Leaders in Lending
Leaders in Lending

Episode · 1 year ago

Digitizing for a More Relevant Banking Experience w/ Cathy Myers


It’s not necessary to give up the fundamentals of banking in order to bring innovation to the industry. The two concepts are not mutually exclusive.

In this episode, we speak with Cathy Myers — Executive Vice President at First Financial Bank with 37 years of experience in the industry — about why we should view “digitization” as simply a modern extension of traditional banking practices.

What we talked about:

- Staying true to the fundamentals of banking while innovating

- Leveraging data to personalize offerings

- Integrating digital capabilities with a human advisor

- The changing nature of the in-branch experience

- Considerations when choosing innovative partners

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

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

It is possible to remain rooted in those fundamentals of banking while doing it a different way. Taking him were data points, find a better processes, making sure we're relevant to how clients want to shop and buy. Today 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 Keltoner, and I'm joined today by Kathy Myers from first financial bank. Kathy, can you tell us a little bit about yourself and about FB? Sure to join you today. I am the leader of the Consumer Bank, so I'm executivice president with First Financial Bank, based out of Sincenati, Ohio. I run the retail branch distribution group as well as mortgage and consumer lending and small business lending, and I've got support groups and community development and consumer administration. I've been in through three seven years and I've loved every bit of it. Actually I'm still pretty excited about it. That's amazing. Thirty seven years is quite a time to stick an industry what's kept to in the consumer banking space for so long. Likes I, when I first started with a banking class in college, I thought it was the most boring class I had. And Anna of course I get a job like everybody else that pays the bills in banking. But I tell you, what I've always loved is that a helping consumers and I can always find ways to help them more and make a difference in their lives. So sincerely, that keeps me, you know, in the industry and excited about them. You know, it's great to hear is someone who came from technology. I've been perpetually impressed was I talked to bankers about, despite the depictions on you know, Hollywood or whatever of the heartless banker, that almost everybody I speak to and consumer banking got into it really to help people with the kinds of products and services I needed. So it's always good to hear and I think it's a great north start to keep you grounded on what's really important about what we do. So, you know, thanks for joining us. I do have a couple of questions to get US started. Hopefully we can dive into them, but my first one was what's a commonly held belief about the consumer lending space that you passionately disagree with? I like things that are a little more contentious than just the basic who what, when? We're why? So what's something you disagree with about how most people think about consumer lending? We know, the more contemplate how our industry remain relevant because the future I can come back to the same conclusion. You know, it is possible to remain rooted in those fundamentals of banking while doing it a different way. Taking Him we're data points, find better processes, making sure we're relevant to how clients want to shop and buy today. So you know, I think that's the contention, is that you don't have to give up basics of banking that are solid and served as well or, you know, century. I guess at this point are decades at least. You can innovate and I don't think the two are conflicting. That's interesting. Now you itoed, you know, new data points or new processes. What are the kinds of data points or processes you're looking at? As how you innovate on top of those fundamentals of banking. Well, if we stop at data points that have to do with the consumer, because really everything we do begins and ends with a consumer, it's really learning more about how they manage their financial wellness. If they manage their financial wellness, but you learn how to walk in their shoes and learn from their perspective on how they want to save or borrow or plans for the future. And the more you learn about how they see what they do every day in the financial space and then model your improvements to meet those needs, I think, the more relevant you are. So, as an example, I think a lot of what we do in banking that is an obstacle is we talk about our perspective. So let me pick on secure letting, because that's your space. So you might think, if there's someone applying for an unsecure loan online on Saturday afternoon, and I got ten applications that day through upstart, that they're all the same, that it's somebody who's...

