Leveraging data to personalize the lending experience

Jim Marous (00:10):

Welcome to a special eight-part series of the BankingTransformed Podcast recorded at MeridianLink LIVE in Nashville, Tennessee. I'm your host, Jim Marous.

Jim Marous (00:18):

During this series of episodes, we dive deep into the world of digital transformation of the financial services industry. We speak with executives from a diverse range of financial institutions, each of whom has embarked on a unique digital transformation journey to become more future-ready and responsive to the changing needs of their customers.

Jim Marous (00:39):

We explore the strategies, challenges, and lessons learned by these forward-thinking organizations as they navigate the complex landscape of digital transformation.

Jim Marous (00:50):

Whether you're a financial services professional, a FinTech entrepreneur, or simply interested in the future of banking, this series provides you with valuable insights and inspiration as we explore the cutting edge of digital transformation in the banking industry. We hope you enjoy these candid conversations with organizations of all sizes.

Jim Marous (01:10):

Hey, it's Jim Marous from Banking Transformed, today, coming from the MeridianLink LIVE event at the Gaylord Hotel in Nashville, Tennessee, where about 1700 financial institutions or attendees I should say, are interacting with each other, interacting with financial services solution partners, and with MeridianLink as they talk about delivering a better experience for members and customers.

Jim Marous (01:36):

So, Amber, this is not the first time on Banking Transformed. Actually, you were on a Banking Transform show a little while ago. You're from A+ Federal Credit Union, where's that located?

Amber Isaku (01:45):

Austin, Texas.

Jim Marous (01:46):

Great area. And how long have you been there?

Amber Isaku (01:47):

Six and a half years, almost seven.

Jim Marous (01:51):

So, can you tell us a little bit about your career path, even though I remember it (a lot of the people listening today may not), and if you can talk not just about your career path, but then a little bit about your organization.

Amber Isaku (02:03):

Sure. So, I started as a teller, which I think is a great place to start if you work in financial services, so ground up. So, started as a teller at a small bank. So, I did start at a bank and then moved to a credit union and haven't looked back since working for credit union.

Jim Marous (02:22):

What's the difference?

Amber Isaku (02:24):

So, the people aspect of working for a credit union, it was kind of night and day for me. I was very early in my career, but I could tell as soon as I walked through the doors of that first credit union that I worked at, just the whole atmosphere and the culture was completely different from anything that I had experienced before. And still love it to this day. It’s people helping people.

Jim Marous (02:44):

What's your role at A+?

Amber Isaku (02:46):

I'm a VP of Lending.

Jim Marous (02:47):

Okay. So, your VP of Lending, you come in and the atmosphere, the internal vibe is different. But today, consumers aren't necessarily going to see the vibe of the people because they may not even come into a branch. And as the VP of Lending, I would imagine, like most VPs of Lending, you're trying to digitize and make the process more seamless, more digital, and making it so a consumer may not have to come to the branch.

Jim Marous (03:16):

Today, how are you trying to personalize that engagement to make it feel like it would've felt like 10, 15 years ago, if you went into a branch in A+?

Amber Isaku (03:27):

That's a great question, because it's easy to lose the human aspect with the digital push, so trying to marry those two things, especially in the credit union space is so critical – not to digitize and automate into someone feeling like they're just a number, but being able to maintain that sense of personalization.

Amber Isaku (03:45):

And I think the data is key. We have so much data on numbers that we can tap into. And like my organization A+, we're still kind of in the early stages of exploring what we can do with that. But using it for member outreach, marketing campaigns, to drive interest and present offers that are personalized.

Amber Isaku (04:07):

And then once they get into the funnel, we tend to call it, do they feel like we know them? We know who they are? We know what the next best product should be for them or what the value is of the products that we're presenting.

Jim Marous (04:25):

So, you're trying to use data to not only make a better digital experience, but also know your member better.

Jim Marous (04:35):

So, let's talk a little bit about the back office, the digitalization of the process. Where are you on the journey of becoming a digital loan provider in the true sense of, I can do it on my phone, I don't have to come into a branch. Where are you in that process right now?

Amber Isaku (04:51):

We've come a long way over the past few years. So, for us, it started with system consolidation because we were using five or six different (just for lending) loan origination systems. So, somebody applying online, their application experience could look completely different depending on which product or which channel they were coming through.

Amber Isaku (05:08):

So, we consolidated everything for consumer and mortgage lending into MeridianLink ecosystem, which has been incredible. So, it broke down a lot of silos between process, a lot of data silos that we had in the past. So, that's really unlocked a lot of potential for us to do just that.

