Dec. 11, 2024

Evolving the Playbook: Tech, AI, and Customer-Centric Lending

Apple Podcasts podcast player iconSpotify podcast player icon
Apple Podcasts podcast player iconSpotify podcast player icon

In banking, yesterday’s touchdowns don’t win today’s games. A great product is just the start — constant evolution is key to meeting ever-changing customer needs.

In today’s episode, host Matt Snow sits down with Rhett Roberts, CEO and Co-Founder of LoanPro, for an in-depth look at the modern financial landscape. Rhett shares key insights from the recent Money 2020 event in Las Vegas, covering everything from AI’s growing role in financial services to the critical shift toward customer-centric lending. Together, they explore how small lenders can embrace tech modernization, the importance of proactive customer service, and the far-reaching effects of regulatory changes on the industry.


Join us as we discuss:

  • Why small lenders should prioritize exceptional, cost-effective customer experiences over geographical reach.
  • How AI and generative tech are transforming financial services, enhancing efficiency and compliance beyond traditional CRMs.
  • The urgent need for financial institutions to modernize their tech to meet customer expectations and leverage open banking.
WEBVTT

1
00:00:02.879 --> 00:00:05.639
You are listening to Leaders in Lending from Upstart, a

2
00:00:05.679 --> 00:00:09.560
podcast dedicated to helping consumer lenders grow their programs and

3
00:00:09.640 --> 00:00:13.919
improve their product offerings. Each week, here, decision makers in

4
00:00:13.960 --> 00:00:16.760
the finance industry offer insights into the future of the

5
00:00:16.800 --> 00:00:22.000
lending industry, best practices around digital transformation, and more. Let's

6
00:00:22.039 --> 00:00:22.800
get into the show.

7
00:00:26.920 --> 00:00:29.199
Welcome to another episode of Leaders in Lending. I'm your

8
00:00:29.199 --> 00:00:33.119
host this episode, Matt Snow, joined by HTT Robert, CEO

9
00:00:33.159 --> 00:00:35.719
and co founder of loan pro Rett Thanks for joining.

10
00:00:35.520 --> 00:00:37.240
Me, Matt, Thanks for having me.

11
00:00:38.159 --> 00:00:40.439
Yeah, yeah, good to catch up and I know we're

12
00:00:40.479 --> 00:00:43.920
in similar industries. A lot we could cover here. I'm

13
00:00:43.920 --> 00:00:46.719
really curious knowing that you were just at Money twenty

14
00:00:46.840 --> 00:00:48.840
twenty and maybe give a little bit of an update

15
00:00:48.920 --> 00:00:51.600
on what you came away learning from there. What were

16
00:00:51.600 --> 00:00:53.560
the topics, what did people care about, and kind of

17
00:00:53.600 --> 00:00:54.439
questions you got there.

18
00:00:54.920 --> 00:00:57.520
Yeah, it's great event. So last week in Las Vegas

19
00:00:57.679 --> 00:01:01.880
was another year of Money twenty time and it was

20
00:01:01.960 --> 00:01:05.280
wild as always, right, there's just so many people in town,

21
00:01:06.079 --> 00:01:08.799
very very efficient. I brought a little bit of an

22
00:01:08.879 --> 00:01:12.680
army of my team down and we held hundreds, plural

23
00:01:12.840 --> 00:01:16.040
hundreds of meetings and they were with a lot of

24
00:01:16.480 --> 00:01:21.640
great individuals and helped progress many deals and opportunities. So

25
00:01:21.719 --> 00:01:24.319
we love that it's a very efficient time to go

26
00:01:24.359 --> 00:01:26.000
through and meet with folks, and I think others of

27
00:01:26.079 --> 00:01:28.480
view it the same way. There's a couple of themes

28
00:01:28.480 --> 00:01:31.519
that came out. Had the opportunity one of the sessions

29
00:01:31.519 --> 00:01:34.439
that I was speaking on stage with, and there was

30
00:01:34.480 --> 00:01:36.680
other things kind of going around the halls and talking

31
00:01:36.719 --> 00:01:38.640
to different people and seeing different themes.

32
00:01:39.040 --> 00:01:40.159
But there was a few things.

33
00:01:40.280 --> 00:01:45.280
Obviously, there was some talk of AI, and that's to

34
00:01:45.400 --> 00:01:47.799
be expected. It was one of the themes of conversation

35
00:01:48.359 --> 00:01:50.840
about What was interesting is there was sort of two camps,

36
00:01:51.159 --> 00:01:54.799
right There was a camp that AI is under hyped,

37
00:01:56.000 --> 00:01:59.079
in a different camp that it's being overhyped. So it's

38
00:01:59.200 --> 00:02:03.120
very interesting to see both of that and see what's

39
00:02:03.159 --> 00:02:07.400
going to happen with AI. And generally there's consensus on

40
00:02:07.480 --> 00:02:13.080
the strategies of employing AI within an organization of how

41
00:02:13.120 --> 00:02:17.159
do you do that right? Take over repeatable tasks, so

42
00:02:17.280 --> 00:02:21.479
lots of things around regulation, lots of things around some

43
00:02:21.599 --> 00:02:24.319
optimization and then sort of move up the value stream.

44
00:02:24.560 --> 00:02:27.439
And so we're seeing that there was talk a lot

45
00:02:27.479 --> 00:02:31.080
about like evolution of payments. Payments was a big topic

46
00:02:31.120 --> 00:02:34.759
as well, in particular as payments have got faster and faster,

47
00:02:35.319 --> 00:02:39.680
lots of things around fraud, and the two that we

48
00:02:39.800 --> 00:02:42.840
might not expect is there was a considerable amount of

49
00:02:42.919 --> 00:02:46.759
conversation about winning the customer. And so in the panel

50
00:02:47.199 --> 00:02:50.039
or the discussion that I led, we had a couple

51
00:02:50.080 --> 00:02:53.199
of folks come up on stage. We talked about the

52
00:02:54.360 --> 00:02:59.240
lending and financial services, the history of how a financial

53
00:02:59.240 --> 00:03:03.360
institution gauges and what's the hook to catch the customer.

54
00:03:03.759 --> 00:03:06.639
And we've seen a few hooks over the years. They

55
00:03:06.759 --> 00:03:09.560
could be like if you get the deposit account, that

56
00:03:09.599 --> 00:03:13.280
turns into the relationship builder, and then that brings over

57
00:03:13.680 --> 00:03:17.960
the accounts that the various lending products, and that's how

58
00:03:17.960 --> 00:03:20.159
it used to be looked at in the past, but

59
00:03:20.199 --> 00:03:23.280
it's sort of flipped on its head that now the

60
00:03:23.319 --> 00:03:27.360
hooks are looking to be much more bespoke and custom

61
00:03:27.520 --> 00:03:31.120
lending products are the hook to get to win the customer,

62
00:03:31.560 --> 00:03:34.599
and there's lots of studies that show once you capture

63
00:03:34.639 --> 00:03:40.560
them on a unique lending product, then you can increase deposits.

64
00:03:40.560 --> 00:03:43.319
So that works for our friends at the various depositories,

65
00:03:44.000 --> 00:03:47.159
and another topic about issuing innovation. So I think on

66
00:03:47.199 --> 00:03:50.199
a credit card, lots of stuff has happened over the

67
00:03:50.240 --> 00:03:53.840
last decade or so on. We could talk to quite

68
00:03:53.840 --> 00:03:58.719
a few of them actually on innovation on the acquiring side.

69
00:03:58.960 --> 00:04:02.560
Some pretty cool stuff really and one of the big

70
00:04:02.599 --> 00:04:05.000
conversation points that we bring to the table at Loan

71
00:04:05.080 --> 00:04:08.120
Pro but others we had conversations with as well. The

72
00:04:08.159 --> 00:04:12.360
focus that we're doing on issuing innovation and these something

73
00:04:12.360 --> 00:04:17.519
we call transaction level credit, this idea of these unique

74
00:04:17.600 --> 00:04:21.519
lending products within the credit card itself. So a couple

75
00:04:21.519 --> 00:04:23.800
of topics, but it was a great event. We're happy

76
00:04:23.800 --> 00:04:25.319
we went great.

