Cross-selling Members for Long-term Growth

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

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episode features a webinar conversation between Janel
Christensen, who's been a previous podcast guest,

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so welcome back, Janel, and
Upstarts Drew Megre. They really dive

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into what is going on at Commonwealth
see you, the current state of personal

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lending, how that's changing, how
you can use AI and mL to improve

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the lending experience and the lending process
for your customers, Strategies for creating high

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quality member experiences, specifically in personal
lending. They also delve a little bit

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into auto lending, kind of what
are the new things there, how do

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you streamline what can be a cumbersome
process in the auto lending space, and

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how you can diversify your portfolio and
the value of diversifying your portfolio into shorter

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duration higher yield assets which can be
pretty useful in economic situations like the current

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one. So please enjoy this conversation
Withdrew and most specifically Janel Christensen. Thanks

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for joining us again. I'm Mike
Krakowski. I'm the moderator for today's program.

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Today, we're fortunate to have with
us three expert speakers who are going

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to engage in a fireside chat of
sorts talking about the key issues here,

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as well as answering questions from our
audience at the back end of our program

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as well. Our speakers today include
Really Turo, President and CEO of Reading

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Cooperative Than. Julie Thurlow is the
president and CEO at Reading, and she

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is responsible for the bank strategic direction
and management. Julie also serves as president

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of the RB Charitable Foundation and as
vice chair of the American Banking Association.

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She's a past chair of the ABA's
Core Platform Council, and she currently serves

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as a member of the Government Relations, Administrative Committee and Membership Council. Who

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is joined today by Phil Bryant,
Executive vice president and Chief Banking Officer at

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Reading Cooperative Bank. Prior to joining
our CB, Bill spent five years as

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President and CEO of the Cooperative Bank
and was the EVP and Chief Lending Officer

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at Georgetown Bank. Over the course
of his extensive lending career, full of

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served as Senior Vice president of Retail
and Lending at Metro Credit Union, Senior

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Vice president and Small Business State Manager
at TD Bank, vice President of Retail

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Banking at Metro West Bank, and
Vice President Business Development Officer at Citizens Bank.

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Finally, we're pleased to have with
us Ed Walters. Ed is vice

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president of account Management for Lending Partnerships
at Upstart. He is over twenty five

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years of financial experience, of financial
services and management consulting experience, and it

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has held various leadership roles, driving
consumer lending growth and establishing fintech partnerships,

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building pmos to support bank transformations and
acquisitions, improving business resiliency, and leading

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technology development. It's all among Julie, Phil and Ed. They have a

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lot of ground to cover, but
they have a lot of great ideas.

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So I'm going to turn the program
over to our host here and that is

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Ed Walters at Upstart. Ed the
floor is now yours. Great. Thank

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you, Mike Into American Banker for
hosting us today. So we'll plan for

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about thirty minutes of content and then
we'll leave fifteen minutes for Q and A.

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Today it is Mike said, it's
gonna be a fireside chat, so

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we want this to be interactive.
So as we're having dialogue and asking questions,

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is if you have questions throughout,
please add them in the chat and

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we're applicable. We'll try to answer
them within the flow. But again and

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we'll leave time at the end.
Julie Phil and I really appreciate you just

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taking the time out of your day
to be with us, and we hope

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that you find our discussion valuable and
relatable to the environment that we're all operating

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in today. So when I begin
these, when I do these conversations,

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these fireside chats, what I'd like
to do first is for the audience is

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give them an overview of our organization. So the our two organizations that are

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speaking today. So Julian Phil,
let me let me ask you guys,

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could you go first and let's share
who is Writing Cooperative Bank, and let's

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describe a little bit about the markets
you serve for the for the audience.

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If you went mount sure, So
Writing Cooperative Bank has been in business since

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eighteen eighty six. We're a mutual
organization and for the last ten to fifteen

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years, we've been thinking differently or
probably the same about our markets. We

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actually were founded for the working man, and we have really focused ourselves on

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a couple of gateway cities that are
in our area, identifying where there is

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need and using a human centered design
approach to hear from the customer what their

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challenges are. And their challenge is
access to credit and even banking. When

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there are check hashers on every corner
in these communities, clearly folks don't have

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access to the full array of financial
services that are other markets benefit from.

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So we've really been focused and identified
the underserved customer and that's when we started

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working with you, folks. And
just to add on to that that,

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I think that as a community bank, pretty much all community banks they have

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that focus on exceptional customer service.
But we really tried to take a look

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at what are the needs, what's
the competition like out there today, how

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can we how can we combine tremendous
or great technology along with customer service to

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create noble hoals efficiencies that you can
get from technology, and we are we

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are willing to embrace technology and use
technology to improve the consumer outcome. Great,

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well, thank you guys for taking
a little bit to give the audience

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an overview. Let me take just
a couple of slides and promise this this

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is the extent of our slide presentation
today, and it's really just going to

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be about the dialogue. But let
me talk about just Upstart for a moment.

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So Upstart is a leading artificial intelligence
lending marketplace really that's designed to improve

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access to affordable credit while reducing the
risk and cost of lending for our learning

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partners. And so what does that
mean? And so, so the thing

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about Start is we're this, we're
a marketplace that enables our lending partners to

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acquire new customers that align with the
bank's risk appetite, which is which is

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very important. And what it does
is we're able to provide our lending partners

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a means to diversify and expand their
learning portfolios by growing with asset classes such

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as personal and auto loans. And
in particular, we're personal loans are attractive

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right now to our letting partners because
they accomplished two things. They're a high

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yield and they're short duration asset,
which is which is really important in a

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very volatile environment with with with the
rate environment. And then you talk about

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providing access to credit and be able
to approve more borrowers, and so how

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we're able to do that is through
upstarts AI credit decisioning model, So we

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use over a thousand data points and
advanced and machine learning algorithms really to find

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the credit whether credit worthy borrowers that
fit into a bank's risk appetite. Right,

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So really the bank themselves defines that
that that credit policy and the Upstart

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model is able to fit borrowers into
that fine borrowers that meet that expectation,

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and all of it is delivered in
a fully modern, all digital experience,

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which which really is is what the
consumers is expecting today. So let me

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explain the last size really okay,
like how does that? How does that

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work? And so banks can partner
with Upstart really on two fronts. There's

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there's the Upstart referral network and then
also within a bank's digital infrastructure sometimes referred

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to as ours our white label solution, and there's two sset classes currently that

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Upstart supports. So there's there's a
personal loan as well as they're the auto

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loans. So now the referral network, what that does is it allows our

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bank partners to subscribe to our marketplace
and really they define on a monthly basis

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what's the desired volume target that they'd
like to get as well as kind of

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the core underwriting criteria and economic criteria. And then so then as borrowers are

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coming into upstart dot com, as
we're driving kind of as a national marketing

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effort, those borrowers are the match
to a single lender that is providing them

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the best rate based upon the capital
that's available of where they meet that lending

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partner's criteria. So it's really matching
up a benefit to the consumer and a

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benefit to the lending partner right making
that connection, and then that borrower becomes

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a customer of the bank, So
it's originating on that bank's paper and it's

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becoming a customer, and so it's
really an effective tool for driving growth all

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within a bank's economic and risk tolerances. Now, the white label solution that

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is something that's integrated within banks fully
branded experience within a banks kind of a

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digital website, and so it's really
what that intent is for is to serve

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kind of existing clients or any prospects
that are coming to your website, are

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coming into your branches. And with
the upstart program, banks have the flexibility

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to either leverage one or both of
those solutions. It really depends on what

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your business need is, what are
you trying to accomplish Writing, for example,

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actually uses both and we'll be able
to talk a little bit about that

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today. So before we go into
the discussion, I think everyone's acknowledging that

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the lending environment has changed right a
lot over the past eighteen months. Banks

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are monitoring the macro impact on their
customers. We're going through a rising rate

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environment. But what hasn't changed is
that consumer still has expectations for digital improved

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digital experiences and lending needs exist.
And so what's critical right now is for

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a bank is how do you provide
that digital experience and support those lending needs

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but really be confident that you're originating
loans within the risk tolerance right with just

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a lot of moving pieces. So
what we like to do is is before

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we start getting to some of our
questions, let's get to know you a

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little bit. And let's start with
two polling questions. So let me pull

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up our first polling questions. So
this is the audience participation be great.