Jim Marous (05:25):

How good is that experience from your perspective? Because you're continually trying to improve that. How good is your experience today and what are the big changes that have happened as part of your transformation of moving from multiple providers to MeridianLink?

Amber Isaku (05:40):

So, we have a cohesive application experience, which was step one kind of foundational. And into that, we've done a lot of work on automated decisioning over the past few years, but we do a lot of indirect lending. So, that was huge in the indirect space because dealers want answers yesterday on their loans.

Jim Marous (05:57):

You knew I was going to call you today, so I want to know, do we approve this person or not?

Amber Isaku (06:01):

And then the same thing for members. Of course, if you're applying online … I don't believe it's other credit unions that we're actually competing against. It's the experience of the Amazons and the SoFis and where everything's instantaneous.

Jim Marous (06:15):

And predictive, and prescriptive is where we're trying to go as an industry. But it's interesting I was leaving the house a few days ago and was telling my wife how I had to take my Jeep in to be serviced up.

Jim Marous (06:28):

And I was talking about the Jeep quite a bit and I said, please we have to ... I can't remember the name of the dealership that I went to the last time, but I kind of knew where it was, but I didn't even know the city because it's not where we live permanently.

Jim Marous (06:39):

And all of a sudden, I look over her shoulder and on Hulu, I get two ads back-to-back during the news, one of the one dealer, one of the other dealer. I go, “Oh my gosh, that's the name of the ...” And all of a sudden, I go, “I know why that happened, the damn TV's listening to me.”

Jim Marous (06:58):

But that process, that whole engagement and personalization process is what people, as you said, expect from Amazon, but they expect from the credit union, they expect from their bank, they expect from their grocery store.

Jim Marous (07:12):

So, in that process, how quick can a consumer right now, a member apply for a loan? I know it's going to differ if they're already a customer, if they're are a member or if they're not. But what roughly timeline standpoint?

Amber Isaku (07:26):

I would say on two ends of the spectrum, a personal loan takes about 30 seconds to submit the application. And if you get an instant decision, you know what the answer is right there.

Jim Marous (07:35):

Because you're taking it off ... you're talking about a current member where you just simply say, “I want this now.”

Amber Isaku (07:40):

So, you have at least your answer within a minute, less than a minute. On the other side of the spectrum is probably something like a home equity application where we don't have automated decisioning for that, but you can get your application in and know that somebody's working on it within five minutes or less.

Jim Marous (07:55):

So, the first engagement is five minutes or less for every loan. And I go in with the feeling that if you've got my application, if you've done the part, if I'm done with my part and I simply have to wait for your part, I'll wait a whole longer time than I would've in a world where you're asking me every single part of what I have to do.

Jim Marous (08:15):

And again, most organizations can't take information that's already on file and pre-populate an engagement, which is so wildly important, because I don't want to answer the question the 15th time.

Jim Marous (08:29):

And God forbid, I've been in a situation where I opened my first account a week and a half ago, and now I'm saying, "You know what, I got to do something else.” And you're asking me all the same information again because it's either not in the system or it's not accessible, or it's just an easier process for the financial institution.

Amber Isaku (08:46):

Exactly, if I'm coming to my financial institution, there's a consumer expectation that they should know me. You go to the Amazons and the Netflix, and they all know you better, probably better than you know yourself.

Jim Marous (08:59):

Registering today at the MeridianLink LIVE event, I only pushed in three letters of my last name, and it pulled down my registration. That's what life's become. I'll start it, you finish it for me and make it as simple as possible.

Jim Marous (09:14):

So, how do you balance that simplicity, that seamless integration with fraud and risk? Because speed and safety are not necessarily a uniform platform, but the consumer wants both. So, how do you do that?

Amber Isaku (09:30):

There's a lot of tools out there in the marketplace, fortunately that ... and this is really important that it's doing what it needs to do, but it's almost invisible to the consumer process. So, integrations that are working behind the scenes, looking at all of the different data points, is this person who they say they are.

Amber Isaku (09:47):

And our only inserting layers into the process beyond a certain level of risk and every institution's going to have their own definition of that. But if it's working behind the scenes and it's smarter than those intrusive processes of asking for paperwork, a human reviewing a piece of paper and getting back to you with an answer.

Jim Marous (10:07):

Or asking for information we just do out of habit, where it doesn't have any bearing on what we're trying to achieve, it's simply habit.

