Passing the Mic: 2024 Host Lineup

WEBVTT

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You are listening to leaders in lending
from Upstart, a podcast dedicated to helping

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

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decision 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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The Consumer Bankers Association is pleased to
welcome you to today's webinar how WSFS

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is driving long growth digitally in uncertain
times, sponsored by Upstart. My name

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is Isabella. It is my pleasure
to facilitate today's event. As a reminder,

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the views expressed in this webinar are
those of the presenters and do not

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represent the views of CBA or its
numbers. It is now my pleasure to

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introduce our speakers, Candice Caruso,
SVP, Chief Retail Lending Officer at the

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WSFS bank and Ed Walters, BP, Accounting Management at Upstart. Candis and

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Ed welcome great. Thank you Asabelle, and to the Consumer Bankers Association for

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hosting us today. So Candace,
are you are you ready? I'm ready

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great. Let's let's begin. I
think what we should do is let's start

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by giving the attendees a baseline of
our organizations to help provide context on how

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we're working together. In Candice,
I'll have you go first to kind of

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share who is WISFUS and then describe
the markets that you serve. Absolutely so,

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thank you so with this. Bank
is a regionally focused institution. Our

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primary regions are Pennsylvania, New Jersey, Delaware, and certainly we do carry

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into other communities for some of our
lending teams, but that's primarily where our

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branch footprint exists. So we have
as of our June earnings, we had

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ninety four branches scattered throughout that region. WISFUS is also one of the oldest

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institutions banking institutions under the same name. We are almost two hundred years of

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experience in serving customers throughout and we've
also grown organically as well as through acquisition,

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so there's been tremendous opportunity, particularly
in the last four years for Westus

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Bank. We are a consumer focused
as well as commercial and small business focus

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bank. Relative to the commercial and
small business we have nine billion in commercial

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loan exposures within our footprint seven hundred
million in small business. We also are

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extending mortgages through our mortgage lending team. In twenty twenty one we had one

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billion in loans originated without throughout the
mid Atlantic footprint. And then also have

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a private banking team focused within our
region. Nationally, we do again have

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some services there. We have Wealth
and Trust with our recent acquisition of brin

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Mar Trust that also was a tremendous
compliment and growth opportunity for our trust businesses

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and has allowed us to certainly be
known as a key player in our region

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but also nationally. UH Cash Connect
is a unique business to Wisfis Bank,

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which is all about safe deployment of
you know, in house cash shops for

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retail based businesses as well as ATM
solutions. Additionally, we have new Lane

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Finance which is a compliment as well
to our commercial and small business lending,

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but is focused in the equipment financing
space and we can get a decision within

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you know hours and a closing within
DEDs for equipment financing with that solution.

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It's vertically focused and is nationwide.
And then we do have a complement of

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strategic partnerships. So certainly a deeply
rooted bank within our region, a one

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that has grown to this side.
So we've also gone through different stages of

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kind of needs and growth, and
I'll talk a little bit about that today

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relative to kind of where we're at
and what our focus is. So with

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that, ed, I'll hand it
back to you. Great, thanks,

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Candace. So let me kind of
give you just a quick overview of Upstart.

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So Upstart is a leading artificial intelligence
lending marketplace designed to improve access to

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affordable credit while reducing the risks and
cost of lending for our bank partners.

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So when you think about it,
by lending and leveraging AI, upstarts a

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marketplace, Upstart power banks can offer
higher approval rates and experience lower loss rates

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while simultaneously delivering that exceptional digital first
lending experience that customers demand. Just with

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the Amazon environment, everyone is expecting
kind of instant, fully digital experiences these

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days. And then Upstart's mission is
just singlely focused on enabling effortless credit based

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upon true risk. So let me
explain quickly how does that work. So

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banks can partner with Upstart on two
fronts. There's the Upstart referral network,

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and then they can also partner within
a bank's digital infrastructure, sometimes referred to

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as a white label solution The Upstart
referral network allows banks to subscribe to the

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marketplace with a desired monthly volume that
is matched to core underwriting criteria that the

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bank defines. So when a borrower
comes to upstart, they're matched to a

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single lender that is providing them the
best rate possible where they meet that lender's

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underwriting criteria. The borrower then is
originated on that lender's paper and then becomes

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a customer of the bank or credit
union. So that's really important. It's

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not a loan purchase, it's actually
a loan origination, and so the relationship

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is you're getting a customer. So
it's a very effective tool to drive customer

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acquisition within a bank's economic and risk
tolerances. The white label solution is integrating

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upstarts technology in a fully bank branded
experience to serve the lending needs generally focused

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on your existing customers or any prospects
that may come to your website or walk

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into your branches. Banks have the
flexibility to leverage one or both of these

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solutions to meet their business needs.
And with this, what we'll talk a

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little bit more later today is is
using both so they'll give you kind of

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perspective on both, so we can
take kind of the slides down now,

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that was the slide content for today. So moving into today's discussion, we

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all acknowledge that the lending environment in
twenty twenty two is much different than it

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was in twenty nineteen pre pandemic.
What hasn't changed. Our consumers still have

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expectations for improved digital experiences and lending
needs still exist, and quite frankly,

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the banks want to continue to serve
the financial needs of these consumers, all

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while staying within a bank's economic and
risk tolerances. But what has changed is

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we're in a rising rate environment,
so it's making lending more expensive to the

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consumer. And then along with higher
inflation recession concerns, these have all added

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to and created additional barriers or challenges
in consumer lending, which we'll talk a

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little bit about more today. So
what we like is before we actually get

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into some of the discussion questions,
we've got two polling questions that we'd like

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to ask the attendees here today to
fill out to give us some content.

