Connect & Collect Podcast - Episode 7
In this episode of Connect and Collect, we’re joined by Robert Keil, the Chief Fintech Officer at FinWise Bank. With over 20 years of experience in the payments and banking-as-a-service industry and a fascinating journey from Germany to the United States, Robert brings a unique perspective to the discussion.
He addresses the potential risks of an ecosystem imbalance between banks and fintech. We dive into the macroeconomic trends, the impact of interest rate increases, and regulatory and compliance challenges.
Robert highlights the value in partnering with fintech to create innovative solutions, help underserved communities and propel the financial industry forward. Focusing on banking compliance, we discuss the need for seamless and efficient customer experiences in collections for reduced complaints and compliance issues.
What we're talking about in this episode:
- The role of fintech partnerships for innovation
- Current trends in fintech and the opportunities for community banks
- Strategies for evaluating fintech partners that support sustainable growth strategies
- Regulatory guidelines and the importance of compliance and risk management
- The prioritization of customer experience in collections to prevent complaints
"The best way handling complaints is not have 'em happen in the first place. So there really needs to be a better focus on the customer experience for anything that deals with consumers." - Robert Keil
*Please note that the views and opinions expressed by our guests are solely their own and do not represent the views or opinions of their employer.
Robert Keil is the Chief Fintech Officer at FinWise Bank, bringing over 20 years of experience in Payments and the Banking-as-a-Service (BaaS) industry. Most recently, he was SVP and Chief Payments Officer at Sutton Bank. Before that, he served as the Vice President of Fintech and Emerging Payments at Fiserv as well as various roles with US Bank and Wells Fargo.
Robert’s career in financial services began in Germany with the Dresdner Bank AG and over his career, Robert has held roles in Relationship Management, Sales Support, Product Development and Marketing including managing a national sales organization with over 70 team members and has driven hundreds of millions of dollars in revenue growth.
Connect with Robert on LinkedIn
Learn more about FinWise Bank
Read the Transcript:
[00:00:05] Michael Pupil: Welcome to Connect and Collect, the podcast for leaders in credit and collections, brought to you by Lexop. Get firsthand insights from our expert guests about the latest innovations, challenges, and opportunities that lenders are facing today. I'm your host, Michael Pupil, Vice President of Sales at Lexop, and today I have the pleasure of introducing today's guest, Robert Keil, Chief FinTech Officer at FinWise Bank.
[00:00:28] Michael Pupil: Robert brings over 20 years of experience in payments in banking as a service industry. Most recently, he was SVP and Chief Payments Officer at Sutton Bank. Before that, he served as Vice President of FinTech and emerging payments at Fiserv, as well as various roles within US Bank and Wells Fargo. Robert's career in financial services began actually in Germany at the Dresner Bank AG.
[00:00:50] Michael Pupil: Over his career, Robert has held roles in relationship management, sales support, product development, and marketing, including managing a national sales organization with over 70 team [00:01:00] members and has driven hundreds of millions of dollars in revenue and growth. Robert, it has been a couple of months since we got to see each other live, but it is a pleasure to see your face again today, sir.
[00:01:10] Michael Pupil: Thank you for joining Connect and Collect.
[00:01:13] Robert Keil: Oh my pleasure. Uh, I've been looking forward to it.
[00:01:16] Michael Pupil: Amazing. Well, aside from, the typical usual scripted, you know, introduction, which is, uh, a great highlight reel, I'd love to get a little bit more personal talk to us, uh, from your perspective, you know, how your career has blossomed, how you've, uh, arrived at FinWise. And of course, tell any of the listeners if they're not familiar with FinWise, a little bit about the organization that you're now with.
[00:01:38] Robert Keil: Yeah. Um, happy to. So I would say in many ways, me, ending up in this position is a series of coincidences that, happened to me. Uh, as you mentioned, you know, I started my banking career in Germany and a little bit over 30 years ago came to the US and my challenge then was that nobody knew what to do with my [00:02:00] educational background.
[00:02:01] Robert Keil: So took me a little while to get back into banking, um, because no one knew what to do with my educational background. Remember, one bank told me who wants to hire a person as a teller that could be smarter than the regional manager. Right. And I just wanted to get back into it, and I guess it took a while, but in the late nineties, um, ended up doing, mortgages, which was, uh, pretty good and did that at the, at no West Bank, which became Wells.
[00:02:30] Robert Keil: And while I was there, I entered the world of payments. Wells had a payment processing business called Instant Cash. And that was my . My, my first entry into US payments, which were, um, you know, at the time pretty archaic compared to where I came from. But that was useful. But then, you know, over, the years I established myself in the in payments industry and particularly what got me into the world of FinTech was my stint [00:03:00] at Fiserv because the role for which I was initially hired didn't materialize. And people didn't really quite know what to do with me until someone said, well, there's all these companies like Chime and Moneyline popping up. Can you figure out what we could potentially do in that space?
