CRO Perspective: Balancing Risk and Innovation in Banking

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

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

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

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best practices around digital transformation, and
more. Let's get into the show.

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Christina, Welcome to the podcast and
thanks for joining me today. Yeah,

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thanks for having me. You know
there's an old what is a Chinese curse?

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Say, may you live in interesting
times? I think I feel like

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we live in interesting times. So
I wanted to start with two categories of

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questions. One, you own risk
if that's correct? Yes, risk,

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Yes, risk. The last week
or two have seemed like the nature of

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risks have shifted or maybe changed.
How is your perspective on risks or risks

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that we're not on your radar come
on your radar ar? So you know,

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how is that shifted in the last
couple of weeks and specifically, depending

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on when this thing publishes, we're
talking about the failure of Signature Bank,

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Silicon Valley Bank, the fear of
contagion and run on other banks. But

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it's a pretty big shift or I
think it's caused some people to think some

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things are risky. Then maybe they
didn't think we're I'm curious your take on

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on how it changes your perspective.
Yes, I think that's true. I

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think for a long time, you
know, it's it's been since two thousands

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since we had had a bank failure. And I think what this recent failure,

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particularly were Silicon Valley Bank demonstrated,
which is the power of quick communication

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that also exists now that didn't historically. We saw the news start to spread

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fast. We also saw the role
that good PR and maybe bad PR can

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play and fueling something like that.
You know, the timing of the events

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the last week with Silicon Valleys failure, We're just interesting with silver Gate announcing

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they were planning to liquidate, the
announcements that were coming out that they were,

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you know, they lost all this
money on Silicon Valley and they were

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going to turn out and do a
big capital raise. You know, that's

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that's an interesting timing and it just
it caused it caused widespread panic. And

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I think, you know, from
a bank perspective, I mean, we

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always pay attention to liquidity, but
banks have been enjoying being flushed with deposits

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for the last several years, and
now as the economy kicks back up,

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you know, people are pulling money
out at their deposits because they need it

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to run to run their business,
not what And of course you know the

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other issues that maybe were a little
bit unique to those two banks in terms

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of what was in their portfolios.
Yeah, exactly. And I think concentration

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risk is just going to continue to
be critically important as banks look at their

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at their loan portfolio. You know
what percentage of your deposits and loan should

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be in which particular industries. And
you know we've always looked at that,

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but I think now you're going to
pay very close attention to it because that's

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what's catching everybody's attention now. Um, you know they had twenty five percent

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of their depositors in this they had
fifty percent of their depositors and that and

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you know that's that's good metrics to
know and to know where your bank is

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that we might need to know the
percentage of our depositors that follow each other

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on Twitter. What looks like in
terms of how that contagient. I think

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it a silicon value. Brank was
at least exacerbated in terms of people pulling

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out the funding. You know,
the actions over the federal government over the

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weekend, I think we're helpful in
some respects because certainly it called the waters

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with all of those people who were
tweeting prolifically about their loss, and of

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course I understand why they were.
Many of those people were worried about making

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payroll, different things like that because
they didn't have access to their funds.

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And if you think about large complex
commercial customers to pay your staff, you

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probably have more than two hundred and
fifty thousand dollars in anyone bank. So

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I understood the fear and why it
ramped up so quickly. But I do

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think the actions over the weekend did
calm the waters a bit. You know,

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people didn't think they were losing millions
of dollars. So that Monday,

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when when the rest of us opened, you know, we were seeing the

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fallout that I think perhaps we would
have seen had they not taken those actions.

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I think the other interesting thing about
the run here was just how wrapping

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me twenty five percent of deposits coming
out in one day. Yeah, I

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feel like that's exacerbating a concern.
I'd heard from some institutions, which was

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this increasing rate sensitivity on the side
of depositors, that like people were pulling

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their money out because they're I'm getting
emails all the time from so Far or

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whoever else at three and a half
percent on a checking account, which is

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I mean, I'm not that young, but getting more than a percent just

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feels absurd to me on a checking
account. Now you have people offering three

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percent something like that, in the
sense of this is kind of combining in

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a world where the safety of deposits
just isn't maybe what it used to be,

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both in terms of how much I
have to compete for them, but

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then how quickly they could shift a
different direction for whatever reason, whether it's

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fears about the bank or the banking
industry, or it's you know, some

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sense of like, hey, there's
some guy every here offen me a little

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bit more money. I'm going to
go go take advantage. I think I

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think that's absolutely true. You know, technology and the ability to open accounts

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online as well as well as email
marketing just makes the market more sensitive to

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people being able to pull their deposits
more easy maybe a better way to say

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it. You know, when I
first took on my checking account, I

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would have had to walk into the
bank give them all my information. And

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now you can click a couple of
buttons and transfer the money, transfer the

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money out, so that you know
with an issue, I think most recently.