77
00:04:25.360 --> 00:04:27.600
Sounds like you had a very productive event. I know

78
00:04:27.639 --> 00:04:29.519
a lot can happen there. You covered a lot of

79
00:04:29.560 --> 00:04:32.639
topics there. I'm not even sure where to go to

80
00:04:32.680 --> 00:04:35.360
start from all of those. But you know, we don't

81
00:04:35.399 --> 00:04:38.000
usually get through a podcast without talking about AI. You

82
00:04:38.000 --> 00:04:39.839
may have been the earliest to mention it, maybe eighty

83
00:04:39.879 --> 00:04:43.160
seconds in. And I have heard a lot on the

84
00:04:43.199 --> 00:04:45.800
overhype side, But I'm curious on the under hype side,

85
00:04:46.800 --> 00:04:49.240
what's the camp there, Like, what's the viewpoint? Are there

86
00:04:49.279 --> 00:04:52.120
certain use cases or things where maybe we're not focused

87
00:04:52.199 --> 00:04:54.879
enough or not taking advantage of some of this Technology's

88
00:04:55.120 --> 00:04:58.480
what's the contrarian view on the underhepe. Yeah, it's a great.

89
00:04:58.360 --> 00:05:00.879
Question, you know. So there it's I think everybody's read

90
00:05:00.920 --> 00:05:05.279
the ecosystem in a fairly similar way, right, lots of

91
00:05:05.360 --> 00:05:09.759
excitement in the earliest days of well, I can't even

92
00:05:09.759 --> 00:05:12.480
call them the earliest days. There's been some vocabulary changes

93
00:05:12.480 --> 00:05:15.279
of what AI definition is over time as well. But

94
00:05:15.360 --> 00:05:17.800
let's go back just a couple of years. Lots of

95
00:05:17.839 --> 00:05:22.120
excitement about generative AI in particular, and then it's sort

96
00:05:22.120 --> 00:05:25.759
of like HM fizzled for a little bit of maybe

97
00:05:25.800 --> 00:05:28.560
it's a little early think of playing with chat, GPT

98
00:05:28.759 --> 00:05:31.920
or other tools that you played with. They call it

99
00:05:32.000 --> 00:05:37.199
hallucinating where it'll just like make stuff up basically, and

100
00:05:37.240 --> 00:05:41.199
so that's kind of dampered some of the excitement. But

101
00:05:41.360 --> 00:05:45.240
what I started to see this view and this conversation,

102
00:05:45.480 --> 00:05:48.959
multiple conversations I was part of, is think of playing

103
00:05:49.000 --> 00:05:54.120
with chat GPT, and it's generally correct on the structure,

104
00:05:54.800 --> 00:05:57.480
Like you asked, ask it whatever question, and it gives

105
00:05:57.519 --> 00:06:01.560
you a very thoughtful structure back in the answer. Now

106
00:06:01.560 --> 00:06:04.800
we're just working on the actual content inside of that structure.

107
00:06:05.319 --> 00:06:09.600
But the structure by itself is extremely useful. So you know,

108
00:06:09.720 --> 00:06:12.480
give me a template form that blah blah blah, and

109
00:06:12.519 --> 00:06:14.560
it gives you one and now you know what should

110
00:06:14.560 --> 00:06:17.120
you should answer. And so as long as you're not

111
00:06:17.160 --> 00:06:19.959
in a world of like a copy and paste, but

112
00:06:20.040 --> 00:06:22.120
if you're operating in a world of like, oh, let

113
00:06:22.160 --> 00:06:25.279
me accelerate design. So we've done some really interesting things.

114
00:06:25.639 --> 00:06:29.680
Had some conversations about helping our customers using some different

115
00:06:29.720 --> 00:06:34.639
tools on writing rules within our platform around compliance, or

116
00:06:35.079 --> 00:06:40.160
in helping them build eachtmail templates or maybe even queries

117
00:06:40.199 --> 00:06:43.959
into the data sets, and this just speeds things up

118
00:06:44.000 --> 00:06:46.800
for them quite a bit. So on the under hyped,

119
00:06:46.920 --> 00:06:50.319
which is maybe what you were referring to as what's

120
00:06:50.399 --> 00:06:55.199
that talk track, it's usually coming from an organization who

121
00:06:56.240 --> 00:07:02.319
keeping some of the conversations anonymous. Yet it's an organization

122
00:07:02.360 --> 00:07:05.720
who's already employed it and it was much more successful

123
00:07:05.759 --> 00:07:09.839
than they thought. There's some costs takeout, but there's also

124
00:07:10.040 --> 00:07:14.399
just a huge amount of efficiencies within how fast they

125
00:07:14.399 --> 00:07:18.160
can get provide customer support or how consistent they can

126
00:07:18.160 --> 00:07:21.879
provide the right answers. Back to the folks that they're

127
00:07:21.920 --> 00:07:25.639
engaging with and we even see some folks using generative

128
00:07:25.639 --> 00:07:28.639
AI to start eroting what used to be viewed as

129
00:07:28.639 --> 00:07:33.000
a very sticky product like a salesforce and other things.

130
00:07:33.000 --> 00:07:35.839
They're using generative AI to actually build some of those

131
00:07:35.839 --> 00:07:38.360
tools within their own orgs. So there's a bit of

132
00:07:38.399 --> 00:07:41.439
that conversation as well. So it is interesting how it's

133
00:07:41.439 --> 00:07:44.160
a barbell, right. It's like, hey, it's way over hyped, like,

134
00:07:44.240 --> 00:07:47.199
don't worry about it, it's just a new label for

135
00:07:47.600 --> 00:07:51.000
machine learning. And then there's the opposite end of like, no,

136
00:07:51.199 --> 00:07:54.600
this is like a game changer and we're not giving

137
00:07:54.639 --> 00:07:55.399
it enough attention.

138
00:07:56.240 --> 00:07:58.759
I like the way decompose that in the structure and

139
00:07:58.800 --> 00:08:02.439
the contents helped me frame where I've seen the successes too,

140
00:08:02.480 --> 00:08:06.319
and I think, like I said, the automation efficiencies, those

141
00:08:06.360 --> 00:08:09.040
things can be huge wins. I saw maybe it was

142
00:08:09.040 --> 00:08:11.720
in Google's earnings or a press release recently they said

143
00:08:12.079 --> 00:08:14.920
twenty five or thirty percent of their code is now

144
00:08:15.319 --> 00:08:19.480
AI generated or enabled. So those things that speed up

145
00:08:19.519 --> 00:08:24.000
the monotonous, more mundane task. I think huge opportunities exist there.

146
00:08:24.079 --> 00:08:29.240
And it's particularly interesting and financial services. Financial services have

147
00:08:29.319 --> 00:08:32.840
a reputation to be slow to adopt to new technologies,

148
00:08:33.480 --> 00:08:37.519
in part because of the increased scrutiny of regulation, and

149
00:08:38.000 --> 00:08:42.919
we'll call them layers of regulation for the audience. When

150
00:08:42.919 --> 00:08:46.120
I was in elementary school, it's probably for most of us,

151
00:08:46.600 --> 00:08:48.799
the way they did classes, the way that they were

152
00:08:48.840 --> 00:08:53.080
presented with an overhead projector. Did you have those, Matt, Yeah?

153
00:08:53.240 --> 00:08:54.960
Did I remember the marketing though.

154
00:08:55.159 --> 00:08:57.559
I actually bought an overhead projector like two years ago

155
00:08:57.639 --> 00:09:00.200
at a garage cell for one dollar, and my kids like,

156
00:09:00.279 --> 00:09:02.919
what is this thing? I was like, Oh, let's get

157
00:09:02.960 --> 00:09:05.679
there at any rate. I like this visual of an

158
00:09:05.679 --> 00:09:08.440
overhead projector and then you put the paper on and

159
00:09:08.799 --> 00:09:11.919
if you do multiple layers there you get some version

160
00:09:11.919 --> 00:09:14.120
of a Venn diagram being projected up on the wall.

