Combating Financial Fraud: Fintech’s Game-Changing Role

WEBVTT

1
00:00:02.879 --> 00:00:07.839
You're listening to Leaders and Lending from
Upstart, a podcast dedicated to helping consumer

2
00:00:07.879 --> 00:00:13.039
lenders grow their programs and improve their
product offerings. Each week, here,

3
00:00:13.039 --> 00:00:17.600
decision makers in the finance industry offer
insights into the future of the lending industry,

4
00:00:18.039 --> 00:00:22.839
best practices around digital transformation, and
more. Let's get into the show.

5
00:00:24.199 --> 00:00:26.679
All right, thanks for making time
to join us on the podcast today.

6
00:00:26.719 --> 00:00:31.519
I really appreciate it, appreciate the
invite. So I'm looking forward to

7
00:00:31.519 --> 00:00:35.560
this conversation. I always like talking
about regulation and innovation, and those two

8
00:00:35.560 --> 00:00:37.759
of my favorite topics, and when
you smash them together, it gets me

9
00:00:37.840 --> 00:00:41.719
really excited. But I like to
start off every conversation asking people like,

10
00:00:41.920 --> 00:00:44.759
how did you get into the industry, because you know, I guess I

11
00:00:44.880 --> 00:00:48.439
you typically make the jolly. Nobody
really grows up dreaming of being a banker

12
00:00:49.399 --> 00:00:52.399
or a regulator or you know,
So, what was your path that led

13
00:00:52.479 --> 00:00:56.000
you to where you're at today?
Yeah, it was a winding path,

14
00:00:56.359 --> 00:01:00.200
Jeff. I'm a kind of a
career switcher, and you know, anybody

15
00:01:00.200 --> 00:01:03.200
out there, it can happen,
but it target to do one hundred and

16
00:01:03.200 --> 00:01:06.519
eighty degree. I wouldn't say that
I'd say it was like a ninety degree

17
00:01:06.560 --> 00:01:10.280
pivot. So I'm working. I'm
a financial regulator right now, right,

18
00:01:10.319 --> 00:01:14.400
and I worked in the financial industry
before, so it's a switch. Politics

19
00:01:14.400 --> 00:01:18.239
was always my first love, you
know, even as a weird child's you

20
00:01:18.239 --> 00:01:21.640
know, I got in trouble for
sneaking into the den after bedtime to watch

21
00:01:22.040 --> 00:01:25.120
member as a Democratic convention back then. I know, that's weird. I

22
00:01:25.159 --> 00:01:27.840
was like, you know, eleven
years old or something. And then you

23
00:01:27.840 --> 00:01:32.840
know, my interview was agree was
politics went into Wall Street. Twenty eleven,

24
00:01:32.840 --> 00:01:34.719
I was in Tokyo, I was
working. I was first out there

25
00:01:34.719 --> 00:01:38.840
with Leamon Ruggs. I was with
them when they collapsed, and then got

26
00:01:38.840 --> 00:01:42.040
another job in Tokyo. And then
in twenty eleven, I did my career

27
00:01:42.120 --> 00:01:45.959
switch, you could say, to
policy and politics. I moved to Boston

28
00:01:46.000 --> 00:01:49.840
to work for Mitt Romney's presidential campaign
and spent over a year there. Really

29
00:01:49.920 --> 00:01:53.280
enjoyed it. Obviously, he won
the primary, which he had lost in

30
00:01:53.280 --> 00:01:55.079
two thousand and eight, right,
so I didn't know how long I was

31
00:01:55.280 --> 00:01:57.640
leaving gonna be. He ran,
he lost in McCain and a wait,

32
00:01:57.920 --> 00:02:00.200
so this could have been a three
month experiment who knows anyway, got the

33
00:02:00.239 --> 00:02:04.640
nomination obviously, you know, Barack
Obama was reelected president. But I had

34
00:02:04.680 --> 00:02:07.280
enjoyed my year and change in policy
and politics. It was one of those

35
00:02:07.280 --> 00:02:09.759
things where following your passion actually worked, you know, sometimes doesn't. And

36
00:02:09.800 --> 00:02:13.560
then I decided to move to DC, where i'd never lived, you know,

37
00:02:13.639 --> 00:02:15.599
down from Boston. You know,
I'd met a lot of people over

38
00:02:15.639 --> 00:02:19.080
the campaign, and instead of coming
down to DC as a triumphant member of

39
00:02:19.080 --> 00:02:22.680
the incoming Remney administration, I was
just an unemployed guy looking for work,

40
00:02:23.159 --> 00:02:25.520
you know, got this little basement
apartment and looking for work. Wound up

41
00:02:25.560 --> 00:02:29.520
working for Senor Tom Cotton from Arkansas, worked for a great think tank,

42
00:02:29.599 --> 00:02:34.439
AI, a free market think tank, and was fortunate enough in twenty twenty

43
00:02:34.439 --> 00:02:38.560
to be nominated by President Trump,
and luckily enough Senators voted for meeting in

44
00:02:38.560 --> 00:02:40.319
the Senate confirmation process. And I'm
here, and I've got a couple of

45
00:02:40.400 --> 00:02:44.240
years left on my third It was
a little bit of a whining road.

46
00:02:44.280 --> 00:02:47.159
It's my sixth big city I've lived
here. But which this big city?

47
00:02:47.199 --> 00:02:50.639
Which do you have a favorite among
them? I know, you gotta stay

48
00:02:51.400 --> 00:02:53.479
in DC because otherwise we will get
angry at you. But like, outside

49
00:02:53.479 --> 00:02:57.039
of DC, what's been your favorite
spot? Well, by the way,

50
00:02:57.439 --> 00:02:59.960
step back a second. For those
of us who moved here for work,

51
00:03:00.199 --> 00:03:02.840
it's common knowledge, like you're kind
of supposed to just DC like the swamp,

52
00:03:02.960 --> 00:03:07.000
you know, you know, especially
if you're an elective member, because

53
00:03:07.000 --> 00:03:08.439
who elected you to people of DC? No, it was the people of

54
00:03:08.520 --> 00:03:15.960
Arkansas or California. But so I
lived in Boston, New York City for

55
00:03:15.000 --> 00:03:19.319
six years, Los Angeles for nine, DC for ten. Now, it

56
00:03:19.439 --> 00:03:23.039
was in Tokyo, Japan for five
years, and Sydney, Australia from one.

57
00:03:23.199 --> 00:03:24.400
I would say Tokyo of those,
First of all, it's just a

58
00:03:24.439 --> 00:03:28.479
great city, but also because you
know, as an American, as a

59
00:03:28.479 --> 00:03:30.879
Westerner, to me, that was
the most interesting, that was most different.

60
00:03:30.919 --> 00:03:34.560
You know, It's absolutely terrific time
in my life. Love, and

61
00:03:34.599 --> 00:03:38.800
I'm planning a trip with my family
to Tokyo in Japan more broadly in the

62
00:03:38.840 --> 00:03:42.520
next year. So we're starting to
work through our tindery. It's a it

63
00:03:42.639 --> 00:03:45.360
is a it's a beautiful place,
and those cultures that are so different do

64
00:03:45.520 --> 00:03:47.759
give you the chance to step back
and think of things for a different perspective

65
00:03:47.800 --> 00:03:51.599
kind of get a different view of
the world, which I think is really

66
00:03:51.680 --> 00:03:54.719
good for you to see things from
a different end. Neat, but such

67
00:03:54.759 --> 00:03:58.840
a polite worlds in Tokyo is this
giant city, right, I mean,

68
00:03:59.240 --> 00:04:02.360
it makes DC look like a small
town. But what's neat is it's just

69
00:04:02.560 --> 00:04:06.159
so safe and polite. You have
everything in a big city. You know,

70
00:04:06.159 --> 00:04:10.479
a million restaurants and nightclubs, got
you know, anything you want to

71
00:04:10.520 --> 00:04:13.439
do in the city is multiple baseball
I recommend a baseball games for the during

72
00:04:13.439 --> 00:04:17.120
a season, but you can walk
home at night at three o'clock in the

73
00:04:17.160 --> 00:04:19.240
morning, dropped the walling on the
street, and go get it the next

74
00:04:19.360 --> 00:04:23.360
day. I mean, it is
uh, it's kind of neat to have

75
00:04:23.600 --> 00:04:27.639
that. Uh, as you probably
already know it. Tokyo and DC have

76
00:04:27.720 --> 00:04:31.920
identical climates, hot, sticky summer
a winner, that's you know kind of

77
00:04:34.560 --> 00:04:41.639
yeah, and uh, there's the
same latitude east facing of a continent.