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The other thing is people are not
as sticky as they used to be,

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and some of that does does you
know people just they will go somewhere

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for a better rate. They might
leave some money at your bank. But

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people do rate shop. But it's
a lot easier to rate shop now because

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there's information everywhere. You're either getting
an email or you can look online and

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compare rates big billboards and whatnot too. But it's just very easy to compare

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rates right now. And then as
a bank, to you match everybody's rate,

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what do you do in that situation? It's yeah, competition for deposits

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is suddenly very very fierce. Yeah, it's good. It's going to be

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kind of a new world. It's
not been our I think, our normal.

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Let me let me shift topics a
little bit. I know your governor

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recently vetoed the ucc A memos.
I think tell me a little bit about

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the background on that. For anybody
who's not as familiar and then you your

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perspective on the change there. Sure, So every so many years the Uniform

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Law Commission comes out with suggested revisions
to the UCC, the Uniform Commercial Code,

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and they recently came out with revisions
in twenty twenty two that are out

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in many state legislatures now I think
twenty or thirty something like that, you

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know, just depending on your legislative
cycle. And a lot of the updates

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were to address things like emerging technologies
and so one of one of the main

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things that this bill did is people
had a hard time lending against bitcoin,

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about taking bitcoin as security for particular
loan, just because of the nature of

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bitcoin. A lot of people don't
you know right now, bitcoin is a

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general and tangible from a UCC perspective, and the way you perfect your security

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interests on in general and tangible is
you file a financing statement. Well,

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people who have bitcoin, they don't. They don't want a filing statement out

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there saying that they own this bitcoin
for a number of reasons. And the

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only other way to do it is
to take control that which that's a little

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bit difficult for a bank to take
control of this. So one of the

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major updates to the UCC was defining
things like bitcoin and cryptocurrency as cr CR

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no make me sound smart as I
can't remember. Oh yeah, cear,

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I have to stop and think about
what it sounds. Because they wanted to

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improve the negotiation negotiability of bitcoin.
The other issue that was happening with bitcoin

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is as someone would have encumbered your
bitcoin, there wasn't a great way to

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track it. So it also under
a current UCC was more difficult for there

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to be a market. There was
a market barrier to the transfer bitcoins.

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So that's, you know, the
main thing that came out of these amendments.

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There's some other things that were updated. You know, just like several

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years ago, we talked about faxes, then we talked about email. You

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know, a lot of the UCC
still talks about paper, and there's there's

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not much paper anymore. But what
has come out now is there's a certain

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segment of the population that actually believes
that as a result of this, that

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the government will have more information on
your records. There's a there's a very

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big segment of the population that believes
this is some kind of way for the

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federal government to understand everything that you're
doing. The other thing that happened with

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this UCC amendment is it defines it
defines money, and it does talk about

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central bank digital currency. It contemplates
that, but we don't have one other

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countries do. Until there's a federal
digital central bank digital currency, that doesn't

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really matter. You know, a
state can't start their whole central bank digital

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currency. But I think there I
think these people also believe that these amendments

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will create this central bik digital currency, which is problematic for a number of

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reasons, and it's just not true. I think people are worried about the

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definition of money. Who thought we'd
be arguing about that, But money for

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purposes of the UCC has a specific
definition. I think people just maybe and

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don't understand what the UCC is and
what it isn't. You know, the

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definitions used in the UCC are really
about, you know, how banks make

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loans, how commerce transfers. It
doesn't change the definition of money across the

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nation for being secrecy purposes, for
anything else. It's just about commercial transactions.

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And our governor believes some of those
arguments and has indicated that, you

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know, she believes it's a freedom
issue, and we just I disagree.

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I don't think it is our governor
has always taken a lot of pride in

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being a business first state, and
you know, we want to make things

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easy in South Dakota for people to
do business. And if we're one of

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the only banks that doesn't end up
adopting the UCC amendments, I think the

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exact opposite will be true. In
fact, I think had we had we

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passed or had she not been told
the UCC amendments, I think it would

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have been a good thing because it
would have permitted us to take security interests

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in bitcoin and eliminated all those barriers. So here here we say I never

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you would have asked me last year
what issue I would be talking about from

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South Dakota's legislative session if we not
have been whether we should pass the UCC

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No. And it's it's like a
bank lawyer geek moment for me because this

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is you know, this is combination
or my legal background and my bank background.

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But I think I think that is
a little bit of a disadvantage because

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it allows misinformation to be circulated very
quickly. People just don't understand that.

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Interesting, Yeah, tell me a
little bit. You talked a lot about

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bitcoin and cryptocurrency in there. Are
you guys doing things in crypto. Where

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do you think community banks ought to
be when it comes to engaging with crypto?