...maybe over extended right maybe desperate because they're searching online, or maybe not as experienced. You know, pick your persona, but I think most of us, as bankers go to our idea of who that person is. But what I'm learning is when you look at the data, it's from all incomes, all educational backgrounds, different reasons why they are where they are and they're what they have done in borrowing and where they want to go. So to me, the data points helps you truly learn more about the customers. Instead of delivering one solution that fits everybody, you could actually start to tailor it more for those individual needs, which equals a better value for the client. That's really interesting and maybe I should have started with this because you said the thing that you think not everybody agrees with is that there's the fundamentals don't have to change. How do you think about what those fundamentals are like? What defines that? The fundamentals of banking and finance for people that you think are constant from the old ways of doing things and what's going to be happening in the future? And there's a couple of lenses for that. So one I often refer to my myself as the George Bailey of banking. So if you happen to watch it's a part of the life during the holidays. I'm George Bailey, and I think that's what we all are. We have people in our community that want to say place to put their money and in turn we lend that money out to the neighbor cross the street who wants to buy the house or wants to buy the car. That's really what banking is. I don't think that changes. You make money, you put it in the bank. You need take money out if you need more than what you have in the bank, and that's a basic, fundamental. If you go to the borrowing space, we have a way. We've learned credit from day one. Right. You need to make enough money to pay you to bills and then you can take on some more debt. You have to have a good credit history on how you've done that in the past. Right, otherwise I won't lend to you. Need to be on a job for so long. You know. Those are the basic kind of five sees of credit that you know. I was taught many years ago and they still stick. But if we don't look at that how that relates to a client today and we as a banking industry don't stay ahead of that, then the customer will find a solution somewhere else and it might be a less informed solution and maybe a solution that's not as good for them. So I think how we lend, in particular with the five season credit, and how we adapt that to be relevant, is something that we all should be focusing on. And there's just more data points now, so I think that helps us. Yeah, we certainly agree that more data points, when looked at intelligently, can help you make better decisions up and down the process stack, from credit to process. I'm curious. You talked about, you know, new products and new things your consumers find. I feel like every bank I talked to, and only exacerbated or accelerated during covid times, is kind of saying I've got to Transform, a digital transformation is kind of that the buzz word. I've got to find a way to get digital. I think they feel a lot of pressure from pure digital fintext or alternative sources. But I'm curious how do you think about, you know, what that digital transformation is, what it looks like and how you prioritize what you want to do in that space? Well, retinally, certain about digities and business. I think what we were really saying is an industry, is that we needed to automate our basic workflow. Those relates pushing paper around. How do I put more automation in? Basically how in deposit account I move money around, how I borrow. So that's why I think you were really saying in the beginning with digitizing, now that most of us have bisine capabilities in to me, what digitalization really doing is saying, how do I help that customer in gain, whether shopping perposing fur thing through their device, and in most cases that's the mobile device these days, and where the engagement model than the baseline capabilities? And what I believe, and our leadership of our company believes, is that the digital capabilities at the experience level need to be integrated with a human being, an advisor, and that's another place where I think you've got to really push back on the industry, because if you're just going to go and digitize and you're not going to couple that with...

...the good foundational banking principles, I worry all the time that someone's going to click but they're not going to understand what they bought. As an example. So in my family I'm a cathy and everybody who's got a banking question calls a cathy, parents, my brothers, sisters, they send the kids. My wife is and Cathy's a banker. Right, she'll help you. And I tell you what. They don't know what they're clicking on. They need a student loan, right, go to nursing school to get their masters, and they've gone online and they can see the loan. But I'm like, so do you know when interest starts to accrue? No, aunt Cathy. Do you know whether it's a fixer variable rate? No, and Cathy, what is that? Right? So they could search it, they could find it. They're young kids, their text savvy, but they don't really know what they're buying and that is a riff to me. So we have an industry if we don't build the capabilities with transparency so people know they're clicking on. That's one big obstacle. and to to advise or whether it's at that time or purchase or sometime down the road. So take the COVID example last year, PPP not. We are hurried up and digitize that process for most of our clients or prospects. But when they had a question, who do they talk to? And they still needed to get to attructed advisor someone who knew more than they did about what was being asked in them. You know, maybe some people don't have that issue until they have some big change in their life, like catastrophe, like a health crisis, and then they need some options. I had a friend, Andrew, who came to me on that topic because his son was really actually passed away and they had a he's cosigned alone for him as like what do I do? So you may not think you needed advisor immediately, but I I'm telling you a good banking principles, good financial wellness principles are eventually you'll need a human being at least when you're at a crisis and there's got to be something you call. So then maybe was a long way of telling you I think digit a little past to be integrated with the ability to talk to somebody when at least you're in a jam and you need some better advisor guidance. Yeah, I love that concept and we've certainly is. We've seen some of our partners who go digital in the application experience. They start to think of their branches and their branch staff less as blown officers, are people who are orient around the product and more as client advisors right where you can offload some of the processing, the entry that work onto the digital technology, but the branch staff start to become really there to help the client make smart decisions and can be more focused on that. I'm curious, as you've seen this kind of play out and in the context of FB, how have you thought about what your branch employees do if you shifted, how you think about their responsibilities or what they're doing with clients? And that's a maybe an odd question in the context where many branches are closed due to Covid so maybe I'll expand it to call center. But I'm curious how you think about the nature of the changing nature of that interaction into branch or when you're on the phone, from what can be a transactional relationship or interaction in many instances to something that's more consultative in nature. That's a great question. Actually, for me it's spot on. It is the main thing I've focused on at first financial bank for the last two and APP years. I came here to help their consumer bank and think of it in the broad concept, not just the branches but always would all center in digital as a partnership for the Multi Channel Approach. I came to help the branch sites and that experience across all channels be more relevant for the future. That's why I'm here and that's what I thought was exciting. So if you take the side example, first thing we did was to stop hiring tellers because money handling is really not a career for them. You know, and I explain to all of them, I didn't create this change around us, but I'm here to help you lead through it because I know you have families to feed. So how do I hope you be relevant it for your future and banking. So we didn't hire any more tellers because we knew that was not a career that was going to be lasting. And then we moved the rest of the staff there, even though there's still one team, into two components so that those who really like servicing, are more service than data transactions, can start...