161
00:09:14.840 --> 00:09:19.360
And I like that visual because we see a lot

162
00:09:19.399 --> 00:09:23.879
of the regulations changing, right, and a regulator has they

163
00:09:23.919 --> 00:09:28.200
have a consistent objective whether they're trying to achieve, but

164
00:09:28.399 --> 00:09:32.039
depending on a whole bunch of factors, including who is

165
00:09:32.039 --> 00:09:35.720
the human, is the strategy working or not? Both a

166
00:09:35.840 --> 00:09:40.080
proactive and a reactive strategies to what's happening in the marketplaces,

167
00:09:40.600 --> 00:09:43.159
the tactics of how they go about and trying to

168
00:09:43.200 --> 00:09:48.159
achieve the consistent objective changes, and so that means rules

169
00:09:48.320 --> 00:09:51.360
change and they adjust and so forth. And so if

170
00:09:51.399 --> 00:09:53.399
you think of the each one, each rule as a

171
00:09:53.399 --> 00:09:57.559
different layer of this overhead projector this then gives you

172
00:09:57.639 --> 00:10:00.440
like a tapestry of the climate that we're oper reading in.

173
00:10:00.960 --> 00:10:03.480
And one of the reasons that financial services have been

174
00:10:03.519 --> 00:10:07.000
a little bit slow to adapt of using new technology

175
00:10:07.440 --> 00:10:11.639
is because it's sort of like a checkerboard of compliance.

176
00:10:11.879 --> 00:10:15.399
There's like all over the place, if that's a geography checkerboard,

177
00:10:15.480 --> 00:10:18.080
if it's where your license is at, and so forth,

178
00:10:18.159 --> 00:10:21.559
and so it gets complicated. And what we're finding is

179
00:10:21.639 --> 00:10:25.240
some opportunities with the generative AI is it can help

180
00:10:25.720 --> 00:10:30.240
make sure there's more consistency in how engagements work. And

181
00:10:30.279 --> 00:10:32.399
that's a lot of the things that get audited. Think

182
00:10:32.440 --> 00:10:36.480
of when an examiner comes into a depository for their

183
00:10:36.519 --> 00:10:41.440
annual examination, they want to get a sample set of

184
00:10:41.720 --> 00:10:43.759
show me so many of these kinds of things, right,

185
00:10:43.799 --> 00:10:47.039
show many loans and deposits, these kinds of transactions, and

186
00:10:47.080 --> 00:10:49.919
to show me basically that you're coloring within the lines

187
00:10:49.960 --> 00:10:54.240
of the sample set that they select, and having a

188
00:10:54.279 --> 00:10:57.799
tool that will always color within the lines is proving

189
00:10:57.840 --> 00:11:01.919
to be exceptionally valuable from a compliance side of things,

190
00:11:02.200 --> 00:11:06.000
but also from a consistency side. Think of like a

191
00:11:06.120 --> 00:11:10.879
favorite fast food restaurant, go to McDonald's, right, one of

192
00:11:10.919 --> 00:11:14.960
their keys of success is consistency, and so getting some

193
00:11:15.120 --> 00:11:19.720
financial services regularly have a consistency, and that these tools

194
00:11:19.759 --> 00:11:21.120
are helping unlock.

195
00:11:20.799 --> 00:11:24.440
That, Yeah, I couldn't agree more. I know we could

196
00:11:24.440 --> 00:11:26.679
go pretty deep on that side as well. I think

197
00:11:26.759 --> 00:11:29.519
you spoke recently with our chief risk officer, Andy Delgado

198
00:11:29.559 --> 00:11:31.960
at a conference recently, and I don't know when this

199
00:11:32.000 --> 00:11:34.240
will air, but you know we talked earlier. It's it's

200
00:11:34.240 --> 00:11:38.600
election day here in the US, so that regulatory environment

201
00:11:38.639 --> 00:11:42.000
could get a lot more complex in we don't know

202
00:11:42.080 --> 00:11:44.879
in which direction yet still, so maybe we can do

203
00:11:44.919 --> 00:11:48.720
a follow up afterwards and see what happens, but it'll

204
00:11:48.759 --> 00:11:49.559
be fascinating.

205
00:11:49.679 --> 00:11:51.840
Rights. So, I've got a lot of friends, know a

206
00:11:51.840 --> 00:11:57.080
ton of folks in the regulatory space, and I think

207
00:11:57.080 --> 00:12:02.519
it's important to highlight that the objectives of the regulators

208
00:12:02.559 --> 00:12:06.440
seem to be very consistent. They're trying to achieve, but

209
00:12:06.840 --> 00:12:09.679
achieve like you know, if it's a certain inflation or

210
00:12:10.039 --> 00:12:14.399
to manage what the inflation rate is soundness that safety

211
00:12:14.440 --> 00:12:19.120
and soundness like there's like consistency in the objective, but

212
00:12:19.240 --> 00:12:24.000
the strategy about how to achieve that objective seems like

213
00:12:24.080 --> 00:12:27.159
it's there's a high probability it will change based off

214
00:12:27.200 --> 00:12:29.480
of what this regulation or excuse me, based off what

215
00:12:29.480 --> 00:12:36.679
happens with the election, because there's two fairly opposing perspectives.

216
00:12:37.080 --> 00:12:40.440
If that's going to be things around how a partner

217
00:12:40.440 --> 00:12:45.039
make model works, if that's things around like the concentration

218
00:12:45.200 --> 00:12:48.440
in big banks versus community banks, if you know, and

219
00:12:48.480 --> 00:12:50.639
you can go on and on, but there seems to

220
00:12:50.679 --> 00:12:55.600
be some strategy differences about how do you go about

221
00:12:55.639 --> 00:12:58.039
achieving an agreed upon objective?

222
00:12:59.039 --> 00:13:00.720
Yeah, and I want to use this maybe to pivot

223
00:13:00.759 --> 00:13:03.120
back to one of your money twenty twenty topics because

224
00:13:03.120 --> 00:13:07.600
with the open banking regulation and perspectives that are coming

225
00:13:07.600 --> 00:13:10.600
out now, it's really changed the way I've thought about,

226
00:13:10.639 --> 00:13:12.600
you know, winning the customer as you said it, or

227
00:13:12.679 --> 00:13:14.480
like what what does it take to win a customer?

228
00:13:14.559 --> 00:13:18.200
Especially in financial services? So maybe I don't know, you

229
00:13:18.240 --> 00:13:20.879
can use open banking if you want to jump into that,

230
00:13:21.000 --> 00:13:22.720
or were there other things when you think about winning

231
00:13:22.759 --> 00:13:27.000
the customer, like who differentiates, how do financial services companies

232
00:13:27.080 --> 00:13:29.840
win or who's going to be the succeed or twenty

233
00:13:29.919 --> 00:13:31.480
thirty forty years now.

234
00:13:31.879 --> 00:13:34.320
Is a great question. So Open Banking has done something

235
00:13:34.320 --> 00:13:38.960
that's pretty interesting. Obviously, the recent rule final rules, they

236
00:13:39.000 --> 00:13:40.840
always call them final, but there seems to be multiple

237
00:13:40.879 --> 00:13:44.600
versions of final. So Final Rules of ten thirty three

238
00:13:45.279 --> 00:13:51.679
about basically unlocking who owns the consumer data and how

239
00:13:51.840 --> 00:13:56.759
portable is that consumer data. And with this portability, it

240
00:13:56.799 --> 00:13:59.399
has a timeline based off of the size of the

241
00:13:59.519 --> 00:14:03.639
organize of how fast they need to comply with how

242
00:14:03.720 --> 00:14:06.519
porous the data will be outside of their system so

243
00:14:06.559 --> 00:14:08.600
that it makes the easiest easier to port So I

244
00:14:08.600 --> 00:14:11.679
think back years and years and years ago when it

245
00:14:11.720 --> 00:14:14.879
became clear that you owned your cell phone number and

246
00:14:14.919 --> 00:14:17.919
if you wanted to change who your carrier was, it

247
00:14:18.039 --> 00:14:21.720
used to be like cancel your phone, get a new

248
00:14:21.840 --> 00:14:25.279
phone number from the other carrier. And so they made

249
00:14:25.320 --> 00:14:31.360
so it was you know, functionally, it wasn't not practical,

250
00:14:31.399 --> 00:14:34.799
but it was like high levels of irritating to change

251
00:14:34.799 --> 00:14:38.159
your phone number. And so their pricing models at that

252
00:14:38.279 --> 00:14:42.360
time were like, look, rhett'spent on this phone carrier. For

253
00:14:42.399 --> 00:14:45.159
a while I'm just going to jack up his prices

254
00:14:45.759 --> 00:14:48.159
because he's not got change. It's pretty sticky, right, it's

255
00:14:48.159 --> 00:14:50.159
just too annoying to him for him to change his

256
00:14:50.200 --> 00:14:54.559
phone number. Well, ten thirty three, that's the analogy I

257
00:14:54.639 --> 00:15:00.240
think of. It opens up this opportunity where a consum

258
00:15:00.840 --> 00:15:06.679
involved in financial services will now have much increased portability

259
00:15:07.000 --> 00:15:09.080
of where they want a bank, where they want to

260
00:15:09.120 --> 00:15:12.279
get a loan, where they want to do financial services.

