The ‘Moonshot versus the Pragmatic Approach’ to Digitization

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

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

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

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week's episode features my conversation with Ben
Yudell, the SVP of Client Experience at

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Lake Ridge Bank, about a three
billion dollars what he calls a classic community

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bank. That was a really interesting
discussion. We touched on what he calls

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a pragmatic approach to technology projects versus
the more moonshot, bye in the sky

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or shiny object syndrome. I think
we're all phrases used to describe a kind

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of different approach. Why they take
that approach, what they think the core

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competency is. Meaning of a classic
community bank? What does that mean mean

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to him? What role the branches
play and that experience and how does that

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fit into a technology enabled future.
And we also touched on a couple other

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areas including buy now, pay later, what the I think the interesting topic

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and being pl isn't just the product, but what the innovation represents, how

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it came about it, and why
it wasn't banks that developed that innovation,

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and what we can kind of learn
from the experience. So a lot of

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interesting topics. I thought it was
a really fascinating conversation. So please enjoy

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this conversation with Ben you dell.
Ben, Welcome to the podcast, and

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thanks for making the time to join
us today. I really appreciate it.

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I'm happy, happy to be here, happy to be here. Maybe you

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should save that until afterward done to
make sure you're actually happy to be here

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when we when we finish, so
well, a little bit of at halftime,

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and well again, if we need
to readjust we'll judge the success of

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it after we've done it. There's
a lot of interesting things I wanted to

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cover with you today, but I
wanted to start. You know, when

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we spoke Grillier, you talked about
the difference between what you call your pragmatic

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approach to innovation some technology deployment,
and what you call pie in the sky

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or moonshot approaches you've seen taken by
others, And I thought it was a

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really interesting framing of different approaches to
the deployment of technology and innovation in the

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context of a financial institution. Tell
me a little bit what you mean by

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the more pragmatic approach versus behind the
sky. Yeah, I think what happens

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is we get so excited about all
the new technology that's coming out, the

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technology that's available to us by providers, and so we look for these gigantic

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moonshot space jumps with how we're operating
as a business, either internally or with

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clients. And what happens is,
I think with a lot of these moon

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shots, you need to really have
a really great level of technological savvy within

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your organization. You need to be
really great with change management. There's a

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cost structure that goes into all of
that. And so when I when I

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started thinking about that, how many
of our organizations that have been doing something

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one way for a long time,
even though we know we need to change,

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even though we know that our own
going to change, that's still a

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lot of change. And so,
you know, you think about becoming more

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efficient, is that some of the
simple stuff that happens either with deployed tools,

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you know, I think of like
the Microsoft three sixty five products that

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we already buy and we don't use. I think of just simply moving away

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from paper and whether that's PDF and
fillable to no code, low code.

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I mean, that's all really cheap, really easy. You can get a

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lot of simple solutions out of that
that makes people feel really good about it,

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just being more efficient during the days
any there time on higher quality opportunities.

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So again, I just I think
that's that's one of the hardest things

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we deal with, is how big
of moonshot do we want to make?

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And is squeeze at this point in
time in our organization's development, I juice

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forth to squeeze one of my favorite
phrases. But I think it's so interesting

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and a lot of what I'm hearing
from your description is kind of like,

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in some ways the kind of front
office versus bad Off as a kind of

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fancy new I mean, we're now
in the moment where everybody's got a chatbot,

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or at least the chatbots keep evolving, right, and the new large

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language models are out there, and
everybody wants this kind of whiz banging interface,

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and yet so much of the opportunity
is in producing the processing time,

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reducing the inefficiency internally simplifying internal operations. Do you see it primarily falling down

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along those kind of like external facing
crazy new product or new feature or blockchain

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or something totally different than what you're
doing, And we're like, let's let's

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kind of meet the meat and potatoes
that the bread and butter and actually like

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kind of fixing the internal and kind
of back office elements. Yeah, that

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take a really great question, you
know, part of the backstory for me

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and coming into this as we literally
just merged with another bank, and so

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you really get to start to see
how people want to make some decisions on

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resources and strategy and allocation. And
it's not that one is writing one that's

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wrong. It's just different. And
you know, I think about all this

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technology we might spend to add new
systems or add more digital and you know,

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I think online accounting is a really
Online account owning is a really great

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example where we fread a lot about
the quality of that client experience. But

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I don't think we get a lot
of clients who are like, you know,

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I got halfway through this online account
own forget this, I'm going to

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go somewhere else, right, They
kind of trudge through because they want to

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go with you, because you have
the promotion. And it still takes five

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ten minutes and they're done, and
you know it. Don't get me wrong,

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it might not be the best experience, but they have account that's open

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now and they're happy. And I
think you take that cost we could have

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had to go from like a B
level to an A level. How much

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are we how much just happening in
the branch where we're doing stuff by paper,

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We're pushing paper around, we're filing
stuff into two different systems. You

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know, we don't have a file
system that's great for auditing, So we

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file this document here and then we
ship something off to the audit team or

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the compliance team or depiles it ups. And so when you think about how

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we spend our money and resources,
you know, across our industry, we

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love that moon shot, but if
you know, you think about the costs

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that if we could take ten thousand
dollars the moon shot and invested into a

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program that allows us to be simply
more efficient with that client experience on the

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front and or more efficient in the
branch, do we have time for more

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of our clients? You know,
I think that's that's that's where you know,

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I think it especially at the senior
level management side of the world,

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we get really excited about these shots
and nobody's talking to bankers, tellers,

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frontline staff, credit analysts about,
um, what can we just streamline that

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makes you better, better with your
role, better with clients. So I

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I I that's that to me.
There's a lot of wins that can take

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place there, and that's probably winning
hearts and minds. I think as well

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when you consider, you know,
wanting to really look after the people that

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look after our clients, and how
do you think about I mean another interesting

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distinction, which is kind of the
self driving I mean self ring kind out

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really the analogy here, but the
kind of like user control, pure digital,

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no human interaction version of digital,
right, we would still have it.