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Such an interesting space. Obviously we
talk a lot about Silicon Valley Bank

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because it was the larger of the
two banks hell, but the other was

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Signal Tamago is really closely aligned with
crypto and being the back end for a

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lot of crypto services. What's your
sense of where banks are on where what

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you guys are doing or what you
think is interesting in the crypto space for

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banks these days? Well, there's
a lot of regulatory guidance out there,

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and I think some banks don't know
whether they should do it. I mean

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there's I think there's a lot of
fear surrounding the crypto industry just in general.

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What risk does it actually pose to
the bank? But I think a

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lot out of that depends on how
a community bank might be using it.

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Maybe cryptocurrency is an asset that someone
can have as part of their furrow one

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K or in um, you know, sometimes a crypto maybe a crypto mutual

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fund, things like that. I
think the custody of crypto assets is probably

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the actual issue that most community banks, frankly, just from a technology standpoint

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are capable of doing right now.
But if if most, if most community

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banks were to pull their records their
customers are buying and selling cryptocurrency, they

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probably have customers. We have in
South Dakota, we have bitcoin miners.

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Um, we have people who are
I don't know if energy is cheap here,

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but you know, we have we
have those businesses and in fact,

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in some of our communities they love
it because they're like making all sorts of

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money on the electrical bills. Um, you know, a rural country because

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of these bitcoin miners. So you
know, I think it's going to be

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a slow adopt in many of the
community banks, and if if they do,

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I have heard of some of the
core providers linking up with a way

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for customers to buy crypto. So
you're linking through the bank, but it

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doesn't actually really impact the bank.
It's just a way for people to buy

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crypto. Yeah. Yeah, it's
the whole crypto custody. I mean that

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the real crypto hardcore folks are like, if you're not self customing with like

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a hardware wallet in the year,
then you're not really doing crypto. And

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I go, well, then the
average consumer is probably never doing crypto.

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That's the requirement to really be in
the game. And I think a lot

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of it is you make it accessible. So one thing coin base has done,

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I feel like it's like, hey, I can like just you know,

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you can go through the MetaMask route
and get and you have a wallet

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and do that. But you know, you can go to coin basins,

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go click and I oh and some
ethereum, I bitcom own whatever, and

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it feels much more accessible. I
feel like that's, I want to say,

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necessarily underappreciated. Many crypto do appreciate
it, but I certainly when I

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hear that, like, do you
don't have your own you know, self

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custody. I'm in self custody in
my cash either, you know. You

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know. I think one of the
interesting things about crypto is people generally,

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although some people are both camps fall
into two paymps. One is it's a

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useful investment tool, it's an asset. You know, you buy it because

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you hope that it will appreciate in
value. And then there's another camp who

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really things that they should be able
to pay for everything with cryptocurrency. They

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focus more on it being used as
a as a payment mechanism, and I

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think sometimes the goals of what you're
using cryptocurrency for differ, and so how

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banks would approach it would be different, you know. I Yeah, there's

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probably the third group too right to
think of it as a stable store of

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value to replace currency, which is
kind of counter to the asset. I

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mean, at some point it's that
for that to be true, the hey,

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this is a great asset, they
keeps going up in value, Like,

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it's not a stable store of value
that's going up a lot, And

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as long as it's going up a
lot, it's going to be subject to

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also coming back down a similar amounts. So what do you think of it

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as a replacement for the dollar?
Is a stable store of value, You've

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got to get to a place where
the price isn't accelerating or desolarity in dramatic

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And so that's the other thing.
I definitely hear the like payments. I

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hear the hey, I'm buying it
because it's going up and people made a

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bunch of money. And the real
I think the real hardcore people who think

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this is the future really view it
is like a better replacement, something will

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be more stable than the dollar.
Eventually it's obviously not where it's at today,

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but that conceptually it should have a
framework that is not subject to inflation,

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to central bank you know, changing
interest rates as we've seen that shifts

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the value of your money and dramatic
ways outside of your control. That it's

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a it should be a more stable
store of value if it works the way

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it's whether or not it's there now
is a different puation. But that's like,

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I think a third camp of people
who really believe in this is the

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future of you know, the way
we store value. In fact, as

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we've been debating this ucc information in
South Dakota, a lot of the people

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on social media and whatnot are talking
about the fact they're saying, you know,

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I am a bank, um,
and this is this is going to

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make sure that I still have my
money when you know kind of the world

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crumbles or the banks all fail,
and it's a it's an interesting again,

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it's an interesting approach for those hardcore, hardcore booth. Yeah, well I'm

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not I own a bitcoin, but
not enough to have thought that it's a

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better store of value at least not
yet. Um. Anyway, we're going

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to shift totally to a different area, which is you have an interesting role