261
00:15:12.440 --> 00:15:15.320
So there's a bunch of companies who have built their

262
00:15:15.320 --> 00:15:19.840
whole business model off of I know it's an oversimplification,

263
00:15:19.960 --> 00:15:22.279
but they've built their business model off of the concept

264
00:15:22.320 --> 00:15:26.759
of the portability of the consumer. And so that's data

265
00:15:26.919 --> 00:15:30.360
visibility and making it convenient to port from company A

266
00:15:30.519 --> 00:15:33.559
to company B and to move over if it's a

267
00:15:33.639 --> 00:15:36.879
loan or a bank account or a debit card or

268
00:15:36.879 --> 00:15:40.440
whatever the product might be, making it simpler to do so,

269
00:15:40.759 --> 00:15:44.960
and especially where that's being delivered via a virtual experience

270
00:15:45.000 --> 00:15:49.279
on an app or your phone. And so what we're

271
00:15:49.320 --> 00:15:52.080
seeing with all of that background of like the underlying

272
00:15:52.120 --> 00:15:57.639
pieces of portability that simplifies it doesn't actually encapsulate everything

273
00:15:57.639 --> 00:16:00.240
of ten thirty three, but it's a major piece ten

274
00:16:00.279 --> 00:16:05.080
thirty three. We're seeing winning the customer is an absolutely

275
00:16:05.120 --> 00:16:06.080
important theme.

276
00:16:06.639 --> 00:16:06.840
Right.

277
00:16:06.840 --> 00:16:10.559
You can't force somebody to be your customer. And if

278
00:16:10.639 --> 00:16:14.559
you thought they were sticky, maybe they're not quite as

279
00:16:14.600 --> 00:16:15.679
sticky as you thought.

280
00:16:15.919 --> 00:16:16.120
Right.

281
00:16:16.440 --> 00:16:19.679
And if they're going to be your customer today, does

282
00:16:19.679 --> 00:16:22.039
that mean they're going to be your customer tomorrow? And

283
00:16:22.080 --> 00:16:25.120
we're seeing this thing that I feel personally, I feel

284
00:16:25.159 --> 00:16:28.679
it's really good for consumers is they need to be

285
00:16:28.759 --> 00:16:32.559
continually to be one over. So how do you win

286
00:16:32.679 --> 00:16:36.480
that customer when it's fairly simple and there's low switching

287
00:16:36.559 --> 00:16:40.320
costs for them to move to somebody else? Well, it's

288
00:16:40.360 --> 00:16:42.879
sort of obvious on some pieces and not so obvious

289
00:16:42.879 --> 00:16:45.039
on others. So the obvious ones, you got to have

290
00:16:45.080 --> 00:16:48.519
better products. You need to communicate better. You need to

291
00:16:49.000 --> 00:16:52.919
remove things that are high friction and high irritation. Andrews

292
00:16:52.960 --> 00:16:56.879
and Horowitz did a study. Angela Strange's authored an article

293
00:16:57.039 --> 00:17:01.960
some years ago about more briage servicing. When you service,

294
00:17:03.200 --> 00:17:05.680
if you get a loan for your home, get a mortgage,

295
00:17:06.119 --> 00:17:09.759
and then you call in for service, how delightful is

296
00:17:09.799 --> 00:17:12.279
your experience? Right? And they did the sample set of

297
00:17:12.279 --> 00:17:14.359
a number of engagements and there are things like it

298
00:17:14.400 --> 00:17:17.480
takes you nine phone calls to figure out an adjustment

299
00:17:17.480 --> 00:17:20.680
to an escrow it takes you two phone calls because

300
00:17:20.680 --> 00:17:22.960
the first one you got hung up on in order

301
00:17:23.000 --> 00:17:27.359
to make it like these like terrible customer experience things.

302
00:17:27.799 --> 00:17:31.079
So there's obviously a great room of improvement that can

303
00:17:31.119 --> 00:17:33.480
be achieved. I think you just got to fix that

304
00:17:33.599 --> 00:17:37.799
kind of stuff in order to continually to win the customer.

305
00:17:38.200 --> 00:17:40.759
And that's a big playbook that my company is going

306
00:17:40.799 --> 00:17:43.799
off of. We're saying, if we provide the right tools

307
00:17:43.880 --> 00:17:48.519
and the right technology to folks that give loans to

308
00:17:48.599 --> 00:17:53.480
provide a customer delight, that will result in them winning

309
00:17:53.519 --> 00:17:56.759
the customer and winning every engagement with the customer. So

310
00:17:56.799 --> 00:17:58.680
I think that's a big theme not only of just

311
00:17:58.720 --> 00:18:01.960
money twenty twenty, but we're seeing that trend be sort

312
00:18:02.000 --> 00:18:05.200
of nudged by the regulations that are being changed, but

313
00:18:05.279 --> 00:18:10.240
we're also seeing that trend be adopted by financial institutions.

314
00:18:10.319 --> 00:18:12.759
Right everybody is trying to look to modernize their tech stag.

315
00:18:13.160 --> 00:18:15.759
It's not just their modernizing for the sake of modernizing.

316
00:18:16.079 --> 00:18:18.400
One of the objectives is so they can continue to

317
00:18:18.440 --> 00:18:21.680
win that customer, provide a delightful experience, do it in

318
00:18:21.720 --> 00:18:25.200
a cost effective way, and so forth. So it's kind

319
00:18:25.200 --> 00:18:27.279
of a long thing, but we feel like there's a

320
00:18:27.319 --> 00:18:29.200
lot of opportunity on winning the customer.

321
00:18:30.279 --> 00:18:32.880
Hey there, former host Jeff kalviner here to let you

322
00:18:32.920 --> 00:18:36.200
know about an exciting opportunity to strengthen your understanding of

323
00:18:36.319 --> 00:18:39.759
artificial intelligence and financial services. If you want to better

324
00:18:39.839 --> 00:18:42.559
understand the fundamentals of how AI models work and how

325
00:18:42.640 --> 00:18:46.440
they will impact a financial services industry, your luck. Upstart

326
00:18:46.519 --> 00:18:49.079
is launched an online course and certification designed to do

327
00:18:49.480 --> 00:18:51.960
just that. This course will give you the knowledge you

328
00:18:52.000 --> 00:18:55.039
need to lead the conversation about how your organization can

329
00:18:55.119 --> 00:18:59.160
best leverage and manage this revolutionary technology. But that sounds

330
00:18:59.160 --> 00:19:02.119
interesting out the course as it's currently free for a

331
00:19:02.119 --> 00:19:05.039
limited time. You can learn more at upstart dot com

332
00:19:05.079 --> 00:19:10.079
slash AI Certification. Again, that's upstart dot com slash AI Certification.

333
00:19:10.559 --> 00:19:12.119
Thanks, and now back.

