Leaders in Lending
Leaders in Lending

Episode · 1 year ago

Disruption & Innovation of Banking Business Models w/ Marc Butterfield

ABOUT THIS EPISODE

In a digital world, threats to banking business models often appear on the horizon. How can banks stay aware of trends in future technology that have the potential to become disruptive threats?

Marc Butterfield, Senior Vice President of Innovation and Disruption at First National Bank of Omaha, joins us to talk about the digital transformation and how his bank identifies threats and determines how to respond to them.

What we talked about:

- 3 areas of disruption in banking

- How model development and model governance are underappreciated

- What people get wrong about digital transformation

- The ways in which customer-facing roles are changing

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But it's a different mindset when you're trying to digitally transform existing banking infrastructure versus actually trying to solve, for okay, what's out there that could be threatening to banks, could disrupt banking business models, and how do we respond to that? You are 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. Hi and welcome to leaders in lending. I'm your host, Jeff Keltner, and I'm joined today by Mark Butterfield from First National Bank Omaha. Mark is the senior vice president of innovation and disruption, which I think is maybe one of the coolest titles I've ever heard of. Mark, what does it mean to be a senior vice president of innovation and disruption? Yeah, I think it's great. Thanks for having me, Jeff. So, the innovation and disruption title came about when we really wanted to focus on what our team's mission and goal was and on our role, is to help solve for banking business model risk. You know, we have a lot of folks here at the bank that manage risk management very well and we don't have a lot of thought leaders thinking about business model risk in terms of banking business models and how they're getting disrupted. So we that was an intentional thing that we wanted to put in the title to say our team's job is to identify and respond to disruptive banking business models, which is a little bit different than other innovation related titles in banking, where a lot of digital transformation efforts get kind of grouped in there. All our job is to think about, you know, macro trends, future technology, and then how do they all converge to a potential disruptive threat to banking and what are we going to do about it? That's really interesting. Well, first of all, thanks for thanks for joining me today, of course, but you know, how did you think about I mean, it's your point. I think many banks have approached this. At and non banking institutions is kind of a digital office. It's responsible for overall strategy and you kind of broken out an innovation disruption group. That's different than just to the digital technology group with in the bank rit large. Why did you take that approach versus the kind of more standard approach? Yeah, yeah, and I think it's important to note that we did not start there. So the evolution has been to this point. We started with we feel like digital transformation and innovation and disruption can all be brought together and have it be on one team, and we felt with our bank structure, it would be better to put the digital transformation efforts with the people that are closest to the customer and those those business segments, and that my job is to help inform and educate on what we're looking at there, but out in the future, if you will. And so we've diverged beyond digital transformation and said we need a team operating faster, thinking differently. I'm really kind of a startup mentality, if you will, and the best way to do that wasn't to be accountable for digital transformation. Those are big, important things, but it's a different mindset when you're trying to digitally transform existing banking infrastructure versus actually trying to solve...