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and that you are in charge of
risk, but also HRUM, which is,

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you know, I think, a
sightly different area. But you did

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describe to me when when we were
speaking earlier that in some ways view people

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in HR not HR like activities,
but like the human capital is one of

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the greatest areas of risk in the
organization. So I'd love for you to

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dive into what you mean by that
and how you think about the importance of

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people and how you manage the kind
of risks around that and how you manage

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them well. We do out at
our bank say often people are most valuable

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asset and as a result of your
asset a subject to risk. Um you

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have to take care of your asset, and I think we've seen that particularly

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COVID accelerated it certainly a lot where
people can work everywhere basically for most for

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most companies, and so as an
organization we are competing for the best and

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the rightest people from not just banks
down the street or a talent over,

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you know, across across the country. And so not only do we have

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to constantly be thinking about attracting new
talent, but I think a lot of

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times people miss retention. Talent retention. You can you can attract people sometimes,

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but you need to make with attractive
benefits or you know, good interviews

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and a good sense of community.
But you need to make sure that you're

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attaining people too. And one of
the things that I think has been interesting

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is we've watched kind of the shift
in employee warrants and employee needs. Is

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you know, some some sort of
benefits will appeal to some people, but

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if you, you know, maternitily, for example, if you have no

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plans to have children, is that
an attractive benefit? And if not,

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what's comparable? What's important in your
life? And what is your employer doing

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to support your interests there? You
know, whether it's maybe pet insurance or

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financial support for you to take care
of getting an advanced degree, or maybe

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leave to take care of an aging
parent. So I think you just have

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to be constantly thinking about people because
at the end of the day, we

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can't do any of the other things
we've just been talking about without people,

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at least not yet. I mean, I know there's AI and whatnot,

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but we still need people to do
the majority of things in a bank.

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So you need people, and I
think a lot of times because of our

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focus on technology and whatnot, you
start to lose sight of the people that

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are needed to run an organization.
I want to ask you a slight shift

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on that, because I love to
focus on people retention. But one of

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the things I was told my first
job was at IBM, and I was

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told by somebody when I joined that
I says people often joined a company but

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they leave a manager or a team, meaning that those benefits. A four

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oh one K looks good, the
salary is good, But then, like

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Mike, real experience at the company
is mostly about the person who manages me,

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the team I work with, the
day to day experience of it's it's

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not the kind of the general benefits, and that often it's that kind of

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individual experience that matters the most in
terms of retention. So I'm curious how

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you think about the risk on that
level, because there's the kind of benefits

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or that which often can be important, like having a kid. I don't

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have maternity leave that I like like, which may not come back or I

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may it does. But on the
flip side, I think, how do

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you manage training, training employees,
managing culture so that people are enjoying their

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day to day experiences often equally if
not more important in terms of retention and

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employee morale and satisfaction. I'm curious
how you think about that on that level.

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I think that's absolutely true. I
think company culture is also just as

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important as your managers, but maybe
that your managers are embracing company culture.

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Somebody said it doesn't matter, it
doesn't matter what's on the wall owners,

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what's happening in the halls, and
I think that's true. A lot of

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organizations have very great culture statements,
very great. You need to make sure

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that you're living them, otherwise there's
no point in having a culture statement.

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I think that the role of a
manager is increasingly important because there's just not

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that loyalty. You know, you
don't hear about people working at the same

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place for forty years, So people
will eat their manager. And so as

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a manager, you're going to have
to learn to manage different If you have

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teams that are fully remote or primarily
remote, that's a different style of management

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than we've been used to in the
past. I think the other thing that

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we find is people genuinely want to
feel valued, and for a long time

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that was money, and I think
there's there's still a role that money does

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make an employee feel valued, but
they want to feel seen and they want

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to feel heard. And you know, previously a lot of managers, you

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know, this is your job.
You will show up, you will do

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it, you will do it well, and you like your manager. But

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now I think it's more about listening
to your people, even if you don't

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agree with what they're saying, but
making sure that they feel heard and that

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they feel like they have an input
into the company. And that's that's just

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a definite shift even from from what
I first started in banking in order to

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be successful, because if people feel
like your manager doesn't care about you and

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they're treating you as a cog in
the wheel, what's what what uses it

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00:21:30.920 --> 00:21:36.039
to stay there? You want to
feel like you're bringing value to the organization

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and the community. You know.
I think we've also seen, particularly with

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this next generation, is you know, they care about the community, they

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care about the world that they're living
in, and they want to know what

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the corporation or what the bank is
doing to support the community, whether that's

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your volunteer or donations, reducing you
know, recycling, even are you recycling

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at your bank. That's just increasingly
important to people as well. And I

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00:22:03.400 --> 00:22:07.079
think sometimes it's easy for people to
what we work Immunity Bank. We've always