334
00:19:11.960 --> 00:19:15.720
To the show. Maybe we can dig into servicing a

335
00:19:15.759 --> 00:19:17.960
little bit because I was thinking about this in preparation

336
00:19:18.039 --> 00:19:20.319
for our conversation and we spend, you know, on the

337
00:19:20.759 --> 00:19:23.119
lending side a lot of time talking about the acquisition,

338
00:19:23.200 --> 00:19:27.559
the user experience, the verification, underwriting all those things obviously

339
00:19:27.599 --> 00:19:30.599
critically important, but lead into a decision that then has

340
00:19:30.680 --> 00:19:34.240
to live, you know, three five thirty years through the

341
00:19:34.279 --> 00:19:36.960
life of the loan. And so maybe let's you know,

342
00:19:37.039 --> 00:19:39.759
talk about servicing a little bit. And I was thinking

343
00:19:39.759 --> 00:19:42.559
about it in relation to insurance. Right, So you know

344
00:19:42.599 --> 00:19:44.759
a lot of times maybe you're comparing on price or

345
00:19:44.759 --> 00:19:50.519
perception or brand or some other tangible characteristics. But that's

346
00:19:50.559 --> 00:19:53.000
servicing that you know, you're filing a claim, like that's

347
00:19:53.039 --> 00:19:55.079
when you need that the most, and it's maybe not

348
00:19:55.160 --> 00:19:59.480
something you can experience or understand until until it's that

349
00:19:59.480 --> 00:20:00.160
that time.

350
00:20:01.200 --> 00:20:05.519
It's a great point. It's you think of the insurance example.

351
00:20:05.920 --> 00:20:09.519
Right there's before you you choose a company to be

352
00:20:09.599 --> 00:20:12.640
your insurance carrier, you can go look to see like

353
00:20:13.720 --> 00:20:15.880
their claim rates, and you can go look to see

354
00:20:15.880 --> 00:20:18.119
I don't know a lot of people do, but you can,

355
00:20:18.640 --> 00:20:22.039
right like, you can see those things. And it's also

356
00:20:22.119 --> 00:20:26.799
interesting the way that loans work is that, especially mortgages,

357
00:20:27.480 --> 00:20:31.400
the originator rarely is the long tail servicer.

358
00:20:31.839 --> 00:20:32.000
Right.

359
00:20:32.160 --> 00:20:35.160
Usually they sell those loans and somebody else does it.

360
00:20:35.200 --> 00:20:39.480
And so the incentive structure, in part because of Fanny

361
00:20:39.559 --> 00:20:43.799
and Freddy and how the standardization and homogenizing the loans.

362
00:20:44.279 --> 00:20:47.319
So in part because of that, the incentive structure is

363
00:20:47.359 --> 00:20:51.519
to divide the value chain of a mortgage into pieces

364
00:20:51.519 --> 00:20:55.319
that misalign the interests. And so you sort of like

365
00:20:55.440 --> 00:20:58.519
just you know, do your part during the origination journey

366
00:20:58.559 --> 00:21:01.200
and process, and then it moves down down down through

367
00:21:01.200 --> 00:21:04.480
the value stream, and after the loan has originated in

368
00:21:04.519 --> 00:21:08.799
funds and proceeds are distributed, that usually the loan gets

369
00:21:08.839 --> 00:21:12.640
sold and someone that you didn't necessarily agree to do

370
00:21:12.720 --> 00:21:17.680
business with is now the party you're with, and they

371
00:21:17.720 --> 00:21:22.200
don't generally get raving reviews for the amount of customer

372
00:21:22.279 --> 00:21:26.079
service that they provide, and so that's a challenge right

373
00:21:26.559 --> 00:21:29.839
our software we focus on really everything but mortgage. We

374
00:21:29.880 --> 00:21:33.279
have some mortgage on the platform, but a significant portion

375
00:21:33.359 --> 00:21:36.160
of the mortgages in the United States are ran by

376
00:21:36.200 --> 00:21:38.839
four big players, and so that hasn't been the area

377
00:21:38.880 --> 00:21:42.400
we focused. But we've taken sort of the contrarian view

378
00:21:42.440 --> 00:21:45.160
of saying, hey, why don't we focus, Why don't we

379
00:21:45.200 --> 00:21:48.400
provide the right technology to our customers so that they

380
00:21:48.400 --> 00:21:53.319
can win every interaction, do proactive servicing, and so instead

381
00:21:53.319 --> 00:21:56.000
of spending all of this money to go acquire a

382
00:21:56.039 --> 00:22:00.480
new customer, or have one business line of one company

383
00:22:00.640 --> 00:22:03.920
acquire pay a bunch of money to acquire the customer

384
00:22:03.920 --> 00:22:06.880
who's already in the other business line of the same company.

385
00:22:07.759 --> 00:22:10.440
Why don't we just treat them with a high level

386
00:22:10.680 --> 00:22:13.759
for customer to light and so all of the cool

387
00:22:13.799 --> 00:22:15.880
stuff and people do some really cool things on the

388
00:22:15.920 --> 00:22:19.400
origination side, why don't we support all of that through

389
00:22:19.440 --> 00:22:24.079
the journey and the experience to win every interaction. One

390
00:22:24.079 --> 00:22:28.440
example is there was a study done years ago related

391
00:22:28.440 --> 00:22:32.480
to this. The CFPB publishes every single year like the

392
00:22:32.599 --> 00:22:36.119
reasons people call in and what their complaints are, and

393
00:22:36.160 --> 00:22:39.920
then they theme or group them and almost always be

394
00:22:40.079 --> 00:22:42.400
on a credit card. The number one complaint is something

395
00:22:42.440 --> 00:22:45.799
to do with their rewards. Right, I thought I was

396
00:22:45.839 --> 00:22:47.759
going to get ten thousand points for this and I

397
00:22:47.839 --> 00:22:51.039
didn't for whatever reasons. Is some like confusion around rewards

398
00:22:51.200 --> 00:22:55.039
or or accusations around rewards. Well, one of the things

399
00:22:55.119 --> 00:22:59.559
is on the list. Years ago was a study that

400
00:22:59.640 --> 00:23:03.039
was done about this concept where if you have a

401
00:23:03.079 --> 00:23:05.240
life event as a consumer, if you have a life

402
00:23:05.279 --> 00:23:09.359
event that occurs fill in the blank, whatever weird stuff happens, right,

403
00:23:09.680 --> 00:23:11.920
you call in your company that you have alone with

404
00:23:12.039 --> 00:23:16.000
and you say, life event happened, how can you help me?

405
00:23:17.359 --> 00:23:22.799
Two thirds two thirds of the servicing companies this might

406
00:23:22.839 --> 00:23:26.039
be an auto loan or personal loan, right, two thirds

407
00:23:26.079 --> 00:23:30.759
of their answers were call back after you've missed a payment.

408
00:23:32.640 --> 00:23:35.279
And think about that. That makes you chuckle a little bit.

409
00:23:35.319 --> 00:23:37.920
You're like, well, that doesn't even pass like the sniff test.

410
00:23:37.960 --> 00:23:42.640
That's not likely even like basically logical, because what did

411
00:23:42.640 --> 00:23:49.000
the consumer hear? They heard you're not going to help me, right,

412
00:23:49.079 --> 00:23:51.759
that's not what they said, but that's what they heard.

413
00:23:52.160 --> 00:23:55.440
And so what we've approached that with to say, why

414
00:23:55.960 --> 00:23:58.559
does it happen that way? Why does the person who

415
00:23:58.599 --> 00:24:02.119
answers the phone and they're happy, they're providing service, they're

416
00:24:02.160 --> 00:24:05.000
engaging with a customer, why did they give the answer

417
00:24:05.039 --> 00:24:08.160
of callback. And it's not that the person who answered

418
00:24:08.160 --> 00:24:10.480
the phone or the company's policies are wrong or anything

419
00:24:10.559 --> 00:24:15.559
like that. It's usually that the software that that servicer

420
00:24:15.720 --> 00:24:19.839
is using didn't tell them this is the available options

421
00:24:19.880 --> 00:24:22.440
of what can be done and how what you can offer.

