Leaders in Lending
Leaders in Lending

Episode 91 · 1 month ago

Safe Is Risky: How Banks Can Stay Innovative

ABOUT THIS EPISODE

Banks can no longer afford to play it safe when it comes to their digital capabilities. “Safe” is now risky.

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

Join us as we discuss:

- The 3 rules of job satisfaction

- Why staying safe is risky

- "The importance of a robust technology infrastructure"

- The threat and opportunity with open banking

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, and more. Let's get into the show. Welcome to Leaders and Lending. I'm your host, Jeff Keltner. This holiday season, we are re airing a couple of our most popular episodes from this year, and this week we're re airing my conversation with Tony Hana, the chief consumer credit risk officer at Key Bank. This is our second most popular episode of the year, UH and I thought it was a really fascinating discussion with Tony. We dove into why staying safe can be riskier UH, which I thought was really fascinating thing coming from a credit risk officer. The importance of really robust infrastructure when you're building out new businesses and trying to expand business in his three rules of job satisfaction, which is something everybody should be thinking about as we go into the new year. So please enjoy this conversation with Tony Hanging Tony, thanks so much for joining the podcast. I appreciate you making the time today during the holidays. Hey, Jeff, it's it's great to be here. Thanks thanks for having me. Yeah, I've been looking forward to this conversation. One of the things you know, I know you do a key bank is to kind of do some of the training sessions for rotational management and other leadership development programs, and you share some of your key pieces of wisdom after thirty years in the lending business. And I figured those are probably some useful insights to share with this audience as well. So I wondered if you could give me a little bit of history on what that program, where those programs look like, and then kind of the key the key messages you try to deliver to those those trainees. Yeah, for sure, you know the like many regional banks, we have rotational analysts that come in, we have internship programs for executive executive management programs, and it's always exciting for me to talk to these folks, you know, young getting started in their career and and and one of the things that I try to imcarpe on them, I call it my three rules of job satisfaction, Which are you know who do you work for, what do you do, and who do you work with? And none of it actually talks about how much money you're making. And I go through a progression where I say, you know, hey, the number one culture builder in your career is the person you're directly working for, and that person can be your advocate. They can make your life easy, they can make your life more difficult, and it's important you know that that you have a good chemistry with your manager. Secondly, you've got to be doing something that you feel passionate about and that you have purpose for, and that's that's a critical thing. And then the one that you can control probably the least, but I still think it's very important, is is who are you working with? And are you working with people that you you can get along with and get together after the office. And it's just to me, to me, working with a good cohort of people is something that also is a is an important driver of job satisfaction. I feel like you shortcut into my usual and three questions with your best career advice, because I feel like this is really good advice. And one of the things...