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done that, you know, which
is true. But you need to toot

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your own horn a little bit in
terms of making sure that everyone understands the

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good work that you're doing. I
think a lot of banks are kind of

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humble that way. I think we
have to be more articulate. I mean,

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don't go out and break about it, but you can be articulate about

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the good work that you are doing, because that is very important. A

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lot of people entering the workforce,
they want to know they're working for a

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company that does good. I love
that, and I love that phrase what's

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happening in the halls versus what's happening
on the walls. That's a great description

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00:22:37.039 --> 00:22:41.599
of the I mean the inspiration poster
that's on the wall that tells you it

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was supposed to be like, that's
not I was talking to our r HR

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leader the other day and she was
making the comment that like, you can

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write whatever you want on a sheet
of paper, but ultimately culture is like

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what you do and you write on
a sheet of paper, does not that

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doesn't change the incentives, what's rewarded, what's punished, what's accepted, what's

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not accepted. Then you can't change
by writing a memo unless you're actually going

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to live live those values in some
way and change the structure of how you

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do things. I think that's a
great point. And the other thing I

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00:23:10.839 --> 00:23:12.960
wanted to riff on was you made
the comment about like your involvement in the

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community and helping your employee that I've
also found that it's super helpful to help

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00:23:18.640 --> 00:23:22.160
employee, see, you know,
stay connected with how their job helps your

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00:23:22.160 --> 00:23:26.319
customers, because sometimes you can be
in this kind of back office or even

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00:23:26.359 --> 00:23:27.799
your customer face you're saying, I
got to take some calls. I've got

340
00:23:27.880 --> 00:23:33.000
you know, your que and your
satisfaction scores and your wait time and whatever

341
00:23:33.119 --> 00:23:37.119
and these kind of metrics, and
you can lose the connection of how your

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00:23:37.200 --> 00:23:41.680
job helps the institution serve a customer
a member of the community in a real

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way. And I feel like that
connection is equally important to feeling value and

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purpose in your role as saying like, how do you how does what I'm

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00:23:48.559 --> 00:23:52.039
doing connect to I see. It's
a lot for our machine learning people are

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00:23:52.160 --> 00:23:53.599
data science is going, but you
know it's a numbers game. Well,

347
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now you're like, you're helping people
get access to credit, that's what you're

348
00:23:56.400 --> 00:24:00.799
that's what you're doing, and you're
helping manage the investment assets. Like those

349
00:24:00.839 --> 00:24:03.160
things are important, but it can
be easy to lose sight of that connection

350
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between your day to day and the
customers that are being helped by the services

351
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the institution offers. I would agree
with that one hundred and ten percent.

352
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I think particularly if we think about
banks. You know, thirty years ago,

353
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almost everybody was touching cash or you
know, running checks through and talking

354
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to customers. Now, if you
think about how banks operate, a large

355
00:24:26.480 --> 00:24:30.559
portion of you know, how the
bank actually runs is not done. You

356
00:24:30.599 --> 00:24:34.799
know their positions that nobody frankly outside
of the banking industry knows that exist.

357
00:24:34.880 --> 00:24:40.599
They're not aware that there's you know, a huge IT departments or large compliance

358
00:24:40.640 --> 00:24:45.279
departments. You know, my role
is difficult and then I do you know

359
00:24:45.440 --> 00:24:51.440
risk You have to be deliberate about
understanding and sometimes connecting the dots for people

360
00:24:51.880 --> 00:24:56.519
because you know, the compliance team
is reviewing truth and savings disclosure. Okay,

361
00:24:56.680 --> 00:25:00.039
but what does that mean? You
know, how does that tie into

362
00:25:00.119 --> 00:25:04.799
the bank's growth goals. You know, I'm drafting the loan document. I

363
00:25:04.839 --> 00:25:10.200
think one of the easiest ways though, to kind of combat that back office

364
00:25:10.359 --> 00:25:15.759
versus you know, frontline customer facing
role is to just be deliberate and communicating

365
00:25:15.799 --> 00:25:19.839
and to bring the people along with
you in the bank successes. You know,

366
00:25:19.920 --> 00:25:23.839
if you have a big loan closing
or loan growth, make sure that

367
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you're also being communism of the people
loan operations, or that you review the

368
00:25:29.279 --> 00:25:33.519
documents or helped you with the closing, ordered the appraisal, because sometimes I

369
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think people lose sight of that connection
to the bigger purpose. And then I

370
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think as an organization, you have
to be deliberate about why banks are good

371
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for the community because otherwise people just
see it as yeah, we do loans,

372
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we do deposits, right, but
in many communities without a bank,

373
00:25:51.720 --> 00:25:53.960
small businesses one start, people won't
buy their first homes. You know,

374
00:25:53.960 --> 00:25:57.599
people can say for college, you
can plan for retirement, like banking is

375
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one of the few curs that impact
X people on almost every point in their

376
00:26:03.319 --> 00:26:07.599
lives, and so you have to
be very deliberate in helping the connect the

377
00:26:07.640 --> 00:26:11.680
work that these people are doing on
a daily basis to that simple fact.