...for okay, what's out there that could be threatening to banks, could disrupt banking business models, and how do we respond to that, and so it has been an evolution over the past three years from where we were at to look a little bit more like a digital transformation team to where we're at now, which is the closest way I describe it as an innovation incubator on the approach of how we look at different things. That's really so. Your reminds me of the innovators to the limb of the the clickers in book. That's kind of very popular Silicon Valley. But to find the disruptors you kind of have to have a unit off on its own that's not constrained by the current realities of the business. That's really interesting that you set that up. I see a little you may be an Omaha, but you seem to have the silicon valley spirit right in tem true. That's yeah, it really models that. So you talked about, you know, the things that are coming up on the four that are, you know, strategic risks, are disruptors to the bank. What do you see that qualifies in that in that category? Yeah, I think for us the main things are the macro themes. We look at our things like banking as a service to start out, and it's in its relative cousin of open banking and this whole concept of there's a lot of different disruptors out there of who is actually going to be providing customer experiences versus who are going to be the infrastructure that powers them. And you have these monolithic stacks of technology that banks own all those things. And what's happening? You know, you look no further than payments and you have, you know, square and Stripe and a few others that are disrupting it in the middle and have been for years. We just think that's going to continue to proliferate with other banking stacks, and so we look at banking as a service, saying what should we be doing about that? How should we be changing how we think about banks and banking systems operate together and provide customers what they need? And so that's one major one. I think another one around more customer facing is the whole concept of autonomous finance or self driving money. So the so this whole idea of the the good analogy I've looked at recently is you know, when you open up Google maps and you say you want to go somewhere, you know have to input a bunch of data. It just says it knows where you're at and knows where you want to go and it tells you the best route to get there. If you think of that concept in for in terms of money, that's really a future state that we think about a lot here. Of It would be great if there was just ai and machine learning and all these great experiences that people are trying to build to where I don't have to do anything from a financial task. They just know where I want to go and it shows me the best way to get there. And and so we think about that a lot. Of how that how that's going to disrupt banking? When you think of products and experiences and advice and guidance within the typical banking business model, they're all doing those things in a non automated way and sometimes better than most, and I feel like our bank does it better than most. But how are you going to actually have that all be automated so that the customer doesn't see anything happening? They just, like I said, open up Google maps or apple maps and it just takes them there. And so we think about self driving money a lot. And then the last one I would mention because it gets a lot of play...

...as crypto in general or Blockchain, and we look at that as technology that's going to power a lot of things in the future, and so we look at that three different verticals to say how could that technology, a specifically distributed ledger technology, how can that solve customer problems in the best, most efficient way? And so we're looking at specific use cases to solve those. Those would be the three big topics I would say we're looking at currently. Those are fascinating topics. I love your focus from a bitcoin point of view because I see so much the commentary that seems just totally detached from what would a customer do with this? And the technology is really interesting, but I think you really gotta what problems are we solving for folks? Is a question that's just we're just at the cusp of solving that part of it. On the on the blockchain technologies, where it leads right right. So you first one. You mentioned the kind of banking is a service, open banking, or this kind of you described as a split between the customer experience of the kind of infrastructure or plumbing. How do you think about where you fit in that world, because there's kind of there's there's models where banks are one or the other or both, in partnering with with Fintext or other you know, even just employers, let's say on the sex side, for certain kinds of products. Where that you wanted at? How do you think about where you know the future of your institution is with respect to that? Yeah, I would say being a full service bank, both on the consumer and the commercial side. We have to figure out where we want to be good and where we want to be good at the experience to the end customer and where we want to be good at distributing our products to the most customers. And so when we think about it, I think of it that way of where do we want to be really good at creating and curating the best experiences for customers and what pieces of those experiences do we really need to own versus operate? And then, on the other side of it, if we just want to be really good at distribution and scale, where do we want to be super efficient in that back end of the stack, if you will, the infrastructure stack, and then enable everybody else to just figure out what the best experience is for customers? And so we look at that on a vertical by vertical basis, and we're still trying to figure that out. We don't have all the answers, but I think we believe, like most banks, that we're already pretty good at those things, and I think in a lot of cases we are for the customers that we serve. But when you think about a whole new generation of customers that are going to expect more, better digital intelligence services and experiences, we're going to have to have some type of a reckoning of okay, so we can invest in everything, we can't be good at every single customer experience. So which ones do we want to be good at? But which ones do we want to be the pipes and kind of enable these things? And so, like I said, we have an answered those yet. But when we think about banking as a service, that's an area that we think about a lot of where do we want to place the bets for the customer experience? And we're to want to place bets for being a distributor of products and financial services, and that's kind of how our team thinks about it's very interesting break into partner different different functions and where you can do or really be better at each right I love yourself, driving money, Google maps, analogy. Maybe it's because I used to used to be a google so I got affinity for those products. But is there anything I could like? I think it's a fascinating concept that I do think you see many consumers really...