I've noticed is that people tend to over index on company benefits like brand name or whatever, an under index on the individual they're working for and the individuals that are working with, which ultimately are like the four oh one K match or whatever are nice, the food is nice, but ultimately like those people determine so much more about both your satisfaction, your job and you're learning and your progression in your career. I think it's a great it's a great point of those are people underappreciate how valuable those pieces pieces of the puzzle are in terms of your satisfaction. Yeah, I think you're right on. I actually got that advice when I was in grad school from a I went to grad school at Renstler Polytechnic Institute and trying New York, you know, and and any board member at the time, Warren Brugman was his name, actually gave me that same advice. And so so I'm just passing it on to the next generation and feel good about doing it because because I lived it, and uh, and he's right on the morning you're curating the good advice. Do you have any advice for people on how you determine those things, like if you're looking at a transfer to a new team within a company or interviewing for a new job. Like you know, it's how do you think about measuring or quantifying or evaluating those kinds of things in that process, because it's like a it's easy to say and it's going to be kind of hard to put into practice when you're in the Hey, I'm looking for my next opportunity, how do I really think about finding the right fit from a from a manager point of view or from a team point of view. Yeah, it's that's a great question. I'm not sure I have the perfect answer, but I will tell you that at some point a dawned on me that you know, you can't always pick your boss, right you You can pick your boss and you can pick what you do normally if you're going to a to a new position somewhere and I and I would just I would just suggest to people just be throw around your due diligence, try to ask those questions, um and get to know the manager beyond just what's in the office. Everybody has a life beyond what's in the office, and to me that that will shine a lot of you know, do you have similar interests? Does does the person value opinions that are different than his or her own and and how do you and how does that person treat his employees To the extent that you can talk to people that that your new manager has has worked with, that's also great insight. Yeah, there's there's a I think there's a lot of strategies. And then and then of course, make sure you really understand what the job is. I mean, you know, I've I've been in situations that that didn't work out so well like anybody else. And you know, sometimes you take a job and you look back and say, jeez, that might have not been what I thought this was at the very beginning. And then uh, and then you spend the next six or nine months trying to figure out if it's really what you want to be doing. So just say, do you just I think that's also good advice, saiding. So often we get caught up in the you know, the job interview process is like a like a contest that I'm trying to win, and you forget that sometimes you want to got to make sure you want to win right and that you know, you get you get caught up sometimes and trying to to succeed in getting the offer that you forget about like doing it's determining through the process is this an offer I really want or not. It's good to remember to keep that in mind as well. It's okay to walk away. It is okay to walk...

...away. And that is something I probably didn't appreciate as well when I was younger, and uh, I was really impressed. My sister is an accountant, or was an accountant, and uh, and she told me she inter for a job and literally stood up after the first interview it was supposed before out of here. And and to have that foresight and actually stepped out and leave. I thought it was pretty bold. But by the way, I'm not recommending that people do that. But but I think it's Uh. I think it's certainly certainly a strategy. It isn't well, you know that it happens internally where the first interview of a candidate on the company side and somebody goes, this isn't gonna work, and there's an email sitting around here that interview is going don't spend too much time here, this is probably not gonna work. Make total sense that you was a candidate the same thing like I met the boss and like, that's not gonna work. I don't know why. It must have been the next two hours here getting grilled like I'm good. That's impressive. I don't know that I have that kind of afforded to but impressed. It's there. I know. We'd also talked about talked about some of your thoughts around driving innovation, particularly in the context of, you know, a bank and maybe in a institiution on one of the institions that is well insulated culturally typically from from the concept of innovation and how incentives play a role and how you get people to do that. I'm curious how you how you think you know culturally at an institution like you bank, do you get do you incentivize people to drive towards innovation level? How do you think about making that dynamic work? Yeah, I think they're I think there has to be. And again I'm gonna I'm gonna pirate something I read in the book, probably over a decade ago. But but the saying was safe, the saying as safe as risky, right, And I'm not I'm not talking about my I'm not talking about my golf game here. I'm talking about like if if you're in corporate America, I think the message there is everybody is constantly trying to innovate, and to the extent that you're not innovating and you think you're playing it safe, it's actually very risky because people are passing you by. And a great example of that, I think in banking is the whole fintech revolution, right and where where you know banks banks were loaded evolve around you know, digital capabilities and there was this huge marketplace that you know, companies like upstart and discovered and and you know, you could make delivery easy and it was you know, it was better for the client, and it turned out to be a huge win. I think, you know Jamie Diamond's comments around Square, I think it was where he said, you know, that was something that the bank should have innovated. That the product that almost everybody uses now and that food stores and barbershops, etcetera. So the concept that that's safe is risky. But by the same token, while you think about innovation, if you're going to fail, you have to be able to recognize failures quickly to move on right And and twenty years ago, when I was in banking, you know, projects were massive and projects spent a lot of money, they took a long time, and then and then you deliver about of what you thought we're going to deliver and it was really really painful. Now it's like this new concept of minimum viable product and and you know, smart team to set to rapid implementations and development. I think is...

