Leaders in Lending
Leaders in Lending

Episode · 10 months ago

Safe is Risky: How Lenders Can Embrace Continuous Innovation


Banks can no longer afford to play it safe when it comes to their digital capabilities.

“Safe” is now risky.

That’s why, in this episode, Tony Hejna, EVP, Consumer Bank Chief Credit Officer at KeyBank, joins the show to share the secrets behind moving fast (without breaking things) and maintaining an edge in a highly regulated and increasingly competitive landscape.

Join us as we discuss:

- The 3 rules of job satisfaction

- Why staying safe is risky

- "The importance of a robust technology infrastructure"

- The threat and opportunity with open banking

- "Predictions for the 2022 macroeconomic environment"

To hear more from Leaders in Lending, check us out on Apple Podcasts, Spotify, or on our website.

Listening on a desktop & can’t see the links? Just search for Leaders in Lending on your favorite podcast player.

... and you think you're playing it safe, it's actually very risky because people are passing you by. You're listening to leaders and lending from upstart a podcast dedicated to helping consumer lenders grow their programs and improve their product offerings. Each week here, decision makers in the finance industry offer insights into the future of the lending industry, that's practices around digital transformation. In more let's get into the show. Welcome to leaders in lending. I'm your host, Jeff Keltoner. This week's episode features my conversation with Tony Hana, the chief credit officer for the Consumer Bank, a key bank which is one of the larger regional banks based in Ohio. This is a really interesting conversation. We recorded it right before the new year self apologies for any new year's or holidays references. Tony really dives into why he thinks safe is risking, a catch phrase. I really enjoyed some of his how he pushes his teams towards micro innovations, a phrase I love. Don't crush the butterfly. Regarding keys acquisition of Laurel Road and the requirement to build proper infrastructure behind your digital innovations, as well as sharing some of his key insights that he shares with management trainees at the bank from his thirty years of experience in the consumer banking industry, does a really fascinating conversation and I hope you enjoyed as much as I did. Tony, thanks so much for joining the podcast. I appreciate your making the time today during the holidays. Hey, jeff, it's it's great to be here. Thanks, thanks, thanks for having me. Yeah, I'm looking for this conversation. One of the things you know, I know you do a key bank, is to do some of the training sessions for rotational management and other leadership development programs and and you share some of your key pieces of wisdom after thirty years in the lending business and I figured those are probably some useful insights to share with this audience as well. So I wondered if you could give me a little bit of history on what that program or those programs look like and then kind of the key the key messages you try to deliver to those those trainees. Yeah, for sure, you know the like many regional banks, we have rotational analysts that come in, we have internship program for executive executive management programs, and it's always exciting for me to talk to these folks, you know, young getting started in the career and and and one of the things that I try to mcart on them, I call it my three rules of job satisfaction, which are, you know, who do you work for, what do you do and who do you work with? And none of it actually talks about how much money you're making. And I go through a progression where I say, you know, hey, the number one culture builder in your career is the person you're directly working for, and that person can be your advocate, they can make your life easy, they can make your life more difficult, and it's important you know that you have a good chemistry with your manager. Secondly, you got to be doing something that you feel passionate about and that you have purpose for, and that's that. That's a critical thing. And then the one that you can control, probably the least, but I still think it's very important, as is who are you working with and are you working with people that you you can get along with and get together after the office and it just to me. To me, working with a good cohort of people is something that also is a is an important driver of job satisfaction. I feel like you shortcut it to my usual and three questions with your best career advice, because I feel like this is really good advice. And one of the things I've noticed is that people tend to over index on company benefits, like brand name or whatever, an under index on the individual they're working for and the individuals are working with, which ultimately are like the one K match whatever. Are Nice, the food is nice, but ultimately that those people determine so much more about both your satisfaction your job and your your learning and your progression in your career. I think it's a great it's a great point of those are people underappreciate how valuable those pieces of pieces of the puzzle are in terms of your satisfaction. Yeah, I think you're right on. I actually got that advice when I was in Grad school from a I went to Red School at Renstler Polytechnic Institute and trying New York, and you know it, and any any board member at the time, Warren Brugiman was his name, actually gave me that same advice and so so I'm just passing it on to the next generation and feel good about...

