Leaders in Lending
Leaders in Lending

Episode · 1 year ago

The Evolution of Credit Unions in a Digital World


Credit unions maintain a distinct advantage over larger banks. As a community-based institution, they are well positioned to truly understand the unique financial needs of their members.

Now, with the proliferation of digital technologies, credit unions can continue to meet the evolving needs of their members — even if they’ve moved across the country.

In this episode, Barry Roach, President & CEO at WPCCU, talks about how credit unions are pivoting to meet the challenges and opportunities of a digital world.

Topics covered:

- What makes credit unions unique

- Gaps driving new kinds of lending

- The value of loyalty and how to maintain it

- The importance of data in decision making

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So communityation institutions. The ones that are thriving are the ones who can who really have that platform that is fitting the needs of the evall we needs of their members. 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, Best Practices around digital transformation. In more let's get into the show. Welcome to leaders and lending. I'm your host, Jeff Keltner. Today I'm speaking with Barry Roach, the president and CEO of Water and Power Community Credit Union based here in my home region of Los Angeles. It's the first time I've spoken with a credit union executive and I really enjoyed this conversation. We talked a lot about the value of trust and loyalty that comes with being a community based institution. We talked about the need for financial literacy and education, helping consumers understand the right products and find the products that meet their needs. How that led burying the Credit Union to really continue investing in their unsecured lending platform. We also talk about how to make sure you're adding value and driving value for all your consumers and all of your products. It's a really interesting conversation and I hope you enjoy it. Barry, thanks so much for joining us today. I really appreciate it. Thanks, Jeff Greig, to be here. Yeah, you know, I think you are the First Credit Union executive to join the PODCAST. I hope not the last. I know we've got a few more we're talking to, but I kind of wanted to start off with your perspective. I know you've been in the banking world and you're not a credit you how do you think about how credit unions versus banks and it kind of what makes credit unions and their space in the financial services sector of a unique? Sure, great question. Thanks, Jeff. Yeah, I'm so my career I started in banking in Canada moved down to credit us in the United States au fifteen years ago or so. So seeing the different perspectives. Cretans really have a special place, especially in community base. As a communit based organization, I think that there will always be a need for creditings in communities. There are certain people in communities who see an affiliation with credens whether it be someone that that they're employed with or it's an institution which they have some sort of an affinity with, but I think at ultimately credit he's really truly understand the unique financial needs of those in their particular communities, more so than some of the larger institutions. And there's a place for everyone. I think it's a pretty big spectrum of financial services and a pretty big market that we're all in, but creditings certainly have, and we'll always have, I think, a place in that market and they certainly have a special place in my heart. My First Bank account was at a credit union associated with my university. So right, that's kind of yeah, that's how I entered into the financial services sector. was with a credit card and a in a bank account of that DDA, I'll say it, at a credit right. So right. So this one of the figures. Why? Why that? Why not one of the larger institutions, because that seems to be sort of the natural place. You see it advertised. Right. Well, I think for me it was just being on campus. It was a campus area, there was a the branch was in the student union and I needed something and it felt convenient and close and somebody I could talk to and this was, you know, I'm not that old, but I'm old enough that this was pre cell phones and pre Internet banking and you know, didn't watch a lot of TV when I was in college for for reasons I don't fully understand, but so I didn't see a lot of advertising. So I think it was just kind of feeling a connection to that community, feeling like they were people there who understood what I what I needed and they were kind of set up to help the student community. So right worked out well for me. So, are you still remember their Jeff? I'm not still remember there. I moved on to one of these. I moved around the country. Local branches became something that was important to me and I've ended up moving quite a bit and I think that's what happened. So again, you know, you started with this crediting because you felt that affinity and that connection and as people sort of move away, they sort of move away from that connection as well and then realize, oh well, maybe I have different needs. Reality is crediting. He's like a lot of community based institutions and with the proliferation of digital technologies, there's no need for you to really truly move to...