I think is helpful for innovations, and I think and I think that banks have moved in that direction and I think it's I think it's good for competition and I think it's good for banks. So I want to ask you one question around how you set up incentive structures. I think this statement that's safe is risky. I think is is very true. It's a fascinating way to put it. And I think it's it's possible to understand it at the institutional level and yet make it untrue at the individual level from a career progression or you know, internal point of view, where the incentives say, I know, we as an institution want to take risks because safe as risky. But at at a personal level, I'm not incented to take risks and to drive that strategy. And I think that's so often where this kind of understanding of the strategy and the needs and requirements of the market breaks down in terms of execution, is how do I get individual team Menners members incented to execute like safe is risky and to push the envelope a little bit. I'm curious if you have thoughts on that, because that concept of how do I make that true for the individual so that they execute the way that the entity needs is I think are really challenging one, particularly for institutions that have been around at a time where safe wasn't as risky, where where risky was risky and safe was safe, and a lot of the culture built up, you know, in that environment for years ago, where there was there was less of this drive for for rapid iteration. So how do you think about creating an environment where individual team members feel like they can execute in as safe as risky kind of a way and push the boundaries. Yeah, so, so it's it's funny. I was actually looking to my left here because I have a stack of papers and I was as I was going through annual reviews of starting the into review process. Yeah, you know, one of the things that I share with my managers and I share with everyone on my team is is what differentiates a somebody who is doing their job and meets expectations versus someone who exceeds and and the first word on that list is innovation. And if you come in and do your job every day, that's great, but but that doesn't mean you're going to outperform in your so to me, and I make it very clear, I'm looking for people who go on above, above and beyond. If I take down to the to the most junior analyst, if I asked a junior analyst for something and they hand me a report on that they've done their job, you know, if they tell me three other things that I don't know already, right, they're they're thinking above and beyond what they should. And in some sense that's like what I would call it kind of a micro innovation. Right. But but if I if I have, if I have people, and I set this expectation with my team, I said, look, I'm okay recognizing failures early. We meet regularly, we discussed projects and are ongoing. But but innovation to me is something that is uh that is very important. And all use an example I think everybody remembers back to March one, we thought the world was about to end and credit losses were going to go through through the roof. Right, Well, what can we do to to prepare for this? And we had a group of people who said, hey, let's and I thought it was pretty good. Like we basically developed a whole new analytical way to look at clients that had asked for some sort of COVID hardship it and we built a new collections valuation exercise...

...around you know, how would we get out of this and when people's when people are off the COVID forbearance or the COVID hardship, you know, we're gonna be prepared, We're gonna be overprepared. That we didn't need it, but it was a great example, I think look at I think it was a great example of where you know, we had never gone before, and we had some smart people who stepped up and uh and did a great job. Yeah, certainly we all we all were in that moment going whatever system and plans we had are not going to be not going to meet the moment. That was a great opportunity for some innovation. I want to get back to something use about you know, the fintech revolution and kind of some of the digital digital execution and opportunity were seen by fintech. You guys acquired a fintech a little while back in Laurel Road, And when did you kind of walk me through how you thought about that decision and why you think it is that FinTechs are able to deliver some ways in ways that banks haven't and I think arguably maybe you're not well set up to do. Yeah, that's a great question. You we acquired Lower Road, I think it was early nineteen Now my my years get mixed up, and I remember one of the first messages out of one of our senior execs, who is instrumental deal, was don't crush the butterfly, right, And what what that meant was, let's not let's not think we're going to take this acquisition like a bank and jam it into our systems. And if you think about it, fin tech's have a a great advantage in the fact that they, you know, traditionally have been at least when they start their single product focused. They build, they build a universal channel for all customers to come to them. They make it easy. They're focused on one thing primarily, and that is providing good value and good service through the technology interface. Switch that to to the banking model. We have. We have a thousand different outlets called branches that all tend to do things. Even though we want to believe they're all doing it the same, that's not that's not happening, right, It's all folitely different. Pete will have different level of skill sets. You have this human interaction going back and forth. You have you have technology that feeds into legacy systems. Um it's much easier to do business with the bank if you're an existing customer of them because they already know you and and things around, even validating ideas. It's just it's a more cumbersome legacy process and banks than it would be in a fintech. So so one of the things that we made a concerted effort at key was we like, we like the business, we like the technology, and and so and then and then the idea is, yeah, certainly there's things that are going to come together in the back office, but there's a lot that we can take from local road that can help lead fraud key along digitally. And and we were you know, we had a discussion at the beginning, for instance, about you know, how how integrated. Should if lower Road wanted to issue an unsecured personal loan and Key Bank wants to know Key Bank doesn't secure personal ones, Well, how closely should the...