[00:03:16] Robert Keil: And, and to be honest, I had no desire to get into that space, uh, but also didn't wanna change jobs again, so figured I'll tough it out. And that was one of the better things, that happened. We really grew that business nicely from zero to very meaningful, for Fiserv. But that gave me then exposure to the sponsor banks because I never could do anything unless my FinTech had a sponsor bank.
[00:03:40] Robert Keil: Which then led me to, build a relationship with the team at Sutton Bank. And, now most recently, started with FinWise Bank and, my role here is to take the bank into the full range of banking as a service solutions. FinWise has had some really good success in lending as a service. [00:04:00] Our usual, um, customer there is a non-bank lender that gets a lending license in a couple of states and then, at some point finds that's not all that practical to have 50 different state licenses, 50 different sets of rules to abide by.
[00:04:16] Robert Keil: So it's easier for them to partner with the bank like FinWise that, takes on the true lender role, puts some skin in the game, and is then responsible for the oversight of those loans for as long as they exist. And so that's where they start working with us. Like I said, FinWise has had great success there, but it's also a volatile business model because lending traditionally is, up and down feast or famine.
[00:04:43] Robert Keil: And so that's then where the desire was to do something that, you know, evens out some of those fluctuations and also future proofs the bank. And so what I'm focusing on is taking the bank into the world of BIN sponsorship, or we're taking on credit cards managed [00:05:00] by fintechs, as well as prepaid and debit programs that increase the deposit base.
[00:05:06] Robert Keil: And lastly, we're also in the process of creating a, um, . platform that allows our partners to integrate via APIs, uh, the majority of non card payment rails, so ACH, same day, ACH wires, fed now, RTP, visa Direct, MasterCard send. So they have more options to get money in and out of the ecosystem. And yeah, that's a long-winded way of telling you how I ended up here.
[00:05:37] Michael Pupil: There's so much to unpack there. I think the first thing that I would say is the, sometimes the most fun adventures are the ones that are unplanned. So it's, uh, it's great benefit that you didn't necessarily plan to go down the FinTech path, but I think you've had a, a tremendous impact to it. And FinWise, taking that approach of a platform via API or at least trying to attempt to reduce the [00:06:00] friction between the transfer of funds and serve, sometimes even underserved, kind of markets is really what is going to propel the entire financial industry forward. And it kind of pushes some of the older, you know, brick and mortar or the, the less advanced groups to really adapt and adopt technology in order to, kind of keep up with that pace.
[00:06:22] Michael Pupil: Otherwise they get left behind and, uh, they're not able to continue that path. So a very, very interesting thing. Now, uh, you know, obviously I made reference earlier in our conversation that we had met face-to-face. We had actually met at um, FinTech meetup event earlier this year in Las Vegas where we got to have a conversation where, obviously you are a, uh, big advocate of some of the FinTech conferences that are out there, and you've been to a number of them. Talk to us a little bit about some of the trends that you are seeing, across the industry and how that is relating to FinWise and your role specifically within Fin Wise.
[00:06:59] Robert Keil: Yeah, no. [00:07:00] Um, a lot of trends, and some of 'em are more on a macroeconomic level, right? I mean, the certainly it's been highly publicized how the venture capital landscape has changed and, uh, fintechs have for quite some time independent on appropriate funding, and those fundings have become harder to come by.
[00:07:23] Robert Keil: So for some of the fintechs there is a little bit more of an existential crisis. But, you know, some of these crises are, are a good thing because what it really does is it, it provides a stress test to the ecosystem and shows which business models have legs and which ones need to go anyway, right?
[00:07:43] Robert Keil: Because there's plenty of, uh, FinTech programs that the way they kept the operation going as they burned through the investor dollars, but the business model itself really has no chance of ever being profitable. You know, one of the, examples for that would be, [00:08:00] uh, some of the neobanks that basically try to do everything for free and then live of interchange from debit card activity.
[00:08:07] Robert Keil: And if it was that easy, why would any bank ever do another loan? Right. It's just not sustainable. And, uh, so that certainly is, is one of the trends, right? Um, there's that shakeup going on and you start seeing how this unfolds. That some of the fintechs that had decent technology but not the right business model, find themselves being bought up.
[00:08:31] Robert Keil: More recently you saw FIS buy Bond, um, as a platform that really caters more to the, banking as a service ecosystem. And we'll probably see that continue for a while. And when it's all said and done, there will be some players left that are bigger and stronger than before because they have the right business model.