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So can we jump to the first
poll question Isabelle, So the first question

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here and I'll give everyone a chance
and I won't read all the responses,

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but it's really we want to get
a chance to hear from you on what

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is your organization's current sentiment on consumer
learning, particularly on personal learning. Okay,

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it looks like majority of the group
lending but with higher rates. And

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then the second is really hasn't hasn't
changed much in the past six months,

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can as any any reaction? Is
anything surprising here on this first question,

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I would say not surprising. So
community banks lake WISTFISS tend to be a

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bit more customer focus and centric and
having more connectivity to the community. So

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we recognize that we're in a rising
rate environment, so lending with higher rates

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is natural. I think that's just
the environment we're in today, and customers

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need to adjust to that higher rate
relative to all the different lending solutions that

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we provide. But we need to
continue to lend. And then also,

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whether it be to our board,
our shareholders, our stockholders and stakeholders,

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we have an obligation to also have
loan growth. So none of this is

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really surprising for me, but is
a good confirmation relative to some of the

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conversation we're going to share today.
All right, let's show the second pulling

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question. These are the only two
audience participation besides Q and A that we'll

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ask you to participate in it.
So this next question is, I want

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to get a sense of what is
everyone's digital approach right now in consumer lending?

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You trying to trying to get a
sense of who's still working through it,

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who is being able to solve it
self developed, or who has partnered,

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say for example, with the fintech
to deliver a solution to the consumers.

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All right, so almost half the
group still requiring a branch visit to

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too close. What's your reaction to
that, Candice, Well, I would

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share that certainly that is where customers
have been served to historically. However,

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we're very much about channel choice for
our customers because I think we're any kind

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of the that transitional state of moving
from kind of the branch experience, which

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historically was the only option, and
now especially with the acceleration of you know,

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PPP and other things that have gone
on in the marketplace that have created

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an expectation by customers that they want
to be served through other channels in certain

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instances, particularly through consumer products.
That probably is why you're sitting in on

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today's presentation, so all makes sense
and affirms that you know, partnership is

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one way to provide that delivery channel
back to your customer. Well, and

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I almost think that that kind of
leads us right into the first question you

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had mentioned a little bit about,
you know, looking at what's the right

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channel, what are the what are
the consumer's preferences? So can we start

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the conversation today really talking about what
are some of your goals in regards to

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you being the chief lending officer in
consumer lending and what you're trying to do

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for your business to serve the consumer. So one of the things that is

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key is we we always are looking
for relationships and so they could be their

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new relationships or existing relationships. So
certainly that is a strategic focus for us

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is you know, understanding who our
existing customers are, how we can deepen

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those relationships, and how we can
acquire new customers or new households. With

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that being said, we are also
sensitive to the environment and the digital age

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that we now operate in and the
highly competitive landscape that we're we have in

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the broader financial service, not just
the banking space. So with that,

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we have a multi year delivery transformation
that we've been working on and continue to

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work on. Part of that is
meeting our customers, as I alluded to

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earlier, where they want to be
met, So that could still be in

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a branch, but it could also
be by phone. It could also be

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through some of the digital delivery channels, whether that be through partnership or in

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house solutions that we provide back to
our customers. Second on the delivery transformation

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front is really looking for those opportunities
to create efficiency for our customer and also

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to create better insight relative to our
customers needs and also performance of loans.

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Particularly with the economics cycle anticipated for
next year, we need to be sensitive

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to that and really to have that
insight in those predictors is going to be

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helpful. But we're expected to modernize
as institutions, so that's really a core

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focus of ours. And the acceleration
that happened because of the necessity for adoption

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for digital tools while we were all
at home working and kind of pivoting during

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COVID times are not going away.
If anything, now they've become more table

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stakes of what's expected of us in
the industry. And then also with consumer

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lending, we strategically have decided that
a partnership model for specific solutions was a

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way that we could have agility,
scaleability and really kind of have the uh,

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the insight their relative to the performance
and the focus from the partnership as

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well as a team within the bank
to help us get there. From a

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growth perspective, No, it's good
and totally aligned with you. On the

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the the expectations have to have evolved
and they're they're they're not regressing right because

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the folks have have gotten used to
operating in a certain way and it just

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keeps evolving of how they're expecting to
be able to do business when and where

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they want to do do the business
right. It's not just you have to

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go to one spot. It can
be I'm at a I'm at a child's

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sporting event and I want to be
able to transact or do do some type

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of business and do I do I
have the capabilities to achieve that? Absolutely.

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So then as you as you think
about the consumer and I'll and i'll

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actually to kind of so this maybe
from two perspectives, One from from your

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your industry view as you as you
talk to your peers as well as kind

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of what you're seeing within your own
business. How have spending habits of consumers

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changed or any other I'll say their
needs changed over the over the past couple

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of years. Like, how have
you seen any shifts either from what you've

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learned from your peers or what you're
seeing at your own own organization. Sure,

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so from a peer standpoint, if
you look across like credit card utilization,

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it's been increasing. There's there's demand
there. It's also an indicator that

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some of that liquidity that was you
know, out there from different stimulus programs

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or different recovery programs may have already
been leveraged or utilized. So with that

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being said, within WISFUS Bank,
we've seen credit card applications increase. Certainly

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our upstart demand increase, and we
anticipate that that will continue. Also,

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the desire to consolidate, you know, credit card debt is something that also

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we recognize is a key opportunity and
we provide some cost savings back to our

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customers. So all of those calls
to actions are out there, and if

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you don't provide the solution to your
customer, they're going to look for another

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way to meet that need. And
you know that's one of the reasons that

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you know, we found it to
be a great compliment to leverage up start

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in offers or existing customers as well
as for new new customer opportunities. So

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as you as you talk a little
bit about you know, understanding the the

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consumer and and and wanting to serve
them, let's talk a little bit about

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data and automomation. So can you
talk about, you know, how how

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does the need for for using better
data about the consumer as well as increased

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automation, How does that like impact
your approach? Is is your thinking about

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consumer lending? So I would share
that data, clean data is critically important

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in getting insight and intelligence around customers
behaviors, needs and also as indicators of

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kind of you know, the next
product that may best serve them. So

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there's there are certainly a lot of
necessity as a bank today and a lot

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of connectors where we can gather data
about our customers to better serve those needs.