...another institution. You can still perform your banking transactions cross the country, around the world. It really doesn't matter anymore. Right. So that's the trick for credits. Right. How do we keep those people who started with us in university or started with us as a first job or second job, and then how do we adapt and evolved to their their needs, as their lifestyle changes, as as they move around digital technologies? It's funny because twenty years ago we were sort of begging people to use digital technologies. It's like, Hey, we've got this really cool online banking system and you can pay bills online, and people like, HMM, I don't know. There's skepticism around it. What's happened now? It's completely flipped right and now people will not deal with you unless you have a rich and robots dual banking platform, because it doesn't meet their needs. People aren't walking down to branches at three o'clock and Friday night to cash a paycheck anymore or, you know, to deposit funds or what have you. Mean that the whole game has changed, and so communication institutions, the ones that are thriving are the ones who can do who really have that platform that is fitting the needs of the evolving needs of their members. Again, as as they kind of go through different challenges and different things, they're like, I hadn't thought about that, but that makes a ton of sense. that. You know, for particularly often geographically based communities, people do leave. That's if I was in college and then I ended up in Kansas City and Washington DC, at nowhere near California where my where my credit union was right. But the digital technology is an opportunity to really bridge that divid an. Nowt the calling the bank are going at the branch is kind of like it's what happens with the digital for me at least, from the digital technology fails. So is that something you guys are really investing in? is saying, Hey, this is a real opportunity to bridge the gap for when our you know, when our members are are spreading out or doing something different, we can actually meet them where they are in a way that just wasn't possible fifteen or twenty years and know the right then definitely, you know, you kneel it. Earlier you said not only that you had in a fanity with this particular credit UN but it was close and you went in for advice because really, as a seventeen year journal student, you didn't know much about banking at all. We still have most of our new members come in today through our branch empork. I wouldn't say most, but it's they're still a pretty large proportion the so commenced or a branches. Now they're not coming into our branches do transactions afterwards. That's got to be done in really, because that's really what consumers are looking for right now. But they're coming into us for that advice or originally, you know, what is the right type of transaction account I should have, or, you know, show me the differences with credit cards, or even explain credit for me, because a lot of fancial consumers, especially younger ones, they're not teaching it in school, they're not getting it in their little in your advanced degrees. They may pick up stuff if they read blogs or they listen to podcast or what have you, but but they're coming in because they've got genuine questions about building credit, about buying the first car, buying the first home and and that's why I think, especially for community based institutions, branches are so important, because there's a accessibility there that I think maybe is lost with some of the digital technologies. Sure, you can do video chats and so on and so forth, but and maybe that will be the the technology that will pull free and be the way that people are going to be consuming that sort of advice. But I think today, especially for the communit based institutions, it is it is the one grounding. We have that and and something's it's a bit of a, would say, a competitive band in some respect, especially in the communities in which we resign. How do you think about the purpose and value of branches? You said the below is they might open an account there, but then they're not coming into transact like I certainly, when I changed my bank account, it was kind of because, like you had to walk into a branch to deposit a check or you paid a big ATM fee and there was no branches. That was like that was what I had to do to be able to not be paying a bunch of fees. Nowaday would never hey, I want my direct deposit, not much check, but also be I would always mobile deposit. But there I still think there is value in the branches. I'm curious, outside of new account opening, where do you see the value that's coming from that branch network in that imperson interaction versus...