[00:08:52] Robert Keil: But we'll probably also see some other, um, Fintechs pop up that learn from the mistakes of the first generation [00:09:00] and probably, come up with different use cases and solve real world problems using the technology that's now around. So that's certainly, one of the trends and, you know, still focusing on the macroeconomic environment, um, we've had.
[00:09:18] Robert Keil: So everyone knows massive interest rate increases. And, and that certainly has had an impact, particularly on the world of lending, where all of a sudden the economics that worked a year or two ago don't work anymore because the cost of funds for especially the, FinTech partners out there has increased dramatically.
[00:09:41] Robert Keil: But the good thing is it appears that we're kind of coming out of that valley that everyone has adjusted to, uh, the new environment, tweak the business models a little bit and starting to see that lending activity pick up again. And also delinquencies on, loans are starting to stabilize, at least [00:10:00] in the portfolio that we have insight to.
[00:10:03] Michael Pupil: Yeah.
[00:10:04] Robert Keil: Other trends. It's always a good thing to keep an eye on compliance and regulation and, I would say this sponsor bank FinTech model, uh, you know, to some degree regulators haven't fully understood it and never looked at the entire construct. Instead, some regulators focused on bits and pieces of it.
[00:10:28] Robert Keil: May it have been vendor management, may it have been Reg E, reg Z. But, um, here just a couple weeks ago, there was some new inter-agency guidance that focuses on these third party relationships. And, that's just part of the trend that, regulators become more familiar with the model, provide more guidance.
[00:10:48] Robert Keil: Um, oversight is getting stricter. That too has an impact on the industry as a whole because for a little while, the oversight was sometimes lacking. Some banks jumped into this not really [00:11:00] fully knowing what their roles and responsibilities are. They have to course correct. That sometimes creates some friction.
[00:11:06] Robert Keil: But, something to definitely pay attention to, especially in, in light of some of the consent orders that have happened over the last year or so, and my gut feeling is there will be a few more. And so much so that it's definitely a trend to watch.
[00:11:23] Michael Pupil: Would you say that that's the part that keeps you up at night the most, is the shift in regulatory and, and the players in the market not necessarily being up to date with it or, or playing outside of the rules, would you say something different keeps you up at night when it comes to this space and, and the environment that we're in.
[00:11:40] Robert Keil: Yeah. To be honest, it doesn't really keep me up at night. Right. I mean, compliance is just part of doing business. You, you have that and, I'd say the banks in the space that are more compliance focused, for them, it's kind of business as usual. They've kind of been doing for the most part [00:12:00] what, what is required anyway.
[00:12:02] Robert Keil: What keeps me up more is there's a certain imbalance in the ecosystem, right? I at times compare FinTech as the goose that lays the golden eggs for banks that, that work with FinTech and, and, and we need that goose to be well fed and not starved. And one of the challenges I see is that there's ultimately not enough banks to serve that, that FinTech ecosystem. And so if, if the goose is starved long term, that's not a good thing, right? Because somebody will come up with different solutions that may endanger the business model and, some of the recent regulatory action has caused some banks to say, this is too risky. They don't want to invest in the right infrastructure.
[00:12:52] Robert Keil: They leave the business. Others that contemplated getting into it made delay their plans. And so then, [00:13:00] um, that creates a challenge and so the business model works great as long as you're somewhere in balance, right? You have enough fintechs, you have enough banks, but whenever you have an imbalance, things are at risk.
[00:13:14] Robert Keil: And that's, to me, the biggest risk that, that we're facing.
[00:13:18] Michael Pupil: Yeah, I mean, couple that with some of the comments that you made earlier about the shift in I guess the landscape when it comes to venture capital. Uh, I think the, the term that is thrown around the most often is instead of focusing on growth at all costs, which is the, burn through the VC money in order to just acquire, even if profitability is not there to now, an expectation of profitability.
[00:13:42] Robert Keil: Mm-hmm.
[00:13:43] Michael Pupil: you know, not growth at all costs, but scalable profitability with cost responsibility or fiscal responsibility, uh, which changes a lot of business models. And I think that's where we're definitely seeing some contractions, some mergers or acquisitions or some [00:14:00] failures, to, to be honest.
[00:14:01] Michael Pupil: So to your point of, you know, feeding the goose or, or starving the goose, um, there's certainly a cycle today with a lot of fintechs that are either having trouble. Making that transition from growth at all costs to profitability and those that are able to go down that path, I think are, are going to see that upswing in the coming year or two that I think we all expect, uh, makes a lot of sense.
[00:14:23] Michael Pupil: And if you can marry that with a compliance, I think that's where your, your sweet spot is that you're alluding to of if you can have, financial or FinTech companies partner with, regional or banks um, to serve an underserved population, stay within the regulatory guidelines, it becomes a very well oiled machine for the industry as a whole. And that's where, you know, things move pretty well. It's when one of those legs of the table is removed that all of a sudden it becomes a little less sturdy. Makes a lot of sense. So what is next on the plate for FinWise?