...doing it because because I've lived it and and he's right on the money. Yeah, you're curating the good advice. Do you have any advice for people on how you determine those things, like if you're looking at a transferred to a new team within a company or interviewing for a new job, like you know, it's how do you think about measuring or quantifying or evaluating those kinds of things and that process? Because that's like a it's easy to say and that's going to be kind of hard to put into practice when you're in the hey, I'm looking for my next opportunity. How do I really think about finding the right fit from a from a manager point of view or from a team point of view? Yeah, it's that's a great question. I'm not sure I have the perfect answer, but I will tell you that at some point a dawned on me that you know, you can't always pick your boss, right you you, you can pick your boss and you can pick what you do normally if you're going to a to a new position somewhere, and I, and I would just I would just suggest a people just be through around your due diligence. Try to ask those questions and get to know the manager beyond just what's in the office. Everybody has a life beyond what's in the office and to me that that will shine a lot of you know, do you have similar interests? Does does the person value opinions that are different than his or her own, and how do you and how does that person treatise employees? To the extent that you can talk to people that that your new manager has has worked with, that's also great insight. Yeah, there's a I think there's a lot of strategies and then and then, of course, make sure you really understand what the job is. I mean, you know, I've been in situations that didn't work out so well, like anybody else, and sometimes you take a job and you look back and say, Jeez, that might have not been what I thought this was at the very beginning. And then and then you spend the next six or nine months trying to figure out if it's really what you want to be doing. So I got to say, do you? Yeah, I think that's also good advice. sading so often we get caught up in the you know, the job interview process is like a like a contest that I'm trying to win, and you forget that sometimes you want to got to make sure you want to win right and that you know you get you get caught up sometimes and trying to to succeed in getting the offer that you forget about like do it. It's determining through the process. It's just an offer I really want or not. It's good to remember to keep that in mind as well. It's okay to walk away, right. It is okay, we'll walk away, and that is something I probably didn't appreciate as well when I was younger, and I was really impressed. My sister, is an account or, wasn't accountant and and she told me she had a fruit for a job and at least stood up after the first interview I was supposed before that day and she says this isn't a fit for me, I'm out of here, and and to have that foresight and actually stepped out and leave my I thought it was pretty bold about by the way, I'm not recommending that people do that, but but I think it's I think it's certainly certainly the strategy it isn't. Well, you know that it happens internally where the first interview of a candidate on the company side, somebody goes this isn't going to work and there's an email sit around there that interview is going. Don't spend too much time here, this is probably not going to work. To make total sense to use a can of because the same thing, like I I met the boss, I'm like, that's not going to work. I don't know why I'm hast been the next two hours here getting grilled like I'm good. It's impressive. I don't know that I have that kind of fort to two but compressed it's there. I know we'd also taught about talked about some of your thoughts around driving innovation, particularly in the context of, you know, a bank, and it may be an institution, one one of the it's dishes that is well insulated culturally, typically from from the concept of innovation and how incentives play a role and how you get people to do that heres. How you how you think? You know, culturally, at an institution like he banked, you get to you incentivize people to drive towards innovation. My how do you think about making that dynamic work. Yeah, I think they're. I think there has to be. And again, I'm going to I'm going to pirate something I read in a book, probably over a decade ago. But the saying was safe the state. It's a saying as safe is risky, right, and I'm not I'm not talking about my I'm not talking about my golf game here. I'm talking about like if if you're incorporate America, I think the message there is everybody is constantly trying to innovate and to the extent that you're not innovating and you think you're playing it safe, it's actually very risky because people...