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The digital account opening is mental like
there's no banker involved, right,

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there's no human in that process,
and you're just totally self service. It's

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probably a better phrase and self driving. And yet there's also this version of

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technology. It's like, how do
I enable my staff when you're talking to

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them, to have a holistic picture
of you and your needs and your history

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with the institution, to have the
right processes and be the best version of

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you know, an advisor, a
consultant, the banker for you in that

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moment, which is a very different
set of technologies and processes and change management

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that going to a total You know, when I have a digital richination solution

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where you can get a mortgage,
you never talk to human being well or

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do I want to make my mortgage
officer a more effective mortgage officer and have

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better tools and faster processing in their
hands without trying to replace them. And

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I'm curious how you think about the
deployment of technology and then pieces aren't pure

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technology that are involved in putting those
tools in the hands of a human to

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use in the context of a conversation. Yeah, what I really think about

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and I think about this a lot
as I talk to my friends and peers

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and some of these conferences and you
kind of, you know, over lunch

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or over drinks, you talk about
what everybody's doing. I think what I

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really find is everybody wants to move
forward in really big ways to be more

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productive, more growth, more successful, but they really seem to lose sight

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of their original strategy that they want
to carry forward. So back to this,

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this moonshot idea with a lot of
how we talk about technology. You

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know, for us, we're a
community bank. We're serving you know,

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the cell central part of Wisconsin.
We've got twenty plus locations. You know,

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I think in many ways we are
very probably a classic community bank.

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And how many of our clients in
these communities only want digital or how many

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only want this face to face.
So from our strategy, we're trying to

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provide that solution that's you can bank
with us digitally, or you can bank

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with us in person, or you
can contact us. And I think what

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starts to happen with some of this
decision making and this bright shiny object that

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that that moon shot is we start
to get out of balance and how we're

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trying to to work with our clients. And so I think for me,

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it's very much about the strategy focus
on who do you want to be at,

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how do you want to apply that, how does that fit? And

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I think we we wrap our decisions
around that relatively well. And you know,

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I think that's what helps us be
successful with clients, at least in

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our marketplace. And I think if
you're a digital player that really wants to

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have you know, that a plus
digital only experience wonderful. If you want

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to be this high touch, high
in person white glove treatment, wonderful.

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I think it's when we start veering
away from those too far that we need

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to come back and find some some
balance with how were operating as an organiza.

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I think the phrase a classic community
bank is interesting. How do you

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think about the strategic Like what is
your the strategy? How would you encapsulate

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what it is that you can do
differently and differentiate as a classic community bank

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in the new age? Like what
does that strategy look like for you?

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Yeah, I think what it looks
like for us, And I think in

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many ways for a lot of classic
community banks, we want to be able

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to bank how clients want to bank
with us. The reason I say that

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is we're not going to have the
resources to have an amazing digital experience that's

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going to compete with the Bank of
America. But I do think on the

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flip side, we can have a
stronger in branch experience that's going to be

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better than some of these larger players. I think if we invest wisely in

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the digital side, we can be
stronger than some of the smaller financial institutions

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in our world, and I know
they're going to stay. They want to

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compete on that customer experience. So
I think it's it's trying to find both

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of those. So we're not going
to be again a really amazing at technology,

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but we're also going to have I
think this real strong commitment to clients.

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I think we have to start thinking
then about what does that really mean?

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Because everybody listening to this podcast is
going to say, well, bad,

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we have an amazing commitment to our
clients, and I think that the

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question is like, what does that
really mean and stuff like For us,

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that means you walk into the branch, We're going to be able to solve

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issues of topics within the branch.
We're not kicking them off to somebody else.

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We don't have to make phone calls
to answer solutions, we don't have

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to get back to them. They're
empowered to help clients. They're empowered a

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wave fees if that's an issue,
right, I think when you call us,

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you know, with a wrong phone
call, you're getting in touch with

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a live person, something that I
know is difficult to do in these days.

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Right, when we communicate to individuals, we're communicating we're using our names.

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If you need to follow back up
to an email that I sent you,

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you can actually find me, and
we make it easy to find me.

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So you know, not that those
are solutions for everybody, but when

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I when I think through, you
know, how do we validate that when

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we say we want to be a
strong player in the community and be easy

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to work with in person. That's
that's what that means. And then you

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know, we'll we'll build out our
online and mobile to be you know,

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pretty darn good too if you're not
A plus a pretty darn good too.

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And Clutch are going to be happy
with that, right because they're getting a

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fair deal and they enjoy working with
us. We are their their their advisor.

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Well use another phrase there, that's
I think a classic wins silk shiny

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object syndrome, which is I think
it's a question of like, is the

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A plus digital experience really the thing
that wins a client's trust, that wins

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a client's business over time, or
is it something else? And you can

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pour a lot of money into having
the slickest digital experience and a lot of

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the I mean, frankly, if
you're trying to keep up with the Big

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four or five, like their their
annual tech budgets look like most people's operating

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budgets, right, So you can't
really compete on that level. But the

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question is like, is that what
it takes to compete or does my client

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want something simpler and do I pour
my resource into something else. I think

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it's important their table stakes, But
if you look at a lot of the

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studies that come out, you know, people want institution that's you know,

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nearby where they live, maybe where
they work. They want a low fee

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situation on easy access to the money, which is often interpreted these days by

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you know, ATM digital payments.
And then what else you need? You

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know, you need mobile deposit,
you need an app like those are all

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basic table stakes. And I'll tell
you when we you know, talk to

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my team or we talked to bankers
about what our clients asking the banker.

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The customers aren't coming in say now
I need to compare your mobile app with

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the cell the banks mobile app before
I make a decision. Like they're coming

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in because they looked at your website
and they looked at refuse and they called

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you and it was just a welcoming
environment that you know, people think they're

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gonna have a good relationship with Right, we spend all this money on stuff

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that people are going to figure out
after the after down the road, and

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I'm not even sure that's a retention
topic for a lot of these topics either.

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Right, if your mobile deposit is
clunky or slow, I can't imagine

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you're going to have very many clients
for like I'm out of here, right,

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they're gonna Yeah. I can't say
as I've like opened up five mobile

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banking apps to check to check the
mobile check deposit and go, hey,

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this is mine. This is my
deciding factor around where I'm going to bank,

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is who's got the slickest mobile check
deposit capability? I agree. I

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think it's such a great case for
our marketing friends on the brand you're creating

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and putting out, is that a
brand that's welcoming to your community or you

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know, I have some friends that
work at banks that have some websites that

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are very very very much created by
bankers, long time bankers, and you

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know, for our family members that
are down in banking, where do you

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see the branch fitting into the future, Like what is the We've talked about

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the branch and the kind of experience
you can deliver there on the phone being

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a differentiator. But how do you
think about the way the branches work,

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how you change your strategy with what
the branches are intended to do, built

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out for, and what kinds of
interactions you expect to happen in the branch

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as you move forward. Yeah,
I think about it from this perspective.