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So the first question we have is
what is the sediment in your organization right

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now? I'm consumer personal lending.
This gives us a chance to get a

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sense of or do you have do
you offer personal loans today? Did you

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offer how is how is that change
your your perspective over the over the past

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year. Okay, I'll give it
just a couple more seconds. We're getting

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some It is one more second,
all right. I always, I always,

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you know, I was either go
too fast right or I take too

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much time. But well, I
think we've got enough. Let's switch this

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one. Okay, So interesting,
pretty pretty even distribution kind of across the

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categories. Any anything here that surprises
any of my fellow panels kind of what

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you would expect. So I actually
I'm not surprised, especially at the very

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first first question. When I think
about our markets, most people use their

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credit card to day instead of getting
a personal loan, even though a personal

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loan is probably easier for them,
or what about by now pay later?

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So what is actually replacing the consumer
loan? I'm about it, but I

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also think about it, what's what's
in the consumer's best interest and we can

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talk about that more later. Yeah, no, that's great. Surprised.

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So the next is is about the
digital approach. So what is your organization's

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digital approach to consumer personal ending?
Get a sense of you know, your

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consumers still required to come to your
to a branch, to to close or

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have you built a digital experience and
and that digital experience have you have you

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built on your own or have you
looked to partner with with a fintech to

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to provide that experience. Let me
pause here for a moment. Okay,

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one more second. All right,
let's go to the answers. Okay,

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so so interesting, almost almost fifty
percent still required to come into a branch.

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Yeah what any any reaction there?
Uh, Julian phil Well, I

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think this is a great opportunity for
you to talk about up start. Yeah

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well good, that's when we were
too, so it's not surprising at all.

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Not surprising. Yeah, well great, So let's let's actually here.

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Let me do this. I'm gonna
just let me just move to this slide

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because really I'm doing more slides,
but I'll just leave this up so you

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guys can get everyone can see more
of our faces, which is really what

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people want to see. All right, So let's let's jump into the really

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the first question. So I had
the audience kind of give us their feedback.

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Could you talk a little bit about
reading as far as what are your

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goals? Is it relates to kind
of consumer lending and both you can relate

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to personal but just overall consumer lending. How do you look at it from

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from your business goals? So maybe
I'll talk about it from more of a

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macro perspective. Community banks have been
losing the personal loan business that we've lost

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the auto loan business, we're quickly
losing the mortgage business, just because everything

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has become more and more automated.
Consumers have their credit card access to so

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many other options as far as credit
is concerned. So the reason why we

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looked at the ability to automate is
and of course regulators right now are very

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concerned about equable access to credit and
financing. However, the consumer loan is

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probably the most expensive to originate as
it relates to the return that you're actually

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going to achieve. So unless it's
automated, it is actually costing you more

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than you're actually going to make an
interest on that short term loan and small

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dollar loan for the bank. But
it is what people need. So I

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mentioned earlier that we've actually opened a
couple of branches in Gateway cities. And

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what we heard loud and clear as
people want credit. They recognize that if

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they want to be successful financially,
they need to use credits so that they

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can leverage and get the things that
they need so that they can actually achieve

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the next goals and take that additional
job, et cetera. So how do

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you actually get money into people's hands, but do it in a profitable way.

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It has to be through automation and
in fact consumers And you know it's

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the thing that happens with your kids, right they turn a team, they

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want a loan, They come to
you to cosign because they can't get alan

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on our own because they don't have
a credit score. But you can't get

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a credit score without having a loan. It's a chicken or egg scenario.

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So just hearing from the folks on
the ground, why you know, what

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are your aspirations and what are your
challenges you with your banking relationship. Access

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to credit is a huge friction point, So solving for that, and that's

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really what we liked about Upstarts.
Your willingness to provide better access to borrowing

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that's not just driven off the credit
score, helping us serve existing customers but

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also new customers. And even the
fact that your model does adjust to the

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current economic condition and we're still in
control of what the rate is, what

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markets we're lending into. We're not
a large institution where I mentioned a mutual,

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so we can only leverage our capital
so much so we can actually set

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the expectations and what size of a
portfolio we want in making sure that we

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deliver for our consumers. First.
No, that's so, but I will

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say this just want to add something
to it, is that I grew up

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in consumer lending, even though when
you look at my resume, I been

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kind of all over the lending world, and I grew up there. And

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I also spent some time at a
credit union, and I couldn't understand.

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Credit unions seem to do just a
great job with auto lending and consumer lending

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and they figure it out, and
why community banks don't play there, I

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never quite got. But certainly having
a way to automate that there's a cost

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of doing it. There's a cost
of collections as a cost of servicing.

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So trying to solve for those problems
was our biggest issue. But it's alf

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solvable, so we just you just
have to find the right partner to do

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it. No, great, thanks
for your context there. So let's talk

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a little bit about that the consumer. You and you talked a little bit

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about about habits and and different products
that that that the consumer is is looking

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at or have available. So is
you look at your business, are you

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are you seeing like spending habit changes
with your with your with your customers today

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or or even seeing the needs adjust
say over the over the past you know,

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twelve to eighteen months. So I
would say so during the pandemic,

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we actually saw that consumers had a
build up of cash. They weren't actually

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looking for a tremendous amount of credit. Well, if you can't go anywhere,

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and you can't go out to dinner, and so this, but and

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and we offered skip payments for mortgages. So people did have have excess access

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funds in their account. While we
are seeing those draw down and we haven't

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yet seen in increasing delinquencies, but
we hear from from other areas that there

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are increases in credit card usage and
by now pale later, we're seeing a

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fair number of that payments are moving
outside of the banking system with Benmo and

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balances our external any consumers have changed
their behaviors board expectation of immediate satisfaction and

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so being able to get anything on
your mobile device and to be able to

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act when you need to and get
access to the things that you need.

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I think that's important to consumers.
I mean, I grew up with layaway,

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not me myself. I remember my
mom, That's how she saved for

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Christmas. We still offer Christmas clubs. But on the other side of the

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house there seems to be more of
a lean towards more more predatory payday loans

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and and I am concerned about the
whole buy now, pay later, when

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consumers don't necessarily have a one hundred
percent control over their account anymore. I

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do like a personal loan because it
is a way to level out monthly payments,

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to be able to plan and prepare
so that the consumer is more in

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control, whereas right now it seems
like the payment companies are in control and

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just a we are seeing I see
it, you read about it in the

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Wall Street Journal, and you're loosing
it here with some of our portfolio.

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Is that your credit is being used
more, most of its variable rate credit

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cards, as we mentioned, So
now people are turning to what can I

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fix that out for three, three, seven years whatever that may be at

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a better rate than they're getting it
with the credit card company. So we

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are seeing that credit consolidation starting to
happen now as well. Yeah, the

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interest rate. So yeah, when
you when you saw as you mentioned it

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right during during COVID, just spending
habits. Really we're dictated because they're just

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folks weren't able to spend right,
and and then there was just this kind

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of this build up, and I
think you's is a lot of a lot

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of bank and credit unique executives I
talked to, you know, talking about

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now you're you're seeing You're seeing that, You're seeing the usage go up,

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You're seeing people are out there taking
vacations there there, they're all these things

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that was kind of you know,
pend up for for a number of years.

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Now is it's kind of it's kind
of coming back, and at different

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stages it did different cycles. So
definitely interesting times that we're in over these

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uh, these these past couple of
years. So that then the leads to

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me to kind of my next question
is as is the is the environment is

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changing, and you talked a little
bit about you know, consumer expectations.