...a sales conversation. And then we increase the number of advisors who wanted to focus in certain areas to add expertise. And what I would say is you can't say hey, today you're an advisor and yesterday you're a banker. You don't come an advisor overnight. You have to really start to build an education program and a lot of that can be self service. We have to build a program to help you be an advisor, regardless of which area you want to focus on, with that's consumer or small business, or it's an emerging segment or an a fluent segment. To truly be an advisor, to do more than lift service to the strategy, you have to start to invest in them, give them self service, ways to learn, help them grow. Done a lot of voice of the customer work as an example, so that you know how to walk in that particular client shoes, which allows you then to be a better advisor. So is a journey were on to create that digital and advisor experience. Again with change roles within the building of a branch. Then we started to actually to disconnect the fail bankers from the physical site, so they aren't tied necessary to a building. They're assigned only a clients and their role is to help those clients deep in their relationships with us and grow additional ones. So it's that makes sense. You know, we've, I think we're well done, a path to make us more relevant for the future because we're more focused on that advisory role and how to build into some it's meaningful for our clients and last thing I tell you, our associates love it. I was totally surprised at the feedback we got from our law are social saying no one's really asked me what segment, what kind of customer I really love working with the most. So while I'll service everybody, I would love to learn more about small business cuffs than, example, or more about in the slimid climb in their needs, it got there. gave them a chance to kind of stimulate their thinking, feel like they're growing in their careers and that was really an unexpected benefit of the small process. That's really interesting. I always thought of that from the consumers point of view and I think what you're saying it to ton of since I love the portfolio of clients versus a branch, because clients always walk into the same branch but they love a consistent relationship. But I didn't thought of the associate side of that and that's a really interesting angle that they like the changes as well because it gives them a different focus and different way to deepen their relationship and their experience. That's really interesting. I'm curious the current economic environment is certainly shifted priorities. Most banks I talked to are lots of deposits coming in, maybe demand for loan going down and you know, obviously concerns about what happens to the economy. What's happened to loan portfolios? And I'm curious, I know you've got to focus on the consumer, which drives some of the product stuff, but as the overall banks perspective on the Consumer Bank or the product portfolio focus shifted, as you've looked at what's kind of happening to the banking industry right now and the stresses that are may be happening, you know, financially, from a deposits loan demand point of view, is that shifted? How you think about where you want to have your focus or things that you're investing in in the near term? Well, it's again the fundamentals is stayed the same. So we're didn't want to have a knee jerk reaction to kind of this bubble in time in the economy. So we still say solid and wanting to grow consumer lending and make sure we meet that need for the client in the lending space. What I can say, though, is I personally elevated and more focus on unsecured lending. And I'll remind you I am over mortgage and consumer lending. So with the pressure the home equity space right. So if you're just look in that line item in the consumer bank come equity lending is flat to down, but that's because the mortgage business was booming last year. So the way I had our team look at is like, I don't care which bucket it goes into if we're helping clients either being the first or second position on their house, as long as as with the bank, I don't care which silo it's in and I prefer to look at it lending that way. I'd rather underwrite you as a person and say which then kind of product is best for you, but not care which silo, first or second mortgage bucket it's in. But what I did tell me was is to be relevant the market...