[00:14:56] Michael Pupil: What are you guys looking at for the tail end or the back half [00:15:00] of 2023. And what do you expect to be the new challenge in 2024? Do we think that the, you know, I don't know if the market is going to turn that drastically, but certainly if there's stabilization to the portfolio, that's a very good sign, um, before the end of 2023. So how do you see the next, 12 to 18 months?
[00:15:19] Robert Keil: Yeah. So for us, as I mentioned, the focus is on expanding our business model. Um, when it comes to the BIN, sponsorship taking on, card programs managed by fintechs, we're pretty close to being able to start, uh, implement some programs. And then the creation of our payments hub. That really ties up a lot of the resources and the focus on things.
[00:15:44] Robert Keil: As far as challenges go, it may sound a little weird to people, but, the challenge is our phone is just not stopping to, to ring, um, because of that imbalance that exists [00:16:00] out there and FinTech starting to understand that a stricter, more conservative sponsor bank might be a better solution than the one that just bends over and does whatever FinTech wants.
[00:16:10] Robert Keil: So there is a certain flight to quality because they're starting to understand if their bank gets hit with a consent order, it can affect their day-to-day business in a very drastic fashion. And so they're looking for the banks that keep them safe. And you know, our initial plan was when I started here, we're kinda putting everything in place.
[00:16:30] Robert Keil: By the end of the year, we can say, okay, we're in this business, we're executing. Let's really take this out. But, uh, it was kind of funny. As soon as I announced on LinkedIn that I'm coming here, the phone started ringing and I couldn't wait for, uh, the business development executive that I hired to start cause he started about a month after me and just took a couple weeks and he's completely drowning. So our challenge is when we pick, have to first pick from the litter, so to speak, [00:17:00] then we pick the right players. And, um, and sometimes growing too fast can be a challenge as well, right? So for, for us to turn the dial so that we grow responsibly and take on customers without, you know, negatively affecting someone because we're, we're growing too fast.
[00:17:18] Robert Keil: And, um, that's, that's a challenge. You know, it's a challenge for BASS banks in general because when you look at the makeup of bass banks, they tend to be, for the most part, below 10 billion in assets. Um, one of the reasons for that is that for the deposit products, debit cards, prepaids, if you're less than 10 billion in assets, you're not subject to the regulated interchange under the, the amendment.
[00:17:43] Robert Keil: And so, you know, that's, that's great for smaller banks. It gives them a niche in which they can thrive. But If you're a smaller bank, you have limited resources, right? It's very different if you are, a community bank with 150 200 employees, or your JP Morgan [00:18:00] with tens of thousands. And so you have to manage your resources appropriately and, not burn your own people out or affect, your partners too much and, that's where I see ultimately our biggest challenge.
[00:18:13] Robert Keil: It's not a tech challenge, it's more a resource management, F T E management challenge.
[00:18:19] Michael Pupil: Yeah. And an evaluation, you know, process that, allows you to pick the right players. Um, picking on that, if there are, listeners out there or fintechs that are listening to that, without necessarily going too deep into it, or providing the secret sauce, what would you consider some of the key factors that you evaluate?
[00:18:37] Michael Pupil: Are there specific qualities or capabilities that you prioritize, in order to kind of see and ensure a successful partnership that, that you guys look for? Or is it more macro in evaluation?
[00:18:51] Robert Keil: No, there's, quite a few, uh, criteria one could or should use. And of course every bank might be a little bit bit different, but high level, here's [00:19:00] what we focus on. So when it comes to lending as a service, just, lending, no cards involved for us to take on a partner. There's a couple criteria.
[00:19:12] Robert Keil: Quantitative, you know, they really should be in a position where they can originate consistently at least 10 to $15 million of loans per month. So 120 to 280 million a year, or more. Um, but also when it comes to, um, the qualitative aspects, right? So if there is a non-bank lender and they don't have internal compliance staff, a compliance officer that focuses on that, it's just not the right fit because this is just the one thing that can, you know, break things.
[00:19:49] Robert Keil: And, and we always have to look at the whole portfolio. It's not just one program. If we were to screw up in a bigger fashion, the entire portfolio is, is affected. So, [00:20:00] um, that's the qualitative aspect, just have to right staff. When it comes to card programs if it's an existing program, I'd like to see at least, uh, a hundred million in annual settlement.
