Leaders in Lending
Leaders in Lending

Episode 64 · 5 months ago

Understanding Trends in Consumer Behavior: The rise of BNPL, solar energy and crypto

ABOUT THIS EPISODE

In the midst of rising rates, how are personalized loans and securitized loans poised to change or influence the lending landscape?

Anand Cavale, EVP of Unsecured lending at Guaranteed Rate, with his varied background in engineering, banking and credit cards, shares his thoughts on the emerging trends in consumer lending and gives us background info on when the changes started.

Join us as we discuss:

  • Rising rates on credit cards may create opportunities for personals loans
  • The move toward buy now, buy later and its implications
  • The opportunity and pitfalls of student lending
  • The shift towards solar energy and crypto

You're listening to leaders and lending from upstart, a podcast dedicated to helping consumer lenders grow their programs and improve their product offerings. Each week here, decision makers in the finance industry offer insights into the future of the lending industry best practices around digital transformation. In more let's get into the show. Welcome to leaders and lending. I'm your host, Jeff Keltner. This week's episode features my conversation with a Noncavali, the evp of unsecured lending, a guaranteed rate, and non had a long banking career at city. Sometime it's so far, so he's got perspective from a bunch of different angles to provide on what's going on in the space today, and we really dove into some of the lessons he learned from the credit card business at city, obviously a business quite a bit of scale. We dove into some of the newer trends and consumer lending specifically, what's going on and by now pay later, what might be happening in Crypto, how to think about that and I thought really important conversation about how critical it is to understand consumer behavior in a deeper way when you're designing products. That and how sometimes consumer behaviors is not necessarily what you expect or what a rational, quote unquote, person might do. Really interesting perspective and very useful when you think about how you're designing your consumer journeys. So please enjoy this conversation with a on non thanks for joining the PODCAST. I appreciate your making the time today. Oh, welcome, it's a pleasure as well. So I've begun asking pretty much all my guests the same first question. So I want to start with that, which is like most of us didn't grow up dreaming of being in the banking space, being bankers or lenders or whatever. What? What? How? What was your path to end up here? How did you kind of end up in the banking space? The honest answer is I was an industrial engineer and my first job was at a smelting iron or smelting company. And the day I hiron or smelting. Yeah, and the day I entered there it was one hundred degrees, you know, making alloys, and I work there for about six months and within the first month I figured out, you know, this is probably not the best day to start a career, but you know, I I I was at Honda in Handa started at in India. But regardless, and I think somehow you know, my operations research kind of took the better half of my liking and I tried to get into more of the management principles. I did my NB and I like that course, and I ended up in a banquet city for a quite a long time. But I knew that on the engineering side is what ware I want to be. So well, how do you see the value of a engineering I mean, I've got a computer engineering degree, so I have my perspective us, but you know the experience of having done real professional work as an engineer and having an engineering background in the context of a non engineering business or company DC value in that. You still like...

...rely on concepts or ideas or ways of thinking for engineer. I'd love to hear your thoughts. Like it's evacinating, you know, to go out of the engineering space with that background. I do, I think. You know, most engineers tend to be more logical and they seem to be comfortable, and they said to be very comfortable with data. Right, so to a loge extent, I think, in a drawing conclusions out of various data points in our work, day to day living and kind of figuring out in a statistically does this make sense? Comes kind of easy after an engineering did you or any mathematical or a science degree to some extent, and I think applications of those of those principles clearly kind of help when you're looking at various data points making consumer basic decisions as well. I think that's my view. My preserves always. But the engineering mindset is sort of one of breaking down a big problem into little problems and figuring out how to take a big thing and make it adjustable and then solve those and they put it back together and that's kind of an approach to solving problems generically that that applies to be a civil engineering, mechanical engineering, computer engineering or just like business, kind of kind of works the same way. Connect and the other other half also is like and I think engineers are kind of build after four or five years and they're built to build stuff stayed by they know how to take from one states to the next stage. So I think when you're building products, even in the financial services in the state, comes very naturally to you to in terms of how do you take a concept of kind of it's very well. Let's use that as a transition point to I know you said you kind of spend some time it's city is kind of what you first got into banking and my understanding is you were kind of in the in the personal wild, personal on space of a little bit of the digitulation space. Tell me a little about what you were seeing there and kind of what the big party is like over the trends you were chasing or trying to trying to get ahead of when you when you were looking at that space. I mean actually I started at city in the credit card space. So you know I don't has done and and you know, pretty much in risk. You know, a couple of different jobs in risk and decision sciences than the digital online space, but predominantly, I think in a half my time in Asia and half my time in the US, I was running in a consumer credit card businesses, which kind of by itself gives a lot of flavor and understanding and and and somebody who likes the business kind of gets to know how consumers behave. You know, what are the products that consumer offerings within the credit card products that consumers we like or dislike. So you kind of belt built towards that and and it was later that I actually, when I went to Asia, I started adding both personal loans as well as credit cards into the same platform, because Asia has a very large lending platform for city as well. So I think the business is designed in a way that we're lending is a complementary product to the credit card transaction is space. So I learned kind of of both of those and kind...