78
00:04:41.800 --> 00:04:44.680
And the cherry trees, you know, are a big thing in DC,

79
00:04:44.759 --> 00:04:47.680
a cherry blossoms. Those were obviously
a gift from Japan. One of the

80
00:04:47.800 --> 00:04:51.959
reasons they were a gift from Japan
is our two capitals Tokyo and DC have

81
00:04:53.120 --> 00:04:57.480
the same climate, so the cherry
trees can grow, can blossom. Yes,

82
00:04:57.959 --> 00:05:00.079
they would not have given the cherry
trees as a game to the King

83
00:05:00.160 --> 00:05:03.399
of Sweden. They would not have
given it to you know, the Prime

84
00:05:03.480 --> 00:05:11.279
Minister of Jamaica, right because right
and now they're famous in DC. That's

85
00:05:12.480 --> 00:05:15.439
well, I want to dive into
the topic of kind of innovation today and

86
00:05:15.519 --> 00:05:18.439
then a little bit on like you
know, how you use a regular support

87
00:05:18.480 --> 00:05:20.319
there. But I first want to
kind of start with, you know,

88
00:05:20.399 --> 00:05:25.600
what's your perspective on the need for
credit unions to innovate? Is that you

89
00:05:25.639 --> 00:05:28.240
know, where do you said on
the kind of like don't don't break,

90
00:05:28.399 --> 00:05:31.040
don't fix what ain't broken, and
like we really have to think about the

91
00:05:31.160 --> 00:05:34.160
future is coming fast and how do
we adapt to it. What's your perspective

92
00:05:34.199 --> 00:05:39.079
on where credit unions need to be
in that? On that spectrum, I'm

93
00:05:39.120 --> 00:05:44.360
over the view that innovation is necessary, always was, is now and always

94
00:05:44.399 --> 00:05:48.839
will be. That it's you know, innovator die that said, the core

95
00:05:49.000 --> 00:05:54.519
of it, what these institutions do
has not changed literally for centuries. You

96
00:05:54.600 --> 00:05:58.399
know, they help people with their
financial management. Money goes in, money

97
00:05:58.480 --> 00:06:01.240
goes out, you lend it,
make payments, so that core of it

98
00:06:01.399 --> 00:06:06.319
hasn't changed in that sense. Yeah, but you know they've always innovated.

99
00:06:06.360 --> 00:06:10.600
You know, they were there early
with ATMs, you know, way back

100
00:06:10.639 --> 00:06:13.000
in the day, and network with
each other, credit unions you know,

101
00:06:13.079 --> 00:06:16.439
for that matter, and banks,
and it's all very different and it always

102
00:06:16.560 --> 00:06:19.639
has been. We could not have
even had this. We're doing this on

103
00:06:19.759 --> 00:06:21.959
video right now, teams. We
couldn't have done this twenty years ago,

104
00:06:23.160 --> 00:06:26.399
you know. So they have to
innovate. And I tell you this as

105
00:06:26.439 --> 00:06:31.519
a regulator, it is hard because
of the way bureaucracies are to develop a

106
00:06:31.680 --> 00:06:38.600
tolerance for some failure because experimenting,
right, the word experiment means you don't

107
00:06:38.600 --> 00:06:42.680
know what gal come is. Yeah, And it's not really the fault of

108
00:06:42.720 --> 00:06:46.800
the agency so much. It's just
the nature of it where examiners and they're

109
00:06:46.800 --> 00:06:49.199
supervisors and stuff, they get heat
when something bad happens, you know,

110
00:06:49.680 --> 00:06:53.160
they say, oh, you know
what happened at Silkon Valley Bank. Wait,

111
00:06:53.160 --> 00:06:56.600
who's their examiner or that Jeff Keltner
guy, you know. And but

112
00:06:56.759 --> 00:06:59.560
meanwhile, when they innovate and it
goes well, you don't really get you

113
00:06:59.560 --> 00:07:02.319
don't get a bonus or anything really, you know, so it's kind of

114
00:07:02.439 --> 00:07:05.240
downside focused. So we have to
say listen, you know, just give

115
00:07:05.279 --> 00:07:08.800
me your technologies. I know you
and I might want to talk about digital

116
00:07:08.879 --> 00:07:12.920
assets. You know, people ask
me. I've had a journalists kind of

117
00:07:12.920 --> 00:07:15.480
well known in the financial world.
I said, you know, you were

118
00:07:15.720 --> 00:07:17.879
gonna let credit uns use you know, blockchain, digital assets. You worried

119
00:07:17.879 --> 00:07:21.480
w problems and like my worrid grade
problems. I know this is gonna be

120
00:07:21.560 --> 00:07:27.800
problems. Every new technology does,
right, you know. And you know

121
00:07:27.800 --> 00:07:31.240
I always say you guys know this, Jeff that there was zero plane crashes

122
00:07:31.720 --> 00:07:35.839
before we had planes. I think
I could have pieced that one together.

123
00:07:38.720 --> 00:07:41.600
No, thousands of years, it
was zero. You know. Uh,

124
00:07:42.079 --> 00:07:44.240
you never had a computer virus before
you had a computer, you know,

125
00:07:44.399 --> 00:07:46.959
so there's always no problems. It's
always two steps forward, once step back.

126
00:07:47.000 --> 00:07:50.959
But yes, they definitely have to
innovate, and as a regulator,

127
00:07:51.040 --> 00:07:55.360
we have to have some tolerance for
failure because that's the only way for long

128
00:07:55.480 --> 00:08:00.199
term success and not try to prescribe
it. You know, we don't want

129
00:08:00.240 --> 00:08:03.199
to say this vendor, this partner, this fintech firm, they come to

130
00:08:03.279 --> 00:08:05.680
me all the time and show me
their fintech and I said, right,

131
00:08:05.759 --> 00:08:09.120
that's cool, but we we don't
have a white list, you know,

132
00:08:09.360 --> 00:08:11.639
of vendors, and I think that
would be dangerous to do, so,

133
00:08:11.920 --> 00:08:15.519
you know, so anyway, that
was a long answer your question, but

134
00:08:15.600 --> 00:08:18.680
there you go. I'n't ask two
follow ups to that because I think there's

135
00:08:18.879 --> 00:08:22.000
two kinds of like fear of failure
that happened in the institutions. One is

136
00:08:22.079 --> 00:08:26.439
to just like many financial institutions are
conservative by nature and tend to have a

137
00:08:26.959 --> 00:08:28.199
you know, the same thing you're
talking about the regulators. They have a

138
00:08:31.360 --> 00:08:33.879
kind of lots of people who can
say no, a few people who can

139
00:08:33.919 --> 00:08:37.799
say yes, like kind of institutional
inertia to them in terms of making decisions

140
00:08:37.799 --> 00:08:41.559
about trying something new. So I'm
curious about putting the regulator aside. And

141
00:08:41.639 --> 00:08:43.159
that'll be my second question. But
first, like, do you have advice

142
00:08:43.240 --> 00:08:46.399
on how you as an institution go, hey, we're gonna start fostering supporting

143
00:08:46.440 --> 00:08:50.080
more of this, because you know
that, I feel like it's unnatural for

144
00:08:50.200 --> 00:08:54.080
many financial credit us, maybe a
little less so than that of the larger

145
00:08:54.120 --> 00:08:56.720
banks I've seen that are really have
a lot of eurocracy that's kind of tends

146
00:08:56.759 --> 00:09:01.240
to be stasis. You know,
it's that is quote oriented. But what's

147
00:09:01.240 --> 00:09:05.440
your advice on how you as an
institution develop the muscle for trying new things,

148
00:09:05.480 --> 00:09:09.960
experimenting and being tolerant and failure.
First of all, I like that

149
00:09:09.159 --> 00:09:11.879
how you put that. I'm gonna
try to remember to use that. Meaning

150
00:09:13.320 --> 00:09:16.879
what you said about these institutions that
are set up that there's a lot of

151
00:09:16.879 --> 00:09:20.519
people who are allowed to say no
and not many people who are allowed to

152
00:09:20.559 --> 00:09:22.559
say yes. I like how you
put that. I hadn't thought of it

153
00:09:22.639 --> 00:09:30.240
that way. One thing I always
say is, and it's not always a

154
00:09:30.279 --> 00:09:35.000
pointball, but is fail small if
you can You know, it always depends

155
00:09:35.039 --> 00:09:37.639
on what you're trying to do.
Have a five dollar failure, don't have

156
00:09:37.720 --> 00:09:45.600
a five million dollar failure. You
know, have you know, just your

157
00:09:45.639 --> 00:09:50.240
career is not going to go south
because you tried something that didn't work.

158
00:09:50.320 --> 00:09:54.200
Maybe you wasted some time, maybe
you wasted some money. Your career is

159
00:09:54.200 --> 00:09:56.879
going to go south when you tank
the entire thing. Yeah, when you

160
00:09:56.960 --> 00:10:00.960
have a faire So again, it's
not a likable all the time, but

161
00:10:01.159 --> 00:10:05.440
test something, try a little transaction
right for it, you know, yeah,

162
00:10:05.600 --> 00:10:09.519
yeah, just test test, test
test, try to minimize your failures.