...stay, particularly younger consumers, that they don't really know where to turn for vice, help, guidance, and it's not so much can I originate a product for you, but it's like which product do I need, or should I want or how should I go? What are you guys actually doing on that front? Is there something I can download or an APP or where are you at and trying to find a solution that? I feel like it's a really under invested area, frankly, and consumer finance, because most of the APPs in that space don't really help the consumers that much. I haven't seen anybody that's got a really good experience. Yeah, nothing to publicly announced yet. Hopefully soon, in a few months. Okay, we'll bring it back in a few months. I appreciate that, but but definitely can tell the concept is around helping people save for things that matter to them and and not even realizing that they're saving. Now, whether that's a feature that are publicly available out there, like in Acorns, of where you can just top up for saving things. That whole concept is what we're looking at building and experience around of when people spend every day, just making them aware of what they're spending and helping them figure out what their what goals they want to say for that's kind of, I think, the first iteration of selfdevery money. It's not certainly no means that Google maps and state, but we're trying to figure that out in terms of so people want to save. They have everything from emergency funds to, hopefully, some day, vacation funds or all these things they're wanted to save for, and it's like the analogy we use. It's like exercise. Everybody knows what they need to do to exercise, but that's why there's weight watchers and every other industry out there of you know, exercise and and eat better, like but why don't people do that? And companies that have done a really good job of making it simple for the customer to do that are the ones that are winning in that space, and that's what we're looking at. Like the Apple Watch, for example. Just wearing an apple watch makes people more aware of their fitness trends and actually has the potential to make them healthier. It's not the cause and effect of the watch, just buying it, but it is the idea of nudging them in a direction of Hey, maybe you should burn your calories, Hey, maybe you should stand, Hey maybe you should exercise, and that constant reminder. It's not autonomous fitness yet, but it is enabling and making people aware of their fitness habits and that's what we want to do on the financial side, make them aware of their financial habits and then that's the first step and then you try to help them with their goals, and so that's what I'm looking forward to announcing, hopefully in a few months here, which really excited to build because we think that's an experience that's cord who we are and the bank is, and so we know what that's you know, getting back to that banking as a service. That is an experience that we want to own and partner with the best in the business to be able to be really good at that's really fascinating. All right, so I'm going to switch here's a little bit. Jaskia. You know you're in the consumer lending space. What's it commonly hell belief you see in the consumer lending space that you think people generally have wrong? I think that, I'll say model development and model governance is I don't say people don't think it's easy, I just don't think they respected to the degree that they should. So when you think around, you know, hey, I want to be in consumer lending, I need to create a really good experience to make it really easy for them, and I think that's true. But whatever goes out of style is sound model governance of model risk management...

...for consumers. It's very challenging to be able to do that for a mass group of customers versus like on a commercial lending space. You know, you ask them for a detailed financial list and you kind of go through that a process and there's a whole thing with that, whether if it's mortgage, the same type of thing. It's a whole exam of somebody's finances. With consumer lending, particularly personal lending, you have to do that very quickly to give the customer what they want, and to do that you have to have really good producing model development and then you need to need to model governance to make you sure you're doing it, it's safe and sound manner and I just don't think that gets appreciative. Amout. So that's for me. In my perspective, that's a commonly hell belief that that's a kind of an easy thing and it's not that easy to perform or pull off. Why do you think people are, you know, have that misconception? Sit past saying I don't. I don't get that answer very off quite I know too much if model governance is not the first thing that pops thats or certainly thinking of it is easy. But why do you think people underappreciate what that takes and what do you think that leads to in terms of their you know, what it does to impact their ability to execute in that space? I think it's because over the years people that haven't been good at it have gotten out of that space, particularly in banking. So then it's and it becomes forgotten like a myth or our legend kind of thing of like Oh, that that is actually really hard to do. Does anybody remember why we don't do that or haven't done that type of lending in thirty years? And and that's why in a lot of cases, like they they had didn't have really good practices in place. So that's why, you know, as you know, I've been in this space before, even though my current title is different, but but I have been in the consumer lending space for a while and that part of it is is a really important experience and knowledge base that I think people forget. That is really difficult to do. So that's why I gave you that kind of off, you know, weird answer, if you will, is because you know that piece of it is. That's why a lot of banks, reason why I believe a lot of banks aren't in the space, is because that piece of it is a really hard one to pull off at scale. No, I think it's a really great point, and I'll ask you this as a kind of fault, which is one of the struggles I see, is that you know, if you want to get bigger in that space, let's say, it's not just a business decision that a line of business owner can take, but that kind of model governance, in particular, model development, model governance, has a lot of stakeholders in the institution right right. So you can't just go hey, we're going to do it. It's a muscle that multiple groups need to be kind of on board with building and developing. How do you think of about, you know, the most effective ways to build support for that across the institution? Because, like I said, if you're if you're the head of a lending program or product manager or you had to consumer lending, you still got a cheap risk officer, you got a model governance team, you know, a compliancy that have to sign off on these things that are maybe outside of what they're used to and a primarily, you know, real estate oriented lending business. Yeah, I would say, like anything, it's having alignment on the common ground of we want to get into this business, we want to have it within a certain risk appetite. The scaling piece isn't really the problem. It's just being aligned with everybody, all the stakeholders you mentioned, to say. Then we're all on the same sheet...