...are passing you by. And a great example of that, I think, in banking, is the whole fintech revolution. Right and where where you know banks, banks were slow to evolve around, you know, digital capabilities and there is a huge market place that you know, companies like upstart and discovered and and you know you could make delivery easy and it was you know, it was better for the client and it turned out to be a huge win. I think you know Jamie diamond's comment around square. I think it was where he said, you know, that was something that the bank should have innovated. that the product that almost everybody uses now and that food stores and barbershops, etc. So the concept that that safe is risky. But by the same token, why you think about innovation if you're going to fail and you have to be able to recognize failures quickly to move on right and and in twenty years ago, when I was in banking, projects were massive and projects spent a lot of money, they took a long time and then, and then you deliver about forty five percent of what you thought we're going to deliver and it was really, really painful. Now it's like this new concept of, you know, minimum viable product and and you know, smart teams that do rapid implementations development. I think is I think is helpful for innovations and I think and I think that banks have moved in that direction and I think it's I think it's good for competition and I think it's good for banks. So I want to ask you one question around how you set up incentive structures. I think this safe in the safe as risky. I think is very true. It's a fascinating way to put it and I think it's it's possible to understand it at the institutional level and yet make it untrue at the individual level from a career progression or, you know, internal point of where the incentive say, I know we as institution want to take risks because safe as risky, but at it at a personal level. I'm not incented to take risks and to drive that strategy. And I think that's so often where this kind of understanding of the strategy in the needs and requirements to the market breaks down in terms of execution. Is How do I get individual team menners members incented to execute like safe as risky and to push the envelope a little bit? I'm curious if you have thoughts on that, because that concept of how do I make that true for the individual so that they execute the way that the entity needs is, I think are really challenging one, particularly for institutions that have been around at a time where safe wasn't as risky, where where risky was risky and safe was safe and a lot of the culture built up. You know that environment forty fifty years ago, where there was there was less of this drive for for rapid iteration. So how do you think about creating an environment where individual team members feel like they can execute in a safe as risky kind of a way and push the boundaries. Yeah, so, so it's funny. I was actually looking to my left here because I have a stack of papers and I was as I was going through annual reviews of starting the interview process. Oh Yeah, you know, one of the things that I share with my managers and I share with everyone on my team is is what differentiates a somebody who is doing their job and meets expectations versus someone who exceeds and in the first word on that list is innovation. And if you come in and do your job every day, that's great, but but that doesn't mean you're going to outperform in your world. Ye, so to me, and I make it very clear, I'm looking for people who go on above, above and beyond. If I take it down to the to the most junior analyst, if I ask a junior analyst for something and they hand me a report on that, they've done their job. You know, if they tell me three other things that I don't know already right, they're they're thinking above and beyond what they should and in some sense that's like what I would call it kind of a micro innovation. Right. But but if I if I have, if I have people, and I set this expect with my team. I said, look at I'm okay recognizing failures early. We meet regularly, we discussed projects in their ongoing but but innovation to me is something that is that is very important. All use an example. I think everybody remembers back to March two thousand and twenty one, we thought the world was about to end and credit losses were going to go through through the roof, right. Yeah, well, what can we do to prepare...

...for this? And we had a group of people who said, Hey, let's and and I thought it was pretty good. Like we basically developed a whole new analytical way to look at clients at had asked for some sort of covid hardship, and we built a hundred new collections, valuation exercise around how would we get out of this? And when people's when people are off the covid forbearance or the covid hardship, you know we're going to be prepared, we're going to be overprepared. That we didn't need it, but it was a great example. I think I look at I think was a great example of where, you know, we had never gone. Yeah, for and and we had some smart people who stepped up and did a great job. Yeah, certainly we all. We all were in that moment going for well, do whatever system and plans we had are not going to be not going to meet the moment. That was a great opportunity for some innovation. I won't do that. Does of these about, you know, the fintach revolution and kind of some of the digital, digital execution and opportunity we're seen by fentax? You guys acquired a Fintac a little while back in the world road. I wanted you kind of walk me through how you thought about that decision and why you think it is that fin text are able to deliver some ways, in ways that banks haven't and I think arguably, maybe you're not well set up to do. Yeah, that's a great question. We acquired a little road. I think was early nineteen. Now my years get mixed up, and I remember one of the first messages out of one of our senior execs who was instrumental a deal, was don't crush the butterfly, right and and what that meant was let's not let's not think we're going to take this acquisition like a bank and jam it into our systems. And, if you think about it, fintext have a had a great advantage in the fact that they, you know, traditionally, have been, at least when they start their single product, focused. They build a they build a universal channel for all customers to come to them. They make it easy. They're focused on one thing primarily, and that is providing good value and good service through the technology interface, which that to to the banking model we have. We have a thousand different outlets called branches, that all tend to do things, even though we want to believe they're all doing it the same. That's not that's not happening right. It's all split. The different people have deferent level of skill set. You have this human interaction going back and forth, you have you have technology that feeds into legacy systems. It's much easier to do business with the bank if you're an existing customer of them because they already know you and and things around even validating IDs. It's just it's a more cumbersome legacy process and banks than it would be in a Fintech. So so one of the things that we made a concerted effort at key was a we let we like the business, we like the technology, and and so and then and then the ideas. Yeah, certainly there's things that are going to come together in the back office, but there's a lot that we can take from low road that can help leap frog key along digitally. And and we were, you know, we had a discussion at the beginning, for instance, about, you know, how integrated should if law road wanted to issue an unsecured personal law and a key bank wants to know key bank doesn't scared personal ones. Well, how closely should the systems from the technology and all else, Mary Right, and and there is this, there's this aspecial goal. Let's get them all on the same system. But then, you know, the long we have that discussion it's like, well, why are we doing that? Because we're we're taking exactly what we bought in one type, partaking exactly what we bought and trying to Jamber in the key. Or if we do it the other way, we're taking we're taking a big project or try to crush the water closing. Yeah, thousand different branches. And so so right now we're you know, we're still moving a little bit slowly on this, but we're we haven't crushed the butterfly yet and I think that's it's a good new story. So, given that, how do you think about the priorities for digital transfers? I think it's something confintex, at least those that are not working with banks and substantial ways under appreciate, which is kind of the the requirements for or what a bank might want to do. That very different...