[00:20:14] Robert Keil: Meaning spend using cards should be a hundred million. But then, on top of it, I want those business models that actually make sense, right? Uh, the, the pure neobank that just doesn't stand a chance to ever be cashflow positive. I'm not interested in, but there is quite a few solutions where, especially in the commercial space where fintechs have solved real world headaches, right?
[00:20:41] Robert Keil: And, and that usually makes the foundation for a good business. Or is there reasonable business model that solves the true headache? Um, and again, compliance cannot be overstated. They need to have compliance officers. There's a system there. Now, it gets a little bit trickier when it comes to a startup [00:21:00] and, when, for startups in, in the card space, ultimately three main criteria I look at. One of them, the leadership really should be in the, been there, done that camp. So somebody that successfully built a, a FinTech program before they sold it, non-compete is up and it's a bit more of a rinse and repeat. They tend to have more appreciation for, for compliance. Then when it comes, to funding, they really should have raised $10 million.
[00:21:34] Robert Keil: That's pretty much the number that it takes to . operate somewhat safely for a couple of years and get through the initial startup phase where you just burn through cash and, and I go back to, it has to be a business model that makes sense. Now, there's times of course, when we might deviate from those guidelines.
[00:21:53] Robert Keil: If, for example, you have someone that bootstrapped all of the technology already and now they're just raised [00:22:00] some funds to do a general rollout. And they probably don't need $10 million because the, big tech expense is already behind them, but those are high level some of the, the guidelines I am, I'm looking at.
[00:22:15] Michael Pupil: Do you make a delineation between fintechs that go after, uh, maybe subprime versus prime and some of the characteristics between those two portfolios? I'm sure there's preferences there, but obviously a lot of fintechs I think try to point first at the subprime market, seeing it as an opportunity to land and expand, probably with the path to go towards prime.
[00:22:38] Michael Pupil: Um, but talk a little bit about the, the differentiation that you see, in those two areas, in both pros and cons.
[00:22:45] Robert Keil: Yeah. So, our bank is headquartered in Utah, which doesn't have a user recap on interest rates. Um, however, we're not looking to add to our subprime partners at all.[00:23:00] You know, just because it's legal doesn't mean that it's necessarily the right business to do.
[00:23:06] Michael Pupil: true.
[00:23:06] Robert Keil: And, it's to some degree, to be honest, a little bit of a quandary.
[00:23:10] Robert Keil: you know, when, when it comes to, to subprime, there is some subprime lenders out there that solve true emergencies. You know, people that, just have fallen on hard times, need money for something absolutely essential. Maybe it's medication, maybe it's to pay next month's rent. Um, but their credit history is such that, they're just a higher risk borrower and that needs to be reflected in the interest rate.
[00:23:41] Robert Keil: but of course some states have made it their purpose to fight, subprime lending, you know, when it comes to to interest rate loans over 36%. And, even though there's nothing that you know legally is wrong, it just creates an environment where you [00:24:00] constantly spend time defending your position and it becomes a big distraction.
[00:24:06] Robert Keil: And so for this reason, at this point, we're not adding to, any partners that are lending in that space. And you know, there's probably, ironically, somewhere down the line, a point where the same, players that complain how horrible the banks are that lend over 36% will complain that banks are so horrible for not lending to a certain segment of the population.
[00:24:30] Robert Keil: Long story short, at this point I'm not adding to the portfolio with any subprime.and when it comes to the, the world of payments, right, moving money, you don't really have that. You don't have the subprime or prime issue. It's more focused on do I know where the source of funds, can I move them safely and compliantly.
[00:24:53] Robert Keil: We'll have to wait and see how, how this whole political landscape shakes out and what the environment will be for [00:25:00] subprime lending. Maybe there's at some point, um, some middle ground where you really help people, are able to reflect, the risk represented and helping those people appropriately in the interest rate, time will tell, but for the time being, it's something that is probably more in the category of not worth the headache.
[00:25:20] Michael Pupil: Yeah, and like you said, one of the flags or the items that you looked at first was, you know, is there a chief risk officer? What are the underwriting policies of the FinTech, you know, like, and, and what does that portfolio look like and how much risk is it absorbing? And so if it has a majority where, it's hard to tell the individuals that are good people in a crisis that are just, hit with a bad credit rating versus, individuals that might be less financially literate where they're getting themselves into trouble.
[00:25:50] Michael Pupil: And it's just a recipe for disaster and you're pouring gasoline on that fire. Um, fire reference is not in any way, shape or form to kind of point at Canada [00:26:00] being on fire. So I understand that your air quality today may not necessarily be the best. So on behalf of the country, apologies to you.
[00:26:08] Michael Pupil: Um, but on a more serious note, you alluded, earlier in the conversation that the portfolio has stabilized in terms of the delinquencies which coming from the Lexop perspective is amazing, because we are not seeing that as a universal trend across, a lot of the, credit unions, regional banks, banks that we're speaking to lenders, in general, that still seems to be a, a point of pain.