163
00:10:09.519 --> 00:10:13.039
I mean, it's an obvious point. But you know, before you're

164
00:10:13.120 --> 00:10:15.159
you know, as my own boss
would say, is from the army.

165
00:10:15.279 --> 00:10:20.039
You know, before you're playing with
live rounds. You know, I fail

166
00:10:20.120 --> 00:10:24.240
small if you're going to fail.
I like that because it also it's something

167
00:10:24.279 --> 00:10:28.399
I think a lot of institutions a
lot of people forget, which is they

168
00:10:28.480 --> 00:10:31.080
want risk management to be like a
black white yes, no, hey,

169
00:10:31.159 --> 00:10:33.240
this is good, this is bad. And sometimes you say, well,

170
00:10:33.240 --> 00:10:35.960
we're going to manage the risk by
saying it's a little bit of great,

171
00:10:35.960 --> 00:10:39.320
We're not sure what will happen,
but we're gonna we're gonna put it in

172
00:10:39.360 --> 00:10:43.039
a small scale. So our risk
management isn't that we've prevented any possible issues.

173
00:10:43.039 --> 00:10:46.039
It's that we've limited the scope of
where the issues can impact, and

174
00:10:46.080 --> 00:10:48.840
we can learn from that and then
it goes well, and we can expand

175
00:10:48.080 --> 00:10:52.080
the idea of managing risk not by
eliminating the possibility of us but managing the

176
00:10:52.120 --> 00:10:54.759
scope of impact in the case that
something goes wrong. I think is a

177
00:10:54.840 --> 00:10:58.360
really interesting approach. That is that
is often people just want to like we've

178
00:10:58.399 --> 00:11:01.840
totally this thing down. Well,
innovation, you can't. You can't always

179
00:11:01.919 --> 00:11:05.639
do that, but you can't limit
the scope of what what you're taking on

180
00:11:05.879 --> 00:11:09.120
is kind of the unknown. Yeah, it comes up a lot in government

181
00:11:09.159 --> 00:11:11.759
and regulation. Some countries, some
states within the US has done a good

182
00:11:11.799 --> 00:11:13.960
job with you know, they call
him sandboxes, regulatory sands. You know,

183
00:11:15.919 --> 00:11:20.559
as long as you stay within these
parameters, which basically are all about

184
00:11:20.639 --> 00:11:24.240
that, do not blow up the
world. Okay, but you can try

185
00:11:24.320 --> 00:11:26.879
something now, you can try something
that isn't explicitly authorized, right, as

186
00:11:26.960 --> 00:11:31.960
long as whatever the problem is doesn't
bring down the institution. And NCUA just

187
00:11:31.080 --> 00:11:35.720
a backup set. You know.
We are the ensure for America's almost five

188
00:11:35.759 --> 00:11:39.039
thousand credit unions and the regulator for
about two thirds of them. The rest

189
00:11:39.120 --> 00:11:43.039
are state charters. But anyway,
what we care about, we're like every

190
00:11:43.080 --> 00:11:45.960
other insure in the world. We
care about having to write a check,

191
00:11:46.120 --> 00:11:50.039
having right acclaim. Like every insure, you like taking in premiums and you

192
00:11:50.080 --> 00:11:52.519
don't like writing big checks out that's
wherever you is. So the main thing

193
00:11:52.639 --> 00:11:54.960
is, don't make us have to
write a big check. Do whatever you

194
00:11:56.000 --> 00:11:56.720
want, but don't you know,
at the end of the day, that's

195
00:11:56.720 --> 00:12:03.200
what matters. But cost benefit.
Yeah, and I say this all the

196
00:12:03.240 --> 00:12:05.759
time at my agency. You know, you have to realize not innovating as

197
00:12:05.799 --> 00:12:11.960
a risk. Once you realize that
staying, you know that you will hit

198
00:12:11.000 --> 00:12:18.000
an iceberg evention. So once you
know that not changing is the riskies,

199
00:12:18.600 --> 00:12:22.879
it can change your cost benefit.
I think in a positive way. It's

200
00:12:22.960 --> 00:12:26.720
kind of a freeing lindset too,
to get out of the zero risk,

201
00:12:26.879 --> 00:12:30.399
zero issue mindset into the like how
do I manage it? I think it

202
00:12:30.440 --> 00:12:33.919
can be a relief when you can
actually convince yourself to go that way.

203
00:12:35.440 --> 00:12:37.000
Yeah, you try ten things,
one goes wrong? Wait, nine one

204
00:12:37.159 --> 00:12:41.120
right, Yeah, all right,
that's pretty good. Let me ask you

205
00:12:41.159 --> 00:12:45.919
that fall up to that, which
is the how do you think about how

206
00:12:46.000 --> 00:12:50.279
a financial institition should should approach their
regulator in the context of innovation, because

207
00:12:50.279 --> 00:12:54.039
I've seen in the number of institutions
I've worked with, credit unison bakes very

208
00:12:54.080 --> 00:12:56.919
different approaches from kind of like we
get everything totally finalized and don't tell the

209
00:12:58.000 --> 00:13:00.679
regulator until it's out the door,
too, going to call them and tell

210
00:13:00.720 --> 00:13:05.799
them what I'm thinking and see what
their perspective is what's your model for effective

211
00:13:05.840 --> 00:13:09.440
engagement with the regulator by a financial
institution on the topic of new, different

212
00:13:09.480 --> 00:13:11.480
innovative programs but using some of these
new technologies we'll get into in a minute.

213
00:13:11.720 --> 00:13:15.559
Are you a engage early and often? Are you a kind of button

214
00:13:15.600 --> 00:13:18.039
it up? Like how do you
like to engage with your financial institutions on

215
00:13:18.080 --> 00:13:22.840
this kind of stuff? All right, So you know I always tell people

216
00:13:22.840 --> 00:13:24.080
you can go to me. Listen, Vaud in the credit union world is

217
00:13:24.120 --> 00:13:28.159
listening. Ka Holtman at ncway dot
com. You can email me, okay,

218
00:13:28.039 --> 00:13:31.080
but that's only worthwhile for the next
couple of years. But you know,

219
00:13:31.320 --> 00:13:35.000
I have to find a new job
somewhere. But listen, the world

220
00:13:35.159 --> 00:13:37.080
is never going to be the way
I want it to be. What you

221
00:13:37.159 --> 00:13:41.639
can have free flowing back and forth
as long as there's someone who's your regulator,

222
00:13:41.679 --> 00:13:45.960
who can shut you down, who's
giving you grades. You know,

223
00:13:46.240 --> 00:13:48.120
in the credit union banking world,
we give her aport card one through five.

224
00:13:48.240 --> 00:13:52.799
One is good, five is bad. It as long as there's somebody

225
00:13:52.840 --> 00:13:56.000
with government power, it's never going
to be free flowing. And I know

226
00:13:56.120 --> 00:13:58.679
some regultors think, oh, we
have regalnership. I assure you they're not

227
00:13:58.799 --> 00:14:01.840
speaking to you the same way,
right, you know, it's like speaking

228
00:14:01.840 --> 00:14:03.759
to a police officer at the end
of the day. They have a badge

229
00:14:03.799 --> 00:14:07.960
and a gun and you don't.
You know, so I and you know,

230
00:14:07.039 --> 00:14:11.799
I want to promote my I'm proud
of a couple achievements. You know.

231
00:14:11.879 --> 00:14:13.840
We now have Uber style feedback,
you know, like a quick five

232
00:14:13.919 --> 00:14:18.840
questions, you know, after the
survey, and I'll give credit to the

233
00:14:18.879 --> 00:14:22.879
Biden wine House for the regular agencies
that are not independent, He's also required

234
00:14:22.919 --> 00:14:26.080
all of them to have like one
through five stars for regular government service.

235
00:14:26.279 --> 00:14:30.519
Does not apply to financially as because
we're independent, we don't fall under the

236
00:14:30.639 --> 00:14:33.840
executive branch precisely. But like if
you're a veteran, you go to be

237
00:14:33.919 --> 00:14:37.320
a hospital house your care, you
know, and it's especially important for Monopolis.

238
00:14:37.360 --> 00:14:39.519
But in terms of communication, we
have like five questions. I make

239
00:14:39.559 --> 00:14:43.600
sure the last one will you know
the sixth question is open and says what

240
00:14:43.679 --> 00:14:48.200
other questions beyond the survey? That
helps with communication because the questions you're asking

241
00:14:48.360 --> 00:14:50.919
signal, Right. I always show
people that the photos of your Uber and

242
00:14:52.039 --> 00:14:54.919
left and right at the top you
know when you do your stars. Both

243
00:14:56.000 --> 00:14:58.159
of them asks right away they have
cleanliness up at top. One of them

244
00:14:58.200 --> 00:15:01.399
calls it l nest you can click
on that and then clean card. The

245
00:15:01.440 --> 00:15:05.679
other one says, what does that
mean? Both the driver and a passador.