...the kind of easy transactions that you can that you can facilitate on a digital device? Yeah, I mean, great question and I think what people are walking our branches for beyond just at that opening the first checking account, first savings account, is that we do have teams of financial professionals in our branches. We've got real state loan professionals. We've gotten investment profession professionals that are credit and license and so on. You know, especially in the investment side. You know I I follow fintech twitter and blogs and so on and read in and Wall Street bets and and you know all of the Robin Hood stuff that happened in the past six months. It's been fighting to watch on the sidelines right but again, if you need true investment advice, that's kind of hard for people to find right now from someone you trust. And so I think again a credit UN there is an inherent trust in the people that are in that credit union and and so that's why we're still having people come in with these legitimate questions about their financial needs and we have the capability, in the resources can be able to provide those, those answers for them. We don't want people walking in to make a trade, for example, of a stock, right, that's let that be in a more efficient platform. But if they just need to get a start or they don't really know what they need for retirement or how to save for retirement or what what options are available for retirement, this is not investment vice, by the way, but but they can, they can come in and see a trusted devisor and I think that's again kind of the competitive advantage that we have maybe over over others today. Yeah, I think that's it's a great perspective and it is made. You mentioned the kind of lack of education around financial things. It boggles my mind today how little financial education so many of our consumers have. We see that in just the wone applications. We just still take people not understanding difference between an interest rate and an APR and or fees on top of an APR or, you know, and like. These are really fundamental issues if you're looking at different, you know, kind of lending and borrowing options like and they're just not APTISCA. I think that assistance in navigating those questions is really critical right help people make the right decisions. Well, I mean it's complicated. These aren't easy products at you know, there we mark the easy products and specially Fintech. Fintech, I will give fintech credit for for really sort of demistifying a lot of financial products out there. They really do make it simple upstart. For example, your on boarding platform, you ask questions in a way that are simple for not just fancial consumers but consumers to understand. You know, there, when I started in banking a long time ago, you know, a loan application was exactly that. It was a you know, in triplicate application with a whole bunch of little tiny feels that had to be filled out by pain. I'm beating myself a little bit, but you know, and those questions were very much central to the fancial institution. It was really it was all about what we need in the infaction, we need in order to make a decision. Now I think a lot of it is really okay, consumer, what is it you need? And and just turning that dialog around I think makes it more digestible and consumable for borrowers today. But going back to fancial literacy, you know, we have. We have more resources, Jeff, at our fingertips today for Francial literacy than any generation has ever had. Yet there's still seems to be generally a lot of misunderstanding of how francial services works and how financial products work. And so again, community as institutions, we try and do a lot of education. We not only educate our members as a walking through the doors. We've got resources that are available on our website and from a community perspective, we also try and go out in the community and educate people about what a credit score is, how you build credit, what things can really harm credit, your credit score and how he can restore that. In my career I've done first time home buyer seminars. I've done education to high school and middle school kids around budgeting and things like that, and so at water and power community crediting we're doing many of the same things here within our community. We're headquartered here, close...

...to downtown Los Angeles. You know which is not you think a community as institution? She may think, okay, Small Town USA, in a rural area, you know, the one bank on the corner across from the hardwork or something. It's not like that anymore. And it really hasn't been for a long time, but our pocket within Los Angeles, the community that we feel we own, is a very sacred and important community to us. So anything we can do to educate those, not just members of the creating but but those members of the community about financial produx and services, we're going to take that opportunity and run with us. Yeah, I love that connection to the community. When you and I were talking earlier, we started talking about you're getting into unsecured lending, but I really wanted to step back and say, you know, it feels like I've always enjoyed my conversations with credit unions because there's a real focus on consumers and consumer lending in a way that the Mani banks don't have. Consumer lending is often only mortgages or maybe credit cards, but pretty limited frankly at many institutions, and I think credit units have been on the forefront of being a little more open to consumer lending, slightly risky your products and really meeting consumers needs. But you and I were talking about the areas where credit units of banks both have not been meeting the needs of consumers, where there are, you know, things that they want. They are not easy to get. So I love for you to talk a little bit about like what you see is those gaps of things driving the new kinds of lending, and then how you think about the credit union fitting into that evolving world? Sure, I mean there's been like not just lending but all banking prodcs and services. There's been true commodization of them over the years. There's not much difference between my check and account and the one down the street. In the one across the road, they're very similar in how they act in the fee structure, you know, there's always a little nuances here and there. It's really, really hard to find a what we used to call the silver bullet solution that they don't really exist anymore, and I think what Fintech has done is come in and tried to find those silver bullet solutions and in some cases they have, and I think unsecured personal lending is one of those. Honestly, you know, again going back to when I started my career, there is real stigma around an unsecured person alone. It was like wow, Jeff, you need non secure person you need to consolidate. You know you've got more than two credit cards. Are you know, it was just it was seen, at least in the institutions that I worked in. It almost seemed like it was a last resort. You know, we'd better be really careful in underwriting this loan, because boy, that the sky already got into, you know, multiple credit cards or unsecured types types of lending. Now we're having to consolidate. That was kind of seen as one step away from, you know, maybe something really tragic happening in your your personal strength to life, and that sigments gone now, I think, because what Fintech in general understood is that is a legitimate fancial need and just because people have a fancial need is not indicative of their credit worthiness. And that statement alone was something that I think was heretical to bankers in the S, even in the two thousands, in two thousand and ten, and specially, you know, as we go through waves of recessions and so on banks and credit. He's the risk we would take tended to directly correlate with the time since the last recession, right. So, you know, we had a pretty bad recession in the early s and and Lenny tightened up and then loosened and then, you know, we had to run up into two thousand and then a recession and it tightened in the two thousand and eight, which the world almost exploded, imploded, I should say, for fans. It's right, and we all got tight. Okay, so now you know. And's what's gratifying to see is, even though we had a very short recession post covid I didn't really see any change in risk appetite for you know, at least within my industry perhaps, and banks and and we saw this week while as Fargo pulling back from personal lines of credit, right, and Securit lots of credit. Right. So that to me, is that's look, that's why, as Fargo, good for them. That's our conscious, risk based decision to Egxsit that product. What opportunity for US communityies, Finn Institutions, and an opportunity for Finntag to have that unmet need, to have a solution...