Jim Marous (10:16):

So, you haven't been with the organization an extraordinarily long time. You moved up from teller to being a loan officer. How do you view digital transformation at your organization, and what's the next thing? What do you see as the use of data analytics towards not just an easier process, but a more personalized ongoing engagement.

Amber Isaku (10:41):

The personalization is kind of our next frontier that we're working through. So, we've been doing all of the groundwork layers of making current process easier, breaking down the silos, getting the ability to tap into all of our data, and now, it's about how do we mine it to build those personalized experiences.

Amber Isaku (11:00):

So, those are the next processes and initiatives that we're going to be working through over the next couple years to get that experience, where if you log into online banking, does my credit union know me better than I know myself? Is it proactively presenting the offers to me? Whether that's loans or deposit accounts or services, whatever it may be – to say, “We know you, here's what we think you need best, here's the value for the options that we have.”

Jim Marous (11:23):

So, what are some of the wishes you have in this whole process? Let's say I'm a mortgage customer or I'm a consumer loan customer. The reality is I get the loan and we don't talk for another two and a half years, or maybe it's 30 years – either way except statements and end of year statements.

Jim Marous (11:42):

How do you see that engagement potential going forward, especially from the loan side? Deposit side, we're interacting in some way or form. But how do you see it happen on the loan side so that I remember where my loan is? Or you show me that you remember who I am.

Amber Isaku (12:00):

I love that question. What really interests me is engagement through almost gamification of the lifecycle of having a loan. So, it's not just a transaction where you get a loan and it's once and done, but now, okay, every time I log into my online banking or I walk into a branch, it's okay, congratulations on how many payments you've made on your loan. Or if it's the case of a mortgage, congratulations, you've owned your home for a year. These little things that kind of-

Jim Marous (12:28):

Makes a difference.

Amber Isaku (12:29):

Make it more personal. And it's not just you making payment transactions for the next 30 years, it's the experience.

Jim Marous (12:35):

And are you looking out for me? I get frustrated because we had a mortgage with a great credit union, they did really well what we needed at the time, but rates dropped. And as a family, we're somewhat lazy financially, we don't do everything we should do, and shame on us. But we decided we wanted to get a second very small place, second home in Florida.

Jim Marous (12:59):

Well, in getting the lending for there, we decided, well, why don't we also pay off and move down the rate spectrum from what was six to a two, and how do you go about that? Well, my previous credit union never reached out until the day we asked for a payoff amount from the other credit union. And they reached out and said, "Oh, we can do that." And my only comment back was, “But you didn't.”

Jim Marous (13:27):

And now, in this case, it was really interesting because the CEO of the organization called me. I didn't have any other relationships with him, there was no big deal here. And he goes, "What happened?" I said, "Well, you've known my rates dropped, you made a decision as an organization, rather than make him aware of what's going on, we're going to ride this."

Jim Marous (13:47):

The problem is, in our case, we increase the size of the overall loan package whereby the profitability on the relationship was going to be stronger than it was in the past. So, shortsightedness but I get from you that what you're trying to do is avoid those types of situations where there's opportunities and you're actually able to prove what the relationship means.

Amber Isaku (14:13):

And I love that example, because I think it's a huge missed opportunity today. It's easy to chase growth in terms of the next member or the next loan, the next product. But then there's this huge missed world of just existing relationships and knowing who those members are and what they might need.

Jim Marous (14:32):

So, are you challenged by the fact that more than ever … yeah, I do a survey of financial institutions when I'm at … in front of a crowd, I say, “How many of you have closed your primary financial relationship in the last five years?” A couple raise their hand.

Jim Marous (14:40):

I ask, “How many of you have expanded your relationships with other financial institutions? Be it a FinTech or a tech company or another traditional financial … in the last two years?” Virtually everybody raises their hand. And few organizations have taken an awareness of what I call silent attrition at their institution.

Jim Marous (15:08):

How do you hope to stem that and make it so that your members don't knock on the doors of other organizations looking for something else? And if you build it, it doesn't mean they already always come because they may not know it. How do you keep your members informed that, “Oh by the way, we're doing this here?”

Amber Isaku (15:28):

I think the personalization is key, not just in the messaging, but in the channels and the ways that we're reaching out to members because not everybody has the same preference of their channels. Some people, small portions still like to walk into a branch. Some of them-

Jim Marous (15:42):

And it's not defined by demographics anymore, it's just the way people want to do things.

Amber Isaku (15:48):

So, you've got to be able to have that ability to tap into meeting your member where they're going to be. You need to know that, and you need to be there. And then with the right messaging and the right personalization so that they feel that their credit union’s there for them.