246
00:15:05.759 --> 00:15:09.919
Every single time we're being asked by
cleanliness, that is uber and left

247
00:15:09.039 --> 00:15:15.600
communicating signaling that that's important, that
little piece of real estate. So we've

248
00:15:15.639 --> 00:15:18.440
done that, and I think that
also shows we want your feedback. A

249
00:15:18.519 --> 00:15:22.759
lot of agencies only had an on
busman line with somebody, a complaint line.

250
00:15:22.759 --> 00:15:24.559
That's all they had. And I
was like, you guys, if

251
00:15:24.559 --> 00:15:28.919
you're you're signaling you don't care that
much, because it's really easy these days

252
00:15:28.360 --> 00:15:31.200
to do you know, uh in
uber and left or to ask hell,

253
00:15:31.240 --> 00:15:35.159
you can't even order another pizza before
you rate the last guy, you know.

254
00:15:35.879 --> 00:15:37.799
Yeah, So anyway, I'm going
off topic. My point about communication.

255
00:15:37.840 --> 00:15:43.120
It's been important to me some transparency, normal private sector transparency. We've

256
00:15:43.200 --> 00:15:45.799
brought that to the agencies, so
I think that matters. It is signals

257
00:15:45.840 --> 00:15:48.039
that that you should be a little
more comfortable calling me because you know we

258
00:15:48.120 --> 00:15:52.039
care. We're signaling it. After
every example, also recording at least for

259
00:15:52.120 --> 00:15:56.840
the two thirds of the credit units
that are federal charters, were encouraging recording

260
00:15:56.919 --> 00:16:00.799
of the exit interview. You have
an exams a couple weeks, examiner is

261
00:16:00.799 --> 00:16:03.360
going to leave. They give your
grade to the board of directors to record

262
00:16:03.440 --> 00:16:07.480
that, just because it's useful information, you know. So anyway, so

263
00:16:07.919 --> 00:16:11.919
on the topic communication, you can
tell them passion about it drove me crazy

264
00:16:11.000 --> 00:16:17.440
when I dealt with regulators in my
prior life anyway. But because no matter

265
00:16:17.559 --> 00:16:19.320
what we do, there's that differential. You know, it's talking to a

266
00:16:19.360 --> 00:16:22.000
cop, you know, even if
it's just on the street. You don't

267
00:16:22.000 --> 00:16:26.759
speak to them like you're friend at
the bar. You know. This is

268
00:16:26.879 --> 00:16:30.320
why trade groups are useful, because
we don't regulate them. They can put

269
00:16:30.360 --> 00:16:36.399
their head above the tree line.
The trade group a vendor, I'm using

270
00:16:36.440 --> 00:16:38.879
a term vendor. But fintech partners, we're not their regulator. We're not

271
00:16:38.960 --> 00:16:44.879
there insurer. So the credit union
usually don't come to us and say,

272
00:16:45.200 --> 00:16:48.840
uh, you know this really cool
fintech talk to us. We're wondering if

273
00:16:48.879 --> 00:16:49.440
we can do it? Are we
gonna get in trouble? Is that all

274
00:16:49.519 --> 00:16:52.399
right? They are afraid to say
that right, because what's the one thing

275
00:16:52.480 --> 00:16:57.279
they know. They know that if
you might deem a risky, so have

276
00:16:57.639 --> 00:17:03.440
other people who we won't regulate and
ensure if possible. Credit unions usually have

277
00:17:03.480 --> 00:17:06.119
a state league or a combination of
states. You know, there's like a

278
00:17:06.119 --> 00:17:08.240
New England one. You know,
there's a DC Virginia DC Maryland one.

279
00:17:08.799 --> 00:17:11.559
Have them, that's what they're for. Have them put their head above the

280
00:17:11.599 --> 00:17:15.480
tree line, you know, or
the national groups, or have the fintech

281
00:17:15.559 --> 00:17:19.200
vendor or hell they're venture capital firm
then investment, having them talk to us.

282
00:17:19.440 --> 00:17:22.599
If you credit union person, don't
want to put your head above the

283
00:17:22.640 --> 00:17:26.000
tree line, because it happens all
the time. You know. You have

284
00:17:26.079 --> 00:17:29.680
somebody call you a salesperson, Hey, we want to work with you credit

285
00:17:29.759 --> 00:17:30.519
and we want to partner with you. We want we want you to buy

286
00:17:30.519 --> 00:17:33.759
our product. And people say,
you know, I'd love to, but

287
00:17:33.880 --> 00:17:36.920
you know, the government man,
the regulator, you know those guys.

288
00:17:37.440 --> 00:17:41.359
Sometimes that's just an excuse to get
the salesperson off the phone. That happens,

289
00:17:41.000 --> 00:17:45.480
but sometimes it's legit, you know. So that's what I would say.

290
00:17:45.000 --> 00:17:49.880
Number one, I want to be
communicative. We're trying to be more

291
00:17:49.920 --> 00:17:55.680
responsive. We made legitimate strides on
that recording and those ubstyle feedback emails.

292
00:17:56.640 --> 00:17:59.680
But also if you're concerned about it, or you say, hey, one

293
00:17:59.720 --> 00:18:03.400
hundred credits want to try his fintech
partnership, why should I? You don't

294
00:18:03.400 --> 00:18:06.400
one who puts my hands up and
brings it up, right, Have someone

295
00:18:06.559 --> 00:18:11.960
else do make a call, have
the conversation, have the meaning your fintech

296
00:18:11.039 --> 00:18:15.720
firm. They have a financial interest
in doing this, you know, having

297
00:18:15.759 --> 00:18:19.319
your league organization, have your trade
group. That's what they're for, all

298
00:18:19.400 --> 00:18:22.960
right. I want to dive into
a couple of the actual technologies here,

299
00:18:22.000 --> 00:18:25.400
and there were two that came up
when you and I spoke earlier. The

300
00:18:25.519 --> 00:18:27.799
first is one that I feel like
has gone out of fashion, so I'm

301
00:18:29.640 --> 00:18:32.200
I'm curious to get your perspective it, which is digital assets, because I

302
00:18:32.240 --> 00:18:34.839
feel like, you know, the
the interest in digital assets and blockchain technology

303
00:18:34.880 --> 00:18:38.599
seems to swing with the price of
bitcoin, and the price of bitcoins has

304
00:18:38.640 --> 00:18:41.559
been up and down and all over, and not that that's a good metric,

305
00:18:41.640 --> 00:18:45.799
but how do you think about you
know, is that going to be

306
00:18:45.839 --> 00:18:48.680
a valuable technology? Was it a
flash in the pan? What do you

307
00:18:48.720 --> 00:18:51.640
think the future is on the on
the front of digital assets and blockchain.

308
00:18:52.160 --> 00:18:56.519
Yeah, it's funny, you know
behind me here in my I CNC on

309
00:18:56.599 --> 00:19:00.640
you know, without the sound,
and something's changed that I think probably will

310
00:19:00.640 --> 00:19:02.319
be with us, which is,
you know, down the bottom of the

311
00:19:02.359 --> 00:19:06.640
corner they have the stock index is
dal Jones SMP, you know, part

312
00:19:06.680 --> 00:19:08.240
of their things. They have the
bitcoin place right and they'll leave the switch.

313
00:19:08.279 --> 00:19:11.119
They have ether. You know,
I don't know if that's going away

314
00:19:11.119 --> 00:19:15.559
anytime soon, but I hear you
on that on that the interested bubble.

315
00:19:15.039 --> 00:19:18.920
Listen, it's the gold rush stage. We've seen all this before, Jeff.

316
00:19:18.000 --> 00:19:21.160
There's a gold rush stage where some
of the things is a pile of

317
00:19:21.240 --> 00:19:26.480
money and people rush in dreamers,
thinkers, and you get overvalued assets sometimes

318
00:19:26.519 --> 00:19:32.319
and you get bubbles, and you
get bad business models that we only find

319
00:19:32.319 --> 00:19:36.359
out when there's a crash, and
you get some flat out scammers and con

320
00:19:36.559 --> 00:19:41.000
artists. Anytime there's a bunch of
money, people think. We saw this

321
00:19:41.079 --> 00:19:42.640
twenty five years ago with the Internet
bubble. Right, a lot of people

322
00:19:42.720 --> 00:19:48.200
first heard the term dot com not
from using any product, but from the

323
00:19:48.279 --> 00:19:51.559
investment world. Oh this IPO triple
people are making money. You know ads

324
00:19:51.640 --> 00:19:53.359
for a merrit trade. You know, hey, make a bunch of money,

325
00:19:53.400 --> 00:19:56.240
and remember those ads that you know, some kid has a yacht,

326
00:19:56.400 --> 00:20:00.839
you know, and and then remember
it all crashed and then tons of people

327
00:20:00.880 --> 00:20:03.319
lost money and tons of empty office
space. It's all gone vaut. But

328
00:20:04.000 --> 00:20:07.839
that was the investment bubble side of
it, and you hit right on it

329
00:20:07.920 --> 00:20:11.240
the price of bitcoin. Okay,
put that aside. When the Internet crack

330
00:20:11.319 --> 00:20:14.640
and all those things, loss of
money, some lumber, bad companies.