...of music with our risk appetite and where we want to start. And then I also acknowledging there's a lot of different ways to get there in terms of expertise. You know, build by partner model, however you want to look at it. I think I think that's the most important piece, is the communication and alignment on your risk appetite. And then once you do that, I think you kind of get all the stakeholders together. Okay, what's the best way to build this model? What's the best way to understand it's the right way to go? How do we keep our regulators informed on what we're doing? So it's being super thoughtful and transparent every step of the way with those key stakeholders. Yeah, the other thing I like about your answers it kind of implies early engagement, like you're getting you're getting everybody on board before you're ready to go, before you've made a call, which in my experience, is really important. Everyone's to feel like they were part of the decision, not rought in after the fact to take a look and stamp signed off on on the decision that was kind of already made exactly exactly. I think, putting everybody in a non threatening position. You do that early on to establish how there's an opportunity here, here's the problems are solving for our customers. There's a need to be had. Let's all be on board with you know, we want to get into the space now. Now here's all the different options of how we get into that space, but I think risk appetite is a big part of that portion, because people make assumptions when you just say you want to get into a business of is a subprime, is a near prime, is a super prime? Like you need to have those conversations and thanks. are very comfortable of having that, but I think having an early on, like you said, in the process is huge, interesting, interesting. Yeah, no, I agree, you got it. You got to get those conversations happening early and probably often right experiences to tell you anything. Now. I know you said digital transformation was kind of where you started in you're now focus more on the kind of disruptive opportunities and threats to the bank. But when you do look out, I mean I feel like every bank or I talked to digital transformation is one of the top two things that they want to talk about and whatever their ten year plan was, it's now a two year plan or they're trying to figure out how to cram it all into two. Where do you see people going wrong with that digital transformation? I mean there's so much focus going on, so much activity, I'm curious where you see the mistakes being made. They're going to be difficult to unwind or set people off down the wrong path on that more traditional digital transformation effort. Yeah, I think so. I won't say model governance is the answer this time, Jeff Good, I like it is. I mean variety mark, when he variety, you said so. But digital transformation, I think what people get wrong is having a clear understanding in the organization of especially banking, of why you're doing it and just be clear on that. So if you're doing it to be more efficient and save money, then really focus on digital transformation, of digitizing your back end processes and systems and say that's why you're doing it. If you're doing it because you want to create a better customer experience and you want to improve your MPs or your customer experiences, then be clear on that. But when you say it's all those things, I just I think that's you're just kind of lined yourself. If you're saying you're doing all those things, I don't think you're doing any of those things. So I think you just got to be really clear on what it why are we doing it? Like, what is the reason why we're doing it? And a third reason can be we're behind on some, you know, table...