...of manage both of those before I came back here. Interesting in either we're just talking the credit card space. Is Interesting because, as we find ourselves likely facing a rising rate environment for a while, it's one of the few businesses that is floating rate and therefore can maintain some sense of margin, even as as the cost goes up, you kind of pass it onto the consumers, which I think is going to be a challenge for a lot of financial institutions, given they have more traditionally fixed rate products, often of longer duration, that end up with them kind of having costs out of whack with with the with the interest rates are charging as rates rise. As I'm not not a macro predictor, but I don't think it takes some magic magic apall to figure out that that's probably something we're likely to see in the over the over the masting. Yeah, absolutely, but I think also as that ain't to go up and hered gout rates become kind of high. I mean it's in the position right now. They're also an opportunity for personal loans to papal and provide a better rate, I mean, assuming that you can get cost up funds into these space. But to the previous point actually, but those one critical in Asia, which I thought was but mentioning. You know, you would give credit cards, but we could say that half your lines could be used for personal loans, you know, so people couldn't either borrow money out, they could use it that time. I'm interesting. What did you see about behavior there? I'm always, you know, one of the questions I get asked is what's driving personal loans as a category. I think it's also similar to this adoption we see of by now, pay later in like what? Yeah, you know, kind of by now. pillater in some ways was to solve problem for many people. I had a credit card that the work pretty well everywhere I wanted to go and I could buy now and pay later. And yet there seems to be a trend towards these fine out, pay later products and I'm curious if you saw anything at that utilization of the personal own versus the revolving credit on the card that gives you any perspective of what you think the consumer trends are and what they're you know consumers are really aiming for with they use those different things. It's really interesting to have half your line available. Is like, is a non revolving more in astallment product? No, I think that are people who I've found that tend to borrow on the credit card and there people clearly who are transacting on the credit card right. So for sure the occasional borrower will probably more lean towards by now plot to kind of products, right. And the occasional borrower doesn't mind if they want to put a loan on their credit card for six months or twelve months because they have a specific need and they don't mind being a couple of percentage points extra, but known for a fixed tree. Those are the kind of people we were getting actually transactors and ability to BOP to borrow on their credit card. So that kind of paved the way of a I think it's a similar trend that you're seeing in by now pailated as well. There they tend to be, in my opinion, they tend to be people who normally would not have taken advantage. They would have paid up their their credit card builds up a thirty days, but now they get an opportunity to pay it off over four months and they say why not? Right, it doesn't cost me anything. So and the whether, the whether, the question whether they...