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I think if I think branches are
not going away, of course they're consolidating,

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they're getting smaller. You know,
some people have a strategy and no

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branch is wonderful, right, but
but big pictures, they're not going away.

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So what I think about is why
are people coming to our branch?

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It's probably because they need to open
an account right checking account online? They

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don't want to do it or check
it account lending, they don't want to

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do it online. So how do
we make that process really streamlined so we

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can't use that time to build a
relationship. I think people are a luxury

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these days, And I wish I
knew where I heard that quote from,

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but I think that's so true with
you know how often you need to support

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and just can't talk to somebody quickly
or somebody person, So I think it's

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solving that. But most people come
in and you know, we have two

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check it accounts. We're not spending
time talking about how they're going to use

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the account. We're gonna you know, this one or this one. Here's

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the benefits, and then we go
for We get everything set up, and

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that needs to be easy. I
think the other thing is it's this problem

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solving, right. They don't want
to go online, they don't want to

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make a call, or they try
to do that. It's just hard to

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communicate. So that's a very different
model than transactional based. I think what

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that means is there's something to be
said about investing into an inviting environment.

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I think a comfortable environment you offer, you know, crappy coffee that people

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don't want to they're gonna they're gonna
leave half of it because it's junk,

248
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rather than sit there and talk to
you because it's enjoyable. I think about

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how investing into the property of being
first class and it looks like you can

250
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take care and secure money. I
mean all of us can think through driving

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through town and seeing different levels of
should we say repair of certain businesses,

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including banks, and you know who's
going to drive into that bank. If

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you have a choice, you've got
three banks, that's you strong, why

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would they take a hard ride into
yours and go So you know, I

255
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might be getting a little long winded
there, but I think we really have

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to think about if people need everyday
transactional items, they're probably not coming to

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the branch. It's because they have
a financial need to open an account to

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talk about alone. They have a
problem. And I think we're also seeing

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a lot of the studies say that
the younger generation they know that going online

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can be a little challenging for accurate
information. When you see somebody that is

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younger in your branch, that might
be the only time all year they visit,

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and you cannot oil that opportunity to
be right, I think I think

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maybe I'd summarize that all by saying, I think where we're at is the

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value of in person is much higher
than we think it is, and we've

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really got to recognize that and have
a really strong approach to how we're interacting

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and engaging with clients in the branch. Are there things you're doing in terms

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of how you train branch staff or
how you prepare people, because it's I

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mean I do think there's this massive
shift going on, not recent but kind

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of continuing, which is kind of
the shift from transactional interactions in the bank

270
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in the branch to something more consulted. Me. I'm not coming into deposit

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of check anymore. I'll do that
on my phone. I'm coming in to

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ask a question. And so I
don't need people who can just deposit checks

273
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and hand out I need people who
can. I need a staff that's prepared

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to handle difficult questions as a predominant
role that they're playing in the branch.

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And how do you prepare the staff
for that reality because it's a different it's

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kind of a different job in some
ways than it was ten or twenty years

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ago. And I think if we
looked at the average age of our our

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bankers, for instance, the banking
team is only getting younger. And if

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they're getting younger, they have different
life experiences. So it's you know,

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it's a different conversation when you've you
know, never opened a CD or a

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money market or a whole equity,
or you know, you have a small

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credit card because you're scared of credit, and now you're talking to somebody that

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has an established financial picture So there's
two things that stand out to me when

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I hear that. The first is
I think examining the products that you have.

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If your products require math, if
they require fine print to understand a

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how is a banker who's under the
age of thirty really going to quote sell

287
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this product? How are they going
to explain it? I think we often

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think about we need to coach and
train bankers to sell our products well,

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but if you're trying to sell them
a complicated products, it's not a lot

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of selling, it's a lot of
telling. It's it's a lot of explosion.

291
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And I think that really makes the
banker's job more difficult, and then

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it doesn't connect well with the customer. You know. The only thing that

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comes to my mind is we we
as bankers, we really love to put

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rules together and we love to have
things black and white. And if you

295
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think about why people leave a bank, it's because of customer service and fees,

296
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right, and those are very entertainer
very interrelated. But what I think

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about is how do we empower our
frontline staff to just simply take care of

298
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issues and do more. And when
you get down to it, there's not

299
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a lot of activities that bankers can
do unchecked in a branch. That's going

300
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to crush the bank. Right,
So they gave away four hundred dollars in

301
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fees on accident, not the biggest
deal in the world to banks, right.

302
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Maybe they gave out an exceptionally high
interest rate, not the biggest deal.

303
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Kind of hard to scroup lending if
you think about sexualized underwriting and guter

304
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systems that we have. So,
you know, I think a lot of

305
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my when I talk to peers,
they put these restrictions on what a banker

306
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can and can't do. And the
reality is that only makes it harder to

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service a client in the branch.
It makes it harder to build some loyalty.

308
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It's more friction for a relationship.
And I think really examining that is

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a way to win some hearts and
minds with your team and with your clients,

310
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and just it just makes some things
easier in the branch. Right.

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The last thing you want to do
is have somebody walk in the branch.

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They can't get an answer. They
got to call their manager over, they

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got to elevate it up the chain. And you know that's not loyalty building

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us to build. I love that
I love that story and that concept,

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Like I think a lot of organizations
trying to figure out how we push down

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authority to the person who's in the
room and has the most information to make

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a decision. But also it reminds
me if I think one thing, so

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many financial incisions kind of can can
go astray in the sense of risk management

319
00:21:36.359 --> 00:21:38.759
being prevention of any kind of risking
it well, like, how badly can

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they screw this thing up? And
are we willing to take that risk given

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the cost it might be associated with
it? And or do we do we

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lose sight of the upside of giving
that that branch employee ability to make the

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decision real tell will they do exactly
what the what the centralized risk management you

324
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would have done? Probably not exactly, but how much is it going to

325
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cost us? And how much good
will do we build with the customers by

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enable that local employee or something like, am I making a good trade off?

327
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And I put tons of rules and
restrictions around that employee? And I

328
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think sometimes we optimize for the risk
minimization as opposed to the right balance between

329
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empowering those lower level employees and building
customer customer respect and loyalty. I think

330
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what I see happening in and fiess
I kind of talk more broadly across banking

331
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with you peers and conferences and whatnot, is we're making these decisions and vacuums.