331
00:20:14.720 --> 00:20:18.640
There were also scams and some of
those models are just were before their time.

332
00:20:18.880 --> 00:20:21.960
But put all that aside. When
the Nastat crashed in two thousand,

333
00:20:22.279 --> 00:20:26.519
was that a fat will hold on
the investment bubble that happens this new thing

334
00:20:27.119 --> 00:20:30.559
called the Worldwide Web. That was
not a fad that has changed all of

335
00:20:30.640 --> 00:20:33.759
our lives. We couldn't even be
doing this interview right now. So once

336
00:20:33.839 --> 00:20:38.839
you shift away all the debris and
you have a helpful bear market, because

337
00:20:38.839 --> 00:20:42.359
that's what cleans out a lot of
problems. It also cleans out scams and

338
00:20:42.440 --> 00:20:45.680
con artists. Member made off was
only found out because of the financial crisis,

339
00:20:45.759 --> 00:20:48.200
right, he could have kept on
going. Bear markets are useful.

340
00:20:48.240 --> 00:20:52.880
They cleared the brush out, you
know. So yes, I think when

341
00:20:52.880 --> 00:20:56.759
it's all of a sudden done,
they'll be concrete, actual uses. Right,

342
00:20:56.799 --> 00:20:59.759
We're already saying it with instant payments
around the world, different currencies,

343
00:21:00.680 --> 00:21:06.079
stable coins very useful. We're seeing
disasters happen and people can send money instantly

344
00:21:07.039 --> 00:21:10.799
for people to use. You don't
have to run it through bureaucratic charities.

345
00:21:11.440 --> 00:21:15.359
I've seen people do interesting stuff on
the identification. It reduces fraud trying to

346
00:21:15.359 --> 00:21:17.880
figure out who somebody is. You
can also help people who are kind of

347
00:21:17.920 --> 00:21:21.440
marginalized, like prisoners get out.
They don't have a valued ID. They

348
00:21:21.480 --> 00:21:23.359
can't get going with their life,
to get a job until they have ID.

349
00:21:25.440 --> 00:21:26.599
I find out a little weird,
Jeff, and I think you too,

350
00:21:27.119 --> 00:21:30.799
because if there's anyone who's identity,
the government should absolutely be if it's

351
00:21:30.799 --> 00:21:33.480
the guy they locked up for the
last twenty years, right, Meanwhile,

352
00:21:33.480 --> 00:21:37.880
they walk out with no ID.
So so it's fraud reduction, it's access

353
00:21:37.960 --> 00:21:41.960
or services, and it's quicker onboarding. That sort of thing. That's a

354
00:21:42.079 --> 00:21:48.880
concrete use of blockchain technology. Obviously, blockchain being the underlying technology behind bitcoin,

355
00:21:48.599 --> 00:21:52.680
and we've seen a few of these
things and just tokenized assets. Right

356
00:21:53.359 --> 00:21:56.240
again, like you said, a
lot of things on people buying this coin

357
00:21:56.359 --> 00:22:00.240
or that coin and make them money. What about regular since we already have

358
00:22:02.559 --> 00:22:07.400
various loans, et cetera that are
just tokenized, they're just easier to distribute

359
00:22:07.559 --> 00:22:10.079
on a piece of right, things
that were very hard to break it to

360
00:22:10.119 --> 00:22:14.160
pieces before, so tokenized assets.
And I bet it's just like the Internet

361
00:22:14.200 --> 00:22:18.119
in nineteen ninety nine, where it's
a whole world of things that I can't

362
00:22:18.160 --> 00:22:21.240
think of right now. Remember how
the Internet started. All it was was

363
00:22:21.319 --> 00:22:22.720
literally the web, meaning it was
a web page and you typed it an

364
00:22:22.720 --> 00:22:26.440
address and you went to it and
you saw a page and went to another

365
00:22:26.480 --> 00:22:30.839
one. Well, that later became
apps that were only possible because of like

366
00:22:30.960 --> 00:22:33.839
GPS. Half the apps I use
wouldn't be possible without if I didn't have

367
00:22:34.039 --> 00:22:37.400
a mapping app. You know,
it's not necessarily going to a web page.

368
00:22:37.480 --> 00:22:41.000
We're using the Internet all the time
and lots of things. So anyway,

369
00:22:41.079 --> 00:22:42.960
my point is I'm just trying to
be humbled and trying to say,

370
00:22:44.000 --> 00:22:45.400
well is this use case and that
use case? Yeah, I can think

371
00:22:45.400 --> 00:22:48.240
of something, I have seen something, but my guess is it will be

372
00:22:48.359 --> 00:22:52.599
something very different, you know,
than the ones I can think of right

373
00:22:52.599 --> 00:22:56.920
now. Put it that way,
But Jayline uses put aside the bubble.

374
00:22:56.000 --> 00:22:59.839
We've seen this before, and it's
kind of good. We had cryptome theory

375
00:23:00.000 --> 00:23:03.559
cleans out a lot of bad actors. Yeah, we've seen We're gonna give

376
00:23:03.559 --> 00:23:04.640
you a watch. A few of
the bad actors get cleaned out here over

377
00:23:04.680 --> 00:23:10.359
the next couple of a couple of
months, I think in dramatic let's talk

378
00:23:10.359 --> 00:23:12.559
about one other technology area that I
think is pretty interesting, obviously near and

379
00:23:12.599 --> 00:23:17.039
dear to my heart, which is
AI. Where do you I feel like

380
00:23:17.119 --> 00:23:21.000
that's one that's maybe a little farther
along the hype cycle at least we're seeing

381
00:23:21.119 --> 00:23:25.960
more more concrete use cases in many
ways like live today and production, often

382
00:23:26.000 --> 00:23:27.839
behind the scenes. But what's what's
your take on where we're at in the

383
00:23:29.000 --> 00:23:32.680
evolution of AI and the adoption of
that in different areas within the Credit Union.

384
00:23:33.119 --> 00:23:37.160
Well, if if I use the
Internet as the analogy for digital assets

385
00:23:37.440 --> 00:23:41.240
in the sense that there was a
hype and a bubble, but at the

386
00:23:41.319 --> 00:23:45.839
end of the day, there were
very good uses the AI. One is

387
00:23:45.079 --> 00:23:51.039
conference with the Internet in the sense
that normal regular people can see cool uses

388
00:23:51.079 --> 00:23:55.160
in front of them. A lot
of cool things you don't necessarily see.

389
00:23:55.799 --> 00:23:57.400
So like, for example, let's
go back and box to en for a

390
00:23:57.400 --> 00:24:00.160
second title. If you ever real
estate in this country, you know how

391
00:24:00.480 --> 00:24:04.440
creaky are a sort of title insurance, you know, making sure that the

392
00:24:04.480 --> 00:24:08.119
house I walk from Jeff was actually
just to sew man well. People may

393
00:24:08.240 --> 00:24:12.880
benefit when that title is transferred digitally
as an NFT. You the mortgage buying

394
00:24:12.920 --> 00:24:17.200
a new home. You don't even
know that it happened. The title went

395
00:24:17.279 --> 00:24:22.559
from the seller to your lender.
You benefited, perhaps in lower title insurance

396
00:24:22.599 --> 00:24:25.240
in the process. You don't even
realize you did. Right, There's a

397
00:24:25.319 --> 00:24:29.000
lot of things we benefit from.
We don't see AI anybody on their phone

398
00:24:29.119 --> 00:24:33.119
or a computer or even just viewing
it. Hell, I keep seeing Instagram

399
00:24:33.240 --> 00:24:37.480
posts from cool AI generated art.
I didn't even have to use it myself.

400
00:24:37.240 --> 00:24:41.640
I can already see it without touching
AI. So in that sense,

401
00:24:41.720 --> 00:24:45.599
people can see it and learn it
the way that you know, the first

402
00:24:45.640 --> 00:24:47.960
time you got on the internet,
you're like, man, this is cool.