...stakes features and we need to catch up and it's a strategic initiative because of that. But I think it's just being honest with yourself as far as why you're actually doing it. That the commonly held belief of digital transformation. I mean the word transformation like is supposed to be hard, like transforming is hard and painful. So accepting that, hey, we can just say we're doing this because there's other digital companies out there doing stuff and we need to be offensive and defensive. And I just think it's so important to stay really focused on why you're doing it. You know, internally we talked about, you know, are you digitizing the back office or are you digitizing and making better the front and experience? And be clear on which one you're doing for whatever project that you're taking, because banks love and most companies love their big initiatives and their projects. But to say that you're going to digitize, for example, the front and customer experience and save money is false. Like you can't do those things. You need to spend money to create better experiences, more engaged customers maybe generate revenue. That's a thing, but don't say you're doing it to save money, because that's different. That's a different mission. And I think people kind of get those wrapped together and that's, I think, a problem when you talk about digital transformation as a whole. I agree the mass this. Do you think those wise or consistent across product lines and initiatives for the bank or it kind of makes me wonder if you know the why for a certain program might be very different than the why for another, which could lead you down very different paths for how you wanted to to maybe tackle that that initiative. I think you're right. I think I think when you look at something, you know, I was looking at an article a couple weeks ago and it said for three years straight that the most to your point about digital transformation, the number one project is digital account opening. So it's been for three years straight the number one thing. It's like, so you've been doing the same thing for three years and I think what your point, I think get highlights it is like, so are you digitizing the back end process of account opening or you just making it digital for an end user and you're not fixing anything on the back end? And our philosophy is that you have to be really clear on breaking up those pieces to do both. So yes, you can enable it for the customer digitally. But if you're not digitizing your process, you're not going to get the full benefit of personal relevance seamless, you know, speed, all those types of things. And you're right, it means different things to different people in the bank or in an organization. So having somebody manage the whole thing, I think it's nearly impossible to do because those are different stakeholders and there's different objectives to be met. When you just take something like digital account opening. Yeah, you know, we talked about it internally with our digital account opening on the consumer side. If you would have asked us three years ago if we had digital, we'd say yes, because you could go put a request form on FMBOCOM. But then what happened is that went to that got printed out internally and then got routed to five different apartments and it was like an eight week process before the customer even like got informed back. But going digital on the back in process, which we've already done on FMBOCOM for consumers, is you can open and...

...fund an account and under four minutes, like, and the only way to do that is to digitize the back office and that was a separate set of projects than digitizing the front end. Yeah, both different, but, like you said, you can easily get confused on a large project, which is why, and I'm making this guess, that it's been the number one project for the last three years on majority of banks list because they can't even figure out, like so, which one isn't and it's this massive project. Yeah, and I did that. Thing I certainly see is if you tell me you have a digital process and then you have a manual back end and I wait eight days for my answer, the fact that you digitize the front end, it make me feel any better success. I'm still waiting eight days for my answer. And so I think you really got to think hard about which of those things is going to make the biggest difference to your customer, to your experience, because you could really get the car before the worse in some ways. To quote unquote, digitize and experience. That really is still a manual process and I don't think you see the benefits. And I worried sometimes people also throw all this didn't work. Well, no, yeah, right, didn't really deliver the value for the customers. Of course they weren't. You didn't double your tailptake rates. Or whatever from that. You know, you got to really you got to deliver the experience that they're looking for. Yeah, I mean we might FMBOCOM. Three years ago we didn't do any back end process. All this someone was done, but we had thirteen different websites. And when we were really clear, like we want to create a better experience and more consistent fronted experience for our customers, and we didn't did it has any back office items. And that's how we're able to complete that project because we said we're really clear, this was to make a better customer experience, this isn't digitizing any backoffice items. And then in you know, ten months or however long it took, but it was less than a year. Like we wanted to make a very better experience for our front end customers and that, like I said, you want to be really clear on what your objectives are when you're embarking at any digital transformation effort. Yeah, and how you measure them, how you how you think about what success looks like, because they're quite different as well. Yeah, how do you think about these digital initiatives as it impacts your branches? I know we're all coming out of an area with a lots of branches closing, and I thought of this to when you were talking about your you know, self driving money or autonomous finances. Concept of what is the branch employee end up doing? What is the call center employee end up doing in a world where many of the more transactional parts of that job are becoming more digitally facilitated? So I don't I don't need somebody typing in an application form necessarily in the branch. But how do you think about, you know, the role that the employees that are consumer facing really end up playing in the world with more digital technologies? Yeah, I think you know, we internally we think about so. And then these numbers aren't exactly right, but you'll get the concept. So if we have like a personal banker and they do tend tend to ask every day, seven of them are entering stuff into a screen, like you said, like they're doing very, you know, wrote very systematic inputs of processes, and so of the ten, let's say seven of them are like that, the other three they're having meaningful, enjoyable, helpful conversations with our customers. And so will we talk about internally, how do we flip that script to where it's they're having seven of their tasks, or maybe hopefully eight or nine of them are relationship based and then the other one or two are helping the digital...