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We live in this this this Amazon
world where you know, I want it

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now and speed, So how do
you see the need for data and more

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automation and and and and just the
digital experience really kind of impact your approach

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is you're is you're looking at seeing
those components is almost almost table stakes,

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I think in some cases of getting
into some of these areas. So if

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the consumer loan is your first loan
product product or your first experience with with

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term financing, the small dollar consumer
loan is hard to justify. I've alluded

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to it earlier. Takes the same
amount of work as a home echoy loan,

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but there's no collateral underneath it,
which makes it very expensive for the

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consumer but also expensive to originate,
higher risk, presumably higher default rates.

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So you need to make sure make
sure that this is a prime customer that

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you're lending to, one that's not
going to default because there's nothing backing it

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and it all gets written off of
the payments don't get made. So scaling

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a product and building a portfolio that
provides the return, it can't be ten

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loans and then you lose on one. It needs to be a lot of

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loans that actually drive down the costs. But those a whole host of loans

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requires that you have a department that
actually can collect on the loans, that

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can process the loans, that can
book the loans. It just is an

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expensive expensive to scale at the community
bank level. And to add what you

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said about table stakes, I think
from my perspective is if we couldn't do

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this quickly, we couldn't do it
easily, app based and be able to

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get fun into them in a relatively
short period of times, that I didn't

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want to do it at all,
because that's what the experience is with larger

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institutions that they have across the country. Right, So that was really kind

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of a no starter for us.
If we couldn't do that, then it

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just wasn't worth going down the road. Well, and that leads us to

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kind of the next question. I
mean on just hey, you have expectations

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of how you want to deliver solutions, and it actually it bodes us.

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Someone asked a question about evaluating partnerships, So so thank you for who asked

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the question, because you let into
my question Number four is really can you

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talk about your approach to partnerships?
And so I think a lot of people

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join these these types of calls to
hear from other bank executives on how did

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you approach looking at fintech partnerships?
How how you know? What were the

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things that you were evaluating and the
processes that you go through as folks are

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thinking about, you know, how
do I how do I do this in

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my organization? So for the FinTechs
that are actually looking at trying to figure

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out how to make the connection with
the bank, it is sometimes it is

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just you know, fortuitous conversations that
that just happened. We are looking for

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FinTechs that provide a service that our
customers are looking for and not some obscure,

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unrelatable service. It has to be
within the banking bandwidth, and for

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us, it has to align with
our organizational values. So it has to

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be providing something that is right for
the customer. It is not taking advantage

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of the customer. It's fair,
it's transparent, and we have to be

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mindful of our bandwidth, so we're
not going to be doing ten projects every

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single year. We have to be
very intentional about which ones we select.

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Is itself contained? Is it easy
to stand up and can it achieve our

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objectives and not just be a one
off? Yeah, and the support is

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also helping. That support from from
the fintech itself, and that we don't

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know how to stand up something like
this, it's foreign to us. We

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need a lot of handholding in the
process to be able to say, Okay,

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here's here's some other people to talk
to that I've gone through it.

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Here's what other institutions are doing.
Now here's you know, this is how

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you've got to deal with your auditors
when they come in. Because Julie mentioned

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00:25:26.079 --> 00:25:30.440
earlier a lot of appliance around consumer
lending, so there's really a we need

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00:25:30.480 --> 00:25:34.720
a lot of handholding from the from
the fintech, from the partner to help

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us get through that process. But
it doesn't just end after we've stood this

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up. Right now, it's going
to be let's let's look at this on

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going. Is it performing the way
we want to do? We need to

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make tweets with it because again this
is our first time going down this road,

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so we need all that help we
can get. So you've got to

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make sure that when you're talking to
somebody else, if you're getting references,

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that you're digging deep into that support, not just in the beginning but after

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they close and after they stand up
the product. Well to that point,

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we also well and to that point, we also need to know that we're

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not betting the bank on something that
could actually harm the institutions. So the

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reporting that you actually provide, I
know Fiel goes through on a monthly basis

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00:26:17.240 --> 00:26:19.799
and reports out the performance of portfolio. We can make make tweaks to it.

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We understand the impacts and and the
fact that you do monitor the outcomes

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on an ongoing basis, so there
aren't any surprises for us as an institution.

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So again going back to an evaluation, whatever we're doing, it is

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additive to the customer and it is
not doesn't create any adverse risk to the

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financial institution. Well, and can
you add that coaltry on like the process

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that you have, so when you
do you have a standard approval process,

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so to get a fintech approved in
your organization, can you can I get

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an described that the steps and there
is there certain committees or hot what what

335
00:27:04.720 --> 00:27:11.960
step did you have to go through
to say approve our partnership. Well,

336
00:27:11.720 --> 00:27:15.640
say, first of it was doing
a lot of due diligence and someone the

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one we had to go do that. There's a lot of due diligence you

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00:27:18.279 --> 00:27:21.880
had to you know, to talk
about what the benefits were. And it's

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00:27:21.880 --> 00:27:25.599
with anything you dually said it right
before, which is it's gonna be hard

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to get someone's attention at a bank
if you are from the fintech world,

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because there's got to be that perceived
need from us first and which is which

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starts with our customers. But it
really was doing a lot of homework on

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it, checking the references. Like
I said before, making sure that check

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the boxes. I had a very
clear idea of what, uh, this

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00:27:45.920 --> 00:27:48.480
process should look like. What we
did not want to do. We did

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00:27:48.480 --> 00:27:52.279
not want to build a department,
you know, we wanted to have we

347
00:27:52.279 --> 00:27:56.880
didn't want to put extra stress on
our on our loan servicing department. So

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we really tried to have it be
as turnkey as well, do everything it

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00:28:00.920 --> 00:28:03.519
needed for us and at the end
of the day we get a net return.

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So it is making it easy,
but we do the due diligence.

351
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We talk about it at our senior
management meeting committees and our meetings. We

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00:28:12.799 --> 00:28:15.480
run up by our Board of directors
to say, this is what we're thinking

353
00:28:15.519 --> 00:28:19.720
about doing, and here's a breakdown
of how this will all work. So

354
00:28:19.759 --> 00:28:25.920
that's it's it's a little bit informant, but we do have a vendor review

355
00:28:25.960 --> 00:28:30.480
process that that we do go through. But I think the bandwidth of the

356
00:28:30.599 --> 00:28:34.880
organization is also really important to us. This cannot be something that we stood

357
00:28:34.960 --> 00:28:41.880
up today and it's an MVP that
tomorrow is didn't make sense or it didn't

358
00:28:41.920 --> 00:28:47.359
stand the test, so that that
that we have to do it all over

359
00:28:47.400 --> 00:28:52.599
again. So that is I think
the challenge from an innovation perspective is a

360
00:28:52.720 --> 00:28:56.200
fintech wants to make their first bank
partnership, but the bank needs to make

361
00:28:56.240 --> 00:29:00.119
sure that the fintech actually has the
glide path in front of them that's going

362
00:29:00.160 --> 00:29:04.839
to be there in the future.
Because once this product is offered and there's

363
00:29:04.880 --> 00:29:08.279
an expectation from our consumer that it's
there and available to them, we can't

364
00:29:08.279 --> 00:29:14.519
just pull it from the menu.
Well, I think that's a great this

365
00:29:14.680 --> 00:29:19.200
is not when when we look at
success and I've had the opportunity of being

366
00:29:19.720 --> 00:29:23.880
being sitting in your chairs, uh, you know, in the in the

367
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in the banking world, making the
decisions and then now on now on the

368
00:29:29.000 --> 00:29:33.880
partner side, you know, we
look at these partnerships of successes in one

369
00:29:33.920 --> 00:29:37.799
month, one quarter, you know, two quarters, right, You're you're

370
00:29:37.880 --> 00:29:41.559
you're building when you get in a
relationship like this and we're we're integrating,

371
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we're integrating our two organizations together right
to serve the needs of the community and

372
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the consumers that you you know that
you're serving. You have to think about

373
00:29:49.640 --> 00:29:53.519
it, is we want to be
celebrating two years, four years, five

374
00:29:53.599 --> 00:29:57.720
years, ten years, right of
of of successful kind of partnership together and

375
00:29:57.799 --> 00:30:03.319
is there is there the right alignment
right with the values of the organizations?