332
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So we're making a decision about I'm
only going to let bankers wave up

333
00:22:30.680 --> 00:22:34.240
to forty dollars and fees for I
need to get a manager evolver. It

334
00:22:34.279 --> 00:22:37.799
needs higher level approval. While the
whole time that client is just ticked off

335
00:22:37.920 --> 00:22:42.319
right the banker can't fight for the
client. And then over here in this

336
00:22:42.359 --> 00:22:45.319
bucket, you might have a finance
team or a strategy team saying, our

337
00:22:45.359 --> 00:22:51.720
average client is here for eight years
and we make x hundreds or thousands of

338
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dollars on the client. Like theoretically
for us to give away so many fetes

339
00:22:56.279 --> 00:22:59.880
and they'll break even and lose money
on our clients. As a portfolio,

340
00:23:00.319 --> 00:23:04.640
it's way higher than forty dollars,
So give away a one hundred dollars and

341
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move on. Or you think about
these programs we run where we give away

342
00:23:07.400 --> 00:23:12.160
you know, cash or incentives,
Like in some ways it's almost like if

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I'm willing to give away three hundred
dollars for a new client relationship. I

344
00:23:18.319 --> 00:23:21.279
almost feel like you'd be willing to
give away three hundred dollars in fees because

345
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what's the difference, right, You
want the want the cloning. And it's

346
00:23:23.759 --> 00:23:29.200
not perfect math, of course,
but it's these things happening in a vacuum

347
00:23:29.359 --> 00:23:33.559
or you know another example, our
risk or compliance team, or an operations

348
00:23:33.680 --> 00:23:36.480
team or ranch too. You know, we're all we're all in this together.

349
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You make a decision because this happened, and then it goes down the

350
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chain and all of a sudden,
people are like, but I can do

351
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this task over here and that's way
more risk. Well that we didn't look

352
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at it as a whole. We
didn't have this evaluate well. We just

353
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said something happened once, so I'm
going to adjust for it. And then

354
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we don't realize how the unlevel that
to kind of plane field is for everything

355
00:24:00.240 --> 00:24:03.160
else. So it's oh, that's
what makes it fun, right, But

356
00:24:03.200 --> 00:24:07.880
it's also creates a lot of opportunity. It keeps it keeps me, he

357
00:24:07.920 --> 00:24:11.920
keeps it busy. Yeah, I
love it. There was one other topic

358
00:24:11.960 --> 00:24:14.640
I wanted to bring up and get
your thoughts on, which is kind of

359
00:24:14.680 --> 00:24:18.039
the innovation in the payment space.
Particularly the buy now, pay later.

360
00:24:18.359 --> 00:24:21.440
I know we talked about this a
bit, and what is it that has

361
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driven the adoption that? In some
ways is not it we talked about.

362
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It's not a new pot. I
mean buying something and paying for it later

363
00:24:26.000 --> 00:24:30.799
on credit. It's like we've had
that for a long time. And it

364
00:24:30.880 --> 00:24:33.440
is also something that came from outside
the banking sectors. So what do you

365
00:24:33.440 --> 00:24:37.279
think it was that is driving the
interest in that product? And why wasn't

366
00:24:37.279 --> 00:24:41.200
it something that financial institutions came up
with you a while ago as a way

367
00:24:41.200 --> 00:24:44.480
to bring consumers on board. Yeah. I first of all, I think

368
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buy now, pay later is one
of the more fascinating consumer topics right now.

369
00:24:48.839 --> 00:24:52.400
I mean the ability for early non
financial players to do a better job

370
00:24:52.440 --> 00:24:57.319
of marketing financial products is wild to
me, right, I mean that should

371
00:24:57.359 --> 00:25:03.000
be very interesting, and I opening
everybody in our space. What I think

372
00:25:03.039 --> 00:25:08.920
it is is we are so tied
into our legacy of how credit cards work

373
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and how personal loans work that as
soon as we have to start getting out

374
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of that box being a little more
innovative, it's just really challenging. And

375
00:25:18.839 --> 00:25:22.559
I get it. You know,
there's there's compliance needs and there's exam and

376
00:25:22.759 --> 00:25:27.759
audit needs, and we as bankers
don't like to take some of that risk.

377
00:25:29.400 --> 00:25:32.839
But I also wonder allowed how much
of that risk is what we're impartying

378
00:25:32.839 --> 00:25:36.720
on ourself, right if we go
buy now, pay later, loan U

379
00:25:38.160 --> 00:25:42.880
versus a credit card for five hundred
dollars to somebody like like it, and

380
00:25:42.920 --> 00:25:47.640
I'm going to have my compliance for
my you know, my risk management friends

381
00:25:47.640 --> 00:25:52.440
maybe push back on that statement,
but you know, big picture, what's

382
00:25:52.519 --> 00:25:55.799
what's that big risk? Right?
And so I think you take that and

383
00:25:55.880 --> 00:26:00.559
even without doing something innovative. I
just think this is a great case of

384
00:26:00.640 --> 00:26:07.000
these innovators understanding the marketplace better.
I saw stat recently that surprise me.

385
00:26:07.119 --> 00:26:11.400
I don't I didn't have the data
behind us like quote it. But the

386
00:26:11.519 --> 00:26:15.119
number of you know, millennials and
gen z who don't own a credit card

387
00:26:15.160 --> 00:26:23.319
or never to use it is exceptionally
high. And so here they are going

388
00:26:23.359 --> 00:26:27.799
to final pay later, which they
might end up spending more money on versus

389
00:26:27.799 --> 00:26:32.720
a credit card with rewards through a
partner that they could potentially walk into a

390
00:26:32.799 --> 00:26:36.640
ranch to solve issues with. And
and I just I think it's that disconnective

391
00:26:36.640 --> 00:26:41.359
marketing between the who our marketing teams
are comprised of in the industry. You

392
00:26:41.400 --> 00:26:47.359
know, we've got twenty five years
of experience, but I don't, you

393
00:26:47.400 --> 00:26:49.839
know, I'm not twenty five years
old again, so what like it's hard

394
00:26:49.880 --> 00:26:55.519
to understand. And I think this
is this great taste of really using our

395
00:26:55.519 --> 00:27:00.640
resources eternally within our own financial institutions, and there's there's just this lack of