[00:26:33] Michael Pupil: And in some cases it's actually increasing. So, you're probably ahead of the curb. Could you share a little bit of insight as to, how you got there and, and maybe if that has to do with some of the risk tolerance that you're looking at or, you know, kind of the, the process that you have, because that's, it's a great sign and I hope that there are more that go down that path.
[00:26:56] Michael Pupil: And I'll expand on that afterwards, but I'd love to get your insight on that.[00:27:00]
[00:27:01] Robert Keil: Yeah, I wish I would have something magical there. Right. And one always has to be careful that one or two months don't necessarily make a trend and we'll have to see how, that continues. But, it's, part of what we've seen is probably a reflection of us being a little bit more careful as to what programs we take on and the underwriting guidelines used, right.
[00:27:24] Robert Keil: So that makes, makes a difference. even for example, when I look at another part of the bank where we have a very nice SBA lending portfolio, the bank somewhere in the close to the top 20 lenders for SBA in the us and, SBA is, you know, labor intensive and lots of paperwork.
[00:27:47] Robert Keil: But within that, that box, we actually have a more narrowly defined box as to what type of businesses we lend to, right? So for example, we don't lend, under the SBA program to startups or businesses that have been [00:28:00] around for less than two years. We're looking for not lending to certain industries there that it's just are filled with, with more delinquencies. it's usually the hotel restaurant space, daycares, that are troublesome. And so all of a sudden we find that our delinquency rate on SBA loans is about 70% less than, than the industry average. And, and that's just a reflection of the overall approach of our bank.
[00:28:30] Robert Keil: And, that might be why, we also see in our lending as a service portfolio stabilization because, a lot of it has to do with the types of loans, right? So for example, if you finance a, let's call it a frivolous purchase, right? Where people are much more prone to walk away from and say, you know what?
[00:28:51] Robert Keil: Just walk away because I don't need that massive $5,000 flat screen TV after all as badly. Right. [00:29:00] Versus if there is a true need, like let's say you have a, a small business that in order to stay operational needed that loan to provide some liquidity, they're much more likely to stick with it because their livelihood depends on it.
[00:29:16] Robert Keil: Right? So, picking out partners that really are in that latter categories, lend money for purposes that are, you know, not that easy to walk away from and pick a borrower that represents a better credit risk. Even going back to, for example, our SBA portfolio, the average FICO there is over 750.
[00:29:40] Robert Keil: That's a borrower that historically has shown they're not just walking away from obligations, right? So that selection of loan partners and then in turn, the underwriting criteria that we agree upon is pretty critical. And maybe that's the reason why we've seen kinda at least for, two months, a [00:30:00] stabilization of delinquencies.
[00:30:02] Robert Keil: But I think, ask me the same question again in six months and then we can say that yes it has definitely turned, or it was just, months or two of outliers. We'll see.
[00:30:11] Michael Pupil: Sure. Well, it sounds like it's discipline and practice as opposed to discipline and theory. Um, and who knows? I, I hope that that is the case. I know, there were very interesting trends over the last couple of years for various financial institutions that got involved in lending practices that in some cases, were new.
[00:30:33] Robert Keil: Mm-hmm.
[00:30:33] Michael Pupil: Not to pick on anything, but I, I love the example of a lot of credit unions getting involved in indirect lending, through auto lenders where they were now underwriting loans for an individual walking into purchase a vehicle. Um, and now the credit union will pick up that loan. And the credit unions have a wonderful relationship with their community, and there's a deep tie between members and the credit unions.[00:31:00]
[00:31:00] Michael Pupil: When a loan is, offered to somebody that had no idea that the credit union was even, kind of doing that, the relationship breaks down and that business model kind of suffers, and that's where their loan portfolio seems to be suffering most because now the payments are coming on from different financial institutions. It was a business model that was never really as, as prevalent as it is today. And so it, it that comment of discipline and practice as opposed to discipline in theory, not that the credit unions are undisciplined. I commend them for reaching out to a new market to try to bring in more credit union members to themselves.
[00:31:37] Michael Pupil: And I think it was, it was great, just bad timing where interest rates have increased, loan origination has come down a little bit and for the most part, delinquencies are on the rise. And a lot of it has not necessarily to do with financial means, but rather just the ease of use. And this is where FinTech comes through, is to break down the friction of getting from point [00:32:00] A to point B.
[00:32:01] Michael Pupil: It, it's very interesting and, and no clue. I don't think anybody has a crystal ball for the next six months, 12 months, 18 months or anything like that. But certainly if the last couple of months have given you indication of stabilization, that is a wonderful thing. I hope that continues across the board.