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The challenges, especially in the banking
community where there's consolidation and things like

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that, is how do we bring
those data sources together and then how do

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we create efficiency. So with that, we also have a focus on automation

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and then also, you know,
consumer lending specifically is really ripe for the

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opportunity, you know, for partnership
models and things like that to help us

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get additional insight on customers that we
haven't yet had the opportunity to serve,

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or for underserved communities in our geography. So that has been something we look

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to continue to learn about and you
know, find out where there, you

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know, maybe other services that we
can even cross sell into our consumer lending

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portfolios. And then also with the
CRA modernization and other things like that,

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we as banking organizations are going to
have to report on the data. So

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cleanliness and the ability to provide that
transparency back to our regular leaders as equally

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as important important as that business intelligence
that we're gaining to come up with new

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solutions or better offerings to meet our
customers in the way that they want to

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be met and with the services that
they are looking to benefit from. Well,

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that's great, thank you for for
that that insight. And let's let's

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double click a little bit on partnerships
as you've kind of mentioned it, and

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then as you went over your over
slide, it shows that the whistis has

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a number of fintech partnerships already,
so fintech partnerships is not something new to

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the organization. Can you can you
share with the group kind of your approach

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to partnerships, How are you how
are you identifying the need we need determining

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it is where we want to partner
versus this is where we're trying to develop

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something on our own. Absolutely.
I think one is you have to look

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at the resources within your organization and
the product suite that you'd like to offer

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there. There are fintech partners out
there, such as upstart that can deliver

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and show up in a way that
will allow you to serve those needs,

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but you need to have very specific
requirements around engaging those partnership opportunities. One

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being is it's a reflection on your
brand, So you want to make sure

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that the that there's a mission,
a community focus, that all the things

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that are true to your brand as
a banking organization align with the partner that

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you're deciding to be out there in
the community. Whether it be a weight

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labeled solution, a co branded solution, or whatever the case may be,

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it's a representation of your brand back
to that customer. They're also as far

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as product offering. You know you
you have to look at you on the

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consumer side your strategy, like what
services do you offer efficiently today? Where

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is their ability to optimize and what
technology is available that otherwise you wouldn't be

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able to provide to your customer.
So does the partnership provide that focus and

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acceleration that you're looking for as well
as that agility would be something that you

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know would be key with any partnership
opportunity. We have a group of individuals

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within the bank that all they do
is manage our partnership relationships. They are

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focused on onboarding, on making sure
that there is that ongoing communication of expectations,

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if there's tweaks to the program,
if there's feedback from auditor compliance,

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all that is part of the process. I would also share that know what

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you do well and know where a
partnership is going to allow you to serve

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your customer best. Again, there's
alternatives out there in the first financial service

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space where they can get their needs
met elsewhere. If it's going to be

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an impediment for you to try to
build something, or if it you know,

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really is a distraction to your core
strategic model for you to try to

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do it yourself. A partnership might
be a more sensible option, but it

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doesn't come without responsibility, that's for
sure. Well, and that's that's where

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I was going to kind of kind
of slide into the next question, right

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is particularly lending. Lending is not
a set it and forget a business,

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and you can't you can't do that
with with partnership. So can you can

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you talk a little more about how
And there's I've got a couple of questions

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on oversight and stuff, because I
think that's important for folks to understand.

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But can you talk on how you're
managing these these partnerships today to ensure that

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they're constantly meeting your business objectives?
Because you described there's there was an original

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need that that started that of why
you may engage in a partnership, But

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then you're you're having to continue to
validate that are you still achieving those business

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objectives? And at times the business
objectives are going to continue to evolve,

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So can you can you talk about
like what are the what are the mechanisms

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that you have in place to to
ensure that the relationship and the partnership is

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hitting the objectives. So one place
to start is of course you should have

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that business case so you go through
the discovery. You need to have that

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business case to understand the opportunity,
the return on investment. Also to have

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clearly defined expectationsations for the partner,
not just around originations, but also around

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serving that customer and you know,
ensuring that for the length of that lending

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relationship to whatever the tentacles are,
the back and forth relative to the service

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piece, they're being met because you
as the banking institution still have all the

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same obligations back to your you know, regulating bodies, so that doesn't go

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away. You also still have the
internal audit and compliance requirements as well that

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you need to meet. I would
also mention that it's really important to kind

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of share that business case across the
executive level of your organization. We can

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talk more about the stakeholders that you
know should be have seats at the table,

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but that executive sponsorship is really key
with partnership model and really understanding the

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appetite of bringing partners into your org
and also whether it be a dedicated team

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or your vendor management group, how
what what is the process to bring that

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partner into the org. Make sure
that they meet all your requirements, make

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sure that the expectations, and then
really have a launch strategy to bring it

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out there. And for us,
we had been providing on secure loans prior

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to Upstart. We found that for
for our selection of Upstart, we found

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that the technology efficiency and the the
mechanism of kind of expanding that credit box

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was something that Upstart frankly just offered, you know us a better solution,

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a more proven solution with a you
know, a track record that we felt

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confident in. So definitely, do
your due diligence on your partner relationship to

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really understand how they're going to show
up for you, how they're going to

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you know, really support you throughout
that relation and ship. It's like you

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know, any other partnership, marriage, whatever you're going to call it.

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Team, It's definitely about collaboration.
No, I'll and I'll add obviously you're

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familiar with this, but I'll kind
of give the audience kind of a perspective

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from from from where I sit is
when we when we work with our lending

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partners, it is about establishing the
main KPIs of the of the program.

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And so we look at it as
what are the economicals, what's the risk

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tolerance that that they want the program
to be built under, Like what's the

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annualized loss rate target? And then
what's the volume that they want to achieve

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both monthly and from a portfolio and
all of those metrics. You should be

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monitoring them at the minimum monthly.
But then those targets can evolve, and

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so where you may start, particularly
as we've seen the macro environment change,

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the economics target of say a program
that started two years ago could look quite

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different today because of a rising rate
environment. For the lost time tolerance may

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adjust because of the environment we're in, you may not want to take on

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as much as much risk, and
so so where we look at it is

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having those define KPIs and then reviewing
them on a regular basis so you can

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make adjustments of what does success look
like because it's in this environment, particularly

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in the past six months. I
think you'd agree the KPIs continuously be reviewed

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and adjusted as the as the market
kind of drives those changes. Yeah,

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and I think loan volume, you're
acceptable, loss ratio, your yield,

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all of that are factors and the
best part of the partnership model is that

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you have levers that you can adjust
along the way if appropriate, but you

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also don't want to keep changing things
too often where you can't get enough data,

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so you know there is a science
to it as well. Yeah,

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that's a great point. So you
mentioned a little bit about the stakeholders,

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because I think that's also for anybody
that's that's that's getting into a partnership,

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particularly in consumer lending, it's for
the for the CLO to be successful.