...process along in the journey. And so that we think about that. Of That's how I believe banks are going to thrive in the future, because we have some great people that have a ton of knowledge on how to help our customers and they do help our customers, but over the years they've gotten bogged down with more and more tasks that aren't fun, you know, that aren't helpful to the end customer, but are important to make sure that that task gets done. And so we talked about that internally of how do we flip that script from from the seven or eight that are mundane past that they don't want to do, to seven or eight that they really want to do and it's one or two helping kind of the process along the way. That example of this would be on our mortgage side. We we just partnered with with the company called blend, where they're doing most of the task now and it's really unlocked or mortgage originators of you know, I'm back to the to the best part of working with customers, you know, building relationships, helping them along the way, you know, and so that on. That is unlocking a whole another set of opportunities that we're thinking about of how do we get even better at helping customers along this dirty now that we have all this, you know, I don't say free time, but more availability with our people versus what blend is helping us enabled digitally, and that's what I think about a lot and we talked about a lot internally. If I don't we flip that script so that there's more of that happening on that and, like you said, the self driving piece, I don't think folks are going to go away. I think it's about unlocking the latent desire that they have of helping customers to give them more time to do that. HMM. Yeah, and the other part of that that I someone mentioned to be recently and I thought was really fascining, was the impact on the employee engagement, not just the consumer satisfaction with getting more advice or help it. Your employees like doing that a lot better than the entering stuff into the sheets and it's exactly better career path for them. So it's it really has double sided benefits me. Everybody's kind of winning in that equation, as long as, to your point that the important tasks do get done. But if you can offload that, it's I think everybody getends up happier. Yeah, I agree totally. Can Do more of that. Yes, so if you had any recent projects that you've executed internally where you've been surprised by the results, something kind of not what you expected, that you can share? Yeah, I would say. So one that I'll say because I think it's important to talk about failures or not. So somebody told me that being the head of innovation, basically you have to be okay with being the head of failure, because you should be. Fail have a lot of failed projects and we do talk about those internally. But but one of them mentioned is where I think I, like a lot of banks, you're trying to figure out the best way to allow customers when we have people move into a like a geographic footprint, like in our seven state footprint. It here at F ANDB Oh, it's like how do you get them to switch their primary relationship with their bank? And and you, like most people, like is the biggest pain in the neck that you could think of when you think of bill pay and you think of just your direct deposit account being switched and I don't think anybody has figured that out. And our team was really Gung Ho working with the startup, which I won't mention because it didn't work well. We try trying to figure this out and we're...