376
00:30:03.359 --> 00:30:06.200
Are we are we both kind of
heading in the right direction of of how

377
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we're trying to serve the consumer.
So it's it's it's it's it's great to

378
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hear of kind of how you guys, you know, how you guys are

379
00:30:11.440 --> 00:30:15.559
thinking about it and and and it
leads me to kind of this follow up

380
00:30:15.559 --> 00:30:18.559
and you've you talked a little bit
about it, but just pull a little

381
00:30:18.599 --> 00:30:23.000
more threads because I think it's it's
it's it's a good one of just selecting

382
00:30:23.039 --> 00:30:27.839
the relationship, right that that doesn't
end it right there, there's hey,

383
00:30:27.839 --> 00:30:32.240
there's there's there's high fives of of
right, we've we've made a decision when

384
00:30:32.240 --> 00:30:36.319
you've selected a partner. But then
there's there's the ongoing management. Right,

385
00:30:36.359 --> 00:30:44.000
So there's there's making your continuously working
to oversee and and and manage this this

386
00:30:44.079 --> 00:30:49.200
relationship and to continue to evaluate is
it still meeting the expectations, the expectations

387
00:30:49.240 --> 00:30:52.720
of why did you get in this
business in the first place, as well

388
00:30:52.720 --> 00:30:56.599
as evaluating that are your business school
still aligned? So can you talk about

389
00:30:56.200 --> 00:31:02.279
I think how you are just I'll
say that can tinuing monitoring of partnerships to

390
00:31:02.359 --> 00:31:07.000
just make sure they stay aligned with
your expectations? Yeah, you know,

391
00:31:07.279 --> 00:31:11.799
and your poll question a little earlier, you had something like twenty five percent

392
00:31:11.039 --> 00:31:17.119
of the audience say that they're concerned
about the current environment and that's why they're

393
00:31:17.160 --> 00:31:21.079
not doing consumer lending. And certainly
was a real concern because we were going

394
00:31:21.079 --> 00:31:25.240
into this process while things were starting
to go down Rachel going up, issues

395
00:31:25.240 --> 00:31:26.359
were starting to happen, and that
was a big question for us. But

396
00:31:26.640 --> 00:31:32.200
we get through a dashboard and I
get KPIs on a monthly basis, but

397
00:31:32.240 --> 00:31:34.960
I can go in anytime like I
did before this call, and looked at

398
00:31:34.960 --> 00:31:37.359
the KPIs to see, Okay,
what do we have for delinquency, what's

399
00:31:37.400 --> 00:31:42.400
our volume, what's our average rate
yield? All those types of things,

400
00:31:42.599 --> 00:31:47.440
and I know we also have ongoing
calls. We did one sixty eight weeks

401
00:31:47.480 --> 00:31:49.680
ago. We talked about, hey, you could be getting more yield fill

402
00:31:51.279 --> 00:31:53.720
for reading Cooperative Bank if we do
some tweaking and still get the type of

403
00:31:53.759 --> 00:31:57.480
volume that you're looking for. So
that was a proactive approach which I appreciated

404
00:31:57.839 --> 00:32:01.680
from up starts to come up to
me and say there's opportunity here, because

405
00:32:01.680 --> 00:32:06.279
what bank doesn't want to get more
yield? Right, So we work that

406
00:32:06.279 --> 00:32:08.559
out. I think we moved our
yield up from a net of all expenses

407
00:32:08.599 --> 00:32:13.160
of five percent yield to to a
seven percent yield, which is not bad

408
00:32:13.160 --> 00:32:15.680
in this environment. So we also
get a slew of reports that I can

409
00:32:15.680 --> 00:32:20.799
look out on a daily basis to
figure out what loans of command and if

410
00:32:20.839 --> 00:32:24.359
anyone are looking for extensions or modifications, so we can really pick and choose

411
00:32:24.359 --> 00:32:29.680
and look at this and break it
down at a very micro level, which

412
00:32:29.799 --> 00:32:32.440
gives me comfort. I know,
it gives truly comfort to have that information.

413
00:32:34.480 --> 00:32:37.400
Yeah. I think the other piece
that I like is that the option

414
00:32:37.559 --> 00:32:45.480
of actually just originating a portfolio and
also using from a white label standpoint and

415
00:32:45.480 --> 00:32:52.480
going to market with individual products,
maybe marketed in a different way depending on

416
00:32:52.599 --> 00:32:55.880
what the usage or the appetite might
be based on the consumer group that you're

417
00:32:55.920 --> 00:33:02.400
marketing too, So having that ability
to also launch other products in addition to

418
00:33:02.559 --> 00:33:06.799
making tweaks to the existing based on
what you're actually seeing. I also like

419
00:33:06.839 --> 00:33:10.880
the fact that you're constantly evaluating what
data is out there in the marketplace because

420
00:33:12.119 --> 00:33:15.519
times changed. Right now, we
know that consumers belts are tightening, rates

421
00:33:15.559 --> 00:33:20.799
are rising, costs are rising,
and making sure that we're always operating in

422
00:33:20.799 --> 00:33:24.680
a current environment, not on historic
data. Yeah, and you in your

423
00:33:24.680 --> 00:33:30.680
model and probable mentioned that your model
adjusts, uh and and adjust, but

424
00:33:30.720 --> 00:33:37.559
it's a learning model to incorporate an
account for blink, what's these that are

425
00:33:37.559 --> 00:33:44.400
happening now based upon past approvals,
And so because the model learns yours,

426
00:33:44.440 --> 00:33:47.559
it's current that it's ongoing and it's
up to date as learning and making adjustments

427
00:33:47.599 --> 00:33:51.559
on the fly. Yeah, And
I think one of the things I can

428
00:33:51.640 --> 00:33:55.920
I can add to that is the
advantage of of of a of a partnership

429
00:33:57.000 --> 00:34:05.480
like Upstart to our partners is the
scale, meaning that you're benefiting of what

430
00:34:05.559 --> 00:34:09.440
the model is learning, not just
from what you're originating, but you're you're

431
00:34:09.480 --> 00:34:16.400
getting the whole bandwidth of all the
loans that we've originated on the platform.

432
00:34:16.800 --> 00:34:22.960
So now you start competing almost with
the same data as you know what we'll

433
00:34:22.079 --> 00:34:27.280
say, starting to compete with the
trillionaire banks of the amount of data that

434
00:34:27.320 --> 00:34:32.320
they're processing. All of our lending
partners are getting similar scale because of just

435
00:34:32.480 --> 00:34:36.639
all the capital that's that's that's coming
together. And so you're right, the

436
00:34:36.679 --> 00:34:43.079
model is continuously looking at and you're
benefiting from loans other lending partners are originating

437
00:34:43.199 --> 00:34:46.480
and in the repayment events because the
models absorbing all of that to build a

438
00:34:46.599 --> 00:34:52.639
very broad sense. There was a
question here I'll go back to the when

439
00:34:52.639 --> 00:34:58.440
you're talking about the diligence. Is
someone who's asking when you were like looking

440
00:34:58.480 --> 00:35:05.360
for partnerships, like how did you
go to identify who was who was available

441
00:35:05.360 --> 00:35:07.840
in the marketplace? Was it was? It? Was it conferences you went

442
00:35:07.880 --> 00:35:10.960
to, was it sites that you
went to to do your research? Kind

443
00:35:10.960 --> 00:35:15.320
of like how did you how did
you build I'll say your short list of

444
00:35:15.360 --> 00:35:20.559
Hey, these are some of the
companies we should talk to for the answer

445
00:35:20.599 --> 00:35:27.800
to the first part, Yes,
that's good, it's true. I mean