403
00:24:48.039 --> 00:24:52.440
I can read the newspaper from another
city. You know AI. You

404
00:24:52.519 --> 00:24:55.440
can do it, and it's neat
and I think concrete uses, you know,

405
00:24:56.559 --> 00:25:00.359
call centers. You know, we
got people calling in in many,

406
00:25:00.440 --> 00:25:06.160
many languages just in the United States. Yeah, and it's hard to hire

407
00:25:06.279 --> 00:25:10.759
customer service people who are fluent in
English and Ethiopian language, like if you

408
00:25:10.799 --> 00:25:15.720
have it in DC or Ukrainian.
So there's neat neat neat uses. The

409
00:25:17.480 --> 00:25:19.240
politically, the one you hear about
here in DC is lending. You know,

410
00:25:21.119 --> 00:25:22.240
is it going to be fair?
Is it going to discriminate? You

411
00:25:22.319 --> 00:25:30.559
know, and people think that humans
can't be discriminatory lending it. And then

412
00:25:30.960 --> 00:25:33.079
when you make a machine that's just
supposed to analyze it rationally, maybe that

413
00:25:33.200 --> 00:25:36.039
goes two. I don't know,
but that's the one you hear about.

414
00:25:36.240 --> 00:25:37.720
I think it's going to change a
lot of things. Lending decisions for sure.

415
00:25:40.359 --> 00:25:44.839
Yeah, you know we have you
know, the FICHO world, you

416
00:25:44.920 --> 00:25:48.079
know, may decrease in value in
terms of its importance. You know,

417
00:25:48.359 --> 00:25:52.759
it may be a variable because you
can analyze so many other things. And

418
00:25:52.960 --> 00:25:56.759
fraud detection, Yeah, fraud's a
big one, because that's a there.

419
00:25:56.039 --> 00:25:59.960
It's really interesting to me that a
lot of people think of AI in term

420
00:26:00.200 --> 00:26:03.079
of the large language models that chat
and GEPT kind of conversing with a model

421
00:26:03.119 --> 00:26:07.640
in some way, but in many
ways, the lending and fraud detection problems

422
00:26:07.680 --> 00:26:11.680
are like the perfect problems for the
algorithmic side of AI, because it's like,

423
00:26:11.720 --> 00:26:14.640
what do you need a lot of
data? You need a lot of

424
00:26:14.720 --> 00:26:18.359
examples you're trying to find up make
a prediction about something that doesn't happen.

425
00:26:18.400 --> 00:26:21.200
Then often you well, hey,
yeah, like loans are we got tons

426
00:26:21.200 --> 00:26:22.240
of data, We have lots of
history and who's paid back and not,

427
00:26:22.319 --> 00:26:26.000
and we can make really smart decisions, and it turns out there's quite a

428
00:26:26.000 --> 00:26:27.400
bit of inefficiency in the space.
And the same thing is true of fraud.

429
00:26:29.279 --> 00:26:30.720
You know, lots of data points, very difficult to analyze as a

430
00:26:30.799 --> 00:26:34.480
human, thousands of pieces of information
about how this individual acted, but but

431
00:26:34.599 --> 00:26:37.359
yet at the same time, very
clear signals when you can piece them together.

432
00:26:37.440 --> 00:26:44.519
So I think, yeah, frosters
ones who are you know, good

433
00:26:44.559 --> 00:26:48.079
at fraud? They know how the
current system works and they know how to

434
00:26:48.160 --> 00:26:51.559
gain it and work around me.
The whole point of AI is not is

435
00:26:51.640 --> 00:26:55.599
that which the human mind does not
necessarily see the problem up front? You

436
00:26:55.680 --> 00:26:59.640
know, yeah, really, the
majority of righting there was the last two

437
00:26:59.720 --> 00:27:02.839
years have gone down in America.
We've had to take over well because of

438
00:27:02.920 --> 00:27:06.920
fraud. Now that's partially because we've
had a pretty good economic times with load

439
00:27:06.960 --> 00:27:10.920
delinquent seas and everything, so we're
not having a lot of credits claps because

440
00:27:10.960 --> 00:27:14.319
of standard economic reasons. But yeah, I think four to seven last year

441
00:27:14.440 --> 00:27:18.440
were a fraud. So that's that's
one neat thing. And you know there's

442
00:27:18.799 --> 00:27:23.839
uh, you know Joe and Barefoot. Okay, I was on her podcast.

443
00:27:25.359 --> 00:27:26.960
Like all three NCA board members,
myself, Todd Harper, and Running

444
00:27:26.960 --> 00:27:30.000
Hood have been on it. She
did one a couple of months ago.

445
00:27:30.039 --> 00:27:36.119
Do you know who her podcast guest
was. I'm gonna guess yeah, that

446
00:27:36.160 --> 00:27:37.960
would that makes sense given the conversation, that's fascinating. I need to go

447
00:27:38.039 --> 00:27:41.680
listen to because I'm very curious how
chat you could see now, it wasn't

448
00:27:41.680 --> 00:27:45.200
even like a Smart Ai. The
voice sounded like Siri like you could kind

449
00:27:45.240 --> 00:27:48.240
of tell it was a computer.
Now, so what she said this is

450
00:27:48.319 --> 00:27:51.400
I think she called it dumb agi. I mean, it wasn't trying to

451
00:27:51.440 --> 00:27:53.519
rep it sounds like talking to Syria
on your phone. But you know,

452
00:27:53.799 --> 00:27:59.799
they had an in depth conversation on
American Financial regultary policy. And you know,

453
00:28:00.039 --> 00:28:03.240
I just yesterday at a conference I
just got home from New Orleans sean

454
00:28:03.359 --> 00:28:08.880
scream interview Joe Rogan and Steve Jobs. Steve Jobs died several years before Joe

455
00:28:10.000 --> 00:28:14.880
Rogan ever had a podcast. Yeah
and check it out. It wasn't Joe

456
00:28:15.000 --> 00:28:19.279
Rogan talking to a AI Steve Jobs. Neither Joe Rogan or Steve Jobs had

457
00:28:19.279 --> 00:28:22.480
anything to do with this. Both
were AI. Both in their own voices.

458
00:28:23.079 --> 00:28:26.319
You and I could sit in the
car drive for twenty minutes, listen

459
00:28:26.319 --> 00:28:30.839
to podcasts and think it was those
two. Or if you knew Steve Jobs

460
00:28:30.880 --> 00:28:33.599
died a while back, you'd say, oh, I guess Joe Rogan got

461
00:28:33.640 --> 00:28:38.440
an AI Steve Jobs. But it's
not. They're both entirely AI, with

462
00:28:38.599 --> 00:28:42.000
their sensibilities, with their accents,
with their voice, saying the stuff they

463
00:28:42.000 --> 00:28:48.359
would say, absolutely fascinating. So
we talked about fraud detection. You know,

464
00:28:48.599 --> 00:28:52.559
if somebody can call up and sound
like me and look like me on

465
00:28:52.680 --> 00:28:56.440
a video or whatever, all technology
will be used by a scammer. All

466
00:28:56.519 --> 00:29:00.920
technologies helped to fight scams, right, so that'll happen both ways. Anyway,

467
00:29:00.920 --> 00:29:02.759
I'm babbling a little bit, man, But I just think ay I

468
00:29:02.880 --> 00:29:06.240
is super cool, it's super fight. It's a wrong way to go.

469
00:29:06.559 --> 00:29:10.319
Yeah, yeah, I mean I
think it is interesting that we see this

470
00:29:10.440 --> 00:29:14.880
real push against a eye because of
the potential downsides or mali uses. Right.

471
00:29:15.000 --> 00:29:17.880
Politics is a huge area where you
can start to make it look like

472
00:29:17.920 --> 00:29:19.799
somebody said something that they didn't say, and it can be very very convincing.

473
00:29:19.839 --> 00:29:23.079
We received a fundraising call and it
wasn't them, you know, it

474
00:29:23.160 --> 00:29:27.240
wasn't made the media. Listen,
you should be scared of the problems.

475
00:29:27.319 --> 00:29:30.160
Oh you bet. Remember what I
said about no plane crashes where it plays.

476
00:29:30.440 --> 00:29:33.759
But they're going to be here anyway, so I assure you. So.

477
00:29:37.640 --> 00:29:40.720
Yeah, that's right. Like from
fire on, there has been the

478
00:29:40.799 --> 00:29:45.799
possibility for good and ill uses of
every every technology that's ever been developed by

479
00:29:45.839 --> 00:29:48.440
human Yeah, and all just like
digital asses. I think America twice,

480
00:29:49.319 --> 00:29:52.960
you're gonna get the downsides in the
long run, anyway, do you want

481
00:29:52.960 --> 00:29:57.240
to at least get all the upsides? And America won the Internet so well.