396
00:27:00.720 --> 00:27:03.720
connection and I think we maybe one
other way to wrap that up is we

397
00:27:03.839 --> 00:27:11.160
feel often like is that really worth
Are we going to get an ROI out

398
00:27:11.200 --> 00:27:17.279
of it? And I mean maybe
not today, but it's part of an

399
00:27:17.319 --> 00:27:22.079
overall package of developing longer term relationships, which you know, Kennidy is kind

400
00:27:22.079 --> 00:27:25.400
of funny. We'll get you know, virtually no ROI on some of these

401
00:27:25.480 --> 00:27:29.559
junior savers accounts and some really early
checking accounts because we know they're going to

402
00:27:29.640 --> 00:27:33.720
build into something more. So why
don't why don't we do that in credit

403
00:27:33.759 --> 00:27:37.240
and help people build credit and have
a program around it and and um,

404
00:27:37.319 --> 00:27:40.839
you know, it's it's not just
about handing money, it's it's about that

405
00:27:40.960 --> 00:27:42.920
education piece. So you know,
again I'm kind of rambling on that,

406
00:27:42.960 --> 00:27:47.720
but I think, um, that's
hard for us. That's hard for us

407
00:27:47.720 --> 00:27:49.119
when we've been around for a while. I get it. I also think

408
00:27:49.119 --> 00:27:52.880
it's um, there's interesting. I
love your reaction to this, this thing

409
00:27:52.880 --> 00:27:56.480
that occursed me, which is like, I feel like there's this you know,

410
00:27:56.559 --> 00:28:00.799
kind of easy ability to dismiss just
BUYO puy later, you know,

411
00:28:00.839 --> 00:28:02.759
as a simple example. But where
you go, well, I mean,

412
00:28:02.839 --> 00:28:04.359
customer can already do that if they
just use their credit card and then paid

413
00:28:04.359 --> 00:28:08.880
it off in four months, like
the same thing right for payments over a

414
00:28:08.880 --> 00:28:11.799
month, it would cost you nothing. But I do think that, you

415
00:28:11.839 --> 00:28:17.720
know, there's this, particularly in
a numbers business like financial institutions like banking,

416
00:28:18.240 --> 00:28:19.680
it can be easy to kind of
assume rationality. And maybe one of

417
00:28:19.720 --> 00:28:23.559
the biggest mistakes we all assume is
that people behave totally rationally by the numbers.

418
00:28:23.559 --> 00:28:30.319
And the reality is consumers reacted differently
to a no interest installment plan credit

419
00:28:30.359 --> 00:28:32.759
then they do to a credit card, particularly after the financial crisis, and

420
00:28:32.799 --> 00:28:34.119
so many people caught up with the
credit card debt. And I think it's

421
00:28:34.119 --> 00:28:36.599
easy to go, hey, we
don't need that, we got a credit

422
00:28:36.599 --> 00:28:37.720
card. They could use the same
thing. Why would anybody do that and

423
00:28:37.759 --> 00:28:41.440
to miss the point that, like
consumers actually really like it, whether or

424
00:28:41.480 --> 00:28:45.359
not it's meaningfully different in some ways
or not, they do and we kind

425
00:28:45.359 --> 00:28:48.599
of have to react to that.
Maybe it's lack of rationality. Maybe it

426
00:28:48.640 --> 00:28:52.039
is a behavioral economics kind of hits
rational just not in the numbers in sense

427
00:28:52.079 --> 00:28:56.160
way, and a human behavioral economics, you know, psychological way. But

428
00:28:56.200 --> 00:29:00.359
I think it's easy for us to
miss those things, those trends. Credit

429
00:29:00.519 --> 00:29:06.559
is such a funny thing to me, where we it's inherently so easy to

430
00:29:06.559 --> 00:29:11.839
think about how we personally use credit
and we will just automatically strong and I

431
00:29:11.920 --> 00:29:15.000
know people use credit differently, and
I still struggle without how would somebody use

432
00:29:15.039 --> 00:29:19.279
credit and how do they want to
talk about it? And that's that's much

433
00:29:19.319 --> 00:29:22.599
harder than a checking account, and
it is. I do think it's interesting

434
00:29:22.599 --> 00:29:27.279
that we are seeing now real innovation
in the credit products being offered. I

435
00:29:27.279 --> 00:29:32.519
mean, BNPL if nothing else is
a it's a different expression from a user

436
00:29:32.640 --> 00:29:34.119
point of view, like a different
product. And for many years we've since

437
00:29:34.160 --> 00:29:38.160
credit cards, we've had kind of
the same rough products in terms of what

438
00:29:38.480 --> 00:29:41.920
pricing may change and the rates change, and we make it easier to get

439
00:29:42.119 --> 00:29:47.400
and whatever. But like you know, a fundamentally different kind of actual offering

440
00:29:47.400 --> 00:29:49.480
to the consumer is a bit new
and we're seeing that an investment with like

441
00:29:49.559 --> 00:29:53.640
robo advisors, and I think it's
interesting to see that evolve in that innovation

442
00:29:53.680 --> 00:29:57.279
though I do think ultimately we will
find you know, financial institutions and the

443
00:29:57.279 --> 00:30:00.880
trust say Garner will be where people
a turn for those. But it's interesting

444
00:30:00.880 --> 00:30:06.119
to see real innovation in the actual
underlying offerings, which is you know,

445
00:30:06.200 --> 00:30:10.960
which is a little bit more rare
at yeah, and I think even the

446
00:30:11.079 --> 00:30:14.640
simple piece, so it's just personal
loans, you know, we're we're an

447
00:30:14.720 --> 00:30:18.880
organization that it just hasn't been bread
and butter. It's been certainly home equity,

448
00:30:18.920 --> 00:30:21.680
certainly mortgage, it's a little bit
of credit card it. So I

449
00:30:21.680 --> 00:30:23.920
think inherently we feel like should we
do that or not? But when you

450
00:30:23.920 --> 00:30:30.160
start looking at the math, there
is a huge volume of personal loans every

451
00:30:30.240 --> 00:30:33.920
year, and you take a step
back and say, well, what sonship

452
00:30:33.000 --> 00:30:37.559
of the population doesn't own a home
so they can't get a home equity,

453
00:30:37.599 --> 00:30:41.920
what preciage of the population doesn't want
to use whole equity and all of a