...place. Unsecure lendings more popular and historically that is an area that has higher risk for a bank right and we're more adverse to that. But we've now tried a couple different products in that space on term loan basis as well as we've been moving to get up our credit card business, which we had invested in a lot in the last, you know, five eight years. So I've got both pieces of unsecured lending, gender whether that's urn or card based, and we're using that again to learn why. You know, how how are we relevant? How can we compete and how can we ensure that we are credit wise while we're doing it? Is that performed well for you a man, I know, unsecured as often the thing banks are most scared of. Your you know, most banks are very used to real estate back, whether it's commercial real estate or residential real estate, loans with high degrees of security and obviously, you know unsecured loans are kind of the riskiest kind of lending you can have. Have you seen that play out or you know? How is the performance of your portfolio looked in the performance of the business through the through the covid experience? Yeah, I'm proud to say our chief credit officer bill, he's pleased. So our first product was a quick loan. We actually launched that the right before covid started, and so we have that portfolio seasoned enough to have the several quarter view of it and it's still has popular demand and the performance of the portfolio needs our credit standards, which are, I'd say, fairly conservative to moderate. And then we just launched with upstart and we are watching very closely, and not only types of clients to bar and and why, but we'll be watching over the next ninety days is the first payment defaults. So it's too soon to tell what we were going to watch that piece of our dat we're very closely. And then credit card portfolio is performing just fine and we've been able to add volume without any additional risk to that portfolio. Yeah, I think people have been pleasantly surprised by the performance of unsecured assets during this time. It's been, you know, surprisingly quite stable. So that's it's good to hear that. You've had some experience and I promise you we're going to deliver on your expectations for your upstart garented portfolio as well. So you know how to find me if we don't. Well, I agree and I tell you that's the partners showsen in the our innovation space for lending, our ones again that are grounded in the basics of banking and they're building the solution and I know that saw so fundamental. But I met with several partners in my career and you know they don't know the basics of banking. So I just how can we feel safe and secure and well informed as a year forward if you've got some of the solution that doesn't understand how to mean Hondo criterias and example, right or hadn't thought about how they were working on secure debt into their casual calculations? You know you have to have a partner who understands the industry and innovates from there. So, you know, it's one things I liked as I got to know the UPSTAR team. How do you think about partnerships in this space? I mean, I know there's a big question to we build, we buyed, we partner. Can we find the right partners? How do you think about where partnerships makes sense? And a little bit on on how you think about finding the right partner. I know focus on the you know, the fun, the metals of banking and the right thing for the consumers there, but how do you go about finding those partners that are well aligned with you in terms of those priorities? Yeah, first, financial we want to be different. I mean that's what we put in our marketing communication. Materials were different. So we need to find partners that are different as well. So we're not running after providers that supply solutions for the biggest banks in the nation, right, because I'm not going to be one of those, right, I'm not going to be a mass market bank that covers coast to coast. That's not us, but I can serve the communities within the four states where we operate. I can find those places where I can make a difference, right, meaningful difference to the client, and that's what we're looking for. So it can be someone who's building a fundamental platform, like and see. You know what a lending platform. You know, sales forts with the basic platform, but that it's going to have room for us to customize where we think it...