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You know, obviously you're you're owning
the business, You're you're accountable for the

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results, but it does take the
support of stakeholders across the bank in order

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to make a program like this successful. And so can you share a little

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bit about those critical stakeholders and and
what are you doing to keep them engaged

307
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in supportive of the program. Absolutely, so, one I would share is

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that the stakeholder management is a key
priority and making any partnership of success,

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it's these decisions should not be a
decision of one it's it's something that we

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need to have the right seats at
the table, especially in the early stages

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of a new partnership, to really
again pull the right leavers, determine really

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what our goals and objectives are you
do define a model to start with,

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but you know the there's different perspectives
relative to those those executive sponsorship opportunities.

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So we I would suggest, of
course your chief credit officer, your risk

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officer, your financial your chief financial
officer, chief retail banking officer, of

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applicable fair lending officer, all really
important people to have in that room and

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get support around and get comfortable around
supporting any partnership, but particularly uh,

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you know, in the consumer lending
space. Those individuals will have valuable feedback,

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they may have good questions, you
can work them through the model.

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It's all about kind of building out
a model that makes sense for your organization

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and what your goals are and also
what you know a successful loan growth looks

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like for you. And then part
of that is balanced with you know,

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engaging committees, providing quarterly business reviews, monthly KPIs providing out monthly report.

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So it's not just the initial executive
sponsorship, it's also that continued engagement so

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that they feel connected with this,
just like as if you were originating these

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loans within your own organization. Yeah, and I think the business reviews where

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we find those valuable and to kind
of give everybody context. With each of

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our lenders, we let them determine
do they want business reviews to be quarterly

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semi annually, And really that's an
opportunity to bring the extended stakeholders together and

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everyone from both sides for the partnership
can kind of come together and assess,

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hey, where is the program and
then where are the business is going and

332
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to make sure your partnerships are aligned. So that is something that I have

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found both from my seat when I
was in on your side of the table

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and then now on this side of
the table of when you can have those

335
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periodic checkpoints of bring it up a
level and just just look at kind of

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the macro relationship. It's also it's
helpful to keep everybody uh all pointing to

337
00:29:02.359 --> 00:29:08.039
the to the true north right.
Absolutely, So let's talk specifically about the

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Upstart partnership. And then you know
I mentioned earlier that you're you're kind of

339
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using uh, you're using both products. You're both using the Upstart referral network

340
00:29:17.920 --> 00:29:22.640
for for for the client acquisition as
well as the white label to serve your

341
00:29:22.000 --> 00:29:26.640
your existing client base. Can you
can you talk a little bit about the

342
00:29:26.400 --> 00:29:30.400
the reasoning behind the two. How
how you've used the two to complement your

343
00:29:30.400 --> 00:29:34.680
consumer lending program. Absolutely, so
it goes back to kind of our strategical

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So one is we want to grow
households, we want to grow new customer

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relationships. So part of that is
done, you know, uh, through

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the upstart channel of originating new business
for us, bringing those to Whistles Bank,

347
00:29:49.559 --> 00:29:56.039
having them get an introduction potentially to
wists Bank through their upstart loan,

348
00:29:56.680 --> 00:30:02.640
and with that then we can we
have marketing campaigns that then offer other solutions

349
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to the customer, whether it be
depository relationships because they are regionally aligned with

350
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primarily where the branches are located within
our network, so that we can have

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that customer grow with us and mature
with us. So certainly that has been

352
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a great tool in reaching customers that
in many cases have did not have an

353
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existing relationship with with with this bank
historically or WSFS Bank, depending on where

354
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you're regionally located. And with that, we also are have just begun doing

355
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a lot of earn or cross sell
campaigns to our existing customers as well,

356
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which allows us to pre qualify the
customer based on different data points that we

357
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have with the partnership with Upstart,
do direct mail, digital campaigns as well,

358
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whatever works best within your organization,
and then you know digitally, given

359
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this is digitally offered digital campaign I
would suggest as most efficient to reach those

360
00:31:03.680 --> 00:31:08.480
but you know that is all something
that is we can then benefit from that

361
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relationship with Upstart in really kind of
not only engaging you households, but deepening

362
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those customer relationship. And we're also
really excited about our pilot which we're working

363
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for offering this more strategically through the
branches. So the branches were so excited

364
00:31:27.359 --> 00:31:32.119
about the Upstart program they already began
referring it. So we have seen some

365
00:31:33.039 --> 00:31:37.799
organic activity that we've we recognize as
with existing customers, and that's just through

366
00:31:37.799 --> 00:31:44.480
word of mouth advertising. But we
do have a salesforce strategic initiative that will

367
00:31:44.519 --> 00:31:48.759
be layered into our delivery where it
will be branded wisk fist go out to

368
00:31:48.839 --> 00:31:55.240
our customers through and Upstart app,
and that will enable our branches to then

369
00:31:55.400 --> 00:32:00.839
offer a unique application link back to
the customer to app by real time.

370
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So there there's a lot of opportunity
and connectivity to these customers. Although you're

371
00:32:06.640 --> 00:32:10.759
doing it through a partner it doesn't
disconnect you from building a rapport and a

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00:32:10.839 --> 00:32:17.160
relationship and really also of course presenting
other solutions back to that customer, whether

373
00:32:17.160 --> 00:32:23.400
it be depository or other lending tools
or even wealth if appropriate, that you

374
00:32:23.440 --> 00:32:29.400
know may be a great compliment.
No, that's great. And and you're

375
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is, you're is, you're looking
at the both both aspects, right you

376
00:32:34.720 --> 00:32:40.359
You have you have both levers available
to you to to drive growth, whether

377
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it's with your existing client base,
so you're deepening relationships as well as bringing

378
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in then new new customers to the
bank, which then starts a new relationship.