454
00:30:41.920 --> 00:30:48.680
sudden, you've got this gigantic marketplace
for helping people with personal loans, and

455
00:30:48.519 --> 00:30:52.400
you know, it's it's one thing
to think whether we should or shouldn't do

456
00:30:52.440 --> 00:30:55.200
it, but it's another then take
a step back and say somebody else is

457
00:30:55.240 --> 00:30:59.640
doing it and are then going to
do a better job, and then now

458
00:30:59.680 --> 00:31:03.400
takes relationship from us. So you
know, what point do we really have

459
00:31:03.440 --> 00:31:07.240
to get to the that that point
of staying we just have to be really

460
00:31:07.240 --> 00:31:08.759
good with this as well. It's
it's a bit of a defensive plug as

461
00:31:08.839 --> 00:31:12.079
much as it is an offensive play. That's a really interesting point in the

462
00:31:12.119 --> 00:31:15.920
personals, and I do think it's
It's also the point you made earlier,

463
00:31:15.920 --> 00:31:18.720
one of those examples where go why
I don't why would someone like I don't

464
00:31:18.720 --> 00:31:22.400
need such a thing? Right like
I? But yet that kind of bias,

465
00:31:22.519 --> 00:31:26.400
we all naturally have to our own
use cases the way we would all

466
00:31:26.519 --> 00:31:27.920
we would I would get a home
equity line if I wanted to do that,

467
00:31:29.079 --> 00:31:33.039
or I would you know, but
you know, like that's the banker

468
00:31:33.119 --> 00:31:37.160
is assuming that the average customer looks
like them. It's a sure way to

469
00:31:37.759 --> 00:31:40.960
not get in the right place for
punks, because the average consumer is not

470
00:31:41.039 --> 00:31:44.559
nearly as informed and uses credit differently
than than than the average banker, And

471
00:31:44.559 --> 00:31:47.599
so I think that's a it's I
think one of those things people miss because

472
00:31:47.640 --> 00:31:49.160
the personal bias is saying, hey, that's not something I would feel like

473
00:31:49.240 --> 00:31:53.039
the need for. I think a
kind of just a funny personal example,

474
00:31:53.079 --> 00:31:56.519
as I traveled for a wedding recently
with a bunch of friends to go see

475
00:31:56.680 --> 00:31:59.720
you know, our friends get married, and so you got to Danny,

476
00:31:59.720 --> 00:32:02.119
you got to drinks, and you
know you do either do everybody buys around

477
00:32:02.200 --> 00:32:05.400
or you kind of still just put
it in. We'll all split it four

478
00:32:05.440 --> 00:32:07.599
ways. Right When I have four
different you know, credit or debit cards

479
00:32:07.599 --> 00:32:10.720
sitting on the table, and you
know, a couple of my friends are

480
00:32:10.799 --> 00:32:14.440
more financially inclined, are like,
why would you have that card? Like

481
00:32:14.440 --> 00:32:16.839
why would you have that card?
And it's it's like it's like imagine,

482
00:32:16.920 --> 00:32:21.200
you know, for a little market
research to go out with friends and family

483
00:32:21.319 --> 00:32:23.680
and split it and say why did
you get that card? And some people

484
00:32:23.720 --> 00:32:28.160
are going to be this is the
best points card I can get, hands

485
00:32:28.200 --> 00:32:30.519
down. Others are gonna be like, I like the design, or I've

486
00:32:30.519 --> 00:32:34.720
had it for twenty years, and
it's the first one I pull out,

487
00:32:34.799 --> 00:32:38.640
And that's so informative to us,
not about maybe how we're going to market

488
00:32:38.680 --> 00:32:43.799
to those to our clients, but
maybe more informative about what we what we

489
00:32:43.880 --> 00:32:47.519
are marketing is maybe not hitting the
spot, maybe it's not responating because it's

490
00:32:47.599 --> 00:32:52.359
it's too narrow of a message for
such a broad audience. Well, then

491
00:32:52.359 --> 00:32:54.839
this has been a fantastic conversation.
I've got three questions I end all my

492
00:32:54.880 --> 00:33:00.079
episodes with Ready for him? All
right? Question one, what's the best

493
00:33:00.079 --> 00:33:04.400
piece of career advice you've ever done? Yeah? The short version is when

494
00:33:04.400 --> 00:33:07.799
I was when I was much younger, I had a manager of mine and

495
00:33:07.839 --> 00:33:09.640
I was interested in this job and
he said, Ben, what do you

496
00:33:09.680 --> 00:33:13.359
want to be when you grow up? And I said, I don't know

497
00:33:13.400 --> 00:33:15.039
what do you want to be?
And he's like, I'm asking the questions

498
00:33:15.079 --> 00:33:20.519
here, and his point was very
clearly most of us don't really know what

499
00:33:20.559 --> 00:33:23.920
we want to be when we grow
up. And his guidance to me was,

500
00:33:24.000 --> 00:33:27.839
you know most people don't, So
what are the experiences, what's the

501
00:33:27.960 --> 00:33:30.599
knowledge? Where do you want to
get involved and what do you want to

502
00:33:30.599 --> 00:33:34.960
try? Who do you want to
get to know do all of that,

503
00:33:35.039 --> 00:33:37.559
because through time, if you do
that with earnest, you're going to start

504
00:33:37.559 --> 00:33:40.640
figuring out like, I'm really good
with this, and funny things happen when

505
00:33:40.680 --> 00:33:45.079
you focus on areas you do well
and I don't enjoy doing this, so

506
00:33:45.119 --> 00:33:49.599
then you stopped doing it, and
maybe you're more fulfilled and you're not.

507
00:33:49.960 --> 00:33:52.279
You know, we all think of
our friends who are in this role in

508
00:33:52.400 --> 00:33:55.480
rules where they're like that you're going
to burn out. You are not good

509
00:33:55.480 --> 00:33:59.720
at that job, right, And
so I thought that was really interesting and

510
00:33:59.759 --> 00:34:02.480
I have always try to impart that
on people I work with and mentor on.