...makes the biggest difference. So I need a partner who wants to be innovative. Right, it takes the basics of banking innovates. They have to care that first financial is a customer, right. So if we're so buried in this law list of customers that we can have a voice, we can't be on the Innovation Committee, you know, we can't have a say, then that's not a fit and we actually bring the leadership with those companies into meet with our leadership team. We've with our three key partners. I would tell you we brought them in and we've had all day sessions to align on their operating principles. They're ultures, a company our culture and make sure there's that there's a mesh at the cultural level, then the solutional level and then down to the innovation level. So that's how we're making a difference. I think, is with building relationships with the right partner who wants to go forward with us. Interesting. That's very interesting. I like that approach. So last couple questions. What's something you've seen in the June general consumer learning space that's surprised you? Thirty seven years in the industry, I imagine. Imagine you've got a lot of stories, but you know what something maybe more recently that's that surprised you a bit. Well, that we talk the unsecured faith, but I was surprised that unsecured lending would be popular again as I'm learning about the types of clients that leverage and secure lending brod that population is and how and that the purpose for it is broad. So that's probably my biggest surprise lately just learning about the unsecured space and the different ways we can meet their needs. Interesting. And how about something you've tried internally outside of launching an unsecure product? Is there's something you guys have done internal to FB where the results have surprised you a bit? One of the things that we did is we launched a Innovation Center and downtown Cincinnati and I inherited the lease and the concept to make a space active and test what would make a site active. I inherited the concept and space, but bring into life really ended up being my job. So what was a really pleasant surprise is that we realized we could build an open and inviting space. Partner with that you need to come on in. So I know it's not rocket sense to say people have cafes and joint working spaces these days, but the way we built this in evasion center we really did make it open and in inviting and when people came in and were wowed by the way it worked, we're wow that they could use it for free. Then the next words out of the mouth, rold she I think I should bank with you and I tell you what that was a here. I mean I was like okay, job done. That you really can't engage in that personal way in a community and you can get traction to grow. And if you think about all the different ways we can do outreach and marketing to grow your business, sincerely inviting them into your space and engaging with them, I wasn't sure would work because, again, if you're going on a hundred percent digitally's it, why do we even need a building? So we've really built on that concept and we actually a starting to package a program that's rolling out across the footprint to use our spaces in that way. That's really fascinating, that kind of multi use space, a little more flexible space, and how it I think it actually pairs really well with the digital transformation and the ability to have a space that can meet the needs that are there, as opposed to preconceiving what those are. It's a that's a fascinating story. What's something you've done recently that you're proud of? I know we talked about this a little before, but I want to give you a chance to go what's you know, what's an achievement you guys have made their fat bet that you're proud of? Yeah, probably would shout out to our person wordagem. They within two and a half years. They're just short of a three year mark because we elevated that busy in this post our last merger. On they hit a billion dollars and that's really going from zero all the way, you know, all the way to a full fledged digital and advisory experience. So that one of the most proud of and Davis and her team. They're really built a great mortgage company and then they've also extended their reached how deep in relationships of those clients into the bank. So they're actually a lead product for us and good corporate partners as well as achieving their billion dollar status. That's Congratulatess the team for that's a great, great achievement. So I've...

...got just three closing questions that I want to end all my podcasts with kind of rapid fire style, so they won't take too long. But what's the single best piece of career advice you've ever gotten? This came from my old boss. She's became my mentor and then friend, and it was never fail. She actually interviewed for that trait. She would look for things in your resume that just showed that, you know what, if you were knocked down, you just dusted yourself off and you just got back up and kept on going, and her focus on appreciating that is really was a good tip for me. It's much more fun to win than never. Try to go for the win. So don't be afraid to fail. Don't be afraid to fail. I like it. What's the single best of advice you've gotten into consumer lending space? You just have to do the math. I learned lending from a film and called the players back in the day, and the math that he taught me the same math you have to do today. So, you know what, you shouldn't make a loan in that. Should know that client can truly handle it. There's no reason to put them behind the eight ball. So lending you just have to do your math and if you feel like that math work self for the client, then you're making a good lan I like that. Do the math. We like doing math here. And last one, what's one bold prediction for the future of consumer lending that you have for us? I won't hold you to it when the time comes, but I'm curious what you thinks coming. Yeah, it'll tell you what? I need to keep a few trade seekers to myself, but if I give you a hint, I think we can break down industry silos in the consumer lending space. You know so if you think about it, and I mentioned this a little earlier in this conversation, but I'll reinforce your on you're not underwriting a product. You don't have to. What if we thought more about underwriting a person and therefore you have so much ability to borrow, and then you can tell me do you want it, you know, fixed or revolving? Do you want card access or don't you? Do you want to secure it or don't you? But underwrite the person. We talk about that a lot and you know in the industry and in the old days you use that bad word, cross cell. But we would say no, we get a mortgage. Right, of course you could have a credit card, but we don't have a real easy mechanism to do that for a client and I think we can make it simpler and easier if we try to think about it from underwriting the person instead of the product. Under write the person. So the product all right, I like it. Cathy, thanks so much for joining me today. I really appreciate it. This was an interesting conversation. I appreciate your sharing your thoughts of our listeners. Well, it's great to get to talk to you today. Thanks, Jeff, I appreciate it. Always a pleasure. Thanks. 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 lenning 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 forward banks. That's upstartcom forward 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,.

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