...systems from the technology? And else? Mary right, and and there's this, there's this aspecial goal, let's get them all in the same system. But then, you know, the long we have that discussion, it's like, well, why are we doing that? Because we're taking exactly what we bought in one steps, we're taking exactly what we bought and trying to jam it in the key or if we do it the other way, we're taking we're taking a big project, trying thousand different branches. And so so right now we're you know, we're we're still moving a little bit slowly on us, but we're we haven't crushed the butterfly yet, and I think that's it's a good news story. So given that, how do you think about the priorities for digital transferation? I think it's something that FinTechs, at least those that are not working with banks in substantial ways, underappreciate, which is kind of that the requirements for what a bank might want to do that are very different than what a fintech can do with open you know, like green Field. I don't need to serve all these customers. I can just whoever can interact with me in the way I want. Is what my customer base will be, which is very different than a financial institution that has lots of history, different kinds of customers and branches and needs to be able to serve customers in a lot of ways. Given those different needs that you, as a as a regional bank have, and what you how do you think about what digital transformation means internal to the bank, because I think it's very different than what a fintech might build off on their own right. It's like, how does the bank really prioritize what you're going to do from a digital transformation point of view. I'm given those kind of constraints and requirements. I think it's easy to say, hey, you know, by such and such a date we're going to have of our loans will be given through the internet channel and by such a touch a day, and that's all. That's all well and good. Where I think it becomes very challenging is the legacy systems and the integration points obviously, and and what that fundamentally means is this and that this is this is what what I would bring to the two people would say, look at we can't expect to be good at a business that we don't build up the proper infrastructure for that business. And what I mean by that is I spent time at a bank in Atlanta, and they had a nice fintech division. And when I was there, the fintech division was probably about eight or nine years old, Okay, And when I got the Key bank, one of our senior managers said, Hey, we're going to be just like this other bank and this fin nice fintech bank. But what was missing in the discussion was the fact that that fintech division of that other bank, which ran completely separately, had its own I T group, had its own underwriting group, at its own collections group. They spent ten years, they spent ten years of pain learning through fraud and evolution, right, And it almost felt to me like the discussion was we want the results that they're having, but we don't really appreciate what it took the building infrastructure over ten years in order to get there. Okay, So fast forward to now, and you know we I think we have a very very measured approach that says, look at we can't we need to incrementalize so we can be we can be good...