...really buy more than what they tend to buy, which is a it has to be validated. If I know, if I never would have bought it, but now I'm going to buy it because the buy now, pay lad that's the question people have to answer. Yeah, I mean, that's the that's the that's the that's the sales pitch from the buy now, pay later guys to merchants. Right, is like increase conversion rates, increase average card value or transaction size, kind of drive a little bit more spend, which is really interesting. But is it does sense? It is, it does exactly. But is it a self select for people who will have trouble paying at all? That's another question that yeah, get well, that is yeah, that that's I can can open into open question right now is what's going to happen to delinquencies and should these things be reported? And how does how does any lender get a good picture of your debtload if a bunch of it is in and nonreported by now? Pay later, you know, for month, kind of kind of things, and I do think to me there was. I'm curious your thoughts as interesting, Delta, to your point about the the transactors who would borrow with the wine. This the sense that some consumers want to they want to use a credit card to transact. You see this somewhat in the shift of debit cards among younger generations that don't they don't really want to borrow what I'll call accidentally by just swiping the card more, but that they want to be intentional about when they're borrowing, how much they're borrowing and clear about the repayment terms which a credit card not not to be rude to the industry, but it muddies it right it's like twenty five been on payment. Well, how long will it take me to pay it back? Like that? I to pay it, we don't know it. So it's very unclear, I think, to the consumer that's looking for clarity. By now, pay later. said. Yeah, when you want to borrow, understand how much you're borrowing, how long it will take to pay you back, what it will cost, even if that could be zero. In certain cases it can be for some of those players. They do interest bearing, like real cost borrowing now, as well as the buy it to pay it for. But I'm curious, do you think of that as a secular trend where consumers are looking for a little bit more clarity and purpose or, like Le Say, intentionality behind their borrowing decisions? I I think so. I think I mean I'm and I was at so far. Clearly, those in the target segment at that for that company was clearly people who didn't like, largely the big banks the way that they gave out credit cards. Right. So they wanted control. Largely wanted to have the ability to say, you know, how do I spend right, so debit God was clearly something that, I think, appeal to them. But if they did want to borrow, I think they wanted to know I can pay it off in twelve months or twenty four months or thirty six months. I think there's clearly a segment of people who, if they want to borrow they want to paid off very clearly. These are people who had student loans that are not paid for five, ten years, right, for a long period of time, and they they couldn't see how it could be paid off. So I think if you give people the ability to see how soon they can pay off with fixed payment,...

...there's clearly a segment of people who want to get their finances under control. Now there are people who can spend three, four, five cars and they have it under control because they know what they're going to spend a day. They're going to pay off right if they have the cash flow. But if the cash flow is tight and they want to spend but have the ability to borrow for a seven period of time, I think supplementing it with some sort of either by now, pay later or personal loans can help, because if you borrow on a credit card, it's, as you said, it's a little difficult to figure out when you're going to end up paying. Yeah, I mean that's I think what's not every understands, but like seventy year eighty percent of the personal own business, at least for most of the large platforms, is kind of consolidating multiple credit cards and in an outstanding payment amounts that are not able to be paid off in a short teration of time. Ten, fifteen, Twentyzero, where it's not hey, over the next two months, I'm going to cover this. It's okay, I can act. This is so think. So there's clearly some desire, when you really have borrowed, maybe maybe accidentally, more than you can play off the shorter but to to move that into something that's more understood about what the plan is. No, no, I we there's an anecdotal side point where we used to ask credit card consumers, you know, do you borrow or do you transact? Right, and mediority of the people said I don't borrow, and then we would go into that rectors and see almost fifty percent of them actually carrying an evolving balance. So I think it's also it's also people's that's fast finistion of perception of it that they have borrowing or not on a credit card. Right. So to a large extent I think people either don't want to associate it knowingly or they don't know that they're actually borrowing an a credit card. Yeah, that's interesting. So talk to a little bit about you know, you shifted from city to so far, you're over it. So far we're running, my understand the the personal and the student loan space. What were the opportunities? I mean it's so far to me is interesting, you know, I think compared often to you know, like market place letting companies, but really is more my mind, of a challenger Bank that started not with the deposit product but with a learning product that really, if you to, become a primary financial relationship with their customers. What was kind of your vision of the gap in the market or the thing that wasn't happening that was driving so far success? What were you guys? What was your perspective, what you were aiming for? I mean, to be honest with you, I think this is this was before the time I join right, student loan and student not refinance was largely being handled by banks and new to regulatory changes and also a lot of, you know, issues that the regulators found with the banks. Thanks just dropped in past rudent own sector and there was a singular opportunity for somebody to come in and take that space in terms of refinancing. And I believe so if I took that opportunity or the absolutely good and I always find interesting that they I feel like so if I realize that the federal government's like upside down on underwriting. I mean they're said they're going, we charge more for an NBA than an undergraduate loan. And from a public policy...