379
00:32:51.359 --> 00:32:54.960
And the exciting thing is from being
this digital first, right, So

380
00:32:55.480 --> 00:33:01.599
these are these are individuals that are
going through a fully digital experience and so

381
00:33:02.400 --> 00:33:08.279
now they're more apt to continue engaging
with you as you make investments across other

382
00:33:08.359 --> 00:33:14.480
digital capabilities just can continue to add
on to that experience, which is which

383
00:33:14.519 --> 00:33:19.559
is exciting. Absolutely. So,
So let's talk about the controls you have

384
00:33:20.240 --> 00:33:24.440
in the program, because I think
that's we've talked about kind of lending in

385
00:33:24.519 --> 00:33:29.680
difficult times, and we've talked about
rising rates and and and we've talked about

386
00:33:29.720 --> 00:33:36.200
the reviews that that that we're doing. You know periodically and the KPIs so

387
00:33:36.200 --> 00:33:42.799
so specifically the when you're working with
a partner, and particularly in consumer lending.

388
00:33:42.920 --> 00:33:45.480
And I always use this phrase,
it's not a set it and forget

389
00:33:45.559 --> 00:33:47.559
it. You just don't say,
Okay, Upstart or whoever you're working with,

390
00:33:47.920 --> 00:33:52.519
just go originate loans. There's there's
there's oversight, there's controls, there's

391
00:33:52.559 --> 00:33:53.920
adjustments that you can make. So
can you talk a little bit about of

392
00:33:55.119 --> 00:34:00.039
the parameters you can control and how
you give the guide rail to UH to

393
00:34:00.119 --> 00:34:07.160
originate. Sure. So one of
the best parts about working with upstart is

394
00:34:07.200 --> 00:34:12.679
it's highly configurable. So we have
leveraged that and have gleaned in sight,

395
00:34:13.480 --> 00:34:19.039
particularly as you know, we have
different levels of production that we're looking for

396
00:34:19.039 --> 00:34:23.039
on a monthly basis, things like
that. It gives us the ability to

397
00:34:23.280 --> 00:34:30.719
really take that marketplace approach and look
across not just within our organization how our

398
00:34:30.760 --> 00:34:34.440
portfolio is doing, but learn from
kind of you know, the behaviors of

399
00:34:34.480 --> 00:34:37.960
the customers, what they're looking for, figuring out like how we should be

400
00:34:38.079 --> 00:34:44.119
priced within the market to get the
types of responses that we need. Also

401
00:34:44.159 --> 00:34:49.079
an important leaver, at least from
our chief credit officer's point of view and

402
00:34:49.119 --> 00:34:52.920
chief risk officer is really what is
that acceptable loss ratio? And like kind

403
00:34:52.920 --> 00:34:58.280
of as our as our portfolio matures, how does that all layer in?

404
00:34:59.159 --> 00:35:05.000
So you know, certainly the configurability
gives you real time to say, you

405
00:35:05.039 --> 00:35:09.719
know, within a week's time that
I want to make some changes and then

406
00:35:09.840 --> 00:35:15.360
you know in a short period of
time you'll see that impact. It also

407
00:35:15.519 --> 00:35:20.039
goes back to kind of the connectivity, so you really need somebody that's going

408
00:35:20.119 --> 00:35:24.239
to own the partnership programs and as
someone that is whether it be yourself,

409
00:35:24.280 --> 00:35:29.719
whether it be you know, someone
that is a director or fintech partner,

410
00:35:29.840 --> 00:35:35.400
whatever that you know, right position
is within your organization. But it really

411
00:35:35.480 --> 00:35:40.199
is important to leverage the fact that
you're getting kind of that that real time

412
00:35:40.960 --> 00:35:45.159
feedback on what the customers want,
what your team wants internally, get that

413
00:35:45.239 --> 00:35:52.679
out there and then also from a
risk talent perspective, you define that yeah,

414
00:35:52.880 --> 00:35:57.800
and I think that's that's great to
highlight, right, is you have

415
00:35:58.480 --> 00:36:02.000
individuals on your team of individuals and
our team that are working hand at hand

416
00:36:02.519 --> 00:36:07.280
on really a daily basis of looking
at the program, looking at the results,

417
00:36:07.880 --> 00:36:15.119
understanding what the different lovers do and
then can make assessments together all based

418
00:36:15.199 --> 00:36:19.559
upon data and then make recommendations to
to you and and the rest of your

419
00:36:20.199 --> 00:36:23.320
uh your support committee on what what
adjustments need to be made so you stay

420
00:36:23.360 --> 00:36:28.159
within the that i'll say, the
foundation of the of your your business goals.

421
00:36:28.199 --> 00:36:34.280
So especially thank you for sharing.
So a couple more questions, then

422
00:36:34.280 --> 00:36:37.239
we'll open up to see if the
if the audience has UH, the attendees

423
00:36:37.239 --> 00:36:43.519
have anything is so, if if
a bank's considering a fintech partnership today,

424
00:36:44.519 --> 00:36:52.400
why is now a good time to
move forward? So I would one on

425
00:36:52.480 --> 00:36:58.079
the fintech partnership side, these customers
have a need, they're out there in

426
00:36:58.119 --> 00:37:02.480
the community. Likely are your existing
customers, So one to make sure that

427
00:37:02.760 --> 00:37:08.920
you are continuing to show up for
that existing customer base is equally as important.

428
00:37:09.199 --> 00:37:14.960
Is important as those new acquisition opportunities. But if you you know,

429
00:37:15.079 --> 00:37:20.679
you want to kind of know that
if you're going to go into the space

430
00:37:20.719 --> 00:37:25.599
that you're working with a team that
experience is knowledgeable, has the the the

431
00:37:25.639 --> 00:37:31.239
bench to kind of deliver on the
originations, but also has a credible risk

432
00:37:31.360 --> 00:37:38.760
profile. And what we were really
impressed with was the the the ability to

433
00:37:38.920 --> 00:37:44.519
kind of measure risk in it a
more unique way, a more inclusive way,

434
00:37:45.480 --> 00:37:53.119
and then also just the the the
intelligence of kind of knowing you know

435
00:37:53.159 --> 00:37:57.360
what what that would produce from a
yield perspective. All of that, but

436
00:37:57.400 --> 00:38:00.960
even with the economic cycle that is
out there, as community banks, we

437
00:38:01.000 --> 00:38:05.320
need to show up for our communities. So we need to continue to lend,

438
00:38:05.679 --> 00:38:08.559
and we have to find ways even
though it might be at a higher