482
00:29:57.319 --> 00:30:00.839
And I'm a Republican, but I
was praise Clinton. Gore administration put

483
00:30:00.880 --> 00:30:04.400
out early guidance nineteen ninety seven for
the internet, and we got all the

484
00:30:04.480 --> 00:30:07.680
negative everybody else. You know,
all the video jobs, video rental jobs

485
00:30:07.720 --> 00:30:11.480
were gone, the travel agens,
we got all the downside, you know,

486
00:30:11.559 --> 00:30:15.440
print media, we lost all those
jobs like everybody else. But we

487
00:30:15.559 --> 00:30:18.680
also got the most upside. You
know, the block Westing Video is gone,

488
00:30:18.720 --> 00:30:22.640
but we got the headquarters for Hulu
and Netflix and the investors that got

489
00:30:22.720 --> 00:30:25.440
in and make money and the people
had life changing. Well, you know,

490
00:30:25.640 --> 00:30:27.200
we got all the upside AI.
We're gonna get the downside, right

491
00:30:27.960 --> 00:30:32.000
we can try to stop in this
country. Even if we succeeded in slowing

492
00:30:32.039 --> 00:30:34.160
down AI. Well, the rest
of the world is not going too so.

493
00:30:34.799 --> 00:30:40.839
Our history in this country has always
been embracing the upside, knowing full

494
00:30:40.880 --> 00:30:44.079
well we're gonna get the downside anyway. But man, it is it is

495
00:30:44.119 --> 00:30:47.799
neat stuff. Yeah, I feel
like it's a very difficult topic to talk

496
00:30:47.839 --> 00:30:51.160
about and too much depth on the
podcast because whatever you say is can I

497
00:30:51.240 --> 00:30:52.839
feel like right now you're going to
be out of datas in a week or

498
00:30:52.880 --> 00:31:00.279
two anyway, because they maybe I'm
not really Kyle having maybe you're not really

499
00:31:00.319 --> 00:31:04.279
defth you know, Oh, don't
tell my wife. All right, I

500
00:31:04.359 --> 00:31:08.599
got three questions. I like to
end the podcast with that. I kind

501
00:31:08.599 --> 00:31:11.920
of ask all my guests, so
I'd love to ask them of you now.

502
00:31:11.920 --> 00:31:15.359
And the first one is what's the
best piece of career advice you've ever

503
00:31:15.440 --> 00:31:19.000
gotten? I'd say one practical one. It's great. The laster you reply

504
00:31:19.079 --> 00:31:22.599
to, the faster you reply to
an email, typically, the less you

505
00:31:22.640 --> 00:31:27.440
have to say, oh, interesting, tell me more about that. The

506
00:31:27.559 --> 00:31:30.519
longer you let it sit, the
more of like a longer answer, you

507
00:31:30.599 --> 00:31:33.480
know, or if it's on a
whole bunch of people and you chime them

508
00:31:33.519 --> 00:31:36.920
in first you can say the most
basic, simple thing, get out of

509
00:31:36.920 --> 00:31:38.480
the way. The sixth person to
reply has got to be a little more.

510
00:31:38.960 --> 00:31:41.480
You know, you had it.
The quicker you reply, less you

511
00:31:41.519 --> 00:31:45.279
have to say. And I'll just
do one more, which is broader,

512
00:31:45.359 --> 00:31:48.720
which is just one word. People. You know a fabulously successful guy when

513
00:31:48.720 --> 00:31:52.079
I was working at Lehman in Australia. You know, it's actually Vietnamese immigrant

514
00:31:52.119 --> 00:31:56.119
to Australia, the incredibly wealth and
he said, it's people. There's a

515
00:31:56.160 --> 00:31:59.599
lot of things, but it's people. People people people. You learn skills,

516
00:31:59.640 --> 00:32:02.279
you get you have that, you
get degrees. Someday you might not

517
00:32:02.319 --> 00:32:06.359
get a job because and you don't
even realize it, someone didn't like you,

518
00:32:06.920 --> 00:32:09.720
right, beetle lights. And in
this town, in particular, in

519
00:32:09.839 --> 00:32:15.039
DC, an astonishing number of decisions
are made by people in their twenties.

520
00:32:15.319 --> 00:32:19.640
You go to Capitol Hill, you
know, there's a lot of white haired

521
00:32:19.680 --> 00:32:24.640
centers being walked around by twenty six
year olds, you know. And so

522
00:32:24.920 --> 00:32:28.839
even though I'm sort of you know, call it mid career now a man,

523
00:32:28.880 --> 00:32:30.160
I always made a point when I
would get these, you know,

524
00:32:30.519 --> 00:32:34.319
real polite linkeding messages here, mister
Altman. You know, I see you

525
00:32:34.359 --> 00:32:37.920
work in the Senate Righting Committee.
Can I speak with you three years later?

526
00:32:37.000 --> 00:32:40.519
That person to be high and try
to Presidential Personnel office, you know,

527
00:32:42.039 --> 00:32:45.319
like so people people people. I
don't want to sound too machiavelliant about

528
00:32:45.359 --> 00:32:50.920
it, but it's it's just a
better life when you want to be respectful,

529
00:32:51.920 --> 00:32:54.160
honest. When I worked on the
Hill, I was routinely asked to

530
00:32:54.319 --> 00:33:00.079
leak information, and I put the
short term gain out of pleasing whoever that

531
00:33:00.319 --> 00:33:04.240
was a journal a lobbyist, whoever, for my long term reputation. But

532
00:33:04.319 --> 00:33:07.039
people, people pee people, Yeah, blow you people above you. People

533
00:33:07.119 --> 00:33:13.119
next you being well liked and respected. Stop right there. You're ahead of

534
00:33:13.160 --> 00:33:15.240
a lot of people, and it's
just very important, and it's going to

535
00:33:15.319 --> 00:33:19.519
come around in waves that will blow
you away. You know. Yeah,

536
00:33:19.599 --> 00:33:22.440
there's a concept I've heard from a
few people now called the infinite game,

537
00:33:22.480 --> 00:33:25.559
this kind of idea that if you're
you know, you can think of things

538
00:33:25.559 --> 00:33:30.880
as transactional, a one time game, but really the game is infinite because

539
00:33:30.920 --> 00:33:34.200
those same parties that you interact with. Your leading example is a perfect example.

540
00:33:34.279 --> 00:33:36.880
Like, yeah, maybe it's a
short term win for you in a

541
00:33:36.920 --> 00:33:38.480
certain way, but like in the
infinite game, in the long term game

542
00:33:38.519 --> 00:33:42.839
where you're playing, where you're interacting
with all of these people on both sides

543
00:33:42.920 --> 00:33:45.640
multiple times, you've got to think
of it in those contexts. And in

544
00:33:45.720 --> 00:33:49.279
that context, understanding people, being
respected by people, doing right by people

545
00:33:49.640 --> 00:33:52.960
pays dividends well into the future is
a very valuable asset, even if it's

546
00:33:52.960 --> 00:34:00.400
not always the most immediately expedient.
That's easier man not being worreless walking in

547
00:34:00.559 --> 00:34:01.839
well I want you know, I
wonder if that guy is going to be

548
00:34:01.880 --> 00:34:04.519
there. You know, we don't
like each other, you know, it's

549
00:34:04.559 --> 00:34:08.519
just and again I tend to view
things through a political lens because that's my

550
00:34:08.599 --> 00:34:15.480
life now, but being able to
work across the aisle, and you know,

551
00:34:15.559 --> 00:34:17.920
we're in a system, a two
party system where it's designed for opposition,

552
00:34:19.079 --> 00:34:21.679
right, You're not supposed to agree
because that's how you were sorted in

553
00:34:21.760 --> 00:34:27.480
the first place. So getting along
well, and you know, I'm proud

554
00:34:27.519 --> 00:34:30.639
of the fact that what I went
through as one of the last Trump nominees,

555
00:34:30.719 --> 00:34:32.679
even after the election was over,
Pausin Biben's coming in. One of

556
00:34:32.679 --> 00:34:37.039
the reasons I got some votes from
the Democratic centers was because of their staffers

557
00:34:37.079 --> 00:34:38.480
in particular, said no, Kyle, I were that guy. Listen.

558
00:34:38.519 --> 00:34:43.360
I know he's Republican, He's different, always honest, always answered the phone,

559
00:34:43.440 --> 00:34:45.360
could always talk to him. He
did what he said he was going

560
00:34:45.400 --> 00:34:47.840
to do, and I'm very proud
of them. And it's just flat out

561
00:34:47.880 --> 00:34:52.000
more a more effective way to be. But again, I'm aware that I

562
00:34:52.280 --> 00:34:55.599
tend to now think part is it
politics, that's the world I'm in,

563
00:34:55.760 --> 00:35:00.840
but it's all encompassing. My second
question for you is what's the best advice

564
00:35:00.920 --> 00:35:05.199
you have about the financial services industry? You know, for someone in the

565
00:35:05.199 --> 00:35:07.280
space, like what's one thing they
should think keep in mind about succeeding in

566
00:35:07.320 --> 00:35:12.679
the industry. B Let's say you're
a young person starting out right now,

567
00:35:13.519 --> 00:35:16.239
no free You know, if you
knew the first three pages of a book

568
00:35:16.280 --> 00:35:19.960
about AI and knew how to use
a couple of these tools from a man,

569
00:35:20.000 --> 00:35:23.360
there's so many. Now there's the
artwork ones. You're gonna look impressive

570
00:35:23.400 --> 00:35:29.719
because older people who've got success in
a different world hear all this stuff.

