Introducing our new “Five questions on FinTech” blog series. I’ll be talking with FinTech players and asking them five questions on hot topics that matter to the industry and those looking to lead it.To start the series, I sat down with Chris On, head of revenue strategy at LendUp, to get his point of view on the key factors affecting the FinTech industry, including the role of customer experience, innovation and his personal motivation.
Q1: What are the key factors affecting the FinTech industry today?
CO: I think we are seeing the FinTech industry is at the inflection point right now of going from a trend, to being a standalone category in financial services. Over the past five years or so, there's been a lot of focus on innovation, so we have marketplace lending, payments and new credit opportunities.
I think over the next five years though, there's going to be a shift to more of a focus on scalability and sustainability. Silicon Valley is not just about building consumer innovative products and scaling; it's also about focusing on things like sustainability and profitability going forward. I think companies are going to be evaluated on different methods going forward, with much more of a focus on profitability and having product robustness.
Q2: What role does the customer experience play in your brand strategy?
CO: Customer experience is really important at LendUp. Part of our mission is to provide anyone with a path to better financial health, which includes expanded access to safe credit and an opportunity to improve their credit over time. As we develop products, we're constantly looking for opportunities in the subprime and deep subprime space where customers might not have as many opportunities because their credit scores are too low, or maybe they're stuck on products that are costing them way too much. A large part of our focus is finding those opportunities, and building products that can help these consumers get to a better spot, whether it's improving their credit history, or moving on to better products over time.
Listening to customers and seeing the impact that we have on them is what really gets me excited and motivated to come into work every single day. This is not just a job, this is something that I'm passionate about, it's a part of my life. Being able to talk and listen to customers, and hear them tell us their stories about how our product has changed their lives has been immensely impactful for me. It's something that keeps me and the rest of the company very excited about what we're working on and building.
Q3: What are you doing differently that has enabled you to lend with confidence to a traditionally challenging segment?
CO: Alternative data is really important for us because our consumers don't always have a robust credit file or have a high credit score, so it is something that we need to do for our customers and our business success. If we think about the customer segment that we're looking at, it includes customers who have as low as a 300 up to a 500 credit score. In that space, traditional data alone doesn't always work, so we need to pull in different data sources to get a better picture of their creditworthiness. These customers may not have credit cards anymore and might be using prepaid cards or cash, they might be paying rent instead of mortgages, or they might not be using any traditional loans. We've found different places where we can get some payment behavior on these customers and understand the financial situation that they're in right now.
Q4: FinTech lenders are known for innovation. How do you foster innovation on your team?
CO: When we think about fostering innovation, we find that actually talking to our customers is the best way to innovate. We've built systems so that we can talk to our customers every single day. Every employee at the company listens to customer phone calls at least once a quarter, which is very valuable. That's where we find the best insights. Sometimes things come up that we aren't even looking for, or we’re looking in a different direction—our customers help us get on the right track.
Q5: Like our clients, we’re always looking to improve the customer experience. So, what do you expect from a good data partner?
CO: When looking at data providers, they have to have high quality data, and they need to be reliable and dependable. Beyond that, we start looking at things like: What does the coverage look like? Are they covering all of America? Are they covering a small subset?
When we look at quality, we assess: How good are they at predicting risk? Are their variables constantly changing? Do they actually cover most of the universe?
After that, we start evaluating technology: How easy is it to integrate with them? How flexible can they be? What kind of customization can they do?
We’re doing many different types of reports and research, and it's very important for us to be able to get that customization along the way. With partners like TransUnion these data explorations are a no brainer, because we are both aligned with what success looks like.
Many thanks to Chris! Coming soon: I’m talking with Ibo Dusi, Chief Risk Officer at Payoff. Hear his insights on the future of the FinTech industry, the importance of differentiation and how they’re saying yes to more consumers.
Click here for related blog posts for the FinTech industry.
Have questions you’d like me to ask future participants? Email FinTech@transunion.com.