...than what a Finteck can do with open you know, like green field. I don't need to serve all these customers, I can just whoever can interact with me in the way I want. Is My customer base will be, which is very different than a financial institution that has lots of history and different kinds of customers and branches and needs to be able to serve customers a lot of ways. So, given those differing needs that you, as a you know as a regional bank, have and what you sort how do you think about what digital transformation means internal to the bank? I think it's very different than what a Fintech might build off on their own. Right. Is I go how does the bank really prioritize what you're going to do from a digital transformation point of view. I'm giving those kind of constraints and requirements. I think it's easy to say, Hey, you know, by such and such a date we're going to have thirty five percent of our loans will be given to the Internet channel and the buy such a touch. To Day we're have sixty five percent and that's all. That's all well and good. where I think it becomes very challenging is the legacy systems and the integration points, obviously, and and, and what that fundamentally means is this, and this is this is what what I would bring to the people. I'd say, look at we can't expect to be good at a business that we don't build up the proper infrastructure for that business. And what I mean by that is I spend a little time at a bank in Atlanta and they had a nice fintech division and when I was there the Fintech division we should probably about eight or nine years old, okay, and when I got the key bank, one of our senior managers said, hey, we're going to be just like this other bank and pay this fit Nice Fintech Bank. But what was missing in the discussion was the fact that that Fintech division of that other bank, which ran completely separately, had its own it group, had its own underwriting group, at its own collections group. They spent ten years, they spent ten years of pain, learning through fraud and evolution, right and and it almost felt to me like the discussion was we want the results that they're having, but we don't really appreciate what it took. The been building infrastructure over ten years in order to get there. Okay, so fast forward to now and you know, we I think we have a very, very measured approach that says, look at we can't we need to incrementalize so we can be we can be good on day one digitally if we're learning to our existing clients, and then and then we need to figure out the next step because we're going to need better fraud tool, need better identity, identity verification tools if we're going to go beyond our existing client base. And you know, look at I think. I think the agile squads that we have now in technology are making a difference. But I think it's also the reason why you see all these mergers of of mid to large size regional banks, because there's a lot of synergies around technology dollars that if you can take, and I forget what the number was, it was like nine percent of each operating Bargeta's technology. She know, you can take two banks and put them together and reduce a lot of the back office expenses and you can get to fifteen percent. Then you can start making a difference, right, but ultimately, yeah, that's that's how it has to evolve. Yeah, I love the focus on building the right infrastructures. I think that is so often what people mean. Digital is like, you know, we're just going to take something that kind of works. Okay, now I put a little web front end on it or a little mobile APP front it, and that's like digitally and I feel like if you don't have the right pieces behind the scenes to plug that into, to allow you to do ID fraud verification or whatever, then then you really are missing the boat and investing in the area where you can't. Can't really when I actually talk to a bank, so we've totally digitized our auto lending its okay, I ask them see the process and you had to walk into a branch to close it and I went like you, well, we don't have any sign yet. Well, well, how do you say your digital if you have you don't have the pieces ready to really execute on that? And so there was a focus on, yeah, we can take the APP digitally, but they didn't have the infrastructure to close alone digitally, and so I just like, you're not going to really win in a digital world if you're if you're executing without all the pieces, and it's I think the investment...