378
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A very few industries can say that
banking, banking, and you know,

379
00:26:15.119 --> 00:26:21.480
lending can. But it's sometimes it's
just easy to lose sight of that.

380
00:26:21.559 --> 00:26:23.599
When you're, like you said,
answering seventy five fold calls, or you're

381
00:26:26.599 --> 00:26:30.880
reviewing seventeen different marketing ads, you
have to really stop and if someone doesn't

382
00:26:30.960 --> 00:26:36.759
understand it pointed out to them,
or let themselves celebrate the success of the

383
00:26:36.839 --> 00:26:41.480
ultimate customer result. So I'm about
to right after this, I'm going to

384
00:26:41.519 --> 00:26:42.480
go to our all hands meeting.
And one of the things we do here

385
00:26:42.480 --> 00:26:47.799
at Upstart that I think is really
helpless as they read a a borrower written

386
00:26:47.880 --> 00:26:51.039
review every week to the entire company, and we kind of pull them out

387
00:26:51.039 --> 00:26:53.519
because you know, we get reviews
written good and good and bad. But

388
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I think oftentimes it's you know,
I'm getting this loan to help me X

389
00:26:57.680 --> 00:27:00.599
pay off a bill in the expect
or pay for this thing, or I'm

390
00:27:00.599 --> 00:27:04.000
getting out of credit card debt.
You know that connection to that's a really

391
00:27:04.079 --> 00:27:08.000
human being whose life was impacted by
the services that you're offered. I think

392
00:27:08.079 --> 00:27:12.039
is really important to help us stay
aligned to not just like what you're trying

393
00:27:12.039 --> 00:27:15.640
to do, but the purpose and
the why I'm behind what you're trying to

394
00:27:15.640 --> 00:27:18.319
do and how you're helping people,
and that's I enjoy that every week.

395
00:27:18.319 --> 00:27:21.480
I look forward to listener to that
being right. It's a fun way to

396
00:27:21.480 --> 00:27:25.799
stay connected to the mission. And
as we had a fun experience recently.

397
00:27:25.839 --> 00:27:27.960
We're a member of our fraud team, which is normally kind of a back

398
00:27:27.960 --> 00:27:33.480
office and I hate using that term, but non customer facing role sort of

399
00:27:33.480 --> 00:27:37.359
position. They went out and did
training in one of our communities and we

400
00:27:37.359 --> 00:27:41.759
were talking about scams. Well,
a couple days later, this customer comes

401
00:27:41.799 --> 00:27:45.480
in and they have somebody on speaker
phone. They walk into a lobby,

402
00:27:45.519 --> 00:27:49.000
they're like, this is what this
is what this employee was telling us about.

403
00:27:49.160 --> 00:27:55.200
Like it's actually happening to me right
now. It was amazing, right

404
00:27:55.319 --> 00:28:00.000
because that real example when like literally
a couple of days later, this customer,

405
00:28:00.240 --> 00:28:03.079
I mean, we're not happy to
customer encountered the scam, but it

406
00:28:03.160 --> 00:28:07.039
just really allowed that person and fraud
to see what a difference they're training made.

407
00:28:07.079 --> 00:28:10.240
As this person walks into the bank
with the with the scammer on speaker

408
00:28:10.240 --> 00:28:15.559
and we're like, yeah, I've
got the scammer here trying to take my

409
00:28:15.640 --> 00:28:18.720
money and I'm not going to let
them. Oh that's great. Um,

410
00:28:18.960 --> 00:28:22.839
so I we're running short on time. But I did want to ask one

411
00:28:22.839 --> 00:28:26.440
other category for you. It's something
I love to ask people in the risk

412
00:28:26.559 --> 00:28:32.839
role generally, which is how you
think about your role in relation to the

413
00:28:32.880 --> 00:28:37.119
lines of business the other parts of
the organization, because I feel like sometimes

414
00:28:37.240 --> 00:28:40.359
risk and it kind of sits like
with legal can get a bad name where

415
00:28:40.359 --> 00:28:41.559
it's like well as the guys who
say no and make it hard to do

416
00:28:41.599 --> 00:28:44.319
all the stuff we know we need
to do and want to do, and

417
00:28:44.319 --> 00:28:48.920
the kind of like the obstructionists to
to to innovation sometimes. And I'm not

418
00:28:48.960 --> 00:28:51.559
trying to put that on you,
but I think that can be the perception