511
00:34:05.519 --> 00:34:07.360
Don't worry about it, but figure
out stuff to learn and get better

512
00:34:07.400 --> 00:34:12.239
at and get involved in and test
yourself. And this bubble is going to

513
00:34:12.280 --> 00:34:15.440
grow in weird shape and that's just
fine. It reminds me of the one

514
00:34:15.440 --> 00:34:19.880
of the most famous commencement addresses ever
Steve jobs Is at Stanford, when I

515
00:34:19.920 --> 00:34:22.840
said, you can only really understand
a career looking backward, but you can

516
00:34:22.880 --> 00:34:24.280
only live it going forward, Like
you don't really know where you're going to

517
00:34:24.400 --> 00:34:28.639
end up, but if you follow
the things you're interested in, it'll make

518
00:34:28.679 --> 00:34:31.199
sense when you look back, but
you probably don't don't see where it's going

519
00:34:31.239 --> 00:34:35.800
to lead. Absolutely everybody wants this
specific next step, and it's like,

520
00:34:35.840 --> 00:34:39.480
I don't know, take ten baby
steps and then see which one you rise

521
00:34:39.599 --> 00:34:44.079
up rather than fall down on and
keep moving all right. Second question,

522
00:34:44.239 --> 00:34:46.800
what's the best piece of advice you've
gotten about the consumer banking space in general?

523
00:34:47.079 --> 00:34:50.440
Oh, that's a that's a great
question. I don't know if it's

524
00:34:50.440 --> 00:34:53.840
so much the advice I've been given
specifically, but I think over time it's

525
00:34:53.880 --> 00:34:59.480
just this reminder that when you live
and breathe it every day, it seems

526
00:34:59.519 --> 00:35:05.920
so easy and you forget about what
that standard average person is like. And

527
00:35:05.960 --> 00:35:07.760
I think the better job we do
of asking our friends and family, like

528
00:35:07.760 --> 00:35:12.760
the card example of having your card
in the middle of table, you know

529
00:35:13.360 --> 00:35:15.239
what would my mom say? Does
that make sense? To my dad?

530
00:35:15.440 --> 00:35:19.239
Is my niece going to be okay
with that? Is? Man? That

531
00:35:19.280 --> 00:35:22.559
would really that would maybe tick off
my sister if we did that. And

532
00:35:22.920 --> 00:35:30.280
I think, you know, using
the your friends and family to really say,

533
00:35:30.320 --> 00:35:34.639
you know that makes sense, that's
good advice. I think of some

534
00:35:34.679 --> 00:35:37.400
of the banks that have gotten themselves
in some ethical issues right, would your

535
00:35:37.440 --> 00:35:40.800
mother be ticked off if you did
this to her? Yeah? You know,

536
00:35:40.960 --> 00:35:45.360
hey, you know, back away. But I think it's also like

537
00:35:45.400 --> 00:35:47.639
back to the marketing decisions we make
as well and the product development decisions.

538
00:35:47.679 --> 00:35:52.639
So again not a specific piece,
but um holistic that i've you know,

539
00:35:52.920 --> 00:35:55.360
we always talk about for time.
Yeah, I remember when I was at

540
00:35:55.360 --> 00:35:58.760
Google, there's a similar thing where
the Eric Schmidt used to say to that

541
00:35:58.800 --> 00:36:00.400
the whole company go like, just
every email, you're right, like,

542
00:36:00.400 --> 00:36:02.719
assume it's going to end up on
the front page of the New York Times.

543
00:36:02.760 --> 00:36:06.559
Would you be proud of what you're
saying in that email? Because like,

544
00:36:07.079 --> 00:36:08.599
welcome to the big leagues, guys, it may actually end up on

545
00:36:08.639 --> 00:36:12.239
the front page of the New York
Times. Like you should be willing to

546
00:36:12.239 --> 00:36:14.599
stand behind the things you say,
even if it may be uncomfortable to have

547
00:36:14.639 --> 00:36:17.079
to do it publicly, Like you
shouldn't be embarrassed or good mind, I

548
00:36:17.119 --> 00:36:20.519
really shouldn't have it. And you
should be able to take pride in the

549
00:36:20.559 --> 00:36:22.480
way you make decisions of the things
that you do and be able to defend

550
00:36:22.480 --> 00:36:25.599
them with a straight face. And
I think that's same thing for speaking up

551
00:36:25.599 --> 00:36:30.519
at work when something's not working well, or you need to present an opposite

552
00:36:30.880 --> 00:36:38.039
opinion or perspective. Its it's you
know, how do you feel comfortable being

553
00:36:38.039 --> 00:36:40.679
a part of the solo shuttle?
All right, last question, Ben,

554
00:36:40.719 --> 00:36:44.719
here we go. What is one
bold prediction for the future. Well,

555
00:36:45.000 --> 00:36:47.440
bold prediction for the future. Again, I don't know if this is bold.

556
00:36:47.599 --> 00:36:55.760
I just I really worry about losing
more of our smaller financial institutions.

557
00:36:57.079 --> 00:37:00.639
And I believe Jeff when we talked, I think we talked before we talk

558
00:37:00.639 --> 00:37:02.760
about No, we talked after Silicon
Valley, right, we talked after Silicon

559
00:37:02.840 --> 00:37:07.800
Value. Yeah. And I just
it's just this other example of how taking

560
00:37:08.000 --> 00:37:13.760
systematic risk out of or I shouldn't
say system the organizational risk out of the

561
00:37:13.840 --> 00:37:21.159
system, and valuing community organizations.
I just think the the the pace of

562
00:37:21.320 --> 00:37:27.239
digital technology, the pace of change, that's all moving much faster than how

563
00:37:27.280 --> 00:37:30.519
a lot of our organizations are keeping
up with it. Another great example right

564
00:37:30.559 --> 00:37:36.360
now is AI and I've been playing
around with it and it's amazing how it

565
00:37:36.400 --> 00:37:38.360
can help you with just day to
day easy things that I would have to

566
00:37:38.400 --> 00:37:43.800
search forever to find. And I
type it in and this is the expression

567
00:37:43.840 --> 00:37:47.679
that I want to put into Excel
and there's just not the resource system maybe

568
00:37:49.000 --> 00:37:51.639
keep up with the joneses for that, and that's that's going to crush.

569
00:37:51.800 --> 00:37:55.400
I think a lot of community focused
organizations, smaller organizations, and it's just

570
00:37:55.440 --> 00:37:59.239
not healthy. And I don't I
don't think a lot of these organizations think

571
00:37:59.280 --> 00:38:05.400
that. And I think that's where
that's probably maybe to really answer your question,

572
00:38:05.440 --> 00:38:07.320
I think that's what worries me.
And I think that's the hot take

573
00:38:07.480 --> 00:38:14.360
is if you asked a lot of
banks our size, I don't they didn't

574
00:38:14.360 --> 00:38:16.400
worry, but they wouldn't they wouldn't
be ready to make big changes. Yeah.