422
00:24:22.599 --> 00:24:26.160
So their software was missing a feature or a function

423
00:24:26.519 --> 00:24:30.799
of proactive servicing. Maybe their systems were only designed in

424
00:24:30.839 --> 00:24:35.079
a model of reactive servicing, and the platform loan pro

425
00:24:35.200 --> 00:24:38.640
provides is around all that. We really provide three experiences, right.

426
00:24:38.640 --> 00:24:42.559
The first one is akin to online banking, a customer portal,

427
00:24:42.640 --> 00:24:44.960
log in and manage your loan self service kind of thing.

428
00:24:45.240 --> 00:24:49.440
The second experience is the agent experience. That's the platform

429
00:24:49.480 --> 00:24:52.559
if you called or walked into a branch or virtually

430
00:24:52.640 --> 00:24:54.720
or physically engaged to say like, hey, what's up on

431
00:24:54.759 --> 00:24:57.119
my loan? What options do I have? Can I change

432
00:24:57.119 --> 00:24:59.039
a due date? Can I make a payment early? Whatever?

433
00:24:59.119 --> 00:25:02.599
Servicing even, that's the platform that the person who's helping

434
00:25:02.680 --> 00:25:05.599
you would pull up your account and do all of

435
00:25:05.599 --> 00:25:09.160
those activities. So if you call in and you say, hey,

436
00:25:09.160 --> 00:25:12.279
can I change my du date? I don't know? Can you?

437
00:25:12.559 --> 00:25:14.359
Is it up to the person on the phone like

438
00:25:14.400 --> 00:25:16.480
it can you? Well, it turns out like there's a

439
00:25:16.519 --> 00:25:19.359
lot of rules around that. The government's got rules that

440
00:25:19.440 --> 00:25:23.160
the f FIEC like does your loan qualify? And what

441
00:25:23.200 --> 00:25:26.559
does qualify even mean? There's like all kinds of layers

442
00:25:26.559 --> 00:25:30.000
that overhead projector thing again, right, all these layers of

443
00:25:30.599 --> 00:25:33.599
can you color within the lines? That's exactly what our

444
00:25:33.599 --> 00:25:37.039
software platform does. So to your question about that piece

445
00:25:37.480 --> 00:25:41.680
the servicing, like, you can provide a delightful experience, but

446
00:25:41.759 --> 00:25:45.240
you need tools in order to do that. Then the

447
00:25:45.279 --> 00:25:47.920
third experience we provide is that back office. Where do

448
00:25:47.960 --> 00:25:51.200
you configure the tool with all of your guardrails and

449
00:25:51.240 --> 00:25:55.400
controls and proactive and reactive servicing things to make sure

450
00:25:55.480 --> 00:25:59.920
that one program might have bespoke rules, things tied to

451
00:26:00.279 --> 00:26:03.319
versus another program. So how do you configure it that way?

452
00:26:03.680 --> 00:26:07.440
I think that's the future of finance is unlocking that

453
00:26:07.559 --> 00:26:11.160
kind of think that allows you if you have a

454
00:26:11.160 --> 00:26:13.839
book of loans, if you're a bank or credit union

455
00:26:13.960 --> 00:26:16.640
or a private credit if you have the right tools

456
00:26:16.640 --> 00:26:20.000
to provide servicing, that's how you win the customer again

457
00:26:20.079 --> 00:26:23.319
and again. Instead of paying all of the reacquisition cost

458
00:26:23.359 --> 00:26:26.200
of getting new customer, just treat your current customer in

459
00:26:26.200 --> 00:26:28.000
a way that they want to stay your customer.

460
00:26:28.759 --> 00:26:31.400
Yeah, I read. I like that proactive servicing. I want

461
00:26:31.400 --> 00:26:33.359
to come back to that, but I wanted to share

462
00:26:33.400 --> 00:26:35.119
a story because I had to laugh when you said,

463
00:26:35.160 --> 00:26:37.599
like call back when you've missed a payment, because I

464
00:26:37.680 --> 00:26:40.960
it's a slightly different analogy, but recently I went to

465
00:26:41.000 --> 00:26:44.079
buy some aftermarket football tickets for my son so he

466
00:26:44.119 --> 00:26:47.200
and his friend could go to an Ohio State game Buckeye.

467
00:26:47.200 --> 00:26:50.559
I'm an alum, big fans, so I went to get

468
00:26:50.559 --> 00:26:53.240
a couple tickets, and we were doing some research and

469
00:26:53.480 --> 00:26:56.240
I found a decent deal on club seats and the

470
00:26:56.240 --> 00:26:58.440
section was C four club seats that showed a view

471
00:26:58.440 --> 00:27:01.200
of the field, you know, right at midfield field, good view,

472
00:27:01.839 --> 00:27:03.480
you know, not the cheapest tickets, but they were a

473
00:27:03.519 --> 00:27:06.279
good price, and I check out and I sent them,

474
00:27:06.480 --> 00:27:09.519
you know, the link, and he sent a text back

475
00:27:09.559 --> 00:27:11.480
to me, and I looked and they were actually in

476
00:27:11.559 --> 00:27:13.960
section C four, which if you've been to the Horseshoe

477
00:27:14.519 --> 00:27:16.960
is in the very top of the stadium in the corner.

478
00:27:17.759 --> 00:27:20.640
And you know, I went online, I called in and

479
00:27:21.559 --> 00:27:24.519
long story short, like the answer to me was I

480
00:27:24.519 --> 00:27:27.240
can't do anything about this because the game hasn't happened yet,

481
00:27:27.759 --> 00:27:31.519
and just and they admitted like it was a glitch

482
00:27:31.519 --> 00:27:33.400
in their system, it was a mapping issue, and they

483
00:27:33.440 --> 00:27:36.079
sold me their wrong tickets. But what I heard was

484
00:27:36.119 --> 00:27:37.640
I don't want to help you, just like you said,

485
00:27:37.680 --> 00:27:41.079
like it and it seemed to be something that like

486
00:27:41.200 --> 00:27:44.880
it made no sense, like you can't help me because I'm.

487
00:27:44.759 --> 00:27:46.920
Going to wait till the window of opportunity is over,

488
00:27:47.160 --> 00:27:49.160
the game's done, then I can help you.

489
00:27:49.160 --> 00:27:50.240
You're like, well, that's not I.

490
00:27:50.160 --> 00:27:51.400
Wanted to watch the game.

491
00:27:52.160 --> 00:27:55.240
Yeah, and against all logic, like I'm willing to buy

492
00:27:55.279 --> 00:27:57.480
another set of tickets through this company. I'm not going

493
00:27:57.559 --> 00:27:59.240
to mention their name because I may never do business

494
00:27:59.240 --> 00:28:03.039
with them again after but you know, I'm willing to

495
00:28:03.200 --> 00:28:05.559
transact with you again if you just make this right now.

496
00:28:05.680 --> 00:28:09.240
But I think your point is super valid. So the

497
00:28:09.519 --> 00:28:12.839
Push ten thirty three is an artifact of what I

498
00:28:12.920 --> 00:28:16.079
believe will be a number of things that will make

499
00:28:17.960 --> 00:28:22.759
financial services more portable, or another way to say, switching

500
00:28:22.799 --> 00:28:26.240
costs will not be as expensive to move from A

501
00:28:26.359 --> 00:28:29.359
to B. And it means folks are going to have

502
00:28:29.440 --> 00:28:34.359
to provide financial products that have a hook in them

503
00:28:34.400 --> 00:28:37.799
that really wants you to stay and they encourage you

504
00:28:37.880 --> 00:28:40.799
to stay. And we're seeing something that's super interesting that

505
00:28:41.039 --> 00:28:44.000
I mentioned it before, but it's a complete one eighty

506
00:28:44.079 --> 00:28:45.960
from how it used to be back in the day.