446
00:35:27.800 --> 00:35:31.360
the conferences and colleagues. We ended
up having a list of I think ten

447
00:35:31.960 --> 00:35:36.280
companies that we looked at in total. And in fact, the first time

448
00:35:36.280 --> 00:35:38.880
we looked at Upstart at writing,
we actually loved your model, loved what

449
00:35:38.920 --> 00:35:46.880
you were doing, but it was
very early on in up Starts tenure,

450
00:35:46.920 --> 00:35:51.760
and so we ended up coming back
a little bit later when we were ready

451
00:35:52.119 --> 00:35:55.079
and we could get comfortable. So
there's a lot of vendor due diligence,

452
00:35:55.119 --> 00:36:00.280
finding out who the other institutions that
are writing, looking at the behaviors that

453
00:36:00.280 --> 00:36:05.239
are actually happening. And then just
again as I mentioned it, because I

454
00:36:05.239 --> 00:36:08.079
know there's a few FinTechs that are
actually on this call is it might not

455
00:36:08.159 --> 00:36:13.800
be you, it might be us
when when we actually don't engage with the

456
00:36:13.800 --> 00:36:17.440
fintech because sometimes our bandwidth is what
it is you have turnover in your organization,

457
00:36:17.519 --> 00:36:20.880
you need to bring on even the
right leader, or maybe you don't

458
00:36:20.920 --> 00:36:24.119
have the innovation appetite in your area
of the bank at that point in time,

459
00:36:24.679 --> 00:36:30.400
and bringing on the right chief banking
officer that actually has an appetite for

460
00:36:30.320 --> 00:36:36.719
more innovation might actually be the right
spot. Or there it might be,

461
00:36:36.800 --> 00:36:39.400
as I said, the institution that
actually needs to learn how to be more

462
00:36:39.400 --> 00:36:47.639
innovative. Good good, good dialogue. Let me let me ask about stakeholders,

463
00:36:47.719 --> 00:36:52.679
because this is something that that I
see now. It's it's it's it's

464
00:36:52.800 --> 00:36:58.039
awesome, you know, having having
the CEO so engage that that's a that's

465
00:36:58.039 --> 00:37:01.000
a that's a that's a pretty important
stake or for fill to have working so

466
00:37:01.400 --> 00:37:05.599
closely. But but can you guys
talk a little b about you is your

467
00:37:05.760 --> 00:37:10.679
organization and is people are looking at
these partnerships the kind of the stakeholder committee

468
00:37:10.679 --> 00:37:16.360
of folks that you need to make
sure stay engaged with, you know,

469
00:37:16.440 --> 00:37:20.360
during the selection process, and then
not that they have to be involved on

470
00:37:20.400 --> 00:37:24.480
a day to day basis, but
that that you're keeping i'll say involved,

471
00:37:24.480 --> 00:37:30.559
whether it's it's quarterly or or monthly
and various reviews, and what are some

472
00:37:30.599 --> 00:37:37.559
of the tactics that you're using to
keep your your extended stakeholders engaged. So

473
00:37:37.000 --> 00:37:40.079
I'd start with saying that when we
first started, we had a lot of

474
00:37:40.079 --> 00:37:45.960
stakeholders. Even though up start manages
the bulk of the program for it's getting

475
00:37:45.960 --> 00:37:50.639
it up and running, making sure
that the fund transfers happened. We had

476
00:37:50.639 --> 00:37:58.440
accounting involved, we had it involved. We had just hired a new what

477
00:37:58.519 --> 00:38:07.480
they call it they not a product
manager, but the project manager, Trevor,

478
00:38:07.559 --> 00:38:10.920
thank you, project manager who kept
us all on track because there were

479
00:38:10.960 --> 00:38:16.440
a lot of moving pieces and you
folks were moving pretty quickly and kept us

480
00:38:16.480 --> 00:38:20.360
on track. And so we had
all those you have to meet on a

481
00:38:20.360 --> 00:38:23.199
regular basis in the beginning, on
a weekly basis, make sure you're hitting

482
00:38:23.239 --> 00:38:28.360
all your road your stops in the
road, and making sure you're you're you're

483
00:38:28.400 --> 00:38:30.639
on track. And so that was
a big part of it. Getting the

484
00:38:30.639 --> 00:38:32.480
board is involved, you know,
having those reports to the board as we

485
00:38:32.760 --> 00:38:38.119
start getting to launch and what we're
hoping to do and here's the the KPIs

486
00:38:38.159 --> 00:38:44.239
we're looking to attain, and then
having to keep them informed on a going

487
00:38:44.280 --> 00:38:47.599
a quarterly basis. We just started
doing this because this relatively new program for

488
00:38:47.679 --> 00:38:52.320
us is showing them the KPIs here's
the growth, here's the delinquency that we're

489
00:38:52.360 --> 00:38:57.159
seeing. Here's here's you know,
a lack of delinquency that we're seeing.

490
00:38:57.199 --> 00:39:01.079
So we keep them involved with quarterly
reporting there as well and tying that back

491
00:39:01.119 --> 00:39:07.400
to what what we presumed at the
very beginning when we actually went to the

492
00:39:07.400 --> 00:39:09.400
board for approval of the product.
So this is the return when we're expecting.

493
00:39:09.400 --> 00:39:13.519
This is a return we're getting.
This is what we anticipated the deliquency

494
00:39:13.559 --> 00:39:16.119
we're great to be and here it
is at this you know, and just

495
00:39:16.239 --> 00:39:22.360
you know, confirming that what we
expected to happen and and setting that threshold

496
00:39:22.400 --> 00:39:27.119
for how much you're going to originate
per month and then seeing that the things

497
00:39:27.159 --> 00:39:31.000
that you expected to happen did happen
is the thing that gives you the competence

498
00:39:31.000 --> 00:39:35.920
to continue to move forward. And
it is truly a partnership. Yeah.

499
00:39:35.960 --> 00:39:40.400
And what's good for him to remember
is when you when you launch a product,

500
00:39:40.480 --> 00:39:46.119
particularly say say personal loan that that
say bank may not be offering today

501
00:39:46.239 --> 00:39:50.159
or is offering very small, you
may think, oh, this is this

502
00:39:50.199 --> 00:39:53.000
is a, this is a small
product in our in our total asset class,

503
00:39:53.639 --> 00:39:58.159
I don't need all the stakeholders.
And I think that's where some folks

504
00:39:58.199 --> 00:40:02.400
sometimes I see get upside down we're
because then they end up maybe having more

505
00:40:02.519 --> 00:40:09.360
challenges throughout their program because not getting
the right in people engaged at the very

506
00:40:09.400 --> 00:40:13.199
beginning and they don't have to be
involved in at all the time. And

507
00:40:13.199 --> 00:40:15.360
I think Bill, as you talked
about, you start with you cast a

508
00:40:15.360 --> 00:40:19.159
good net, You get the right
people there that are helping make a decision,

509
00:40:19.400 --> 00:40:21.880
and then you determine who's got to
be part of it to run the

510
00:40:21.960 --> 00:40:27.039
day to day, and then keep
those those those ancillary stakeholders updated on a

511
00:40:27.079 --> 00:40:30.480
regular basis so that just they're seeing
that the program is growing, it's being

512
00:40:30.480 --> 00:40:37.800
managed, it being oversight because then
you know that comes back to the regulators

513
00:40:37.960 --> 00:40:40.920
and as you're as you're presenting the
regulators about partnerships, you're able to describe,

514
00:40:40.920 --> 00:40:45.199
Hey, here's how the organization is
staying engaged. So let's let's go.

515
00:40:45.280 --> 00:40:51.199
Actually, when you're talking about our
existing portfolio, we were writing very

516
00:40:51.199 --> 00:40:54.000
few consumer loans, and we were
writing them that eighteen percent interest rate.