...like yeah, let's go into it, let's experiment, let's let's try this, you know, all the all the mentality run innovation you can think of. And what we found, the deeper we got, is to talk about digitizing processes, like there was nothing different from how we get people to switch in terms of manual processes, helping them along the way, and it really wasn't solving a lot of customer problems there. It was just kind of a digital front end, but the back end stuff, if you will, all the plumbing, was the same and we're like this isn't really transformational at all. This is just putting a digital front end around something that we already know as a pain in the neck to do. Like, you're not helping us with any of that. So we moved on, you know, quickly. We're like, okay, this isn't helping us, like this is this is not helpful, but that would be an example of we really thought that we had picked the winner, if you will, in terms of okay, this this company has figured it out, they've solved this problem, and then the closer we got to it, the more we did our diligence, it was yeah, this isn't digitizing any back office items. This is still a pain in the neck to solve and we're still looking today trying to figure that out. But that's that'd be an example of when we kind of quickly moved on from I'm sure if you figure that one out, many people would be interested in how, because it's there's certainly a painful process. Yeah, I like your example, though I'm a you know, the since Silicon Valley here there's a huge culture of fail fast. I think was one of those things that came out of Google, and I really hate the phrase because if you learn something, you didn't really fail. You just have to go into it with the mindset that we're here to learn and as long as we learned, some of those will produce useful businesses and products and some of them won't, but the learning was the thing we're optimizing for and kind of making it a cult of failure like it is, I will say it's more fun to win than to fail. So, yeah, I agree. I don't want to retail objective. No, but we do talk about it internally with our team. It's learning is a KPI. Yeah, so so we talked about what did you learn? That is an actual thing that we want to track. How many learnings did you get out of that thing? You explored or discovered or failed on? And that's the that's the culture that that we try to try to adopt here. But you're right, it's it's learned quickly versus fail fast. Maybe that's the monicker you and I need to need to change, but it is. It's about what you learned, yes, and how fast can you can learn, iterate and learn again, because it is kind of it's kind of like compound interest, is how I sometimes trying to describe it to my kids. If you can get rate on that fast, I pace huge dividends over time when you're learning quickly. It's true, kids not quite getting the compound interest in analogy. I don't have to work on them on that one. I would ask you this too, because you guys have been in the consumer lending space, more so than many banks, and term loans and credit cards. But are there untapped opportunities or replaces you see in the consumer lending ecosystem that are kind of underinvested in terms of the opportunity versus where you really see people pursuing? Yeah, I don't think so. I feel like all the things that, you know, I felt like had gone on a style are just coming back again in a digital way. So if you think of the buy now, paid later, like wasn't that lay away at Kmart? Like I thought I did that a long time ago and it was an important thing. But I think the way all these companies have a digitize that are really fascinating to be able to make it super easy for customers digitally to do those things. But I don't think that's a kind of a new or...

...untapped thing. I think that's just more about digitizing something that was already a product that, you know, maybe went out of style a little bit, but now it's back in which is, you know, either layaway or helping people budget things. But no, when I think of lending, I can't think of a lot of things that I haven't been tapped other than, like I said, the idea of that's why I like this concert of self driving money. I think in the future it's not going to be you're going to think about how many loans you have, if that's going to be done for you, automated, based on your cash flow, and it's all going to be managed in a way that you're not even going to think of how many loans you have or when to pay them off or what's the best rate. I feel like in the future that's all going to be managed for you through a series of APPs. I don't think there's going to be any I think some of the talk lately has been like a super APP, you know, one APP to rule them all, kind of thing. I don't believe that. I think they'll be several APPS that will want to offer those things, but I think in terms of at a personal level, I think there's going to be different ways that they're going to talk to each other, if you will, to make sure that it's managing your personal finances best for you. But you're not going to think about it. And the example I would use, even though it's not a great example bit, it is a traditional banking product, which is when you're checking account is attached to the line of credit. M Now, if you think of that concept like that's a smart concept, like take away all the noise around overdraft fees and things like that. But if you think about that like I shouldn't have to worry about falling below zero on my week to week, you know, month the month, paycheck to paycheck, it just dips into that when it goes down below zero and it draws from it and then I pay it back in a responsible way, like that's intentionally what it was originally supposed to be, you know, using it smartly and wisely. It's a great product. So what's a better digital way to enable that for customers? I think that's the part of the self driving piece. But that product in and of itself, I just think get such a simple concept but makes a lot of sense of okay, I have a balance of money, I have cash full coming in. When when it dips below like it's going to draw into it. Like I feel like that experience in the way that all it gets managed, is the future. I don't know if there's any new lending products per se that I think are underdeveloped or underresourced. Yeah, I like that. It's or not. I tend to agree with you. I think there's been a focus on the UBER APP that's going to have everything, and right, you know. Ultimately, I think most of these products consumers shop and they need them all, but that doesn't mean they're going to want to only get them all from one provider. I think they're going to be looking for the management of those across maybe multiple providers over time, multiple financial institutions that they're working with on different products that they need. In the coordination is people tended to think of that as the bank roll. The NEO banks want to be the center of it. Most of them are doing it by trying to provide all the services as opposed to actually coordinate what you need across maybe different providers and different partners. Yeah, yeah, I think and and I certainly didn't invent this, but the whole concept in banking specifically is what we're experiencing right now is an unbundling of financial services and I think consumers are going to expect some version of rebundling. Like how do I figure all these things together? The the analogy is all the streaming services, like I don't even know how many I have. I don't have cable anymore and that was like the ultimate bundling, right. It was...