...for that unmet need. It's just because whilst Fargo did away with that product doesn't mean that need doesn't exist anymore. That need is still out there. Right, someone will soak it up. Those that have the wherewithal and the ability to do it will will find those people and we'll have a product for them. Yeah, I love that. I did see it's interesting. We've talked a lot about credit cards because, to your point, a lot of unsecured lens of upt refinance and credit card it's but I increasingly also see I'm curious your thoughts on this. Moving it beyond that, I will say ahead of it in some ways, but just to say credit card debts always accumulated somewhere and credit cards typically are a what I always describe as a great transaction medium but a pretty bad borrowing medium for anything but a but a very short term. And so, whether it's the buy now, pay later or large purchase financing with longer term unsecured installment loans, I do think this sense that people are trying to be smarter about how they borrow and be intentional about how they borrow is really driving and that feels like a real opportunity for institutions orient around trust and helping consumers make smart financial decisions and not just simplifying the facilitation of the transaction but really ultimately get if you're revolving on a credit card for months at a time, like it's a very expensive way to borrow money outside of you know, a couple of weeks. It's it's not a great way to do that. I think that's a real opportunity to will to come in and say you need it alone. Let's help you get that thing that you need and build trust and kind of help you in your financial journey. Right because paying down that credit card bounce, it's almost it feels like they never ever playing. You know, as you pay some down there's more interesting. It just you know, it's two steps forward and one back. But you know it can take forever to pay that down, gain an unscure personal loan to pay it down immediately. Usually the lower rate is a far bear fincial to maybe even better than the decision to not make that purchase in the first place. But that's that's another story. You know, you talked about pay later programs, which any any consumer of on the Internet sees these. Now, Hey, pal offers them a firm. There's a few others out there that. I just got a new Wi fi network at home. It was six hundred dollars. Instead of paying six are and right up friends on Amazon. They said we'll do four payments of one hundred and fifty. Okay, why not? Right out of my debit card. So I I'll never pay any interest off it. But so that was that was a personal financial decision I made that just made sense for me at the time. I think a lot of consumers are seeing that now. Now, what does that do? That erodes that opportunity for us to get that unsecured personal or to carry those credit card bounces, because the dirty secret of credit cards, at least in institutions, is we do like and we want people to use those credit cards and then pay those balances because they're not an interest as an issuer of those though, they're not paying interest, so there's there's an income affect there, right, so both sides of both as a leader in financial services and as a financial services consumer. Right. So I do see these new I'd say a nuance in payments start changing the landscape for fanship consumers and for institutions down the road, because that's going to be less opportunities for us as a financial institution to offer that sort of unsecured loan. It seems to me, though, that you can't consumers, if if any shift is real to be in the last fifteen years, consumer have gained the upper hand in these kind of relationships with larger institutions. So it feels like, I don't know, you've got it. You got to be meeting the consumers deed, because they're in the driver's seat more than they were ten or fifteen years ago. Right. They've got options, they've got comparison. So it feels to be like the winning play is like figure out what's the US think for the consumer and an offer to them and it see how you make money, because if you're right, if you're not doing that, somebody else will, and customers are increasingly able to find whatever is whatever option makes the most sense for that will be made available to them in one way shape. We have more access to financial services and products than at any time in our history, and I'll say the same thing again next year, in the year after, in the year after. It just it keeps growing and growing and growing, right, and that's good for consumers because there's choices. Right, it used to be, especially in small towns, because I grew up in a small town, there were very few banks and credit is available. If you didn't like the service from Bank A, you may have gone across the bank being bank. See, that's it. Now, if you don't like that. There are literally thousands...