...point, if you make sense? From a risk point, if you do, it really doesn't. And that was there was an arbitrage there to say hey, the risk is miss priced in substantial ways. Now it's not very high yielding. So you can have an efficient market to execute this vision. But there was an arbitrage in the just fact that the risk with miss price between different kinds of loans because of the way it was in the purposes for which it was right. I think it was. You know, that's what I said and I think make Cagney and his team kind of clearly understood that. That side of the opportunity. And then if you keep the cost low and keep it completely digital even of the margin could be less. And the student loan in the United States of but one point six trillion dollars. So it's a very big market. So if we get a large volume, even at smaller margins, you could you could make decent money. So that's kind of a I think that's how the opportunity came into being and I think after I join and and and was managing business week very quickly added, you know, whether it goes money or expanding the the invest business, crypto and, you know, adding a platform for insurance. A lot of things was done across the company that actually made it a much more diversified business. So, yeah, aiming to solve quite a wide variety of financial needs for the consumers that were there, not just as many of the fent tax have stayed a relatively focused on one or two products. So far has been it's been one of the kind of leading examples of a real roddening a product portfolio facing consumers, which is which is really interesting and I guess the focus is still on a category of consumer that is seem to be somewhat underserved or poorly served by the current market. There's an opportunity. Yeah, I think it's a mix of one underserved and to people who may be slightly younger but in a new de financials. EVISO didn't understand the complexity of the banking side, but this made it very easy and simple for them to take on. So it's a it's a long term play, quite honestly, right, having having in a student loans, which they know very well. And if you get student loans under control, can you can you save your money and can you then get a credit card? Then you and then you get your pet insurance. So whether you can get your life insurance and all those things follow as you as you go through one by one. Right. So I think that's the path to some extent so far. Let well, the student loan is such an obvious starter product for a young kids if you're looking to attract the twenty something. Most everybody who graduates college does so with some amount of student debt, right, and that's not, you know, any negative signed about your behavior or decisions. It's just the reality of how we fun college in the United States. And so I guess my question that would be so it's a very natural like, Hey, this is the first thing you're going to need to do within you're like you're likely to buy a car, you're likely to want a credit card, you're going to get a retirement account, your your buy a house. Like we can start you off and build that relationship. I...

...guess the counter two questions. Why do you think the banks pulled out of. That is such a formost banks I talked to struggle with the how do we bring in the young? Yeah, right, I need more twenty year olds, twenty two year olds, twenty five year olds coming into the bank, because my current population every year kind of ages and gets older. I got to refill the younger folks, and yet they're pulling away from such a natural entry point for a younger consumer. Why do you why do you think that happened? I mean, honestly, I don't have a hundred percent answer, but I know that, for example, at City we had a student credit card which was fantastic. Didn't make money, but it was an empty point to get into all of the products and then get into other credit card part here, I believe, and this is what I had D up or kind of set one, is I think there was a little bit of, you know, the regular to saying, you know, your relationship with the universities was not you know, shouldn't be like that. It's you know. So there was a few of those with the banks having, you know, lending through financial institution. And then second the margin was also not that big in student lending. Right. So when you have a large infrastructure and you have student loans where the margins have thin but then you know a lot of regulatory stuff comes in place and it increased the cost of operating it. It's a natural decision to say is it what being in the in the business. So I think the transition to a digital platform where it makes it very easy and simple and transparent for the consumer and still reduce the cost, was a was an immediate offshoot of of the regulative changes. Is My get. That makes sense. So the other area I wanted to kind of dive in and our discussion was like what are the trends you see or the interesting products? Me Personal loans has been this really interesting example of a product. It's kind of taken off since two thousand and seven, two thousand and eight, where it kind of almost didn't exist at that time as at any real scale or volume. It's really grown. And then there's things like by now pay later in Crypto and like all sorts of new financial instruments that are they're kind of growing it becoming real meaningful parts of the ecosystem. Do you see, you know, threads running through those or other areas of curious your thoughts on. What are the things your focus on that are kind of the new products that are out there that represent kind of a change in the traditional status quo of what the Financial Services Industry is offering your consumers? I think you know again, this is just a personal hunt and they will be different versions of personal loans, in my opinion, right. So I think personal loans is here to stay, because the digitization as well as the fintext will make it very easy for people to get this right. Some more and more people will enter and more and more people will provide a flavor, whether it's that point of sale or whether it is by now, pay later, or whether it is, you know, different way of consuming the same loan. I think, whether it's with merchants, without merchants, doing an accredit card in a separate from a credit card, then will be different versions of that that that that will flavor it out, and I think that's a good opportunity because especially for...