419
00:28:51.640 --> 00:28:53.960
people have of risk. And so
I'm curious how you think about, uh,

420
00:28:55.079 --> 00:28:56.920
you know, your role and engaging
with the other parts of the organization,

421
00:28:57.359 --> 00:29:00.880
um to keep a positive and be
a good partner to them versus you

422
00:29:00.880 --> 00:29:06.359
know, being an obstruction to things
getting done the department of No. Yes,

423
00:29:06.559 --> 00:29:11.000
I am familiar with that with that
characterization, you know, I approach

424
00:29:11.079 --> 00:29:15.680
it in two separate ways. One
in order for an organization to be successful,

425
00:29:15.880 --> 00:29:19.119
you have to have asset generators and
asset protectors, because if you're just

426
00:29:19.200 --> 00:29:22.640
generating assets and no one's coming along
the back end to make sure that you've

427
00:29:22.680 --> 00:29:27.039
got appropriate controls or reviews and whatnot
in place, your organization is not going

428
00:29:27.039 --> 00:29:33.000
to be successful. So you really
do need both just to counterbalance each other.

429
00:29:33.759 --> 00:29:37.599
I always say that if people think
that you know the compliance team,

430
00:29:37.680 --> 00:29:41.960
if everything they're sending is getting it
approved, that's probably not great. There

431
00:29:41.000 --> 00:29:45.160
should be some natural tension there,
and that tension should exist because you have

432
00:29:45.279 --> 00:29:51.880
different overall goals. But the top
goal is protecting the company, and that's

433
00:29:51.880 --> 00:29:53.920
the goal we're all working towards,
is to have a successful company. Some

434
00:29:55.000 --> 00:29:56.960
of us do it by generating revenue, some of us do it by protecting

435
00:29:57.000 --> 00:30:02.960
it the other. The other approach
I try to take is really to be

436
00:30:03.240 --> 00:30:07.000
a partner and explain the why.
I think a lot of times where people

437
00:30:07.039 --> 00:30:11.759
at risk sometimes get that attitude is
there's just like, well, no,

438
00:30:11.759 --> 00:30:15.119
would I understand. But if you're
there and you're like, well, have

439
00:30:15.200 --> 00:30:19.680
you considered this would this work for
you know this particular customer situation? Could

440
00:30:19.680 --> 00:30:23.400
you say it this way? In
this particular ad. If you give people

441
00:30:23.880 --> 00:30:29.000
options or ways to help them problem
solve, then they're going to see you

442
00:30:29.240 --> 00:30:32.079
as more of a partner than just
saying, you know, that's not a

443
00:30:32.160 --> 00:30:34.160
proved you can't do it that way. I think the other thing that is

444
00:30:34.200 --> 00:30:40.000
helpful is honestly sometimes I think people
think that like you made up that particular

445
00:30:40.119 --> 00:30:44.279
rule that you're citing, like you
did not write your congressman or woman.

446
00:30:44.440 --> 00:30:47.920
You know, I think that's also
helpful, Like if you just empathize with

447
00:30:47.960 --> 00:30:52.119
them. I know this is a
pain, I'm sorry, this is what

448
00:30:52.200 --> 00:30:55.079
the law says. We're going to
have to just work through this together.

449
00:30:55.640 --> 00:30:57.799
You know. People just again want
to be heard and they want to understand

450
00:30:57.960 --> 00:31:02.720
the why behind you're taking the position
that you are. Yeah, I love

451
00:31:02.759 --> 00:31:06.160
the why, and it is the
the You're not the rule maker, just

452
00:31:06.240 --> 00:31:08.799
the one there to When we started
the business, we had this rule for

453
00:31:08.839 --> 00:31:11.119
a while, this goal of like
keeping our CEO out of jail, which

454
00:31:11.160 --> 00:31:14.319
is a bit tongue in cheek,
nobody really thought he was going to jail.

455
00:31:14.480 --> 00:31:15.680
Was like, let's not screw up
so bad. We're you know,

456
00:31:15.680 --> 00:31:18.839
we had a regulator knock on the
door about what the hell are you guys

457
00:31:18.839 --> 00:31:22.680
thinking, or you know, somebody
knocking on the door from the federal government

458
00:31:22.759 --> 00:31:25.480
or a state agency, gone,
what on earth are you guys thinking?

459
00:31:26.079 --> 00:31:27.920
Uh? So you need those people
to protect it, you know they early

460
00:31:27.920 --> 00:31:34.359
It feels like very personal protection when
you're scratch um, but it is an

461
00:31:34.400 --> 00:31:37.799
important role. Well, this has
been a great conversation. I get three

462
00:31:37.880 --> 00:31:41.960
questions I ask everybody at the end
of the podcast, so ask your current.