...on day one digitally if we're lending to our existing clients. And then and then we need to figure out the next step because we're gonna need better fraud tooled, better identity verification tools if we're gonna go beyond our existing client base. And you know, look at I I think I think the agile squads that we have now in technology are making a difference. But I think it's also the reason why you see all these mergers of of mid to large size regional banks, because there's a lot of synergies around technology dollars that if you can take and I forget what the number was, it was like nine percent of each operating budget is technology. And if you can take two banks and put them together and reduce a lot of the back office expenses and you can get the fifteent, then you can start making a difference. Right. But but ultimately that's that's how it has to evolve. Yeah, I love the focus on building the right infrastructure because I think that is so often what people mean digital is like, you know, we're just gonna take something that kind of works okay, now, like put a little web front end on it or a little mobile app front end, and that's like digital. And I feel like if you don't have the right pieces behind the scenes to plug that into to allow you to do I D. Fraud verification or whatever, then then you really are missing the boat and investing in an area where you can't you can't really. When I actually talked to a bank, so we've totally digitized our auto lending its okay, I asked him to see the process and you have to walk into a branch to close it. And I went like, well, we don't have any sign yet. How do you say you're digital if you have you know, you don't have the pieces ready to really execute on that. And so there was a focus on, yeah, we can take the app digitally, but they didn't have the infrastructure to close alone digitally, and so I just like, you're not gonna really win in a digital world if you're if you're executing without all the pieces, and it's I think the investment in that kind of under beneath the covers kind of technology layers is underappreciated, and some of these things, and the sexy thing is like we gotta look at the web, look at look at the application online. It looks so good. And that infrastructure is so important. So I love that that focus you have on on making sure you have those those back office pieces rights that you can really deliver. Yeah. And when I talk about infrastructure, just to be clear, I'm talking about people, process and systems. Yeah, right, because because everything is new and I think you get it right on the money. Yeah, then the process to me, that's it's a great point because you've got to I also see a lot of digital is like take our old process, but don't don't change the process. What will find to your point, like I D verification k y C. If I'm gonna if I'm gonna execute something digitally successfully, I can't use my old ky C process and try and make a digital I need to figure out what are the tools available? How do I execute that? So it is it's really not just a technology thing. It is a people process and technology. It's a good point. So how do you think of that digital transformation playing I guess be able to say between banks, but there's this concept of open banking that I think the digitization of a lot of our interactions makes us think about how do I how do I move into world where things are more interoperable. And there's this phrase open banking. It gets tossed around. What are your thoughts around open banking and what that really means for the it's your consumer...

...experiences and institutions like key. It makes me very nervous, quite frankly, right, I mean, it's and and And the reason why it makes me very nervous is it is a It puts more onus on having a robust technology infrastructure, right, I mean if one of the key advantages that regional banks have right now is the massive amounts of data that we have on clients, and that data becomes open, right, I mean that data is available for anybody you know, you could you could easily envision a world where you know, clients can just say they have their data, they can shop anywhere, and it will further commoditize and in many ways you wonder, like, you know, what will will there be a new evolution around retail banking because of that? And what would that look like? Because if the powers and the data whoever can figure out how to process that data to give a better customer experience is going to is going to win. Now, the second part of that I would say is that I still believe there is a place for human beings and in branches and stuff like that. And the reason why I say that is, like, hey, if things are relatively straightforward, if they're easy, and a lot of stuff is from a product standpoint, or credit card application or unsecured loan application, you know those those are pretty straightforward. But you know, I think you, like me and everybody else, if you have a problem and it's becoming incredibly hard to actually talk to a human being, you know what I mean to resolve the problem, whether whether it's whether it's customer service at a financial services company or whether it's an airlines or whatever. I mean, what was it Delta Airlines had like a seventeen hour hold or something like that, Like, you know, it was so insane. And nevertheless, I think there will be an area for for branch banking. But but I do think that the threat that open banking provides has to be a catalyst for companies like Key to truly sharpen the focus around innovation and delivering on on the data it has today to provide that good customer experience. And you know, Jesus, this is not too long ago. And I'm not gonna even going to mention that the company I was with at the time, but everybody wanted to talk about, you know, that relationship bank, relationship with a relationship bank. And but it occurred to me, it's like, has anyone told the senior management team that we actually are not using any relationship data in our underwriting? And this was this was, this was this is less than a decade ago. Okay, it's a less than a go but but people wanted to say, we're relationship bank. Well, how are you're really a relationship bank if you're not using the data your have? Right Again, it becomes like if you can make that happen, if you can make it happen effectively and efficiently, then I think I think you get a competitive advantage. Yeah, I mean, it's it's funny time about open baking...