439
00:38:08.559 --> 00:38:15.320
cost given the rising rate environment.
We have to find ways to show up

440
00:38:15.360 --> 00:38:22.519
for our customers, provide solutions,
and do them in a way that allows

441
00:38:22.599 --> 00:38:27.199
us to continue to learn and continue
to monitor that risk because we won't stay

442
00:38:27.239 --> 00:38:30.920
in that cycle forever. And to
get ahead of that curve relative to the

443
00:38:30.960 --> 00:38:35.280
adoption of this technology is key and
it will take your time to get it

444
00:38:35.320 --> 00:38:39.039
through your vendor management team or whatever
the appropriate level of due diligence. You

445
00:38:39.159 --> 00:38:45.159
also set to complement that in onboarding
a partnership relationship now, thank you,

446
00:38:45.199 --> 00:38:50.840
And where we would to add is
going back to the theme of hey,

447
00:38:50.840 --> 00:38:57.760
we're in kind of choppy waters,
unknown unknown waters for a period of time,

448
00:38:57.800 --> 00:39:00.800
and I will by no means try
to be an economy or predict the

449
00:39:00.800 --> 00:39:04.360
future. There's there's smarter people that
are trying to do that every day.

450
00:39:04.960 --> 00:39:09.719
But when you look at of when
is the when is the right time to

451
00:39:10.039 --> 00:39:16.239
maybe start looking at at partnerships is
where where I think sometimes when these environments

452
00:39:16.280 --> 00:39:22.159
are good, is I kind of
equated to you're you're not looking If you

453
00:39:22.159 --> 00:39:24.960
have a boat, you don't want
to try to fix the boat in the

454
00:39:25.000 --> 00:39:28.599
summertime. In the summertime, you
want to be out on the lake.

455
00:39:28.719 --> 00:39:30.400
You want to be on the boat
enjoying it. And then the winter is

456
00:39:30.400 --> 00:39:35.000
when you want to be cleaning it
up, fixing it up, getting it

457
00:39:35.079 --> 00:39:39.519
ready for summer. And so the
environment we're on now, although folks are

458
00:39:39.639 --> 00:39:43.840
are much more cautious, as you
said, there's there's still there's still a

459
00:39:43.880 --> 00:39:49.400
need for consumer lending. And so
to me is this is where it's advantageous

460
00:39:49.480 --> 00:39:54.880
for a bank to be exploring these
relationships, starting the groundwork, getting the

461
00:39:54.920 --> 00:40:01.039
stakeholder engagement, doing the due diligence, and then potentially even getting some type

462
00:40:01.039 --> 00:40:06.360
of a program installed in ramping up
kind of a controlled ramp up so that

463
00:40:06.480 --> 00:40:12.000
when when it's sunny skies again and
it's the lake is calm, Uh,

464
00:40:12.159 --> 00:40:15.760
you're out there enjoying the boat versus
then you're deciding, oh, wait,

465
00:40:15.800 --> 00:40:19.639
I want to catch up. Because
I think what we saw during during COVID

466
00:40:19.800 --> 00:40:25.280
is our partners that were already on
the program once things you understood a little

467
00:40:25.320 --> 00:40:30.199
bit about what was happening after that
initial shock, those were the lenders that

468
00:40:30.360 --> 00:40:36.760
were able to take advantage and really
serve the needs of the consumers while the

469
00:40:36.800 --> 00:40:40.039
rest of i'll say partners were evaluating
what they should do, right, should

470
00:40:40.039 --> 00:40:45.440
they should they establish a relationship with
us or another lender or partner or somebody

471
00:40:45.440 --> 00:40:46.880
else. And so that's where that's
where I kind of see a time like

472
00:40:46.920 --> 00:40:51.360
this is always good because you can
take it slow, you can monitor,

473
00:40:51.440 --> 00:40:53.519
and as you talked about, getting
the clean data so that you can learn.

474
00:40:53.599 --> 00:41:00.559
So definitely there's there's never there's never
a bad time, I think,

475
00:41:00.599 --> 00:41:04.159
to be to be exploring partnerships.
And so before we've got some we've got

476
00:41:04.159 --> 00:41:07.280
some good questions which we'll come back
to. And I think one of the

477
00:41:07.360 --> 00:41:10.639
questions kind of leads to my last
one, which is just what's what's next

478
00:41:12.000 --> 00:41:15.400
for the organization. As you're as
you're looking at other things you want to

479
00:41:15.400 --> 00:41:21.199
do and and I'll kind of kind
of tied into one of the questions from

480
00:41:21.199 --> 00:41:24.119
an attendee was was kind of asking
a little bit about goals for the rest

481
00:41:24.159 --> 00:41:28.480
of twenty two and and as you're
heading into twenty three, what's uh,

482
00:41:28.679 --> 00:41:32.199
what's what's on your radar? Well, So I did touch on this earlier.

483
00:41:32.239 --> 00:41:39.559
So we definitely are continuing to focus
on delivery transformation digital transformation client experience.

484
00:41:39.719 --> 00:41:49.280
So we recognize that our customers want
the optionality of, you know,

485
00:41:49.440 --> 00:41:54.920
getting their transaction need transaction needs as
well as their lending needs met through digital

486
00:41:55.000 --> 00:42:00.920
channels as well as through branch or
other needs. So certainly we're investing in

487
00:42:00.920 --> 00:42:06.679
that, whether it be through partnership
or whether it be through internal delivery of

488
00:42:06.760 --> 00:42:12.639
those solutions. So you just have
to decide where what the right place for

489
00:42:12.760 --> 00:42:15.639
you to focus relative to your own
version of that might be. But I

490
00:42:15.679 --> 00:42:22.840
think the expectation is that we as
financial institutions need to show up for our

491
00:42:22.840 --> 00:42:28.400
customers in that way. So certainly
our foot's not off the guests relative to

492
00:42:28.440 --> 00:42:32.559
that in partnering, but we are
being selective. So we decided Upstart solution

493
00:42:32.760 --> 00:42:37.239
for unsecured lending was the right delivery
mechanism for us and the right tool for

494
00:42:37.400 --> 00:42:43.159
us to engage those new customer relationships
as well as deep in those existing that