571
00:35:29.760 --> 00:35:32.079
You can't not hear about bitcoin.
You can't not hear about AI. Yeah,

572
00:35:32.239 --> 00:35:36.079
have you ever traveled with somebody you're
been in a restaurant where someone speaks

573
00:35:36.119 --> 00:35:37.920
a little bit of the language you
don't you know? And you know,

574
00:35:37.960 --> 00:35:39.920
I remember I first got in Japan. One guy I knew how to like

575
00:35:40.079 --> 00:35:43.679
order some food. And you know, to me, this is a magic

576
00:35:43.760 --> 00:35:46.280
trick. Whoa You know why?
Because you knew twenty wars more than I

577
00:35:46.360 --> 00:35:51.480
did. You know, if you're
that person who seems to know what's up

578
00:35:52.159 --> 00:35:55.639
when it comes to cryptocurrency or blockchain, you don't need to know a ton

579
00:35:57.400 --> 00:36:00.519
you're you're the person who knows how
to say ten phrases is in French,

580
00:36:00.000 --> 00:36:02.559
and when you're in France, with
your friend. It doesn't speak anything.

581
00:36:04.119 --> 00:36:07.519
You're the guy, you're the one
you know, you're the person. So

582
00:36:07.239 --> 00:36:10.079
and it doesn't take a whole lot
of knowledge to be known as someone who

583
00:36:10.159 --> 00:36:15.320
knows knows. I've already seen it
on the hill. People have now carved

584
00:36:15.360 --> 00:36:20.719
out careers for themselves by learning about
digital assets. Like there's a whole lot

585
00:36:20.760 --> 00:36:22.840
of people that know it like matters, and they hear about it and they

586
00:36:22.920 --> 00:36:28.079
know it. It shoudn't matter to
them. And there's a small number of

587
00:36:28.119 --> 00:36:30.360
people you know that if at least
sort of done the one on one understanding.

588
00:36:30.360 --> 00:36:32.360
So that's what I would say to
a young person for right now,

589
00:36:34.039 --> 00:36:37.159
play around with AI know some stuff, no, some terms, and that

590
00:36:37.239 --> 00:36:40.400
for that matter, digital assets.
The older people know it's important, but

591
00:36:40.440 --> 00:36:45.199
don't necessarily like really know how to
use it. They're not confident you can

592
00:36:45.280 --> 00:36:50.039
go far being somebody with a little
knowledge about something new. All right,

593
00:36:50.079 --> 00:36:52.719
that's great advice. And my last
question for you, what's one bold prediction

594
00:36:52.800 --> 00:36:57.639
for the future. I mean,
I can get a cheesy one change.

595
00:36:57.719 --> 00:37:00.400
I really want to say that by
New England Patriots go back to the super

596
00:37:00.480 --> 00:37:05.920
Bowl, but I don't, I
don't know. I don't know about that,

597
00:37:06.280 --> 00:37:09.039
but I think that, again,
I tend to think of things politically,

598
00:37:09.320 --> 00:37:14.199
some of our problems will be solved
in ways that are not dealt with

599
00:37:14.480 --> 00:37:19.519
in the current arguments about the problem. Okay, it sounds weird now,

600
00:37:19.599 --> 00:37:22.239
but two thousand and four, two
thousand and five that you know, the

601
00:37:22.400 --> 00:37:28.719
US government trying to block a merger
between Netflix and I'm sorry, Blockbuster Video

602
00:37:28.719 --> 00:37:30.199
on Hollywood Video because they were gonna
have too much market power and there was

603
00:37:30.199 --> 00:37:34.599
already concerns about how much they were
charging. There was also a massive class

604
00:37:34.639 --> 00:37:38.320
actual lawsuit in like twenty six attorneys
general were in it about how Blockbuster did

605
00:37:38.360 --> 00:37:42.559
their late fees, how they computed
them. There people off and everything,

606
00:37:43.360 --> 00:37:45.599
and you can have regulators get in
and how you do lead fees. And

607
00:37:45.639 --> 00:37:50.559
they had a settlement. You know
what solved that problem Netflix, That's what

608
00:37:50.679 --> 00:37:55.239
solved the problem. Right. So
the framing of well, but you need

609
00:37:55.320 --> 00:38:00.239
more competition in the video rental space
and we shouldn't allow this murder and arguing

610
00:38:00.280 --> 00:38:02.360
about they're gonna use market power and
pricing and the arguments about the late fees,

611
00:38:02.360 --> 00:38:06.079
and this is just one example of
the many. It wasn't solved in

612
00:38:06.199 --> 00:38:09.039
that paradigm, it was solved by
a whole new thing blowing it away,

613
00:38:10.199 --> 00:38:13.360
and it was irrelevant. Try to
speak to a ten year old today,

614
00:38:13.400 --> 00:38:15.440
explain it, you know, returning
a movie late? How do you return

615
00:38:15.519 --> 00:38:17.440
a movie? Athletes? Like,
how does that even make sense? How

616
00:38:17.480 --> 00:38:21.880
do you rewind it? You know, like the terms don't even make sense.

617
00:38:21.920 --> 00:38:25.639
So I think a lot of our
yeah, you know, they're going

618
00:38:25.679 --> 00:38:29.719
to be solved in ways that are
not necessarily part of the certain argument.

619
00:38:29.760 --> 00:38:30.880
And we might look back at ourselves
and say, man, that was a

620
00:38:30.920 --> 00:38:36.960
lot of energy expended when if we
had just let human ingenuity run free.

621
00:38:37.360 --> 00:38:39.599
Not that we'll solve problems, but
we're going to solve them in ways that

622
00:38:39.639 --> 00:38:44.760
are not necessarily debated right now,
you know. So that was that was

623
00:38:44.840 --> 00:38:47.280
a very unspecific broad one, but
that's what we broad But I love it

624
00:38:47.360 --> 00:38:52.000
the idea that the answer to a
lot of our problems isn't a totally different

625
00:38:52.000 --> 00:38:54.079
framing, and you don't you don't
always see it coming, you don't always

626
00:38:54.079 --> 00:38:57.280
see it coming. I think that's
a great way to end it. Kyle,

627
00:38:57.320 --> 00:38:59.519
thanks again for making the time today. This was a great conversation.

628
00:38:59.559 --> 00:39:02.480
I appreciate you're joining me. Hope
do back sometime again. I'm sure.

629
00:39:04.239 --> 00:39:08.079
Upstart partners with banks and credit unions
to help grow their consumer loan portfolios and

630
00:39:08.159 --> 00:39:14.199
deliver a modern, all digital lending
experience. As the average consumer becomes more

631
00:39:14.320 --> 00:39:19.000
digitally savvy, it only makes sense
that their bank does too. Upstarts AI

632
00:39:19.159 --> 00:39:24.599
lending platform uses sophisticated machine learning models
to more accurately identify risk and approve more

633
00:39:24.679 --> 00:39:30.400
applicants than traditional credit models. With
fraud rates near zero, upstarts all digital

634
00:39:30.480 --> 00:39:37.599
experience reduces manual processing for banks and
offers a simple and convenient experience for consumers.

635
00:39:37.119 --> 00:39:42.280
Whether you're looking to grow and enhance
your existing personal and auto lending programs

636
00:39:42.760 --> 00:39:46.199
or you're just getting started, Upstart
can help. Upstart offers an end to

637
00:39:46.440 --> 00:39:51.800
end solution that can help you find
more credit worthy borrowers within your risk profile

638
00:39:52.079 --> 00:39:57.239
with all digital underwriting, onboarding,
loan closing, and servicing. It's all

639
00:39:57.320 --> 00:40:01.320
possible with Upstart in your quarter.
Learn more about finding new borrowers, enhancing

640
00:40:01.360 --> 00:40:07.400
your credit decisioning process, and growing
your business by visiting upstart dot com slash

641
00:40:07.519 --> 00:40:13.679
foward dash Banks. That's upstart dot
com slash forward dash Banks you've been listening

642
00:40:13.719 --> 00:40:16.400
to Leaders and Lending from Upstart.
Make sure you never missed an episode.

643
00:40:16.679 --> 00:40:22.119
Subscribe to Leaders in Lending in your
favorite podcast player using Apple Podcasts. Leave

644
00:40:22.159 --> 00:40:24.199
us a quick rating by tapping the
number of stars you think the show deserves.

645
00:40:24.519 --> 00:40:27.440
Thanks for listening, until next time,