...in that kind of under beneath the covers kind of technology layers is underappreciated and some of these things, in the sexy things like we got to look at the web, look at the look at the application online. It looks so good and that infrastructure is so important. So I love that that focus you have on making sure you have those back office pieces rights that you can really deliver. Yeah, and when I talk about infrastructure, just to be clear, I'm talking about people, process and systems. Yeah, right, because because everything's new and I think you get it right on the money. Yeah, then the process to to me that's a great point, because you've got a also see a lot of digital is like take our old process it, but don't change the process. What will finds your point, like ID Verification Kyc. If I'm going to if I'm going to execute something digitally successfully, I can't use my old KYC process and try and make a digital I need to figure out what are the tools available? How do I execute that? So it is it's really not just a technology thing. It is a people process and technology. It's a good point. So how do you think of that digital transformation playing? I guess they will say between banks, but there's this concept of open banking that I think the digitization of a lot of our interactions makes us about. How do I I move into world where things are more interoperable and there's this phrase open banking. It gets tossed around. What are your thoughts around open banking and what that really means for the future? You know, consumer experiences and institutions like key makes me very nervous, quite frankly. Right, I mean, it's and and the reason why it makes me very nervous is it is a it puts more onus on having a robust technology infrastructure. Right. I mean if one of the key managers that regional banks have right now is the massive amounts of data that we have on clients and if and of that data becomes open, right, I mean that data is available for anybody. You know, you could, you could easily envisional world where, you know, clients can just say they have their data, they can shop anywhere and you know, further commodities and in many ways you wonder, like, you know what will there be a new evolution around retail banking because of that, and what would that look like? Because if the powers in the data, whoever can figure out how to process that data to give a better customer experience is going to is going to win. Now, the second part of that I would say is that I still believe there is a place for human beings and and and in branches and stuff like that. And the reason why I say that is like, Hey, if things are relatively straightforward, if they're easy, and a lot of stuff is from a product standpoint or credit card application or unsecured loan afficiation, you know those those are pretty straightforward. But you know, I think you, like me and everybody else, if you have a problem and it's becoming incredibly hard to actually talk to a human being, you know, I mean to resolve the problem, whether whether it's whether it's, you know, customer service at a financial services company or whether it's an airlines or whatever. I mean, what was it? Delta airlines had like a seventeen hour hold or something like that, like you know. Yeah, it was so sane. And nevertheless, I think there will be an area for for branch banking. But but I do think that the threat that open banking provides has to be a catalyst for companies like key to truly sharpen the focus around innovation and delivering on on the data it has today to provide that good customer experience. And you know, Jesus is this is not too long ago, and I'm not going to be going to mention that the company I was with at the time. But everybody wanted to talk about, you know, the relationship bank, relationship and a relationship bank. And but it occurred to me it's like, has anyone told the senior management team that we actually are not using any relationship data in our underwriting right, and this was, this was, this was, this is less than a decade ago. Okay, is less than that, but but people wanted to say more relationship bank. Well, how are you really a relationship...