Jim Marous (16:02):

So, you're one channel or you’re one product line within your organization and you obviously depend on other product lines to have the data transferred. How are you doing as an organization from the democratization of data standpoint of not having to just be the IT department – that you have to knock on the door and say, “Well, can you tell me this, but where you have access?” Are you doing that at your organization yet?

Amber Isaku (16:24):

That's a really timely question because we're in the midst of a data warehouse project right now that's doing exactly that, is the goal. It's bringing all of our data sources together and then we're going through training and accessibility to be able to tap into that data.

Jim Marous (16:37):

And security and everything else that goes with that.

Amber Isaku (16:38):

Exactly.

Jim Marous (16:39):

But to give you the tools at an instant, to make decisions, to do test modules, to figure out marketing programs, whatever it may be. And that's interesting because that is very uncommon for a smaller finance institution.

Jim Marous (16:55):

What drives your innovation mindset and your culture from the standpoint of looking for that next thing? Because we all know we can sit back on our laurels. We're not going to go out of business. And unfortunately, there's a whole lot of leadership teams at major financial institutions that have gone by the same model for the last 30 years and they've always made money.

Jim Marous (17:16):

How do you do that internally? What is different about your organization from an internal standpoint to be … I mean, you're talking gamification. I haven't heard gamification come out … in fact the last time I heard gamification come out of somebody's mouth was yours. The last time I interviewed … I'm going, “Oh, I know that's exactly the way she used it.” But that's interesting because it's more than a mindset. What is different about your organization?

Amber Isaku (17:44):

I mean, digital and data-first is pretty much at the forefront of everything that we talk about, when we talk about strategy, forward-looking. We have the buy-in top down to have that be our focus and that be our lens of how we look at how we prioritize initiatives within the organization, where we're looking forward and where we need to be positioning ourselves.

Amber Isaku (18:04):

And we're an Austin based credit union to, so I mean, this is true for all over the country, but Austin is very tech heavy market.

Jim Marous (18:13):

And getting more so every day.

Amber Isaku (18:14):

Absolutely.

Jim Marous (18:15):

Can read the paper and somebody else has moved to Austin.

Amber Isaku (18:18):

So, we've got to be there. We've got to be there as a credit union.

Jim Marous (18:21):

Has your leadership changed or the same leadership thinking differently?

Amber Isaku (18:25):

A little bit of both. It's a healthy mix.

Jim Marous (18:28):

But it's interesting because it's not the technology, it's the culture and the employees that can drive the use of that. Because you can buy stuff anytime. It's expensive if you aren't using it, but we see multiple organizations buying Salesforce but not deploying it.

Jim Marous (18:48):

What is on your to-do list over the next couple years that you're saying, “I'm getting this done? I'm going to fight whatever battles, but I'm going through walls …” because I just sense from your personality that you're going, “I got some things up my sleeve that people don't even know about yet, but I'm going to win the battle.” What are some of those ideas? And we'll keep it secret.

Amber Isaku (19:09):

For lending, I would say some of these pieces that we've talked about, which we just have not gotten to yet, but it's on our roadmap. Short-term, it's the fraud solutions, digital fraud solutions. How can we do that in a seamless way that's smarter and better identifies risk but is not adding friction into the process. And then we're working through more phases of automated decisioning. How do we keep pushing the needle on that? We have about-

Jim Marous (19:34):

An automated instant funding or instant dispersion, things of that nature.

Amber Isaku (19:38):

That's next. So, that's kind of our dominoes that we're going to be working through over the next 12 months.

Jim Marous (19:43):

So, you have to pick partners for this. Are you in charge of picking partners for the lending solution or do you have ... because what happens in lending, happens in deposits and all these things.

Jim Marous (19:55):

How do you work as a team to determine the partners you want to use going forward? Because this is an open site with every solution you're trying to do, because as you mentioned, fraud. In today's world, which is kind of cool, but also somewhat scary, that you don't have to use the same partner for different components of these composable solutions, because they all have gotten very good at working with each other.

Jim Marous (20:18):

I mean, we see here that MeridianLink has put front and forward a lot of their solution partners that they've used to build their solution, but they're opening it up also to you directly saying, if these are people you want to work with directly, it can be done as well. How do you determine who your partners are going to be?

Amber Isaku (20:33):

So, we usually start with our best existing partners. Start there, evaluate those solutions, and then if they don't have some native solution for the need that we have, then we start looking at the partnership recommendations and the different marketplaces that they have (MeridianLink's got a huge array). So, that's usually our start to evaluate kind of next best.