...all on one. Now I don't pay for that anymore, but I have all these different streaming services. I don't even know how many I have. I intuitally know that. I think they're less than my cable bill used to be, but I don't even really they know that anymore and I probably should. But think of that in terms of finance, like there's all this unbundling happening and consumers are going to get anxiety of okay, this is too many. I need to figure out a way of how to manage all these things and I think that's really the next frontier. Yeah, I would check your credit card statements. I'm not sure all your bundle streaming services are actually less than the cable bill was. Yeah, you're probably right. Yeah, it's if you're hassles anything like mine, the kids dictate a number of services which drive up the costs pretty rapid lest. Yes, so true. All right, mark, I got three last questions that I like to end all of the interviews on this podcast with. So I'm just going to farm away a little bit the rapid fire style. Yes, stood. First One, what's the best career advice you've ever gotten? For me it was it's probably don't give me what I ask for, give me what I want. I like that and when somebody told me that I was like, I don't know what the hell that means, and over time I realized more and more that what I understood that to mean and and if it really helped me in my career, it Google. They was used to quote Henry Ford. He said if I asked my customers what they wanted, they would ask for a faster horse, which I write is the same, the same concept and type of thing. Yeah, it's always been kind of near and to give them what they need or what they want, not not exactly what they ask for. NESCI. Okay, that's great. Yeah, yeah, in the consumer lending space, what's the best advice you've gotten about consumer lending in general in your career? I think it is is respect, I think the the credit appetite that you're willing to go after and get really good at that piece. I'm an old product market but I still have some credit risk ties and I think you know, having that healthy tension is important. But for consumer lending, I would say in particular it's be really clear on your risk appetite and understand how you want to play in that space. Understand your place in the space. All right. And lastly, any bold predictions for us on the future banking consumer lending that you want to but I'll have you back in here. We'll see if you're right or not. But I'm curious what's that's right coming down the pipe. I think my bold prediction is what's going to happen is there's going to be a huge boom, post pandemic and all these all this type of spending, and it's going to rarely come from traditional banks and experiences. I think they're going to be embedded more and more into the experiences that when consumers do travel, for example, and they're not, I'm going to realize that they're doing loans. I mean they are, but how they pay for it is going to be way different than how they pay for it today. And I think specifically, whether you want to think of by now, pay later, or you want to think of embedded finance with lending, I just think more and more the typical way, which is go to the bank to get a loan or use your credit card. I think that's going to continue to get disintermediated to the point of consumers are going to going to go through the experience of booking travel and then they're going to pay for it in real time what by whatever means, and they're not, I'm going to think of it being a bank. Okay, I like an embedded finance of the future.

Yes, well, mark, thanks for your time. I appreciate you joining us today. Thanks, Jeff Shit away. Upstart 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 to. UPSTARTS 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 into in 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 Ford Banks. That's UPSTARTCOM for 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.

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