575
00:38:16.599 --> 00:38:20.679
I worry about that too, because
I mean I think I think you're

576
00:38:20.760 --> 00:38:25.480
maybe seeing policymakers and legislators see the
reality of the value of the community institution

577
00:38:25.920 --> 00:38:31.400
today, because what I've seen is
as people are getting nervous about their regional

578
00:38:31.440 --> 00:38:34.599
bank or their community bank and they're
saying, Hey, we're going to go

579
00:38:34.639 --> 00:38:37.079
move our checking accounter. I had
a checking account at SVB and now I

580
00:38:37.119 --> 00:38:38.599
need to go I'm gonna know somewhere
else. And they call up Chase and

581
00:38:38.639 --> 00:38:42.559
they go, how do I sell
you know, I'm a new I'm a

582
00:38:42.599 --> 00:38:45.159
new digital first company. What's your
dress? I don't don't have an address,

583
00:38:45.199 --> 00:38:45.920
we don't know how to we don't
know how to help you, right,

584
00:38:46.159 --> 00:38:50.119
or uh, you know, I'm
a new restaurant opening up here,

585
00:38:50.119 --> 00:38:52.199
Well, how do I you know? Like, those small businesses in particular

586
00:38:52.360 --> 00:38:58.159
really rely on the capabilities of community
financial institutions to support their growth. And

587
00:38:58.239 --> 00:39:00.159
I think it's easy to think you
can do everything digitally, but I think

588
00:39:00.199 --> 00:39:04.559
those things that those investments in the
community are gonna be hard to replicate for

589
00:39:04.599 --> 00:39:07.480
the for the large national banks.
And it's a it's a real service to

590
00:39:07.519 --> 00:39:10.400
the American economy and to the small
businesses and their and their employees to have

591
00:39:10.440 --> 00:39:14.960
those institutions out there. And at
least I see from some of the comments

592
00:39:14.960 --> 00:39:16.320
from the fact that they that they
kind of get that and they want to

593
00:39:16.320 --> 00:39:21.159
make sure we're not in a position
where the sense that big four banks are

594
00:39:21.159 --> 00:39:23.679
safe and everybody else's, even your
deposits, are at risk causes a flee

595
00:39:23.760 --> 00:39:28.400
from the community institutions that causes their
demands. I think that would ultimately,

596
00:39:28.760 --> 00:39:31.000
at least as what it stands today, be real detriment to the to the

597
00:39:31.000 --> 00:39:34.679
country. And I think, you
know, a lot of times we think

598
00:39:34.679 --> 00:39:37.440
about it's just money solves the right
money adds the digital products that improves the

599
00:39:37.480 --> 00:39:43.400
experience, which digital transformation and improves
the branches that allows you to you know,

600
00:39:43.440 --> 00:39:46.519
grow branches or or I just associay
ad branches or you know, renovate.

601
00:39:46.599 --> 00:39:51.639
And but there's a talent gap that's
going to start to exist. You

602
00:39:51.639 --> 00:39:53.079
know, AI will go back to
that. If there's one or two people

603
00:39:53.079 --> 00:39:58.360
in your bank doing work with AI
and you go to a much larger organization

604
00:39:58.400 --> 00:40:02.039
and there's fifty people doing it,
you know that that's you know, it's

605
00:40:02.119 --> 00:40:06.440
I like to use often two plus
two can equal four, or if there's

606
00:40:06.480 --> 00:40:09.559
fifty people in an organization with two
plus two equals eight or nine or twelve.

607
00:40:09.599 --> 00:40:15.000
Like that's just that exponential rate of
growth that happens from these efficiencies and

608
00:40:15.159 --> 00:40:20.199
uses of transformation. It's just it
really is kind of mind blowing you think

609
00:40:20.199 --> 00:40:24.280
about the spread between some of these
organizations these days. So that's gonna be

610
00:40:24.320 --> 00:40:30.360
tough. It's gonna be tough,
it's gonna take a lot. So that's

611
00:40:30.400 --> 00:40:32.679
why we're here. Well, I
think that's that's why we're here. That's

612
00:40:32.719 --> 00:40:36.480
what makes it fun. Every day
to show up to work right, All

613
00:40:36.519 --> 00:40:37.159
right? Well, Ben, thank
you so much for your time today.

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00:40:37.199 --> 00:40:39.960
This was a great conversation. I
appreciate your joining us for it. You're

615
00:40:40.000 --> 00:40:45.239
welcome. I enjoyed it, Thanks
Jeff. Upstart partners with banks and credit

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00:40:45.320 --> 00:40:50.360
unions to help grow their consumer loan
portfolios and deliver a modern all digital lending

617
00:40:50.400 --> 00:40:54.639
experiments. As the average consumer becomes
more digitally savvy, it only makes sense

618
00:40:54.679 --> 00:41:00.599
that their bank does too. Up
Starts AI lending platform uses sophistic hated machine

619
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learning models to more accurately identify risk
and approve more applicants than traditional credit models.

620
00:41:06.880 --> 00:41:12.679
With fraud rates near zero, upstarts
all digital experience reduces manual processing for

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00:41:12.760 --> 00:41:17.039
banks and offers a simple and convenient
experience for consumers. Whether you're looking to

622
00:41:17.119 --> 00:41:22.079
grow and enhance your existing personal and
auto lending programs or you're just getting started,

623
00:41:22.440 --> 00:41:27.760
Upstart can help. Upstart offers an
end to end solution that can help

624
00:41:27.760 --> 00:41:31.719
you find more credit worthy borrowers within
your risk profile. With all digital underwriting,

625
00:41:31.920 --> 00:41:37.679
onboarding, loan closing, and servicing, It's all possible with Upstart in

626
00:41:37.719 --> 00:41:43.320
your quarter. Learn more about finding
new borrowers enhancing your credit decisioning process and

627
00:41:43.480 --> 00:41:47.719
growing your business by visiting upstart dot
com Slash four dash banks. That's upstart

628
00:41:47.800 --> 00:41:52.760
dot com Slash four dash Banks.
You've been listening to Leaders in Lending from

629
00:41:52.840 --> 00:41:58.159
Upstart. Make sure you never miss
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next time.