...of lenders out there, or banks or credits or Fintech that can meet that need that you have. So you know, we all I think from an industry perspective, it also keeps US somewhat honest. You know, those players who may have taken opportunities around pricing or may have taken opportunities around credit underwriting standards and so on. I'm not seeing you compromise those things in the future. But you really have to be pensive about this and and and not just look at it from pure financial perspective, because it could you road any of the good will you have with your existing membership or customers or perspective, your perspective, consumers and may be coming to you as well. So it's the landscape is completely changed for us as originators of loans, but I think, as you said before, even more so for consumers. Yeah, totally agree. So I would ask you this because in our earlier conversation, you know, we talked a bit about earning loyalty in the digital age and how you think about the value of that different consumers and the value of them maintaining your growing relationships. I'd love to kind of get your thoughts to this. I think it's a really interesting question. I've sometimes said loyal to used to be about real estate rite. Loyalty was like the closest branch. That's clearly out there now, but how do you think about the way you maintain loyalty in the value of loyalty to your institution? I think a lot of it, Jeff, is as long as you're showing value back to that person, and value is different for you than it is for someone else. Right it may be, is a unique thing to that fancial consumer, but as also Fancio consummer, feels that they're getting value from their relationship with you, then they're going to continue with you. And that could be if they're walking into your branch or if they're calling you with the question, or if they're if they're interacting with you digitally. Or look at this way, if you don't have a rich enough digital platform and and that's not meeting the needs of that fancial consumer, there's a good chance they're going to find it from somewhere else and they're going to find it easily. So you know I use a term value. It's it's such a hard thing to sort of pin down. So we almost have to cover all of our basis. We have to make sure that we're providing value for those transaction needs. You have, the payment needs, the borrowing needs, the advice needs, the investment needs, whatever it is. We've got to make sure that we have a good enough value proposition that you're not just going to want to come and deal with us, you're going to want to stay with us and that we can continue to provide that of value. As your level of sophistication is are the level sophistication of your need changes, because the retirement needs of a twenty one year old are different from the retirement needs of a sixty one year old. Sixty one year olds going to need a different type of advice right and even a different suite of products than the twenty one year old. They're both equally important, but I think it's a different method in which we're going to fulfill that value proposition for each of those individuals, and that's our challenge. Is How do we do that? It's not trying to be all things to all people, but in a way it is as it relates to their unique financial means. How do you think it likes so maybe this is a hard question and you won't have a great answer, but how do you think about evaluating how you're doing and where your weaknesses are in terms of adding value? What its product oriented or consumer segment ory? It's there like a framework you have for evaluating how you're doing on that metrics. I think it's a great metric of my adding value to this consumer and this transaction, but it's also, to your point, like it's a very question. Instead of set of needs, how do you think about, you know, defining where you're doing well, where you're not, where maybe you need to make an investment, like a new product line or a new capability? I'm just curious how you think through that challenge, because it's a it's a non trivial challenge, definitely, and you're talking about a qualitative measurement, trying trying to quantify a qualitative measurement, which you know is, we all know is difficult to do. So there's I can't say there's no sort of one magic number that that we used to look at, but we do look at it not just from our product perspective, but from a channel perspective and then from a segment perspective. As well. So looking at you know, as I illustration I had before, the twenty one year olds financial needs versus sixty one returning needs, it should say. We have to look at that from a product perspective. So how about the the suitet invest in products? Is it really meeting the needs of both of that cohort?...