...bank if you're not using the data? Your right again, it becomes like. If you can make that happen, if you can make it happen effectively and efficiently, then I think, I think you get a competitive advantage. Yeah, I mean it's funny too about open banking. You talk about using that relationship date and I talked to a bank who shall remain nameless, wanted to use some of the relationship data and underwriting and could not get their two systems to talk and so they were using a third party conduit to grab data from system a and put it in system be just so they could use a little of your depository transaction history or linked to relationship and underwriting. And to your point, it really indicates to me that a lot of institutions have not they may have the data and it may conceptually give them a real advantage, but they're not leveraging it to really provide buy that advantage if you can't actually give a consumer a better rate, not just for the relationship, but frankly, you know a lot more about them if you're if you've got three products with them. You should understand their risk better, not just say hey, I want to give you a good deal because you're already here or because it's lower cost to me to serve you than to acquire a new customer, but because, like I, actually can see a risk and I think our relationship will mean you're more likely to pay me. We've seen this too. Or a customer with a history with an institution, all things being equal, or pay at a higher rate than someone who's walking first time into an institutions. You ought to be able to leverage that to not just, you know, for the good of the relationship to something, but, you know, with with good reason, on a risk side. And yet most institutions, I think, or just in the early stages of really leveraging that data. Maybe open banking will be a bit of a kick to say hey, you know, if you don't, if you don't leverage your data to help the customer got a better experience, turns out we might be making that data available to others so they can do that. But it does feel like there's just so much green field for really intelligently taking advantage of that of that data to provide better experience that there's it's not as much of that. Plus it can be an opportunity. Means you can, if you get good at leveraging that kind of data doesn't have to only be data on your own clients that you can use that honor in a world where there's open banking and you can connect that data from other institutions. So, if I guess every opportunity is every threat is also an opportunity. You can look that in the right way. Right. I can completely agree, Joe. But the last thing I want to ask you about Tony's we've been in a kind of weird macro economic environment. I've talked about how you know that we've had well would look like a macro economic stress period and yet you know typically not the credit results that would indicate that we've actually been through an economically stressed time period. What are your thoughts on on how we should think about where we're at and if we even call this the cycle or a cycle, like what's the what's the macro environment, and how do you think that shifts, you know, heading into the next year? Yeah, I think in the data support this comment that you have unprecedented government transfers over the last eighteen months. Right staggering that up until I think last month, the savings rate was literally at all time highs and and and I think it was something like, you know, five or six times higher than what it ever was in the past. And we finally started, you know, we've started, finally started to come back with some of the stimulus ending. But there's still a lot of stimulus out there, right. You have you have this child care credit. Now obviously uncertainty about the buildback that or Yep, you have you have student loan deferrals. That out there extended again and and I'll tell you, I think, I still think that. You know, my view is that at least would've communicated internally, because three weeks ago President Biden said we're not extending the student loan. More touring, you know, after buildback better, was kind of shut down a little bit by Joe Major Manson. He do you had, you had. Okay, well, now we're going to going to extend this. The first thing I did was call up kind of the business part. So I said, look at I think we have a ton of opportunity now in in our lost plan and because of XY there maybe and so and so I think I think the thing is is, well, how do you adjust? Because I actually think that that we're in for another, you know, year of Pretty Benign credit environments. And look at that. Doesn't mean I believe that a six hundred and twenty five goes a prime fight goo score. You know I mean.