...the earlier point that you raised, where people may not want to take credit cards anymore. They would rather spend on a bit cut because they know they have the money. But then if you can provide this control mechanism on a credit card with some some means to do for the consumer to kind of decide, I have a thirtyzero line, how do I want to use it? Right, it might be a different vite, a different flavor. Right, it might be a different way and a concept of how do you drive that, giving control as well as giving the ability to finance at a particular price and not shooting off in and a variable rate which can go on increasing, for example. Right. That's that's one area that you can think about. The other is that are macro factors that that we see. One is clearly the solar component of on a whether it's in housing or in cars. Right. And I think if more and more people are going to, you know, have their homes with in a solar power, it does require a chunk of change in terms of borrowing or financing that part, sure, and I think you know, with with costs of you know, heating or gas, you know, which may continue to rise, I think more people will move towards this macro trend and I'm seeing that in my own development here that, you know, people are very rapidly shifting towards a Tesla or other you know Evi's as well, as you know, and actually electrifying their home. So that provides a big opportunity, I think. Quite honestly, you know, it's another form of actually alone, but it's more securitize. But it's an offshoot of of a personal loan combined with a secretized loans, I think, to some extent the house being the asset, and I think that could be there could also be offshoots of lending with if housing values really go up. You know, is their offshoots of using housing values as a means of spending within a certain limit, where you know you're not borrowing at a huge rate but borrowing within a certain better rate, but still gives the flexibility of a credit card, for example. So I think, you know, again, these are all not fully flushed out, but these are kind of drawing board kind of phases. I think that are there are Fintech companies already evaluating credit cards on on like a Homemad cutty line, but rather as a credit card kind of tools, right, but solar some of the companies are done very well. They have already started in getting on that trend. But I think the lending side, the personal loan sites, still has some room. The jury still out and buy and now, hey later and see how those things stand up once the rates go up. And how do you think, I mean how do you think about find out pay later is different than I mean on some level there's the no cost version, the pay and for, but...

...on some of them it's just a it's just a personal alone on a shorter duration. And I would think with some really just with a merchant is center right, like the reason it's interest free is because the merchants paying a fee on the back end, right. I mean that the winders make and make an margin. They're just doing it on the Winder on the on the merchants side. So I'm kind of curious if how you think that plays out, because it does on some ways it feels like different products, different distribution. But your points it's kind of just a different flavor of the same thing in many ways where it's not that different. I mean I kind of segmented into two pieces. One is if it's basically it's a lending product, right, so if you are providing a lending product before to these consumers, but now you're providing a different flavor of saying you can borrow for for payments or six payments, whatever it is right and paid off its zero interests that particular transaction. We didn't provide it on a credit card or some other loan write a short term. So I think that's good in a way you're giving to the same people. But in the other category, where is it really people that you wouldn't have qualified before are now qualifying for a for a four payments, six payment kind of thing? That's a little bit questionable. I mean, do you really think that the underwritings, underwriting skills said would be that different for somebody to borrow or for payments? And that's you know that time will tell, right, whether you're actually bringing in incremental people who wouldn't get along before or wouldn't get a credit card for who could borrow, importantly, who wouldn't get a loan or credit card and we'll pay back and would pay? That's what I'm saying. Will they will the really pay back? What is it is it? Is it really truly incrementally good people who will credit quality wise, who will actually pay? So I think those are the two differences. Right, if there are more people coming and borrowing in the buy now, pay later who didn't borrow before, that's a good thing. Yeah, although I'm not I'm not a hundred percent sure on that second part. Yeah, we'll see. How I've been asked what I think. By now, pay later means for personal loans in the kind of fundamental a love E. Law musks get down to fundamental physics, and I feel like the fundamental physics of this is if, by now pay later is increasing the overall debt leverage of the American consumer and personal loans are generally a way of consolidating over leverage consumers, then it's hard to see how it's a negative in the long term. Right. If it's, if people really are buying more than they're increasing the total debt burden, and products that help them to spread that dead burden out over longer periods of time at lower interest rates would have to seem like they they're not threatened by an increase in leverage exactly. So we'll see. I think it's interesting. It's interesting with the product itself, right, you didn't have between a loan, you didn't have a short term loan for two months and you didn't have credit. God that that allowed you to make for installment payment. So the product itself is a new category which I agree right. So any any credit card issue, I can shape it into their credit card by by all means right. So the question is really is that.