...about using that relationship data. And I talked to a bank who shall remain nameless wanted to use some of the relationship data and underwriting and could not get their two systems to talk, and so they were using a third party conduit to grab data from system A and put it in system BE just so they could use a little of your depository transaction history or LinkedIn relationship and underwriting. And to your point, it really indicates to me that a lot of institutions have not They may have the data and it may conceptually give them a real advantage, but they're not leveraging it to really provide that advantage. If you can't actually give a consumer a better rate, not just for the relationship, but frankly, you know a lot more about them, if you're if you've got three products with them, you should understand their risk better. Not just say hey, I want to give you a good deal because you're already here, or because it's lower cost to me to serve you than to acquire a new customer, but because like I actually can see your risk and I think our relationship will mean you're more likely to pay me. We've seen this too, or a customer with a history with an institution, all things being equal, or pay at a higher rate than someone who's walking first time into an instituency. You ought to be able to leverage that to not just you know, for a good of the relationship to something, but you know with with good reason on a risk side, and yet most institutions I think are just in the early stages of really leveraging that data. Maybe open banking will be a bit of a kick to say, hey, you know, if you don't, if you don't leverage your data to help the customer get a better experience, it turns out we might be making that data available to others so they can do that. But it does feel like there's just so much green field for really intelligently taking advantage of that of that data to provide better experience that there's it's not as much of that. Plus it can be an opportunity. Means you can if you get good at leveraging that kind of data, doesn't have to only be data on your own clients. That you can use that on in a world where there's open banking and you can connect that data from other institutions. So I guess every opportunity is every threat is also an opportunity. You can look that in the right way, right, I can completely agree, Joe. But the last thing I want to ask you about Tony's you know, we've been in a kind of weird macro economic environment. I've talked about how you know that we've had what would look like a macro economic stress period and yet you know, typically not the credit results, it would indicate that we've actually been through economically stress time period. What are your thoughts on on how we should think about where we're at and if we even call this the cycle or a cycle, like, what's the what's the macro environment? And how do you think that shifts, you know, heading into into next year. Yeah, I think in the data support this comment that you have unprecedented government transfers over the last eighteen months, right, staggering that up until I think last month, the savings rate was literally at all time highs and I think it was something like, you know, five or six times higher than what it ever was in the past. And we've finally started, you know, we've started finally started to come back with you know, some of the stimulus ending, but there's still a lot of stimulus out there, right. You have you have this, uh, the child care credit now obviously uncertainty about the build back that are. You have you have student loan deferrals that hope they're extended again. And and I'll tell you, I think I still think that you know, My view is that at least what...

I've communicated internally, because you know, three weeks ago President Biden said we're not extending the student loan more. Touring after Build Back Better was kind of shut down a little bit bout Joe Matson do you had you had? Okay, Well, now now we're gonna go and extend this. The first thing I did was call up kind of the business part. I said, look, and I think we have a ton of opportunity now in in our lost plan and because of X, Y and so and so, so, I think I think the thing is is, well, how do you adjust because I actually think that that we're in for another, you know, year of pretty benign credit environments. And look at that doesn't mean I believe that A is a prime Vico score, you know, I mean, but but but I do think that if you're in a situation where there's opportunity and you can you can get paid for risk. To me, it's like the environments probably not going to get better than what we're seeing. I think right now when lifetime it's it's hard for me to manage. It's been a it's been a very unique experience to go through this this this cycle, if you will call it that, because it has been both from a macro level indicator's point of view, stress period and yet to your point, maybe the most benign credit environment that most of us have ever seen. And those two things don't usually come in tandem, but but this time they are. So it's I think that does leave opportunity for arbitrage if you can find if you can find the right areas to advantage of that. And you pointed out to me earlier, it makes it tough on AI models right to it does relying unemployment. Yeah, I was knowing we have we have in our models some kind of like you know, unemployment and you know that correlates to increase in defaults, so you can kind of look at how risky is the current environment how and like started learning that like high unemployment is low risk, and I'm high unemployment plus high government stimulus might be low risk. Highunemployment with low gutment stimulus still high risk. That we we had a tweak models too, because you know, you were starting to learn that the unemployment didn't didn't impact credit performance because we had really high unemployment for a while and really no impact on credit performance or at least the insecure leans and that was the kind of an odd lesson. We had to go into the system and go ahead. There's an extreme factor here that needs to be accounted for. Otherwise you're gonna learn a really bad lesson. One of those truths of AI that if you get give it the wrong data, it will learn the lessons that you give it, and you get careful what those lessons are. So that was been an interesting time period from that point of view. Yeah, well, is there anything you had on your mind that you want to talk about today that I didn't ask? And if not, we can hop into my three questions. But I would like to give you an opportunity. You know, I will just tell you that you know I I do think. I do think that there is a there's a reason to be optimistic going into into twelve. I look at we we have the gamut. I know there's inflation. I think the inflation is going to stick around. Home prices I think will stabilize. But but I think there is reason to be optimistic from from a Lenning standpoint, I think even with even with some of the stimulus that's been that's been stopped, I do believe that we have opportunity to grow and grow smartly as an industry.