But, but, but I do think that if you're in a situation where there's opportunity and you can, you can get paid for risk. To me, it's like the environment's probably not going to get better than what we're seeing. I think right now. In our lifetime it's it's hard for me to imagine. It's been a it's been a very unique experience to go through this, this this cycle, if you will call it that, because it has been both from a macro level indicators point of view, stress period and yet, to your point, maybe the most benign credit environment that most of us have ever seen. And those two things are usually common tandem, right, but but this time they are. So it's I think that does leave opportunity for ourbitrage if you can find, if you can find the right areas and the abands. That, and you point it out to me earlier, is makes it tough on AI models, right. It does align unemployment and yeah, I was knowing we haven't we have an our model some kind of like an unemployment and you know, the correlates to increase in defaults. You can kind of look at how risky is the current environment. How in like started learning that like high employment is low risk, and I'm high unemployment plus high government stimulus might be low risk. Highnemployment with Lok got from a simulus still iris the week we had a tweak models to because, you know, you were starting to learn that you unemployment didn't didn't impact credit performance because, you know, we had really high unemployment for a while and really no impact on credit performance for at least the unsecure lenes. That was the kind of odd lesson we had to go into the system and go ahead. That's there's an extraneous factor here that needs to be accounted for. Otherwise you're going to learn a really bad lesson. One of those truths of Ai that if you get, if you ti give it the wrong Daya it will learn the lessons that you give it and you got to careful what those lessons are. So that was been an interesting time period from that point of view. Yeah, it will today. Is there anything you had on your mind that you want to talk about today that I didn't ask? If not, we can happen to my three questions, but I would like to give you an opportunity. You know, I will just tell you that, you know, I do think. I do think that there is a there's a reason to be optimistic going into two thousand and twelve. I look at we have the gamut. I know there's inflation. I think the inflation is going to stick around. Home prices, I think, will stabilize, but I think there is reason to be optimistic. From from a lending standpoint, I think even with even with some of the stimulus that's been that's been stopped, I do believe that we have, you know, Opportunity To grow and grow smartly as an industry. I think. I think housing prices will stabilize. I think, and I do think that I continue to be optimistic that, you know, we were. We're facing the last big wave of this of this pandemic meck and and I'm certainly hopeful. I I think figure out how how we live with it is going to be incredibly important, which, which you know, brings me to the whole back to the office thing. Jeff, you know, you and I've talked about this. One of the biggest challenges I see is how do we how do we cultivate future leaders in a remote environment. It's incredibly, incredibly difficult and you know, I try to encourage people to to the extent possible. We we have a new mobile, you know, mobile environment, where people can come in reserve a spot, but it's not permanent and you know, we try to get together periodically so we can see each other facetoface because, you know, look at word species that needs human interaction. And Yeah, and in video conference doesn't lend itself to spot made or serendipity or hey, what do you think about these numbers and what do you think about this? You want to go grab a bite to eat, you want to go grab a plank after work? Yeah, whatever it is, it's pretty pretty darn tough to do that through through a zoom call. Yeah, it is to be really interesting to see how that plays out. I feel like everybody has had their plans and none of them are whatever your plan was six months ago, it's not your plan today, because the the world keeps are on things at us. But I'm optimistic. You're right that we are on, I won't call it the last wave of the pandemics. I think ultimately this is going to become an endemic issue where like we're not going to get to zero covid we're going to we're going to learn how to live with it and through vaccines in thattural community and other things, that will get to places where we can come back to some symblots of normal. I think some things will. I may not beginning on airplanes without masks for a while, but I'll beginning on airplanes, and so I think there's we're going to get back to that. But then the sense of how do we what does...

...it new normal look like, is going to be really interesting, and we are social species, like you know, we can out with an interesting plan. I don't know if we haven't really talked about this, but we we're going in a couple days a month's post, a couple days a week at upstart. But we're doing it where the team you were it's not couple days whenever you want. It's like this team is getting together on this office for these days because we want you to build a culture and Camaraderie and so we want to make sure that we're kind of focusing that time on the you know, the cross functional teams that need to get to Gother, not just like your marketing team or your sales team or you're probably cross functional working groups are getting together in different months. So it's we're trying to find a way to create that opportunity for serendipity but in for interaction. But it's going to be a really fascinating thing to see how the world evolved, because there are also have been benefits to being at home more right and people are enjoying the flexibility, and then we're have to find a way to to meld those two things in the future. Would be very interesting. Yeah, all right, well, don't as you know, I got three questions. I used to end every podcast. I feel like the first one what's the best piece of career vice you've ever gotten? I feel like we spent the first ten minutes time that we definite it. We can slip that one. Yeah, they will. It's look on that one. I feel like I feel like you have it pretty well. The segud was what's the best piece of, you know, consumer lending or consumer banking advice you've ever gotten? You know, I think there's I think there's two things and these are two pearls of wisdom that that I try to share with people occasionally to write. It's a first of all, everything needs to be better, or faster and less expensive. Right. If you if you're not, if you're not, and this goes back to innovation, you're not innovating every day, right, then you're not getting better, faster, less expensive than there's an issue. And the other thing is, which is very much related to that, and I'm going to be careful how I frame this, right, but we're in we're in a fairly higher in a highly regulated business through which which means that even if you're innovating, you know there's there's certain inherent limitations in that. And if you have a competitor that's doing something that you can't figure out, then somebody's somebody's probably cheating. And I have some examples of that. And and I don't even know if I can see this on this webcast, but you know, like, let's let's hype pathetically say, for example, that that one of your competitor banks has an ex excessively high success rate in like cross cell or something like that. And then, and you can't figure that out, but they're the poster child or their or their expense ratios are very very good and you can't figure that out right. I've seen this about four or five times in my career where, you know, institutions have been held up as like the examples of how great everything is and why can't we be like this company? Why can't be like yeah, and virtue? Every one of them turned out to be a little bit of a shell. Right. It is about hard work, wet an industry and yeah, you can get smart people and you can get incremental avail advantages, but it's pretty hard to get an advantage that is just a, you know, an avalanche of good news, if you know what I know, I do, and I did think we've always said here learning to iterate quickly and learn rapidly in the construct of proper really following regulations and requirements, so that are important in there for good reason. Is Like it's a magic thing if you can, if you can do both, because people to need to be like move fast and break things, and we're like a no breaking things here. There's there's things, there's things. You can't break. This you real important stuff going on and I and regulated and it's people's money. Right, you know, you can break things, but you also can't be you know, so slow that you're waiting for ever and to make decisions. So finding the balance of being fast and yet respectful of the regulation is, I think, a magic sauce for anybody in financial services like that's the the secret, the secrets you gotta find. On my last question, what's your bold prediction for the future where we're looking at a new year, so it's a great time for bold predictions. Look, and I'm going to I'm going to try to do two here. Okay, all right, I like to and and and what is you know, look at it. If you have a college age or someone who just got out of college and they have they have federal student loan debt, I don't think they're making a payment for the rest of this year. I don't think. I think that stimulus, which is, you know, roughly three to four hundred per person, is going to be with us. I find it very unlikely that President Biden would remove this three months before a midterm elections. And you're so,...