Is that a big enough industry to stand by itself and create these opportunities with merchants? And if merchants are willing to fund it, it will stand, right. If the merchants are not willing to fund it, then it won't. It won't stand because eventually the risk will creep up and somebody's got to be at the risk. That's right, it's so. So we's got to get paid for the risk and that cost is going up a safe such straits. Writing back. So last topic I wanted to do, you know, because you mentioned Crypto, is one of the things. I think you guys have looked at it so far and I'm curious. It's hard to talk about new consumer products and not talk about crypt I feel like every podcast in an article has to mentioned crypto somewhere. Do you ever take on on where cryptos are or what's happening or what you think is going on either the Crypto or the web three space these days? I mean, honestly, I don't know how to classify and to be on join the club. I don't know whether it's an asset or whether it's a it's something else, but what I feel is that this is the way I look at it. Ready, if, ten years ago, if somebody had asked, you know, do you will there be so many elect electric vehicles on the road, people are just said no, right, true, and and and today people are buying, you know, without thinking, I mean very easily. You know, people are. You know, I I see a hundreds of teslas around right. So, you know, is is the one area where Crypto is really helping, I think is in international payments, right, where you have where you're paying a ton of fees on both sides, whether you're originating in a bank and the person who receives it. You know, there's a lot of cuttry being made. I don't want to name companies. I mean you know there are you know, very expensive to some money overseas, but it's very expensive right. It's there are banks, non banks, who you know especially, you know if you have short term you know, when I was in Asia, there used to be a lot of migrant workers used to come to Singapore and they start, they spend month send money across to multiple countries, you know, across Southeast Asian countries, and it used to be very expensive to send the money. Right. So if you use crypto and if you had a fixed exchange, I mean that can reduce the cost of, you know, sending money very easily, right. I mean, it has a definitive value. And I also hear friends who are using it in place like Argentina right now, you know, and Venezuela and places where, you know, they can exchange crypto a bitcoin real time when they want to buy their groceries. Right. So I think that's definite value. But I feel more like the first example I gave you, five years from now, if you said, you know, if you, if you are just bought small portions of Crypto or a Bitcoin, it would be worth quite a lot of money. Maybe, discretionary money, maybe own it a little bit and Tennessee where it takes you. But it is volatile, right. So that's so from a personal point of view, from my point of view, I think you know, if I, if I would have, you know, the in mind losing like...