[00:32:17] Robert Keil: Yeah.
[00:32:17] Michael Pupil: Robert, I know that, we've talked about some of the events that you've gone to, certainly a lot of FinTech events. Um, as I understand, you're going to be at both Finovate in September, money 2020 in October. Um, so for anybody listening, if you are there, I can attest that Robert is a wonderful person to have a meal with, amazing person to meet face to face.
[00:32:36] Michael Pupil: And I'm sure that you would love to, to speak to individuals, but what are you looking forward to the most out of those two events that are coming up, like what are you seeking? Uh, because it will be later in the year and it'll be towards the Q4 timeframe where year end is going to be wrapping up.
[00:32:51] Michael Pupil: What are you specifically seeking at those two events upcoming?
[00:32:56] Robert Keil: You know, really the same that I'm always looking for when, when going to [00:33:00] those events. I never get enough time to actually take in some of the presentations, which, I'm trying to be more, disciplined about, taking the presentations that really seem to, at least based on the description, deliver some cutting edge knowledge.
[00:33:16] Robert Keil: That's just important, right? It's so difficult to keep up with everything because it's like more, it could spend the entire time every day just focusing on industry news, but some of those presentations are key. And then on top of it, you know, I'm just a big believer in true networking and, and maybe I should clarify that, because to some people networking means I'm doing business, trying to sell stuff, and that's just frankly annoying.
[00:33:44] Robert Keil: Um, to me, true networking is I find people that have a real business, solve real issues and, and then you just kinda see if, if you can help them in some way, you know, sometimes it's a matter of introducing them [00:34:00] to someone that needs their solutions. Sometimes you just provide them some, some guidance in some way, shape or form, you know, doing that without any expectation of repayment is long-term the best way of doing business because it establishes you as somewhat of an expert that's, truly worth spending time with. And I found that you do that long enough business just comes to you, right? Because you're that, that trusted partner. And it's sometimes funny how a decade goes by and somebody feels under some moral obligation to repay a favor that I've long since forgotten.
[00:34:37] Robert Keil: Um, It comes and that's where the trade shows are just great, right? Because, that's usually, especially, money 2020 FinTech meetup, all the right people are, are there. And being able to meet them, learn a little bit about their businesses is great. And often I found you, you come across a company that has a solution that either we [00:35:00] can use directly or it solves some real headaches for my partners for my customers. And, and that's then again, where you add sometimes value, where I introduce a solution to a partner of mine might be no revenue in it for me, but man, I scored a lot of brownie points. And, having enough of those build up is, is a good thing. And so I guess staying on top of industry trends, meeting people, for the purpose of, of true networking and frankly that, fills up the, the schedule at those shows every year. I mean, it's, it's usually crazy at money 2020 when I count it up, I usually end up having taken over 40 meetings, which is draining, but also a lot of fun and productive.
[00:35:49] Michael Pupil: what a well said to boil it down to people over product. Um, you know, have the conversations, find those birds of a feather that, kind of talk the same talk. What is really interesting, [00:36:00] in technology, and I've, I've been a big advocate of this. Whatever technology you are purchasing, whether it's a consumer or business purchase, whatever it is, even our phones that, that we buy, the technology will look different and it'll change in a year from now.
[00:36:14] Michael Pupil: And so whatever it is that you're buying today, Will ultimately change. And imagine the shirts that we're wearing or the pants that we're wearing. If you told me that I bought this and in a year from now it'll be red. because that's how it's gonna change. and you don't know what it's going to look like in a year from now, because that's the point of technology.
[00:36:30] Michael Pupil: There's new features that come up. And so it's not the technology that you're purchasing or partnering with, it's actually the people behind it or the, the company vision. And if the company vision takes into account the partnership, the needs and the changes within the industry, whatever the color of that shirt is, it should match what is requested and required by the industry.
[00:36:51] Michael Pupil: So I love the approach. It's probably why we ended up, you know, chatting at breakfast because we didn't try to go down the business road. We went down the personal side more than, [00:37:00] more than anything else. Robert, I value this time that we've, uh, set together. I know how busy you are, so I know that, carving up this time is, a favor that I do owe you, and I hope you call it in, in the favor I will not soon forget it. so I hope that that is a, a chip that you get to play onto the table at some point in time. Um, so at this point I'm just gonna say thank you. I'll wrap up the show. if there's, one last thing that you would say, just as a, an initiative . Or something for yourself that you hope you see, um, you know, in the next couple of months before the year end, what would that one thing be?
[00:37:34] Robert Keil: Well, I think the one that has crept up a little bit, and I think that goes a little bit into your world, of collections, is because it's related to complaints. You know, when I look at what has happened over the last year, year and a half in this space,
[00:37:49] Michael Pupil: Yeah.