I'll tell you, and by the way, that's why I'm bullish. Two Thousand and twenty two. From a credit standpoint, I just I just don't think you forty million, forty million people in the country who are going to are going to be on some sort of a stimulus payment holiday throughout the year. That's number one. Yeah, the second one, and I don't know how bold this is, but, but, but I think there's no other way forward then for for banks to to partner more with Fintech companies and, like, you know, like we did with lower road, and figure out the path for I don't think. I don't think it's feasible for banks to think that they can invest, you invent their owns and I think it's going to be great for the fintech innovation that happens outside of banking and to see those, those entities merged together. I think it's going to be really exciting and I think it's going to continue interests over the next half decade, decade and beyond. Yeah, I love that as a bull prediction that I do think those those who think the fin tax will replace the banks and none of those who think the fin tax will die and the banks will just eat them, and I think both of those are foolish. Like ultimately they're going to come together and offer highly properly regulated, properly delivered services in conjunction with banks. That that to me feels like the future as well. So I liked that as a bull prediction. Hopefully, if you're right, also have a job and five or ten years so come have a conversation about that. Well, tell you, this was a great conversation. I appreciate you're making the time over the holidays. Thanks for coming on. I really appreciate it. Jeff, thanks for having me, and it was. It's great to be part of this. Upstart partners with banks and credit unions to help grow their consumer loan port folios and deliver a modern, all digital lending experience. As the average consumer becomes more digitally savvy, it only makes sense that their bank does too. Up Starts AI landing platform uses sophisticated machine learning models to more accurately identify risk and approve more applicants than traditional credit models. With fraud rates near zero. Upstarts all digital experience reduces manual processing for banks and offers a simple and convenient experience for consumers. Whether you're looking to grow and enhance your existing personal and auto lending programs or you're just getting started, upstart can help. Upstart offers an Endto d solution that can help you find more credit worthy borrowers within your risk profile, with all digital underwriting, onboarding, loan closing and servicing. It's all possible with upstart in your corner. Learn more about finding new borrowers, enhancing your credit decisioning process and growing your business by visiting UPSTARTCOM FOR DASH banks. That's UPSTARTCOM FORWARD DASH banks. You've been listening to leaders and lending from upstart. Make sure you never miss an episode. Subscribe to leaders and lending in your favorite podcast player using apple podcast. Leave us a quick rating by tapping the number of stars you think the show deserves. Thanks for listening. Until next time. The views and opinions expressed by the host and guests on the leaders and lending podcast are their own and their participation in this podcast does not imply an endorsement of such views by their organization or themselves. The content provided is for informational purposes only and the discussion between the host and guests should not be taken as financial advice by companies or individuals.

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