...hundred bucks a month or something, then I would have I would put it in Kanna see what happens after five years. Yeah, yeah, there's, you know, all these there's all these people from you know, Jamie diamond to to Workshire, who have different points of view and of course the younger people always like younger generations kind of tend to like. That's why I think so fine, you know, introduced it at that time and I mean they're very positive and there's a there's a huge population that is extremely positive about crypto. So I think, yeah, only time will tell on the end. News right that they did. Yeah, it's certainly if nothing else, I think for a banker you've got to look at it as an asset category that your users are interested in and, just like any other asset category, is it as a manager you would want to allow them to into or exit. It's got to be on the list. Now the question of whether there's more interesting use cases, whether it becomes a bigger asset class at cash or, you know, you know Fiat currencies, is a whole different question. But certainly where there en nobody if I buy, if I buy a dollar, you know, coin and I transfer the dollar coin and has the same value in Thailand tomorrow in Venezuela. Right, then it's a it's really worked it right at the end of the day, because I don't lose anything in the exchange and I just transfer it to somebody. Right. I see tremendous use of that. And but probably banks will make less money. Right. So, as a bank are you're thinking money on currency Kesin as long as as long as the etherium gas fees don't stay too high and it'll be cheaper in the banks. That nice money. But well, that's a see. Will see if that better makes yeah. Well, I have the same three questions I ask everybody at the end of this podcast and I'm going to kind of throw them at you now. Would love to get your answers. The first one is what's the best piece of career advice you've ever gotten? The best piece, I would say, is you know, when you change your jobs, make sure fifty percent of the job you already know, okay, and then sell you fifty percent you don't fifty percent you can learn. Don't go beyond fifty percent of something that you totally don't know in a new job. Right. The reason, I mean the reason the gentleman gave me was that you know you can still execute on the fifty percent that you know very well while you're coming up the curve. Right. I like that right. So that that I think that that helps you frame whether this is this is a job that you you should get into. I mean if it might still be okay to get into, you might be a quick learner, but your probabilities of failure that could be high if you don't know much about that job in terms of transitioning to yeah, but it's there's also the opposite side, which I see is, you know the other side of this. Don't take a job where you know a hundred percent of what to do, because then you're not yes, you're not learning exactly, you're just yeah, that's probably not the right crow. Yeah, I'm assuming a going to a new job because...

...you can do more, you can learn more, you can do something, but you know, if you're suddenly going from lending to Crypto and you're going to you know something in that space, that that would be difficult. That's it. The fifty five. I've heard the concept of the fifty breakdown is new, so that's interesting. Fifty percent and don't know fifty percent of what you need for in a job. That's interesting. Gout. Yeah, I suck. Second question you've had. You got a quite a career in the consumer lending space, so you probably have an interesting or what's the best piece of advice you've gotten about the consumer lending space generally? I think you know, anybody who deals with consumer space in general and consumer lending needs to understand consumer behavior. Right. You can always design products and and services around the consumer needs. At the surface everything seems very simple. I'm just going to borrow, I'm going to transact, but you really need to know where the people shop, right do they and add as is a trend shifting online. You know, are they using different parts for shopping online versus physical? Are People working from home? What is their preference? What are the hassles? Where are the road blocks for somebody to make a transaction? And once you understand that, I think designing products and services which are really cool makes sense. That feels to me like the like, a like, a like a lending version of the don't assume people are rational, utilitarian, maximizing being that just they're they're not. And if you assume that, like well, we got a twenty basis point lower rate, of course they would come here like, oh, that may not may not be right. I've been uply. That's not a good assumption. It is easy to particularly in finance, where we think of things is so number oriented, to get caught up in like the acting slab, the actings. They use that ex if they use an experience was very smooth. People really didn't care the rates, that my state was a factor, but sometimes you will dare take a higher rate just because it goes much easier to accept it and and complete alone right at the end of the yeah, we found that too, for sure, that borrowers are both rate sensitive and we refer to as effort sensitive. They will, they will walk away into some extent that you can see adverse selection in the effort bias, because the good barrowers are particularly effort sensitive in some instances. And so connect your action could be not only negative to your funnel but negative to your credit performance because you have an adverse selection. Yeah, you know factor play as well. Yeah, all right, my last question. What's one bold prediction for the future? Poor prediction for the mean? Bolds in the eye of the behold things. You don't need to feel too intimidated by behold. Look and then look at my kids generation. They just don't know what a branch, bank branch is. Quite honestly, they've never been in one. I don't think they'll go in one. So I don't see in fifteen, twenty years I don't think banks will have any branches anywhere. All right, whatever reason, the bit the end of the bank branch, that I'll...

...give you credit for. Bold you met. You met the you met the bar of the assignment. Good job, full prediction. The end of the bank branch. Well not. Thanks for joyaous say. This was a great conversation and I appreciate your taking the time and sharing your insights of perspectives. No, that'sinitely I enjoyed it very much thanks to you and your team. 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. 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 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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