I think I think housing prices will stabilize. I think, uh, and I do think that I continue to be optimistic that you know, we we we're facing the the last big wave of this of this pandemic, and I'm certainly hopeful. I I think figuring out how how we live with it is going to be incredibly important, which, which you know, brings me to the whole back to the office thing. Jeffrey. You know, you and I have talked about this. One of the biggest challenges I see is how do we how do we cultivate future leaders in a remote environment. It's it's incredibly, incredibly difficult, and you know, I try to encourage people to the extent possible. We we have a new mobile mobile environment where people can come in reserve a spot, but it's not permanent, and you know, we try to get together periodically so we can see each other face to face because you know, look at word species that needs human interaction and in video French doesn't lend itself to spot maybe or serendipity or Hey, what do you think about these numbers and what do you think about this. You want to go grab a bike to eat, you want to go grab a plank after work, whatever it is, it's pretty pretty darn tough to do that through uh, through a zoom call. Yeah, it's gonna be really interesting to see how that plays out. I feel like everybody has had their plans, and none of them are Whatever your plan was six months ago, it's not your plan today because the world keeps on things at us. But I'm optimistic You're right that we are on I won't call it the last wave of the pandemics. I think ultimately this is going to become an endemic issue where like we're not going to get to zero COVID. We're gonna we're gonna learn how to live with it through vaccines and natural community and other things that we'll get to a place where we come back to some symbolance of normal. I think some things will. I may not beginning on airplanes without masks for a while, but beginning on airplanes, and so I think there's we're gonna get back to that. But in the sense of how do we what does any normal look like? It's gonna be really interesting. And we are social species, like you know, we can with an interesting plan. I don't know if we haven't really talked about this, but we we're going in a couple of days a month, because for us, a couple of days a week at Upstart, but we're doing it where the team you were. It's not a couple of days whenever you want. It's like this team is getting together in this office for these days because we want you to build a culture and camaraderie, and so we want to make sure that we're kind of focusing that time on the you know, the cross functional teams that need to get to kind of not just like your marketing team or your sales team or you're probably like cross functional working groups are getting together in different months. So it's we're trying to find a way to create that opportunity for serendipity but in for interaction. But it's going to be a really fascinating to see how the world evolved because there also have been benefits to being at home more right, and people are enjoying the flexibility, and I think we have to find a way to to meld those two things in the future would be very interesting. All right, Well, tonys, you know I got three questions I used to end every podcast. I feel like the first one, what's the best piece of career advice you've ever gotten? I feel like we spent the first ten minutes talking about that. We definitely we can slip that one. Yeah, let's look on that one. I feel like I feel like you've covered it pretty well. The second was, what's the best piece of you know, consumer lending or consumer banking advice you've ever gotten? You know, I think there's I think there's two things, and these are two pearls of wisdom that that I try to share with people occasionally. To right, it's a first of all,...