495
00:42:43.199 --> 00:42:47.599
we've been speaking about. I would
also share that you need to be continuing

496
00:42:49.039 --> 00:42:57.119
to look for opportunities, whether that
be for other compliments and deepening partnership relationships

497
00:42:57.239 --> 00:43:05.079
or also finding new partners that maybe
maybe enable you to reach those delivery channels

498
00:43:05.079 --> 00:43:07.639
more efficiently. So that's always something
we're looking at. And then we also,

499
00:43:09.039 --> 00:43:14.400
you know, want to make sure
that we're learning more about our customer

500
00:43:14.519 --> 00:43:20.599
and leveraging those business intelligence. We
are salesforce organization. We use a lot

501
00:43:20.599 --> 00:43:23.000
of the tools that many of you
may be familiar with, and so we're

502
00:43:23.000 --> 00:43:30.880
really trying to be thoughtful around centralizing
customer data, reaching our customers in the

503
00:43:30.880 --> 00:43:37.239
way that they want to be met. And although that big picture may seem

504
00:43:37.280 --> 00:43:39.880
flashy, there's a lot of hard
work that goes into achieving all of those

505
00:43:39.920 --> 00:43:45.639
goals. Yeah, now it's it's
uh. We unfortunately don't have unlimited time

506
00:43:45.719 --> 00:43:50.320
or unlimited resource, right, So
a lot of it is is is prioritization

507
00:43:50.639 --> 00:43:55.199
and and and really assessing the impacts. So as we jump to some of

508
00:43:55.280 --> 00:44:02.639
the Q and A. One of
the questions here was just around staffing to

509
00:44:02.679 --> 00:44:07.760
support a program like this, Are
you open to sharing at least you don't

510
00:44:07.760 --> 00:44:12.519
have to go into specifics, but
kind of a ballpark of the type of

511
00:44:12.719 --> 00:44:19.639
FT structure that one would need to
support a program, Yeah, if you

512
00:44:19.800 --> 00:44:23.039
have a So for we do have
multiple partnerships, We do have some individuals

513
00:44:23.079 --> 00:44:30.400
that are kind of shared roles as
well. Related to kind of the accountability

514
00:44:30.400 --> 00:44:37.199
to partnership, we had decided that
it made sense to have a director level

515
00:44:37.239 --> 00:44:44.039
position to kind of lead the strategy
and lead the charge relative to kind of

516
00:44:44.079 --> 00:44:47.840
keeping those stakeholders at the table informed. So we did make the investment in

517
00:44:49.199 --> 00:44:55.480
a director of Fintech partnership and digital
delivery. And so that is something that

518
00:44:55.760 --> 00:44:59.679
may or may not make sense for
your organization. You have to go through

519
00:44:59.719 --> 00:45:05.119
your own discovery based on your size. We also do have other data analysts

520
00:45:05.199 --> 00:45:12.280
that support that role as well,
and that also includes collaboration with some of

521
00:45:12.320 --> 00:45:17.480
the business lines depending on the partnership
model. So for Upstart, you know

522
00:45:17.719 --> 00:45:22.440
we have retail loan servicing. There's
other pieces of our bank that do touch

523
00:45:22.519 --> 00:45:29.800
this relationship and there's connectivity there too. So I would anticipate at least to

524
00:45:29.920 --> 00:45:35.599
start one dedicated FT is necessary,
and then it depends on the size,

525
00:45:35.639 --> 00:45:39.400
scale and scope of how many partners
you're looking to manage and how you kind

526
00:45:39.400 --> 00:45:46.480
of grow that within your organization.
But you know it is something you want

527
00:45:46.519 --> 00:45:51.840
to stay connected with. It also
maybe something you need to think about the

528
00:45:52.039 --> 00:45:57.400
level of loan volume and growth you
look to have from the portfolio before you

529
00:45:57.480 --> 00:46:02.079
make that investment as well. Starting
with the business case would probably be a

530
00:46:02.119 --> 00:46:07.000
great place to start, so then
you can really figure out what the right

531
00:46:07.920 --> 00:46:14.760
structure might be for your organization.
Oh good, that's very helpful. There

532
00:46:14.880 --> 00:46:20.920
was a question about the referral network
and really what differentiates this from marketing with

533
00:46:21.039 --> 00:46:24.280
say financial hubs, and so I
kind of explained just just a high level

534
00:46:24.360 --> 00:46:32.639
is the advantage of the Upstart referral
network is it allows Upstart to utilize nationwide

535
00:46:34.000 --> 00:46:37.920
multiple marketing channels. So that is
we're doing direct mail, digital mail,

536
00:46:38.039 --> 00:46:44.639
social media, we're doing our own
kind of pre screening campaigns. We'll also

537
00:46:44.760 --> 00:46:50.880
have partnerships with aggregators and so we're
able to cast this wide net that really

538
00:46:50.880 --> 00:46:54.800
allows us to i'll say, manage
a cost to acquire that, then we're

539
00:46:54.880 --> 00:47:01.440
able to then bring all our partners
together and just amass the share amount of

540
00:47:01.519 --> 00:47:07.599
volume and it bats for for our
partners. And the advantage is is if

541
00:47:07.599 --> 00:47:12.599
you're an individual lender that's trying to
go out and do all of this type

542
00:47:12.599 --> 00:47:17.960
of marketing A it's it's it's very
expensive and just the conversion rates aren't is

543
00:47:19.079 --> 00:47:22.679
high. And part of it is
because what we're doing is we're bringing just

544
00:47:22.760 --> 00:47:25.559
a number of lenders and a number
of scale. It's it's allowing us to

545
00:47:25.639 --> 00:47:30.599
actually aggregate all of this and then
align it up to our lending partners.