507
00:28:46.599 --> 00:28:49.759
So Carl Pascarella, he's the former CEU of Visa. He's

508
00:28:49.759 --> 00:28:52.240
on my board here at Loan Pro and he was

509
00:28:52.279 --> 00:28:55.640
heavily involved in the debit card, and so the whole

510
00:28:55.680 --> 00:28:57.640
process of a debit card, and one of the big

511
00:28:57.680 --> 00:29:01.200
things he's told me in a story is one of

512
00:29:01.240 --> 00:29:05.000
the reasons the debit card was really successful is it's

513
00:29:05.000 --> 00:29:09.519
an access point to a checking account or a deposit account. Well,

514
00:29:09.559 --> 00:29:14.000
the bank wants to increase deposits, but provide a bunch

515
00:29:14.039 --> 00:29:16.839
of tools, and this was a really nice new tool

516
00:29:17.079 --> 00:29:20.279
that encouraged to increase a deposit. So it used to

517
00:29:20.319 --> 00:29:25.680
be when the relationship meant they were bringing their deposits

518
00:29:25.680 --> 00:29:28.680
to you, and then you would expand into other cross

519
00:29:28.720 --> 00:29:31.799
sell products. If they had deposits with you, then they'll

520
00:29:31.799 --> 00:29:34.240
get an at alone from you and so forth. Well,

521
00:29:34.279 --> 00:29:38.119
what we're finding is technology has enabled that to flip

522
00:29:38.160 --> 00:29:42.880
on its head, where folks are now saying, hey, deposits

523
00:29:42.880 --> 00:29:46.319
are kind of a commodity. As long as they're insured deposits,

524
00:29:46.759 --> 00:29:50.000
they have online banking, that's good enough for me to

525
00:29:50.079 --> 00:29:52.759
engage with. I don't really care where it's at because

526
00:29:52.799 --> 00:29:55.200
the government's got a backstop on it for me. But

527
00:29:55.279 --> 00:29:58.960
what I really do care about is the lending products

528
00:29:58.960 --> 00:30:02.960
that are highly bespo to me and cover my particular situation.

529
00:30:03.559 --> 00:30:06.559
And so what we're finding, and many of them are

530
00:30:06.559 --> 00:30:09.240
powered by the loan Pro platform, But what we're finding

531
00:30:09.240 --> 00:30:14.640
in the ecosystem is these bespoke lending products are the

532
00:30:14.680 --> 00:30:18.240
hook of I won you as a customer and then oh,

533
00:30:18.279 --> 00:30:20.519
by the way, if you do your auto loan or

534
00:30:20.519 --> 00:30:24.000
your mortgage or your ATV or your whatever loan with

535
00:30:24.119 --> 00:30:27.640
me and you do your deposits, then there's like an

536
00:30:27.640 --> 00:30:30.359
incentive for that. So what we're finding is it's flipped

537
00:30:30.400 --> 00:30:33.680
full one eighty, which is just super interesting that technology

538
00:30:33.680 --> 00:30:37.319
has enabled that and the push of portability of a

539
00:30:37.359 --> 00:30:40.400
consumer is I believe going to accelerate that.

540
00:30:41.240 --> 00:30:43.279
Yeah, I think you're right, and I know you guys

541
00:30:43.279 --> 00:30:46.480
as well, as U said upstart our API enabled systems

542
00:30:46.480 --> 00:30:47.920
as well, and maybe a little bit ahead of the

543
00:30:47.960 --> 00:30:52.599
regulator allowing some of that. Do you see across you know,

544
00:30:52.640 --> 00:30:56.359
the financial services industry? Are our companies ready for this?

545
00:30:56.559 --> 00:30:59.680
Like you know, I know government, I don't love when

546
00:30:59.720 --> 00:31:01.960
they get in the business of picking winners and losers.

547
00:31:02.000 --> 00:31:04.519
And sometimes these regulations, like he said, you've got the

548
00:31:04.559 --> 00:31:08.559
transparencies and they overlay and you know, by by proxy

549
00:31:08.559 --> 00:31:11.440
they're they're they're determining who's going to succeed in the

550
00:31:11.440 --> 00:31:16.480
new world, maybe proactively or not. But uh, are some

551
00:31:16.519 --> 00:31:19.319
of these smaller banks and credit unions, community banks, like

552
00:31:19.480 --> 00:31:21.000
are they going to be able to take advantage of

553
00:31:21.000 --> 00:31:22.400
this or is this going to put them at a

554
00:31:22.440 --> 00:31:25.880
disadvantage kind of requiring more of this portability? And is

555
00:31:25.920 --> 00:31:28.160
it only going to make those who have the tech

556
00:31:28.640 --> 00:31:31.160
capabilities today, you know, stronger.

557
00:31:31.599 --> 00:31:34.599
Yes, yes, and yes, like like it's just it's just

558
00:31:34.640 --> 00:31:38.519
a yes, right, Everyone's going to have to modernize their

559
00:31:38.559 --> 00:31:43.400
tech stack. Technology is not differentiator. I had a very

560
00:31:43.400 --> 00:31:46.119
wealthy founder of a tech company. I asked him, what's

561
00:31:47.279 --> 00:31:50.119
what's one of been the most surprising learnings you've had.

562
00:31:50.720 --> 00:31:54.039
He's made a ton of money, wildly successful company, and

563
00:31:54.079 --> 00:31:58.480
he said, it was surprising to me that a technical

564
00:31:58.599 --> 00:32:01.480
moat was in as much of a moat as you

565
00:32:01.559 --> 00:32:04.680
think it is. And so there's been a lot of

566
00:32:04.759 --> 00:32:08.079
companies who have built out and they think that they're

567
00:32:08.079 --> 00:32:11.039
in like they have a technical moat, but it'll get

568
00:32:11.039 --> 00:32:14.759
eroded over time. Right, So if you by definition, that

569
00:32:14.839 --> 00:32:17.799
means you had like the first mover's advantage and it'll

570
00:32:17.839 --> 00:32:20.759
be a moat for a while, but eventually technology in

571
00:32:20.759 --> 00:32:23.680
the half life and half fastt moves, it will get eroded.

572
00:32:23.720 --> 00:32:26.799
You have to create some other kind of differentiator. And

573
00:32:27.480 --> 00:32:30.680
I think that we see everybody in financial services. You

574
00:32:30.680 --> 00:32:33.039
guys do a really interesting job with this as well.

575
00:32:33.440 --> 00:32:37.519
You're providing a unique product, you're winning a certain customer set,

576
00:32:37.599 --> 00:32:41.279
You're providing opportunities to them they can't otherwise achieve in

577
00:32:41.559 --> 00:32:45.000
an easy way. So it's this great service that's being provided,

578
00:32:45.559 --> 00:32:49.079
but you have to continue to innovate winning. Yes, you

579
00:32:49.079 --> 00:32:54.000
know what's that saying. Yesterday's touchdowns don't win today's games. So, like,

580
00:32:54.839 --> 00:32:56.920
if you got a cool product good for you, you

581
00:32:57.000 --> 00:32:59.960
have to maintain a cool product going forward that meets

582
00:33:00.160 --> 00:33:02.720
that meets those needs out there. And I think that's

583
00:33:02.720 --> 00:33:07.039
one of the challenges the community banking smaller organizations that

584
00:33:07.160 --> 00:33:11.519
haven't invested in this. Almost everyone I speak to they

585
00:33:11.599 --> 00:33:14.920
know they need to and they're coming up with strategies

586
00:33:15.160 --> 00:33:17.599
about how do they continue to win that customer, how

587
00:33:17.599 --> 00:33:21.440
do they differentiate themselves. And it doesn't mean everybody looks

588
00:33:21.480 --> 00:33:26.400
the same. It doesn't mean that you can't have a physical,

589
00:33:26.519 --> 00:33:31.039
in person branch that knows a certain customer set super

590
00:33:31.079 --> 00:33:34.319
well like that will still resonate really well to a

591
00:33:34.359 --> 00:33:37.920
certain group of customers. But think of my kids. I've

592
00:33:37.920 --> 00:33:41.240
got four kids. My oldest is in high school now crazy,

593
00:33:42.519 --> 00:33:46.799
that's a lot of fun. But the experience they have

594
00:33:46.920 --> 00:33:53.559
with banking, it's different than certainly my parents. And his expectations,

595
00:33:53.559 --> 00:33:58.759
my oldest son, his expectations of why in the world

596
00:33:59.079 --> 00:34:03.079
would it not just be on my phone? And you're like, well,

597
00:34:03.559 --> 00:34:05.640
I have a really good answer for that, that's right,

598
00:34:05.680 --> 00:34:08.280
And so like who he's who, he can do business.