Amber Isaku (20:54):

And as an organization, that's a tough line, because so many vendors can do so many different things, so many different services out there, making sure that they all talk to each other. And as much as where we can identify partners that do a spectrum of things that can multipurpose within the organization.

Jim Marous (21:12):

And work well with the other partners. I mean, they all realize recently in the whole spectrum of the financial ecosystem how important it was to not be trying to defend your turf against another partner, because the only person that suffers is a financial institution – guess what? They're the end decision maker on who they're going to allow in.

Jim Marous (21:34):

It's interesting when you look at the future, if you look at the biggest opportunity, your organization today, what is the biggest overall opportunity that you're looking at and saying, “This is cool, we can do this?”

Amber Isaku (21:51):

Oh my, there's so many. I keep coming back to the personalization piece, I think just because it's top of mind for us. That's something we're actively looking for right now is how do we get a partner (we're looking at potential partners for this) – but how do we get something plugged in that taps into our data that can be able to provide those kinds of offers through online banking. This is not just a lending thing, this is across the organization, but how do we do that-

Jim Marous (22:22):

It's automation from the consumer standpoint as opposed to the product standpoint. I'm not going to push a loan to a person that's not ready to buy, but I'd like to find out who's ready.

Amber Isaku (22:33):

So, we've got both ends of it. Like the personalization to help drive the right members into the funnel at the right time, with the right offer for them. And then once we capture them, how do we have the smoothest most friction-free process with things like the fraud and the automated decisioning and the instant funding, and just everything flows.

Jim Marous (22:52):

Well, it's interesting because again, the marketplace provides you so many opportunities from a solution standpoint. What I find interesting is your organization, we've had a couple others on the shows recently that are relatively small, but I think are pushing the limits on what even the providers have in the marketplace.

Jim Marous (23:11):

Do you find yourself at times asking for something that the provider says, “We want to do that because you're right, you're not the only one, and we need to find a way to work with you for lack of a better term, a beta site for being able to implement.” Are you find yourself in that position as an organization today?

Amber Isaku (23:29):

Yes. At times, yes, and at times we’ve been that.

Jim Marous (23:30):

At times it’s frustrating, and sometimes it's really exciting that you can help build the solution, I would imagine.

Jim Marous (23:38):

That's very cool, because again, the ability we have recently on our podcast to interview small banks doing amazing things is really invigorating because you realize that size doesn't matter. It's the energy of the people. It's the culture of the organization. It's leadership, it ends up falling somewhere, and it's the ability to envision what's possible.

Jim Marous (24:07):

I really appreciate you being on the show again. It's been a tremendous opportunity. You bring back some great memories when we started talking. This is very cool because you are really fearless, for lack of better term, and to have the reinforcement of your organization to be fearless.

Jim Marous (24:27):

When I asked you about what your future looks like, it was kind of like going, “Oh, they don't even know what my future looks like.” You got to get the basics right, but the consumer's expecting so much more.

Jim Marous (24:37):

I use the example often about you pay $170 a year to Amazon, and it's not for free delivery because you can get it in a lot of other places. It's not for rapid response, you can go at a lot of ... and don't tell me it's your TVs and TV shows and books. No, that's not it.

Jim Marous (24:54):

The reality is you're paying for the fact that that organization knows you, understands you, and will customize an experience to you when you don’t even notice it. And by the way, they have never messed up on the fraud and on the risk standpoint, in that you feel comfortable that they're not going to put your relationship, your identity at risk.

Jim Marous (25:17):

That's worth a lot of money. And hopefully, as organizations, we can realize that there's a value transfer there that we can ask to be paid for, as not a penalty fee – an opportunity cost that, oh by the way, this relationship is worth to not get the lowest price offer out there.

[Music playing]

Jim Marous (25:34):

Thank you again for being on the show. I really appreciate it. It's been great.

Amber Isaku (25:38):

Thanks, Jim. It's an honor.

Jim Marous (25:38):

Thanks. Appreciate it.

Amber Isaku (25:39):

Thank you.

Jim Marous (25:42):

Thanks for listening to Banking Transformed, the top podcast in retail banking and the winner three international awards for podcast excellence.

Jim Marous (25:50):

We appreciate the support we've received from MeridianLink in making this eight-part series of episodes a success.

Jim Marous (25:58):

This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage; director, Dave Douglas; audio engineer, Chris Fafalios and video producer, Will Pritts.

Jim Marous (26:10):

Thanks for joining us and until next time, keep innovating and transforming.