We look at from a channel perspective, because the twenty one year old may be dealing more from a digital perspective, whereas the sixty one year old maybe coming into to visit with us a little more. Right. That's typically kind of how we see and versus a segment perspective. So we have a whole segment of twenty one one year olds and whole segmentcy so they all have sort of different measurements and you really have to I guess the magic of your analytics department is how do you take all of those data points and turn it into consumable and coherent information that can be used to inform your decisions? We're trying to use data more and more, as we all have, but it's, you know, it's almost like shoveling snow, for any of you who grew up in the north or in the east and you know you can when you're shoveling joining a snow storm, you know that there's more data, you know, going going in, then there is going out, sort of thing, right. So, and that's what's happened. There's more and more data points now that we can use and will be able helps us to refine what those measurements should be. But it's also a little bit of a moving target. Right just when we think that we may have good measurements around how to quantify value of the data is changing and the amount of data is changing and the data points themselves are changing and getting getting more and more precise. So if one of those things where we will never finish shoveling snow, I think because it's never going to stop. So knowing from a data perspective, but we either got to get a better shovel or more shovelers and and that's kind of approach that we take to it. Yeah, I think it's a really interesting insight that, like the ability to make sense of data, in some ways becomes a value ad limiting factor, the thing that limits your ability to understand how you're doing, where you're doing better, how you improve, how do you guys think about investing that. I'm curious if you think of that as a horizontal function that runs across business units in products and something where you're kind of saying, Hey, I need to I have a universal view that there's any kind of investments or strategies you take to say, Hey, we need to be able to look across or if you think of that more in investments like product oriented or a segment or exist kind of different approaches. But it seems like you know from your description something that's going to be really critical to the ability to succeed in the future is doing doing this. Well, Oh, definitely make sense of the data. Yeah, I mean the platform, I think it is horizontal, Jeff Right, but the product owners or the channel owners are going to have their own unique data points that they're going to want to look at from a measurement perspective. Right. But you know, at upstart, like many Finn Text, I mean you've got teams of data scientists who daily are looking at not just a data that you've got, but data that you could get and what that means. And you know, I know a little bit from from dealing with with you with upstart, about the algorithm you use for for underwriting, and it's using machine learning, which is perfect because machines can learn at a faster, more rapid and probably in a more, I don't want to say intelligent, but in a more structured manner than the old credit guys like I am. You know, how I learned to underwrite is entirely different from how the modern credit underwriting is done, and it's probably a good thing because I you know, humans have biased and humans have we all have our own judgment. Machines are take the emotion out of it and look purely at the data, and so it's more efficient. You can prove that efficiency with data as well, with machine learning, is constantly refining. That algorithm is constantly trying to find a better way of either reducing risk or increasing profit, or whatever the case may be. I kind of see the same thing on a much smaller scale with data for us right. So use that platform that goes across all procs and channels, but each channel manager, each product manager, can get really defined into the data that is going to give them the right sort of answers back in order to inform them on what innovations need to be made in that product or in that channel, or if there's a profitability thing, or from a from risk mansion perspective. You know, really data science kind of blowls my mind and should blow everyone's mind, because it is really infinite right if you really think of it, there are infinite number of data points that we could potentially be using. It's...

...a finite number right now for all we have. But when you when you really sort of dream about this, you know the sky's limit and I love that Fintech is really pushing that envelope and making community based institutions realize that we can no longer just get by on intuition and experience. We've got to use data to inform those decisions as as we make these curtical decisions for our business going forward. How do you think about in that context where you mentioned we partnered together and it up starts, you know, kind of providing some underwriting capabilities based on the data sets we have? How do you think about where you're building in house capabilities, where maybe you look to partner and augment with people who are outside? Because that's I feel like the question I give a lot of financial institutions is like build by partner like a how do I approach it? So I'm curious if you've got a rubric or framework for how you think about a build versus by versus partner, because there's things I think you would got to keep in house or things you probably can't compete with what's available on the market and Nice curiously think about that challenge. Right. Well, let's talk about insecure personal lending, right. So we've been on secure personal lenders for a long time. We continue to be and I think, and I look at the measurement, we're pretty good at. In fact, it's one of the products and that, when I look at our entire suite, is is one of the most profitable, is one of the most used by our membership. So you talked about value. I mean just from those two elements alone, I see that we're providing value to the people that are looking for that particular product. So well, why would, why would we partner with for the fintact or something we're already good at? Well, I think the reason is I understand that the data points we have are limited. I understand that the intelligence and the collective intelligence we have, the humans and the systems that we have are not as robust as what of contact would have you guys have been in this business now for about ten years or so, you know, because you these thoughts for Germany before you even had a progerty to go to market. Right. So I know that you and your leadership you've been thinking of this for a long time and you've got the programming talent and you've got the systems to be able to not just have this great this product of great value right now, but one that will continue to have great value, because that is something that that that you're always trying to do is okay, this is personal lending in two thousand, scared personal ending in two thousand and twenty one. What's it going to look like next year, in the year after, in the year after? And you've got systems that will be able to continue to innovate. That is an investment that we could make. I don't know if we would ever be able to catch up with you, let alone pass you. And so I think there's no there's no rubric around this, Jeff, but I think it's just our notion of does this make sense to invest in more systems and technology and intelligence for something we're good at right now, or do we want to augment some other part of our business where we feel that there's the potential for greater value to be added, whether that's building more branches, whether it's adding more staff or developing our staff so they've got more competencies and and more licensing and so on. So more so, we all have scarce resources, especially communicates institutions, and especially in the low rate environment where it's really hard for traditional lenders to make a lot of money right now. So with those scarce resources, we've got to be really careful about how we use them. If I don't need to spend a penny, I'm trying to innovate, say, an unsecured lending underrating platform, and I can partner with Vintech. That, to me is today the best solution that we could go and go are there. We're talked a lot about day. are other other areas of technology that have you excited or curious or kind of, you know, poke around, going hey, this is something that I got to figure out how to how to bring into the institution. I mean, I feel like Mlai is on everybody's every is list of like it's going to do something and I got to figure out where it fits and how how provides valu o. There are the things in that cindgory you're looking at for the future. Is that the primary one? Yeah, I know. I think machine learning and AI and and we're not even closer to where we need to be on something like that. We're still trying to make sure our platform is is developed in a way that we could actually get the right amount of data at the right time to be able to feed into some sort of...