599
00:34:08.360 --> 00:34:10.280
So we just probably set up a bank account for him.

600
00:34:10.760 --> 00:34:15.000
He's fifteen years old. He's starting a little business there

601
00:34:15.159 --> 00:34:19.639
that a couple buddies in him have created this trailer

602
00:34:19.719 --> 00:34:22.199
that attaches on the back of a bike and you

603
00:34:22.239 --> 00:34:25.280
can like think of like a hardshell trailer you can

604
00:34:25.320 --> 00:34:27.280
haul around to go like on a mountain bike in

605
00:34:27.280 --> 00:34:28.719
the middle of the woods, and then you can put

606
00:34:28.760 --> 00:34:30.800
your tent and all your stuff in your trailer, so

607
00:34:30.840 --> 00:34:32.920
you can still do mountain biking, but you can haul

608
00:34:33.079 --> 00:34:36.480
your gear with you without a backpack that gets in

609
00:34:36.480 --> 00:34:38.920
your way while you're actually riding your bike. So they're

610
00:34:38.960 --> 00:34:41.599
starting this business. We're taking them through this journey how

611
00:34:41.639 --> 00:34:42.960
do you do it? And trying to treade it as

612
00:34:43.000 --> 00:34:46.480
a good learning experience and part of that setting up

613
00:34:46.519 --> 00:34:49.119
a bank account. Right, he's a miner. There's only so

614
00:34:49.239 --> 00:34:53.639
many banks out there who have a delightful experience to

615
00:34:53.679 --> 00:34:58.039
set up a minor custodial bank account online. Most of

616
00:34:58.079 --> 00:35:00.559
them it's like, I don't know, bring your mom or

617
00:35:00.599 --> 00:35:04.480
dad into a branch, and there's only a handful at

618
00:35:04.559 --> 00:35:06.920
least that we found. We did like twenty minute Google

619
00:35:06.960 --> 00:35:10.519
search and engage there, and we actually created a relationship

620
00:35:10.559 --> 00:35:13.960
with a new institution that my wife and I don't

621
00:35:14.159 --> 00:35:18.199
bank with because the folks that we bank with did

622
00:35:18.239 --> 00:35:21.480
not have an easy or convenient way to set up

623
00:35:21.519 --> 00:35:25.880
a custodial account in an online experience. And so I

624
00:35:25.920 --> 00:35:28.519
think those are the kinds of things that they don't

625
00:35:28.519 --> 00:35:33.679
necessarily leave someone behind. But all of history is full

626
00:35:33.800 --> 00:35:38.159
of you gotta modernight, you gotta update, and you gotta upskill,

627
00:35:38.719 --> 00:35:42.840
and the banks are no exceptions. They'll have that same

628
00:35:43.000 --> 00:35:44.119
opportunity as well.

629
00:35:44.679 --> 00:35:47.320
Yeah, that's funny, Right, went through a very similar experience.

630
00:35:47.440 --> 00:35:50.119
My oldest is an noown senior in high school. We

631
00:35:50.199 --> 00:35:52.679
voted this morning together, which was fun, but I still

632
00:35:52.719 --> 00:35:55.760
remember going through that experience. Like you said, maybe fifteen

633
00:35:55.800 --> 00:35:58.159
twenty minutes of googling. It led me down to two

634
00:35:58.280 --> 00:36:01.400
financial institutions, and I chose one that I had absolutely

635
00:36:01.480 --> 00:36:04.800
zero relationship with before. But I could open that account

636
00:36:04.840 --> 00:36:08.360
and put funds in his checking account immediately, and he

637
00:36:08.360 --> 00:36:10.079
could have an app on his phone and access to that,

638
00:36:10.519 --> 00:36:14.960
So it makes a huge difference. I really enjoyed the conversation.

639
00:36:15.039 --> 00:36:17.119
Maybe we can end today with like, what would be

640
00:36:17.239 --> 00:36:20.920
advice you would give to some of those smaller lenders,

641
00:36:21.119 --> 00:36:22.920
you know, as they're thinking about like how do I

642
00:36:22.960 --> 00:36:25.639
differentiate or what should I even do to think about

643
00:36:25.880 --> 00:36:28.519
technology and catching up? Is it like some kind of

644
00:36:28.559 --> 00:36:29.199
an assessment.

645
00:36:30.920 --> 00:36:33.360
Yeah, I think that the way to look at it

646
00:36:33.440 --> 00:36:36.239
is to think about who you want to be right

647
00:36:36.360 --> 00:36:38.880
and this on a personal level, but also as a business,

648
00:36:38.920 --> 00:36:41.320
like what is your brand? What is the problem that

649
00:36:41.360 --> 00:36:45.599
you're solving? And if you're a small lender or medium

650
00:36:45.679 --> 00:36:49.840
or large lender out there, choose what your differentiators are

651
00:36:49.880 --> 00:36:52.679
and choose your group. So basically, think of the original

652
00:36:52.719 --> 00:36:56.920
definition of community banking. It used to be if you're,

653
00:36:57.039 --> 00:37:00.639
you know, a small bank in Chicago, and your community

654
00:37:00.639 --> 00:37:04.760
bank there, you built your products, you understood who you

655
00:37:04.760 --> 00:37:06.599
were serving and maybe it was all tied to the

656
00:37:06.639 --> 00:37:11.159
meat packing industry because of the geography of the time there. Well,

657
00:37:11.519 --> 00:37:14.360
now remove geography and still think of what is a

658
00:37:14.400 --> 00:37:17.519
shared experience and who is it you're going after, what

659
00:37:17.679 --> 00:37:20.679
problem are you solving, and just build the best products

660
00:37:20.679 --> 00:37:23.800
to support that person in that experience. And you need

661
00:37:23.840 --> 00:37:27.599
the right tools to do it. It includes a loan

662
00:37:27.639 --> 00:37:30.519
management system, a loan origination system, the right kind of

663
00:37:30.599 --> 00:37:33.920
partners and we're happy to help in that journey, but

664
00:37:33.960 --> 00:37:36.480
we just want to help accelerate and to see each

665
00:37:36.519 --> 00:37:37.480
of you be successful.

666
00:37:37.679 --> 00:37:41.000
Awesome. Well, thanks again, Ritt, really appreciate the conversation and

667
00:37:41.039 --> 00:37:43.320
I hope you have a good Yeah, thank you, Matt.

668
00:37:44.039 --> 00:37:46.519
I'll start partners with banks and credit unions to grow

669
00:37:46.559 --> 00:37:50.519
households and expand consumer lending through its leading AI lending platform.

670
00:37:51.159 --> 00:37:54.280
I've Start powered banks and credit unions leverage AI to

671
00:37:54.360 --> 00:37:57.639
offer higher approval rates and experience lower loss rates while

672
00:37:57.679 --> 00:38:02.519
simultaneously delivering the exceptional digital first lending experience that consumers demand.

673
00:38:03.000 --> 00:38:05.840
Whether you're looking to grow and enhance your existing personal

674
00:38:05.840 --> 00:38:09.639
and auto lending programs or you're just getting started, Upstart

675
00:38:09.679 --> 00:38:12.920
can help. Upstart offers an end to end solution that

676
00:38:12.960 --> 00:38:15.840
can help you find more credit worthy borrowers within your

677
00:38:15.920 --> 00:38:21.320
risk profile. With all digital underwriting, verification, loan closing and servicing,

678
00:38:21.719 --> 00:38:23.719
it's all possible with Upstart.

679
00:38:23.320 --> 00:38:23.880
In your corner.

680
00:38:24.320 --> 00:38:28.440
Learn more about finding new borrowers, enhancing your credit decisioning process,

681
00:38:28.480 --> 00:38:32.400
and growing your business by visiting Upstart dot com slash Lenders.

682
00:38:32.800 --> 00:38:35.559
That's Upstart dot com slash Lenders