...everything needs to be better, faster, and less expensive, right if you if you're not. If you're not, and this goes back to innovation, you're not innovating every day, right, then you're not getting better, faster, less expensive than there's an issue. And the other thing is, which is very much related to that, And I'm going to be careful how I frame this, right, but we're in we're in a fairly highly we're in a highly regulated business, which which means that even if you're innovating, you know, there's there's certain inherent limitations in that um, and if you have a competitor that's doing something that you can't figure out, then somebody's somebody's probably cheating. And I have some examples of that, and and I don't even know if I can see this on this webcast, but you know, like let's let's hypothetically say, for example, that that one of your competitor banks has an excessively high success rate in like cross sell or something like that, and then and you can't figure that out, but they're the poster child or their or their expense ray shows are very very good, and you can't figure that out. Right. I've seen this about four or five times in my career, where you know, institutions have been held up as like the examples of how great everything is, and why can't we be like this company, why can't be like that? In virtually every one of them turned out to be a little bit of a shell. Right about hard work an industry, And yeah, you can get smart people and you can get incremental advantages, but it's pretty hard to get an advantage that is just a you know, an avalanche of good news if you know what I do, and I do think we've always said here learning to iterate quickly and learn rapidly in the construct of properly following regulations and requirements so that that are important and there for good reason. Is like, it's a magic thing if you can if you can do both, because people tell need to be like move fast and break things, and we're like, no breaking things here. There's there's things, there's things you can't break. This real important stuff going on and regulated and it's people's money, right, you know, you can break things, but you also can't be you know, so slow that you're you're waiting for them to make decisions. So finding the balance of being fast and yet respectful of the regulation is I think a magic sauce for anybody in financial services. Like that's the secret, the secret you gotta find. And my last question, what's your bold prediction for the future. We're looking at a new year, so it's a great time for bold predictions. Look, and I'm gonna I'm gonna try to do two here, Okay, I like to and and and what is you know, look at if you have a college age or someone who just got out of college and they have they have federal student loan debt. I don't think they're making a payment for the rest of this year. I don't. I don't think I think that stimulus, which is you know, roughly three or four dollars per person, is going to be with us. I find it very unlikely that President Biden would remove this three months before a midterm elections. Interesting, I'll tell you. And by the way, that's why I'm bullish. Two from a credit standpoint, I just I just don't think you're forty million, forty million people in the country who are gonna are going to be on some sort of a stimulus payment holiday throughout the year.

That's number one. The second one, And I don't know how bold this is, um but but but I think there's no other way forward than for for banks to to partner more with fintech companies and like you know, like we did with Lowell Road and figure out the path forward. I don't think. I don't think it's feasible for banks to think that they can invest, you invent their owns. And I think it's going to be great for the fintech innovation that happens outside of banking and to see those those entities merged together. I think it's going to be really exciting, and I think it's going to continue in earnest over the next half decade, decade and beyond. Yeah, I love that as a bull prediction. I do think those those who think the fin tech will replace the banks, and then of those who think the fin tex will die and the banks will just eat them, and I think both of those are foolish. Like ultimately that they're going to come together and offer highly properly regulated, properly delivered services in conjunction with banks, and that that to me feels like the future as well. So I like that as a bull prediction. Hopefully, if you're right, also have a job and pretend to yourself, you can come back and have a conversation about that. Well, Tony, this was a great conversation. I appreciate your making the time over the holidays. Thanks for coming on. I really appreciate it, Jeff, thanks for having me and it was it's it's great to be part of this 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 too. Up Starts AI lending platform uses sophisticated machine learning models to more accurately identify risk and approve more applicants than traditional credit models. With fraud rates near zero, up starts 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. Up Start offers an end too 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 upstart dot com slash forward dash Banks. That's upstart dot com slash forward dash Banks. You've been listening to Leaders and Lending from Upstart, make sure you never miss an episode. Subscribe to Leaders and Lending in your favorite podcast player using Apple Podcasts. 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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