517
00:40:54.159 --> 00:40:58.599
So the only person that took them
is a person that was desperate, and

518
00:40:58.679 --> 00:41:01.440
so we actually understand so that we
had losses in that portfolio because we were

519
00:41:01.880 --> 00:41:07.000
providing these high rate loans to people
that were desperate, because they clearly they

520
00:41:07.000 --> 00:41:10.400
would have used their credit card if
they could. So in this situation,

521
00:41:10.480 --> 00:41:15.760
we're instead writing loans to people that
are using personal loans for a purpose and

522
00:41:15.760 --> 00:41:19.880
they're paying them back, and so
we have better performance of the portfolio,

523
00:41:20.599 --> 00:41:25.360
but the consumers also getting a better
experience because the rate is more beneficial to

524
00:41:25.400 --> 00:41:32.880
them. O. Great, So
you mentioned a little bit about the partnership

525
00:41:34.480 --> 00:41:39.480
that you use both the earn the
Upstart referral network for new new customers as

526
00:41:39.480 --> 00:41:44.280
well as you use the white label
to stand alone, you know, off

527
00:41:44.320 --> 00:41:49.719
your website for your your your existing
customer base. So can you talk a

528
00:41:49.760 --> 00:41:53.079
little bit about the decision of like
how are you, how are you looking

529
00:41:53.199 --> 00:41:59.760
and leveraging both products and the perspective
to kind of kind of leverage both versus

530
00:42:00.079 --> 00:42:05.719
to the other. Well, I
think that we wanted to have something to

531
00:42:05.719 --> 00:42:10.239
offer to our customers because as truly
mentioned, we didn't really have anything in

532
00:42:10.280 --> 00:42:14.679
the consumer lending area. We priced
it at such a point where it really

533
00:42:14.719 --> 00:42:17.239
wasn't competitive, and so we want
to be able to have a link on

534
00:42:17.280 --> 00:42:22.239
our website where we hite label this
it looks like our product. It shows

535
00:42:22.320 --> 00:42:24.519
up with the Reading logo on it
when you go into the app, when

536
00:42:24.559 --> 00:42:29.760
you click through, and experience for
the customer that it seems like us.

537
00:42:29.960 --> 00:42:34.920
It seems like reading. They can
get approved and seconds, they get their

538
00:42:34.960 --> 00:42:37.199
money next day, and so it's
a really good experience. And we wanted

539
00:42:37.239 --> 00:42:39.480
that, but we didn't think there
was going to be enough volume there.

540
00:42:39.480 --> 00:42:44.480
But we did want that customer experience. And so we also did the marketplace

541
00:42:44.480 --> 00:42:47.719
so that we would be able to
define an area that we wanted to do

542
00:42:47.800 --> 00:42:53.119
business in and then I'll start with
would market in that area, and if

543
00:42:53.119 --> 00:42:58.000
loans came up that fit our criteria, our credit criteria which we developed from

544
00:42:58.000 --> 00:43:00.519
the beginning, then we would get
those wells. So you know, at

545
00:43:00.519 --> 00:43:04.320
the end of the day, we
do we do about a million dollars a

546
00:43:04.320 --> 00:43:07.000
month only because that's our choice.
That's the limit. That's how much we

547
00:43:07.039 --> 00:43:12.679
want to do. We could certainly
do more if need be. Yeah,

548
00:43:12.679 --> 00:43:15.719
and I think actually you answered you
answered one of the one of the questions.

549
00:43:15.760 --> 00:43:19.719
I think someone was asking the volume
that you're looking to do on an

550
00:43:20.119 --> 00:43:23.840
annual basis, and then I think
the other question I saw was and it

551
00:43:23.880 --> 00:43:29.599
kind of feeds into about the controls. So when we talk about your your

552
00:43:29.599 --> 00:43:34.719
footprint here, when you think about
the controls you have to manage the program

553
00:43:34.920 --> 00:43:37.880
and so that you know what what
you're able to define, what changes you're

554
00:43:37.880 --> 00:43:43.679
able to make to ensure that the
program's staying within your your risk tolerance?

555
00:43:43.719 --> 00:43:45.679
Can you can you talk about that
and even talked a little bit about the

556
00:43:45.960 --> 00:43:52.960
controls on from a from a footprint
standpoint. Sure. So you know,

557
00:43:52.960 --> 00:43:54.559
when we started the setup of the
program, one of the first things we

558
00:43:54.599 --> 00:43:57.920
do we had a worksheet and say, okay, what are we willing to

559
00:43:57.920 --> 00:44:00.679
do? Do you want to if
they have a if they have a bankruptcy

560
00:44:00.800 --> 00:44:04.400
is an automatic note? What's your
bottom line credit score that you're willing to

561
00:44:04.440 --> 00:44:07.719
accept, what's your bottom line debt
to income that you're willing to have.

562
00:44:07.199 --> 00:44:10.400
So there's controls. There is a
number of questions we go through to determine

563
00:44:10.840 --> 00:44:15.840
just how deep and how much risk
we want to take. And so we

564
00:44:15.880 --> 00:44:20.679
put that in place and then let's
start works within that. You guys come

565
00:44:20.719 --> 00:44:23.519
in and you tell us be based
upon based upon the controls you have in

566
00:44:23.559 --> 00:44:28.960
place in the market you define,
which we define as Massachusetts in southern New

567
00:44:28.960 --> 00:44:32.280
Hampshire because we're in the northern we're
between you know, New Hampshire and Boston,

568
00:44:34.079 --> 00:44:37.440
and so within that they'll say,
well, there's a based upon carent

569
00:44:37.480 --> 00:44:42.920
volume, there is a nine million
dollars a month market opportunity, and so

570
00:44:43.840 --> 00:44:47.880
we can and the tighter we make
that criteria, the smaller that market opportunity

571
00:44:47.920 --> 00:44:53.599
would become for us. So we
determined once we hit a million dollars,

572
00:44:53.280 --> 00:44:58.719
stop for us, stop doing it, stop marketing us. And the way

573
00:44:58.719 --> 00:45:00.760
it's worked, and I appreciate it's
done this way, is that it's not

574
00:45:00.840 --> 00:45:07.239
a million dollars in the first five
days. It's spread out basically evenly over

575
00:45:07.280 --> 00:45:09.719
the course of a month that we
slowly work up to a million dollars.

576
00:45:10.199 --> 00:45:15.039
And I think we have something like
that seven or eight million dollars portfolio now

577
00:45:15.159 --> 00:45:21.840
from what was probably a two hundred
and fifty thousand dollars portfolio. And I

578
00:45:21.840 --> 00:45:24.119
think I'll add to I think there
was another question about you know, does

579
00:45:24.760 --> 00:45:30.239
does the does the does a borrower? One hundred percent, you know,

580
00:45:30.639 --> 00:45:34.360
get the get the lowest rate,
and and and the and the answer is

581
00:45:34.360 --> 00:45:38.119
is the borrower gets the lowest rate
based upon the capital that's available. And

582
00:45:38.159 --> 00:45:42.719
so that's kind of what what what
Phil had shared is, you know,

583
00:45:42.840 --> 00:45:45.440
Phil happens to have the lowest rate
in the on the platform. All of

584
00:45:45.480 --> 00:45:51.000
Phil's capital just doesn't get used up
at at you know, at midnight or

585
00:45:51.480 --> 00:45:54.599
twelve oh one am on June first, Right, So so there's it is.

