, and I think there's even some of those changes maybe help with the idea of the assessment area or including the idea that there's a maybe a digital footprint as well as a physical footprint within a bank's network. Right, Yeah, absolutely, So you mentioned a few others is going to turn into like an alphabet soup here with M d I, c d FI and CRA.

17:50 Maybe talk a little bit more about your involvement with those types of institutions. With or maybe even start with, what is a md I or a cd FI. Yeah, So, an md I is is a minority depository institution. It is a bank that is more than fifty percent owner controlled by by minorities. And a Community development financial Institution or CDFI is an organization that is a certified community development lender that really is looking to kind of close the gap between where traditional financial services start, so you know, predominantly serves historically underrepresented or you know, vulnerable communities.

18:39 Our work with CDFIs and MDIs has really grown, I think over the past. Couple of years. Namely, the major item I would highlight is that we have placed fifty million dollars of deposits with minority deposit institutions as part of a commitment we made being a founding member of something called more alphabet soup for you, the EOC, the Economic Opportunity Coalition. And what's important about those deposits is that during the pandemic, many MDIs received one time funding to make additional loans in communities where they were really needed. But to do that and to lever those investments up, it was important that those MDIs had a stable deposit base. And so what we can do is partner with the minority depository institutions to place deposits there that we know will be stable, that are below market rates so they're a little bit cheaper, and those dollars then get levered up to make loans into.

19:47 Communities where they're needed most. That's great. What loans are those typically for the small business? Are they consumer? Are those usually back both? It really depends on the focus area of the NDI, but I would say small business and and mortgage lending are probably the two predominant categories. Gotcha, have you seen any of that changes. It's been, you know, really interesting economic cycle that we're going through now. They all are and that have their own different flavors. Anything that you're seeing, uh, you know, as rates change in terms of the types of products and services in these communities. I think what I would highlight most in terms of where I'm seeing changes are and part of it is rate driven. I think part of it is just general recognition of the need, but is around special purpose credit programs, in particular for mortgage lending. So Key has three special purpose credit programs. A number of banks out in markets have have those programs and that's really where you can offer favorable terms to historically underserved classes of people. And so I think some of those programs focus on you know, closing cost assistance, some of them focus on down payment assistance, Others focus on rate buydowns four loans, which I think

21:19 can help in this type of environment. I think, you know, as an industry overall, we've seen mortgage lending in particular come down quite a bit from where it had been in you know, twenty twenty and twenty one, but housing prices are still high. Rates are still high. It's really you know, makes it much harder to get. Into a home. And I think some of these you know, products are trying to look at ways that we can make home ownership more affordable, not just a key, but across across the industry. Yeah, definitely a hot topic and try not to stray too deep into politics, but even you know, reading today about some of the proposals maybe from Kamala Harris around twenty five thousand dollars down payment assistance for new home buyers.

22:06 So I think, you know, the pressure is around home ownership definitely are being felt across the nation, and there's always room for innovation and how do you know, make that more affordable easier for for all folks because it's a huge, you know, generational wealth driver, an important part of. Growing in advancing communities and individuals in the US. Yeah, and over time, I think there's such a long term aspect to it that. We we have to keep keep our eyes on. Yeah. Absolutely, What else are you seeing in terms of you know, regulation change, Things that are on your mind that you know you're trying to kind of keep aware of that maybe potentially can impact keys business.

22:51 Yeah, so maybe less on the on the bank regulatory side. But I think one of the things that we are seeing across the country are mandates around financial education as part of school curriculums as as as or curricula as graduation requirements. And in many cases, you know, those mandates may be unfunded, and so I think we are seeing. A greater need for. Financial education you know, high school students and up and even in certain cases even earlier that we're really starting to think through how is that you know, unneat that we can help meet in our communities.

23:35 Oh. Interesting, So one of the ways that you're thinking of doing that is that through curriculum or having folks in schools or what were some of the things you're thinking of. Yeah, so we historically have done financial education you know, on an as needed basis or when someone would you know request it, we would you know, find someone who could go deliver. And and actually it was a series we did at a at. A local high school here in Cleveland, and that got us thinking about the creation of a more established financial education and empowerment program. And so in April of this year, we launched a new financial education program that we call Money. Me and Key and UH.