...a machine learning program or or AI. You know, the good thing with ai is that there's some route processes that we've had in fancial services, banks and credits for years that ai can do sort of more efficiently, maybe faster cheaper, as the case may be. And this isn't about, okay, well, if if I could automate some processes that I don't need processors. I want to take those processors who truly understand the ethos of our credit UN and are and that we serve and turn them into people that are going to be serving the members of our community, whether they are working in branches or having some sort of direct contact or building procts and services. That that that that our community needs. So I think the notion for AI machine learning is a lot about workforce reduction. It's not that at all. I see it as really workforce transformation. And you know, having started my career as a teller on the front line, yeah, that's kind of never left me. That that we need to I don't care how much technology is out to Jeff, at some point you may need to speak to someone directly and that person you speak to there's an inherent trust. But that trust has got me backed up with that you've got the right amount of advice, that you've got the right amount of information at and and so the more that we can take people away from, you know, saying that their desks with head down doing work, more sitting up and facetoface, and I to I with her members. I think that's that's a excellent tradeoff, not just for us but for any community as institution. Yeah, that's a concept I've heard a couple times now that I think makes it on. It sense moving kind of staff from administrative processing type work to real value at customer facing type work, which is not only better for you but frankly, I think a staff is happier doing that. It's more fulfilling kind of engage them, right. I mean, look, there's still lives in our branches, I'll be honest, right, and as there are for other community based institutions. So you know, that tells me there's still people that want to come in, there's still demand for that, and maybe we're not we don't have as much staff as we need or as much train staff as we need to handle all those needs at all those times. Right, and technology can also help you figure out when those times of demand are, by the way. But yeah, so that's I think that's something that that increasingly were we're trying to do more and more in our credit, and I know a lot of my cohort, at least around California, that that I talked to her, trying to do much the same thing. Excellent. was there anything I forgot to ask her you wish I'd asked during this conversation or did know? No, I think we did a good job in preparation. I like that's always good job. I like the interviewing part. That was my favorite. I always enjoy what people have said. Kess me on my toes. Really, I mean you, you we didn't talk about this, but you laid that out really nicely that. Hey, you know, I joined it crediting and it's like perfect, right, there's my outter. Well, why, why did you make that choice? Or why aren't you there now, Jeff, you know like that. That really interests me because I start with a large bank, you know, one hundred branches across the country and five big banks in Canada at the time. By the way, there's there's few more now. But it was really like, well, kave, you don't deal with us, you're dealing with with one of the other four, and it almost seemed like a right. You know, when I think of our thinking at the time, we have the right for you to deal with us because, you know, it's it's not monopoly, but with it all its felt like a near monopoly. Right, community as institutions weren't something that were on anyone's radar at the time in the nited states, and especially now, completely different. Right, everyone has a choice everyone, and that choice is easy for you to make, an easy to fulfill. Absolutely. I'm glad I said that. I did not intend to set that up, but work it well. Yeah, it worked out well. So I've got three questions that I always in the podcast with and kind of a rapid fire loads on. I don't know if you read these in advance. I sent them to you, but if not, I did, but I mean I remember them, so it will be. But it's like everything. Do I have to answer it in the form like maybe that's right, I'll make the music. Dude, what's the single best piece of career advice you've ever got? Boy, never forget where you came from. Who gave you that advice? What is that advice there actually? So you know, I come from from a family of bankers. My father was bank manager.