586
00:45:54.639 --> 00:46:00.280
It is it is smoothed out throughout
the month so that the lender can

587
00:46:00.280 --> 00:46:05.199
be paced and that also we're we're
ensuring that that the best rates are available

588
00:46:05.719 --> 00:46:09.320
as as as much as possible throughout
the month for for for all the concert

589
00:46:09.320 --> 00:46:14.639
company of the program. So hopefully
that answered the question that we had in

590
00:46:14.639 --> 00:46:19.559
the in the chat. So let's
talk a little about you know, if

591
00:46:19.559 --> 00:46:22.840
you're if you're we saw that fifty
percent of the folks aren't doing personal lending

592
00:46:22.880 --> 00:46:27.199
today and it may not have a
partnership today, So a lot of those

593
00:46:27.199 --> 00:46:31.280
folks are probably considering is now a
good time to get in a fintech partnership

594
00:46:31.360 --> 00:46:35.719
or not? Like, how how
would you why would you think now would

595
00:46:35.760 --> 00:46:38.079
be a good time or not.
But too, why would you think it

596
00:46:38.079 --> 00:46:44.599
would be a good time to move
forward and think about a partnership. Well,

597
00:46:44.639 --> 00:46:50.320
you just heard from Phil how how
we've made our decision that will enter

598
00:46:50.400 --> 00:46:53.800
in and we'll do it slowly in
a methodical way so that we're constantly investing,

599
00:46:53.840 --> 00:46:58.400
and so their short term loans they
will pay off in short time.

600
00:46:58.440 --> 00:47:02.800
So just like you, we we
lived through cycles. But I would actually

601
00:47:02.800 --> 00:47:07.679
say right now, the consumer is
going to have more demand than they did

602
00:47:07.800 --> 00:47:12.400
during the pandemic. During the pandemic
they were flushed with cash. They didn't

603
00:47:12.400 --> 00:47:15.679
have an appetite or the trips or
the travel for for other things. So

604
00:47:15.719 --> 00:47:21.159
I think there will be more appetite
at this moment. But I also think

605
00:47:21.199 --> 00:47:27.760
the fact that the market constantly adjusts
to the credit conditions that are there also

606
00:47:29.400 --> 00:47:37.000
mean that that a late, well
later plan will actually mitigate risks. Right.

607
00:47:37.719 --> 00:47:44.000
I think everyone's finding it's a tough
market to hire people, and so

608
00:47:44.039 --> 00:47:46.599
when you can find an end to
end solution where you're not having to add

609
00:47:46.639 --> 00:47:53.000
staff and replace staff as they leave, it makes it much easier for us

610
00:47:53.000 --> 00:47:57.599
to manage. So the short answer
your question, is it a good time

611
00:47:57.679 --> 00:48:02.760
to to partner with a fine definitely, particularly if you can streamline a process,

612
00:48:04.079 --> 00:48:08.360
make it very efficient and uh and
not have to deal with those ongoing

613
00:48:08.360 --> 00:48:14.760
issues with staff and employees and building
an apartment that may walk out a new

614
00:48:14.760 --> 00:48:16.119
proportions may walk out a new a
period of time. So certainly from that

615
00:48:16.159 --> 00:48:22.360
perspective, it's it's key as well. Well. And I think we're if

616
00:48:22.400 --> 00:48:25.280
we look at what our goal is
as an organization is you know, we're

617
00:48:27.119 --> 00:48:32.039
a technology company that that we feel
we do what we do really well,

618
00:48:32.119 --> 00:48:39.599
right is enabling access to credit and
really helping define true risk and writing does

619
00:48:39.679 --> 00:48:44.440
what you do really well as far
as is you know, being a financial

620
00:48:44.480 --> 00:48:47.280
institution, be able to be able
to serve the needs of your community.

621
00:48:47.440 --> 00:48:52.719
And I think that partnership then allows
us to bring the expertise from both our

622
00:48:52.760 --> 00:48:58.800
organizations into your right where Phil,
it's it's you know, many organizations don't

623
00:48:59.239 --> 00:49:04.320
don't have the capacity to take on
all these other abilities, right, all

624
00:49:04.360 --> 00:49:07.719
these other tasks, and so how
do you how do you focus on what

625
00:49:07.840 --> 00:49:12.119
you do really well and then you
find partnerships with folks that align with that

626
00:49:12.360 --> 00:49:17.079
with your goals and then together really
provide those services that your consumers need well.

627
00:49:17.119 --> 00:49:22.159
And I think that's one of the
things that we liked about Upstart as

628
00:49:22.199 --> 00:49:28.159
compared to competitors is the fact that
you are intentionally trying to get credit into

629
00:49:28.360 --> 00:49:34.199
more hands by recognizing that there are
other values behind credit beyond credit score to

630
00:49:34.280 --> 00:49:37.599
determine some whether or not somebody has
the attributes to pay a personal loan or

631
00:49:37.639 --> 00:49:42.840
an auto loan on a timely basis, and the fact that you have opened

632
00:49:42.880 --> 00:49:47.639
that up further recognizing that with a
six eighty credit score there are a lot

633
00:49:47.679 --> 00:49:53.519
more people are that actually qualify or
there are a lot less people that are

634
00:49:53.559 --> 00:49:57.880
going to default on the loan,
and being able to figure out who the

635
00:49:57.920 --> 00:50:01.320
eighty percent are that will never never
to fault and make sure we give broader

636
00:50:01.320 --> 00:50:08.000
access into the community so that alignment
with what your organizational values end. Even

637
00:50:08.039 --> 00:50:10.880
what you're doing with the more than
Fair initiative, I think is to be

638
00:50:10.920 --> 00:50:15.920
commended. No, thank you,
thanks for bringing it up, and maybe

639
00:50:15.960 --> 00:50:19.119
I just get a comment on that
for for folks and aren't familiar, is

640
00:50:20.039 --> 00:50:23.800
you know we're part of this more
than Fair and if anyone's interested in googling

641
00:50:23.840 --> 00:50:30.199
and it's it's it's just the website
is more than fair dot com and it's

642
00:50:30.360 --> 00:50:37.639
it's really it's a community of organizations
both made up of technology organizations, our

643
00:50:37.719 --> 00:50:45.960
bank partners, other consumer advocacy groups
that are all dedicated to improving access to

644
00:50:45.760 --> 00:50:50.920
you know, affordable credit and inclusive
lending. And and really that the idea

645
00:50:51.039 --> 00:50:54.599
is is that a lot of us
all are trying to solve this problem,

646
00:50:54.679 --> 00:51:00.440
and so how do we kind of
scale our our interest together as far as

647
00:51:00.440 --> 00:51:04.800
everyone's trying to solve this And so
it really makes it a much stronger i'll

648
00:51:04.840 --> 00:51:10.159
say, advocacy for creating change,
working with regulators, all these types of

649
00:51:10.199 --> 00:51:14.880
things, of all these partners together, so not just an upstart thing,

650
00:51:14.920 --> 00:51:19.079
but all of these groups, all
of our letting partners like yourselves that are

651
00:51:19.159 --> 00:51:22.519
that are advocates, advocates and participants
of it. Of really how do we

652
00:51:23.199 --> 00:51:28.880
enable more in our communities to get
access? And so the final question I

653
00:51:28.920 --> 00:51:32.800
have and we've got some time left
for for some additional Q and A that

654
00:51:32.920 --> 00:51:37.559
I've seen the in the in the
boxes, But so what's next, Like

655
00:51:37.000 --> 00:51:43.719
what are you looking forward to?
What's what's exciting you over the next you

656
00:51:43.719 --> 00:51:51.639
know, twelve to twenty four months
at Reading, So so we're looking forward

657
00:51:51.679 --> 00:51:54.239
to tailoring more products. So first
of all, we actually need to and

658
00:51:54.519 --> 00:51:58.840
that's our next step is figuring out
the new customers that are coming to us

659
00:51:58.880 --> 00:52:04.039
through this product and out how we
can turn them into Reading depositors, turn

660
00:52:04.079 --> 00:52:07.400
them into expanded relationships at Reading Cooperative
Bank. So that's that's the first thing.

661
00:52:07.519 --> 00:52:15.039
Further automation of our processes again,
figuring out what the customer needs next,

662
00:52:15.760 --> 00:52:20.400
and continuing our digital transformation. We
actually mentioned before, we're now in

663
00:52:20.440 --> 00:52:23.840
two gateway cities in Massachusetts. There
those two cities provide us about two hundred

664
00:52:23.880 --> 00:52:29.840
thousand more consumers, and so having
this product on our menu and available to

665
00:52:29.880 --> 00:52:34.199
those consumers allows us to meet consumer
needs in these in these broader markets.