463
00:31:41.960 --> 00:31:45.720
Here we go three questions. Number
one, what's the best piece of

464
00:31:45.720 --> 00:31:49.119
career advice you've ever gotten? Um? You know, just to show up

465
00:31:49.160 --> 00:31:52.440
as the best version of yourself.
Um. Every day. Just show up

466
00:31:52.440 --> 00:31:56.559
as the best version of yourself.
Um. It's easy to get distracted.

467
00:31:56.920 --> 00:31:59.160
Um. And then take them on, you know, every days a new

468
00:31:59.200 --> 00:32:01.279
day, to show up the best
version of yourself that day. Could I

469
00:32:01.319 --> 00:32:04.279
give that advice to my kids every
day? I hope, I hope it

470
00:32:04.319 --> 00:32:06.599
sticks every now and then. All
right, Segod, question, what's the

471
00:32:06.640 --> 00:32:09.440
best piece of advice you've gotten about
the banking space in general? You know,

472
00:32:09.480 --> 00:32:14.160
it's a marathon, not a sprint. I think it's it's very easily

473
00:32:14.400 --> 00:32:19.880
to get discouraged or to focus on
one particular problem, But you know,

474
00:32:19.960 --> 00:32:23.160
my bank has been around since a
great depression. It's it's a marathon.

475
00:32:23.759 --> 00:32:28.640
We make decisions every day. Some
of them are based on right and what's

476
00:32:28.680 --> 00:32:30.720
good right in that moment, but
most of all it's it's a long term.

477
00:32:30.799 --> 00:32:34.799
It's a long term play. Yeah. I like that. It's a

478
00:32:34.839 --> 00:32:37.279
marathon on a sprint. The last
question, what's one bold prediction for the

479
00:32:37.319 --> 00:32:43.519
future. I see, um.
I think we're going to see more banks

480
00:32:43.559 --> 00:32:50.319
partnering with FinTechs, and more banks
looking outside of their core providers for solutions,

481
00:32:51.440 --> 00:32:55.799
and in banks looking to solve problems
by additional relationships instead of relying so

482
00:32:55.880 --> 00:33:01.200
heavily on their course just to solve
their problem. That's an interesting that's an

483
00:33:01.200 --> 00:33:07.440
interesting statement, and it always runds
me whenever people talk about the fintech bank

484
00:33:07.480 --> 00:33:08.839
relationship being like this was a new
trend, and I go, well,

485
00:33:08.880 --> 00:33:12.960
the cores are kind of like the
original fintech. It's been around for as

486
00:33:13.000 --> 00:33:19.319
long as there's been technology and banking. There have been financial technology providers provide

487
00:33:19.359 --> 00:33:23.240
solutions to banks and credit unions.
But it is interesting to think that it's

488
00:33:23.240 --> 00:33:28.000
been a somewhat for I mean,
not super recently but for a long time

489
00:33:28.000 --> 00:33:30.319
as a relatively stagnant set of players
that were broadening and now you've got a

490
00:33:30.359 --> 00:33:32.680
lot of I don't mean that in
a negative way to the course, but

491
00:33:32.680 --> 00:33:37.039
it was a small group that was
kind of pretty stable maybe a better word.

492
00:33:37.039 --> 00:33:39.039
And you're seeing a lot of entrants
in that and that's an interesting will

493
00:33:39.079 --> 00:33:42.799
be an interesting space to see evolved
because there's I think a lot of opportunity

494
00:33:42.799 --> 00:33:45.000
and maybe no faster pace of innovation
than we've seen in the last handful of

495
00:33:45.079 --> 00:33:50.400
years. Yeah. Somebody said last
year or two years ago at ABA convention,

496
00:33:50.680 --> 00:33:53.000
you know, the pace of banking
has never been this fast and it

497
00:33:53.000 --> 00:33:57.559
will never be the slow again.
And I think that is one hundred percent

498
00:33:57.640 --> 00:34:01.079
true, particularly as you look at
just solving problems. How are you going

499
00:34:01.079 --> 00:34:04.319
to solve this problem? Are you
going to partner of the fintech to do

500
00:34:04.359 --> 00:34:07.480
it? Are you going to wait
for your core provider? And is frankly

501
00:34:07.559 --> 00:34:10.159
that the best product for your bank? I think that's what we're going to

502
00:34:10.199 --> 00:34:14.239
see in the next the next year
or two. Excellent. I love it,

503
00:34:14.320 --> 00:34:15.400
Christia. Thank you so much for
your time today. This this is

504
00:34:15.440 --> 00:34:20.719
a great talk. Yeah, thank
you. Upstart partners with banks and credit

505
00:34:20.800 --> 00:34:24.480
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506
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517
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518
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521
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