My father actually quit twelveth grade early so he could work for the bank in his small fishing town in eastern Canada. Now he went back and got the high school degree. Was the next hundred and fifty nine. This was and once he once he started that job, that was it. That was his career. So we moved around a lot when I was a kid, every couple of years because he was on the fast track and it was all branch based, right. So I come from a legacy of being in small communities where the banker who was a kind of a big deal at the time. I guess it's some of these in these communities help thousands of people literally with gain their first home or helping them with their business needs or things like that. But you know, my father, he attained, you know, some great heights in his career, never forgot where he came from. He came from a small fishing village. In some respects maybe didn't want to go back to that fishing village, you know, and always try to attain something a little bit greater in his career, but but never forgot sort of those small town values and I think he hard that on me. I like that. So second question, what's the best piece of advice you've gotten around consumer lending or consumer banking, separate from General Career Advice? Make sure that what you're doing is, I'm trying to find a sort of an efficient way of saying it, but really make sure whatever it is, whatever procursors you have, is consumable, is something that people really want, because I've been on the PROCT development side and have put some procts out there that we all in a room thought, wow, everyone's going to love it and it just sank like a stone and then you scratch your head and you wonder why, and the reality is we weren't. We weren't thinking of it from the consumer perspective. So consumer centricity. We talked member centricity. How you know one of our taglines it's human centered banking, and it truly is about that. Jeff that if you know we're trying to create a product that's not really going to meet the need that consumer has, then why bother? So it's got a start with the consumer and sort of go out from there. Start with the consumers. Great Advice. That was one of Google's mantras all the time was always focus on what the user needs. Right. Everything flows from that. Right. In My last question, you've a bold prediction for the future. Can Be Banking, lending, anything you like, but I like this. Is this going to be a reason to bring you back and hold your feet to the fire? Accurate or not? Well, consolidation will continue. Twenty, five, thirty years ago, don't quote me on the numbers, but there were Twentyzero banks and twenty thousand credits in the names right, and now there's about five thousand banks and five thousand credit heines. Consolidation will continue. If I could have a one ad to that prediction, partnership with Fintech will continue as a community based institution. When we're fintech first came out, we all thought, okay, these are just, you know, these are college kids with ie ideas. This will turn in nothing, you know. And then it's turn into these massive companies with with really good value propositions that are meeting, and I met, financial need. I think that that all communication institutions and a lot of banks, larger banks as well, need to look for partnership opportunities and not look at Fintac as as a direct competitor, even though they are. But it's I think it's easier to join with thin tech then is to try and out smarter, outweight or outspend. We have legacy fancial businesses here that that we have to protect. FINTECH has all kinds of great ideas and tons of abundant capital and can take all kinds of risk. We can't take those same sorts of risks, but I can from afar, watch those risks being taken, see the ones are actually working or have some promise and partner with them and that will give better value to to our crediting and to the members that we served. Like this. Certainly our belief as well that the partnership between, you know, community institutions and banks and fantext could can ultimately provide the best service to consumers, and that's ought to be the true nor star for all of us. Right right fully agreed. Well, Barry, thanks so much for joining. This is a great conversation. I really enjoyed it and I appreciate you take it the time. Thank you, Jeff. Much appreciate. I have a going okay, Youtube. Thank you. Up Start Partners with banks and credit unions to help grow their consumer loan portfolios 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 to fisticated 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 learning programs or you're just getting started, upstart can help. Upstart offers an into end 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. Upstart in your corner, learn more about finding new borrowers, enhancing your credit decisioning process and growing your business by visiting UPSTARTCOM Ford Banks. That's upstartcom Ford 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 as 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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