[00:37:51] Robert Keil: Some of the banks out there, got a little bit in hot water because their 3rd party risk management wasn't up to par or they didn't monitor Reg E, [00:38:00] Reg Z complaints and disputes appropriately or resolve 'em appropriately.
[00:38:05] Robert Keil: So there was a lot of focus on that. but where I see a shift is now the focus on consumer complaints. And, that's a little bit more squishy because like with Reg E, it's all clearly defined. You gotta give your provisional credit within 10 days. You gotta resolve the dispute within so, so many days you gotta send the notifications all very clear.
[00:38:26] Robert Keil: But what's the right way to resolve a dispute? Sometimes that's not, not that easy, right? And so, The best way handling complaints is not have 'em happen in the first place. So there really needs to be a better focus on the customer experience for anything that deals with consumers. May that be deposit products, may it be loan products.
[00:38:51] Robert Keil: Focus on on the right customer service experience, and that means. As much as, as technology, [00:39:00] folks like to automate everything, you still need a call center where you can talk to a human being. If you do use a chatbot, make sure it's not all artificial, but no intelligence. It really needs to do something.
[00:39:14] Robert Keil: If you provide email support, respond, and usually it's just that. Call center support or it's somebody that you cannot understand no matter what, because it's a call center in, in a country where people just don't really speak English. Chatbots that don't make sense. No response. What's the consumer to do when they can sometimes get answers to simple questions?
[00:39:39] Robert Keil: They file complaints and that turns into a very manual effort of handling, really aggravates regulators because it's a real manual process for them. And that's where really goes into your world of collections. Collections definitely or sensitive area where it's easy to upset people, frustrate them.
[00:39:59] Robert Keil: And[00:40:00] that's why I like your company and your solution, right? It's a much gentler way of, Preventing complaints from happening in the first place. And, that I think is one of those new trends to really watch and focus on. And, I would argue that some of the FinTech programs that, feel, well, we cannot have the 800 number because it's too expensive.
[00:40:23] Robert Keil: Why? If you can't afford that, you really can't afford to be in business, right? You need to adjust your business model, and that would be the one thing I throw out there as food for thought for everyone. If it's too expensive, well find a better way that's less expensive, but still provides a top-notch customer service experience, and then you'll be in good shape.
[00:40:46] Michael Pupil: Uh, this is, Those are enlightening comments, especially on the backend of, the origination side of things. I couldn't agree with you more. in fact, just poking at Lexop for a second, that the approach that Lexop takes [00:41:00] to trying to marry empathy to technology is not in replacement of any of the channels that you were talking about.
[00:41:06] Michael Pupil: There are still people that want the human connection, which is why a call center is absolutely needed. And a lot of it has to do with demographic changes. expectations from different, consumers. Um, and so the, communication styles need to be plentiful. even text messaging is becoming more of a communication channel for, lenders across the board in order to connect with their consumers.
[00:41:33] Michael Pupil: In order to answer questions or to relay information and in the event of delinquent payments, be able to work with that customer in order to arrange repayment and keep them within service so that there aren't things like cancellation of service, repossession of items, no bank, no credit union, no lender is in the business of all of a sudden repossessing cars and becoming a car [00:42:00] dealership. Nobody wants to repossess a home. It is not a fun experience, for anybody. And so communication is what it boils down to, and the method of which needs to be looked at from every organization. And like you say, if there's a chat bot that's there, don't make it AI completely. There's a really great advocacy for helping, the self-serve type of thing. And where, Lexop proudly comes in is that we do try to marry that empathy to technology. And thank you for the kind words to that. We'd love to play a small part in that role.
[00:42:34] Michael Pupil: Alongside all of the other communication channels. And I think that's when you get the best sound out of the symphony is when you have multiple instruments, right? Or the best job is you have multiple tools, not just one, not just the hammer. You gotta, you gotta move a little bit past that.
[00:42:51] Robert Keil: Exactly.
[00:42:52] Michael Pupil: thank you so much.
[00:42:53] Michael Pupil: I can't think of a better way to transition this over into our next one. I will cut you loose.. Thank you, Robert for joining [00:43:00] Connect and Collect, for this session. This has been a, a lot of fun. I look forward to seeing you again as well, and so hopefully you have another meal and get to have a couple of conversations as well.
[00:43:09] Michael Pupil: I know we had a lot of fun last time and no doubt we'll have fun next time.
[00:43:14] Robert Keil: Absolutely pleasure.
[00:43:16] Michael Pupil: Thanks for joining everybody. Join us next month on Connect and Collect, where we will discuss the future trends that are coming through for both lending and collections. Thank you everyone for joining. Bye-bye.