546
00:47:30.639 --> 00:47:35.239
So that's it's we're we don't just
use a single source. We use multiple

547
00:47:35.360 --> 00:47:38.280
channels in order in order to drive
the volume based upon the capital that we

548
00:47:38.320 --> 00:47:43.920
have available. So hopefully that I
answered your question. And then the last

549
00:47:43.960 --> 00:47:51.559
question we have here is just observations
on customer satisfaction between the digital deliveries and

550
00:47:51.679 --> 00:47:53.559
compared to the branch Do you want
to share a little bit on you know,

551
00:47:53.599 --> 00:47:58.039
I know you and I talk MPs
scores, but if you talk kind

552
00:47:58.039 --> 00:48:00.599
of just sad like, how do
you guys look at it and how do

553
00:48:00.599 --> 00:48:07.760
you guys compare it? So customer
satisfaction is key. So the way we

554
00:48:07.800 --> 00:48:12.719
represent our brand in our communities is
that w s f S stands for we

555
00:48:12.800 --> 00:48:16.760
stand for Service. So that's really
important to our brand and that was something

556
00:48:16.840 --> 00:48:22.079
that we spend a lot of effort
and time on in vetting partnerships and making

557
00:48:22.119 --> 00:48:28.360
sure that they are going to represent
us in the same way that we would

558
00:48:28.360 --> 00:48:31.519
present to our customer or better,
you know, whether that be on the

559
00:48:31.599 --> 00:48:37.800
digital delivery channel. So with that
being said, we did a lot of

560
00:48:37.880 --> 00:48:45.639
due diligence and research relative to upstarts
reputation and selecting them and kind of identifying

561
00:48:45.679 --> 00:48:50.960
that that you know, they would
show up in a way that you know,

562
00:48:51.360 --> 00:48:54.440
really aligned with our desire to you
know, have that service, truth

563
00:48:54.519 --> 00:49:02.800
and community first. And what I
would also share related to that is that

564
00:49:04.679 --> 00:49:10.199
we've had tremendous feedback through trust Pilot
and other means that it has really shown

565
00:49:10.280 --> 00:49:15.280
up in that way that that individuals
that have used and been exposed to the

566
00:49:15.320 --> 00:49:21.920
wisfis brand through you know, the
entry point of upstart, that it has

567
00:49:22.000 --> 00:49:24.519
reflected in a way that it was
really positive. We got tremendous feedback.

568
00:49:24.599 --> 00:49:31.239
So certainly one that we've been satisfied
and we've gotten good information that it does

569
00:49:31.360 --> 00:49:37.960
aligned with kind of how we're positioned
within the community and provides that continuity around

570
00:49:38.000 --> 00:49:43.199
service and experience that we were looking
for. And I think that's really critical

571
00:49:43.239 --> 00:49:46.719
with determining, you know, any
partner relationship that they're going to show up

572
00:49:46.760 --> 00:49:51.800
for your customer and the way that
you would no. Thank you, and

573
00:49:52.079 --> 00:49:55.159
I think we I mean, we've
seen from our end is from a net

574
00:49:55.239 --> 00:50:00.400
promoter score as we look at,
I mean, on average on the upstart

575
00:50:00.440 --> 00:50:04.239
platform, it's it's generally in the
high seventies, low eighties. Our lending

576
00:50:04.280 --> 00:50:07.239
partners tend to be tend to be
higher, and it's just they because of

577
00:50:07.280 --> 00:50:13.280
some of the competitive rates that they're
able to offer and just experience. If

578
00:50:13.280 --> 00:50:16.320
we didn't get a chance to answer
your question, we'll we'll at least try

579
00:50:16.360 --> 00:50:22.559
to either follow up with you or
you can reach out to lenders at upstart

580
00:50:22.599 --> 00:50:25.519
dot com and we'd be happy to
do a follow up outside of the session.

581
00:50:27.079 --> 00:50:31.400
First off, Candice, thank you
the session. I always I always

582
00:50:31.440 --> 00:50:34.960
enjoy talking to you because you and
I get to get to talk a lot.

583
00:50:35.000 --> 00:50:37.280
But it was just great kind of
riffing with you for this hour talking

584
00:50:37.280 --> 00:50:42.000
a little bit about the business,
and I'm sure our attendees really got a

585
00:50:42.000 --> 00:50:45.119
lot of value out of hearing your
thoughts and insights today. So thank you.

586
00:50:45.800 --> 00:50:49.679
Thank you for the opportunity, and
you know, happy to support other

587
00:50:49.760 --> 00:50:53.800
community banks as well. That's one
of the great things is because we are

588
00:50:53.840 --> 00:50:58.599
regionally focused, we have the ability
to help and kind of share and collaborate.

589
00:50:59.000 --> 00:51:04.000
So appreciate the chance to share.
Thank you. Upstart partners with banks

590
00:51:04.000 --> 00:51:07.320
and credit unions to help grow their
consumer loan portfolios and deliver a modern,

591
00:51:07.480 --> 00:51:13.960
all digital lending experience. As the
average consumer becomes more digitally savvy, it

592
00:51:14.000 --> 00:51:19.440
only makes sense that their bank does
too. Upstart's AI lending platform uses sophisticated

593
00:51:19.480 --> 00:51:24.480
machine learning models to more accurately identify
risk and approve more applicants than traditional credit

594
00:51:24.519 --> 00:51:30.760
models. With fraud rates near zero, upstarts all digital experience reduces manual processing

595
00:51:30.800 --> 00:51:37.159
for banks and offers a simple and
convenient experience for consumers. Whether you're looking

596
00:51:37.199 --> 00:51:40.840
to grow and enhance your existing personal
and auto lending programs or you're just getting

597
00:51:40.840 --> 00:51:45.719
started, Upstart can help. Upstart
offers an end to end solution that can

598
00:51:45.760 --> 00:51:51.280
help you find more credit worthy borrowers
within your risk profile. With all digital

599
00:51:51.360 --> 00:51:55.760
underwriting, onboarding, loan closing,
and servicing, it's all possible. Upstart

600
00:51:55.800 --> 00:52:00.599
in your quarter. Learn more about
finding new borrowers, enhancing your credit decisioning

601
00:52:00.639 --> 00:52:06.960
process, and growing your business by
visiting upstart dot com Slash four dash banks.

602
00:52:07.199 --> 00:52:12.440
That's upstart dot com slash four dash
banks. You've been listening to Leaders

603
00:52:12.440 --> 00:52:15.519
in Lending from Upstart, make sure
you never miss an episode. Subscribe to

604
00:52:15.639 --> 00:52:20.559
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605
00:52:20.599 --> 00:52:23.039
quick rating by tapping the number of
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606
00:52:23.039 --> 00:52:24.719
for listening, until next time.