24:17 And that is a you know, there are twenty two modules that are part of that curriculum. They don't have to build on one another, so it can be you know, basics of budgeting, you know, how to establish an emergency savings account, to you know, opening a business or buying a home. Uh, you know, whatever is relevant for the audience. And actually that program will start, you know, not in schools, but working with the many community community partners we have across our across our footprint. But what's unique about the model for us this time is that you know, we have asked our teammates to.

25:01 Sign up to. Become what we are calling Money mentors, and and those money mentors go through a facilitation course and ultimately get certified before we can send them out you know, an internal certification, but before we send them out in communities to deliver that education. And I would tell you. After you know, our launch, we had about six hundred of our teammates sign up to be money mentors, and I think they're really looking forward. Has more requests come into getting out and delivering. That education in community? Oh that's great. And it goes back to you know what I was thinking about earlier around where do people get advice? So this seems like a really positive, proactive way that you guys are getting out there, like the idea of a you know, internal certification, getting people prepared. Like are there certain topics or where have you seen the biggest gap in terms of that, just like basic financial knowledge and education that a general consumer has and or is.

26:01 Like you said, it's not a one size fits all. Maybe there's different life events that trigger different needs or just how to you know, manage and navigate a certain product. I think it's probably the two topics we've seen most requested are just a basic class, tell me about banking, Tell me about you know, some of the products and services that are available, how are they used, what are they used for, and how might they benefit me? That? And then home ownership, you know, that is always a question I think, given some of our earlier conversation, you know, such an important topic, you know, really across the country. I think, you know, folks want to understand how do I how do I own own a home and build wealth over time? And then actually I would add a third onto that comment, which is we are hearing a lot more interest lately in estate planning, how to think about, you know, end of life issues and making sure that as you grow and build wealth over time, that that you're doing your very best and kind of everything you can do to pass along that wealth to future generations.

27:12 Yeah, that's actually a great point. I hadn't thought of that. The banking ecosystem can be complex enough, but layer on top of that the legal system, and you know that's almost impossible for you know, any person off the street to navigate themselves. Eric, I appreciate the time today. Is there anything else we haven't covered, maybe that you wanted to highlight. I think we've covered a lot of ground in a short period of time. I just think, you know, maybe one of the things I would highlight is the importance of building partnerships. There are so many organizations across the country doing phenomenal work that reach really deeply into communities and help expand you know, that have the potential to help to expand your own reach. And so I think for us, you know, those partners are for us in terms of you know, meeting communities where they are, understanding their needs and and frankly holding us accountable to you know, what we can and need to be doing better.

28:11 Great. Yeah, I couldn't agree more. And as we've talked about, you know, this world is complex and growing more so by the day. Are there any other podcasts you listen to, authors you like, you know, industry publications that help keep you up to date you would want to share. You know, maybe a little bit of a different answer to your question. All right, So I talked earlier about you know, understanding you know, local plans. I would say, read local news, you know, follow elected officials on their social media accounts, and understand what the priorities of of of local governments are. I think, you know, read the city plans and and really think through you know what are those plans telling you about the needs and a community, And so I think it's not just one source, but several sources that get you closer to what's happening, you know, on the ground, and what are important to the people of each individual community.

29:14 All right, great pivot, I like that advice. Well, thanks again for joining, Eric. Yeah, happy to be here, thanks Matt. Upstart partners with banks and credit unions to grow households and expand consumer lending. Through its leading AI lending platform. Upstart powered banks and credit unions leverage AI to offer higher approval rates and experience lower loss rates while simultaneously delivering the exceptional digital first lending experience that consumers demand. Whether you're looking to grow and enhance your existing personal and auto lending programs or you're just getting started, Upstart can help. Upstart offers an end to end solution that can help you find more credit worthy borrowers within your risk profile with all digital underwriting, verification, loan closing, and servicing.

29:58 It's all possible with Upstarting in your corner. Learn more about finding new borrowers, enhancing your credit decisioning process, and growing your business by visiting Upstart dot com slash lenders. That's upstart dot com slash lenders.