666
00:52:34.199 --> 00:52:38.599
So we're excited what the future has
for us and for YouTube and also right

667
00:52:38.719 --> 00:52:44.400
i'd love to one way that we
can do a similar type product of what

668
00:52:44.400 --> 00:52:46.119
you have in the small business world. We can figure that one out,

669
00:52:46.159 --> 00:52:50.639
that would be nice, and that's
something we're looking at certainly, and I

670
00:52:50.679 --> 00:52:53.079
think July alluded to it earlier.
There's we have certain ideas on how we

671
00:52:53.400 --> 00:52:58.519
take this product, take take up
start and maybe be able to to slice

672
00:52:58.519 --> 00:53:05.239
it and dice it to be more
direct marketing towards certain groups out there versus

673
00:53:05.239 --> 00:53:09.000
just having it as a consumer loan
created and package it differently. So we're

674
00:53:09.039 --> 00:53:15.079
looking forward to doing that as well. Well. We uh we we welcome

675
00:53:15.119 --> 00:53:19.519
the creativity in the in the idea
generation and see what you know, what

676
00:53:19.239 --> 00:53:22.960
what what the future head holds.
So let me we've got a little bit

677
00:53:22.960 --> 00:53:24.719
of time for questions, and there's
there's there's kind of kind of like I

678
00:53:24.719 --> 00:53:30.159
think there's a there's a couple of
questions that maybe we can answer together.

679
00:53:30.199 --> 00:53:32.719
And I'll start off and then have
you guys add is there's there's been a

680
00:53:32.800 --> 00:53:38.280
number of questions about like model,
model governance, getting comfortable with with using

681
00:53:38.480 --> 00:53:43.039
a third party model in the in
the queue and and I'll start with so

682
00:53:43.239 --> 00:53:46.559
one of the things that that Upstart
does is is I mean we have we

683
00:53:46.599 --> 00:53:52.559
have our own internal risk management organization
and and and and risk disciplines, we

684
00:53:52.599 --> 00:53:57.440
have model we have model governance team, and then we actually use a third

685
00:53:57.519 --> 00:54:00.719
party on top of our own internal
testing, but we use a third party

686
00:54:00.800 --> 00:54:07.159
to do model validation and model testing
and and those types of things are data

687
00:54:07.159 --> 00:54:13.119
and information that then we provide back
to our lending partners as well as other

688
00:54:13.599 --> 00:54:19.639
model oversight docs and and other information
that that we can share as part of

689
00:54:20.039 --> 00:54:23.880
our own oversight. But then it
feeds into what the what the lending partner

690
00:54:23.920 --> 00:54:28.559
has available in their own kind of
model oversight, and then when they're talking

691
00:54:28.639 --> 00:54:31.920
to the to the regulators, could
you guys talk a little bit about just

692
00:54:31.960 --> 00:54:37.159
as you know, using a third
party with a you know, with with

693
00:54:37.199 --> 00:54:42.679
a with a model, just what
you did to get comfortable and the kind

694
00:54:42.719 --> 00:54:46.320
of the the oversight there. Well, I can tell you well, first

695
00:54:46.360 --> 00:54:52.480
we talked to a lot of several
of your customers and did reference checks on

696
00:54:52.559 --> 00:54:55.519
that. But most importantly, shortly
after starting the program, we had our

697
00:54:57.880 --> 00:55:02.719
external internal auditor I guess, do
a review of the program and there was

698
00:55:02.760 --> 00:55:06.880
a lot of questions and it's certainly
the one I want to say it was

699
00:55:07.360 --> 00:55:10.320
challenging at first was they have all
the questions, you have all the answers.

700
00:55:10.760 --> 00:55:14.960
So what was what worked out really
nicely is we found and I wish

701
00:55:14.960 --> 00:55:19.480
I knew her name, a woman
who works for you who had all the

702
00:55:19.519 --> 00:55:23.400
answers and she got on the phone
directly with the person who was doing the

703
00:55:24.000 --> 00:55:30.280
review from our auditing company, and
they got all their answers, they really

704
00:55:30.280 --> 00:55:32.920
didn't find anything. The couple of
things I think, you know, maybe

705
00:55:32.960 --> 00:55:37.519
I sent you a while back that
where just had to do with the signing.

706
00:55:37.679 --> 00:55:40.800
That was just amount of opinion.
But it was nice. We did

707
00:55:40.880 --> 00:55:45.519
that intentionally because we wanted to make
sure even though we had a good comporal

708
00:55:45.599 --> 00:55:49.440
level going in with partnership, we
wanted to make sure that our auditors looked

709
00:55:49.440 --> 00:55:52.840
at it and that they were good
with it as well. So we passed

710
00:55:52.840 --> 00:55:55.719
that audit. It just happened maybe
forty five days ago. Well, and

711
00:55:55.800 --> 00:56:00.960
I think Upstart also did a lot
of leg work as well, making sure

712
00:56:01.000 --> 00:56:06.960
that they went to the regulatory bodies
and went over their model, and you

713
00:56:06.960 --> 00:56:09.760
were pretty transparent about that, and
I think your willingness to be transparent with

714
00:56:09.840 --> 00:56:15.519
regulators and with us goes a long
way to having having access to that data.

715
00:56:15.599 --> 00:56:20.880
Someone else also had a question about
APIs that this is not an API

716
00:56:21.400 --> 00:56:27.880
enabled products that connects to our core
and so that also is what makes it

717
00:56:27.920 --> 00:56:32.079
easier to stand up for us as
NFI. No great. Well, I

718
00:56:32.119 --> 00:56:36.480
know, coming up to the top
of the hour, and I try to

719
00:56:36.519 --> 00:56:39.519
answer as many questions throughout the dialogue, and I know there's many we still

720
00:56:39.559 --> 00:56:44.800
didn't get a chance to get to. So if if folks have have further

721
00:56:44.920 --> 00:56:49.159
questions that we weren't able to get
to, please reach out. There's some

722
00:56:49.159 --> 00:56:54.119
some contact information as well as is
my email address, Ed Walters at upstart

723
00:56:54.159 --> 00:56:59.280
dot com. We've more than happy
to have follow ups if there's if there's

724
00:56:59.320 --> 00:57:05.559
something we didn't answer, and what
before I turn it back to Mike.

725
00:57:05.719 --> 00:57:12.320
Just you know, thanking Julian Phil
for the engaging dialogue. An hour goes

726
00:57:12.360 --> 00:57:15.480
by quick when when you're when we're
when you're having fun, so I really

727
00:57:15.679 --> 00:57:21.320
appreciate the time and I feel hopefully
folks learned a lot today from from talking

728
00:57:21.360 --> 00:57:25.800
with three of us. So Mike
back to you. Okay, Thanks Ed,

729
00:57:25.880 --> 00:57:31.239
and thanks to Julian Phil for your
insights and for being so generous with

730
00:57:31.280 --> 00:57:37.039
your ideas and recommendations. Ladies and
gentlemen. That does conclude today's program.

731
00:57:37.039 --> 00:57:39.199
We're gled you could take time out
of your day to learn more about this.

732
00:57:40.119 --> 00:57:44.480
We hope that you'll join us for
future with seminars brought to you by

733
00:57:44.480 --> 00:57:47.440
American Banker and its partners and once
again we do want to acknowledge and thank

734
00:57:47.480 --> 00:57:52.440
up Start for sponsoring today's program.
We greatly appreciate their support. So on

735
00:57:52.519 --> 00:57:58.519
behalf of American Banker as well as
Upstart and your presenters, Thank you all

736
00:57:58.559 --> 00:58:02.199
for joining us, ladies and gentlemen. Upstart partners with banks and credit unions

737
00:58:02.199 --> 00:58:07.840
to help grow their consumer loan portfolios
and deliver a modern, all digital lending

738
00:58:07.880 --> 00:58:09.639
experience as the average consumer becomes more