00:02.430 --> 00:05.940 Tal Schwartz: KHello, good morning, and welcome back to a 00:05.970 --> 00:11.670 CLA webinar, we have a really exciting session, for you all 00:11.670 --> 00:15.660 this morning, we're going to be doing an assessment of the 00:15.660 --> 00:19.080 fintech lending industry in Canada, where it's come from, 00:19.200 --> 00:23.910 where it's going. You know, it's been an incredibly exciting 00:23.910 --> 00:27.180 week, obviously, with the American elections, looking at 00:27.180 --> 00:31.830 the public markets, things are pretty wild. So really excited 00:31.830 --> 00:38.910 for today's conversation. Also, big thank you to our sponsor and 00:38.910 --> 00:43.050 supporter TransUnion. You're going to hearing a lot from 00:43.050 --> 00:48.180 TransUnion over the next hour. And I encourage you to connect 00:48.180 --> 00:54.330 with with the team or with Matt, afterwards to discuss some of 00:54.330 --> 00:58.410 the solutions that they offer. So with that, I'm going to hand 00:58.410 --> 01:00.510 things off to your moderator, Mark. 01:02.430 --> 01:07.980 Mark Reisler: Thanks. Thanks to all welcome, everybody. Happy 01:08.010 --> 01:12.420 early Thursday morning, and really looking forward today. So 01:12.420 --> 01:14.640 I'm Mark Rossler. I'm the managing director of lending 01:14.640 --> 01:19.920 over at FGS, where we tend to focus on growth strategies for 01:19.920 --> 01:23.670 large financial incumbents. And today, we're going to try and 01:23.670 --> 01:27.000 separate the conversation into a bunch of segments. So segment 01:27.000 --> 01:29.580 one, we're really going to dive into what's happening with the 01:29.670 --> 01:32.520 lender and the lead tech landscape. Segment two, we're 01:32.520 --> 01:34.710 going to take it from an empathetic point of view and 01:34.710 --> 01:38.340 under trying to understand our borrowers. And then if we have 01:38.340 --> 01:41.880 time, we'll go through some quickfire questions and open up 01:41.880 --> 01:45.600 the q&a a little bit more. So before we get started, I'd love 01:45.600 --> 01:48.630 to introduce our panel. Kevin, why don't you kick us off with 01:48.630 --> 01:50.430 an introduction. And we'll go from there. 01:50.970 --> 01:53.280 Kevin Clark: Great. Thank you, Mark. And thank you tal and the 01:53.280 --> 01:57.270 CLA team for putting on the event. My name is Kevin Clark. I 01:57.270 --> 02:02.010 am the Chief Revenue Officer for merchant growth. I have I guess, 02:02.010 --> 02:05.250 about five and a half years under my belt in the FinTech 02:05.250 --> 02:09.900 lending space. Having founded lender five back in 2015 and 02:09.900 --> 02:15.480 judy.ai. Shortly thereafter, and managed through the challenges 02:15.480 --> 02:19.410 of COVID and have come out on top with merchant merchant 02:19.860 --> 02:23.130 remains one of the premier lenders in the small business 02:23.130 --> 02:28.230 lending space here in Canada. And prior to my FinTech years, I 02:28.230 --> 02:31.410 spent 30 years with the bank of Nova Scotia in a variety of 02:31.860 --> 02:36.300 lending positions. And and so come at this space with a lot of 02:36.300 --> 02:40.260 different background be traditional lending, and now in 02:40.260 --> 02:43.230 the modern world of FinTech lending, and it's been a 02:43.230 --> 02:45.870 fascinating ride, and I look forward to being a part of the 02:45.870 --> 02:49.050 panel. Thanks, Mark. 02:49.830 --> 02:51.660 Mark Reisler: That's great. Matt, do you want to go next? 02:52.440 --> 02:55.620 Matt Fabian: Sure. Good morning. I'm Matt Fabian, I'm director of 02:55.620 --> 02:59.250 research and consulting at TransUnion. Canada. For those 02:59.250 --> 03:02.790 that may not know, TransUnion is a Global Information Services 03:02.790 --> 03:06.810 data and analytics company. We provide not only credit 03:06.810 --> 03:11.490 solutions, but other data fraud and analytic solutions for the 03:11.490 --> 03:15.780 lending industry, including fintech. And part of that I was 03:15.780 --> 03:20.220 in roles in strategy and analytics roles at one of the 03:20.220 --> 03:24.240 big five banks for about 18 years. And part of that was in 03:24.240 --> 03:27.630 management consulting. So really excited about this topic, high 03:27.630 --> 03:30.360 growth area. We've been monitoring it worldwide. 03:30.360 --> 03:34.230 Certainly. And, you know, I know a lot of the folks on this 03:34.230 --> 03:35.610 panel, I think some of you great discussion. 03:36.780 --> 03:39.600 Mark Reisler: Great. Thank you, Jason. 03:40.800 --> 03:43.320 Jason Appel: Thanks, MarK. Good morning. My name is Jason Appel. 03:43.320 --> 03:46.470 I'm the chief risk officer and go easy limited. been with the 03:46.470 --> 03:49.770 organization there for just under eight years. Go easy as 03:49.770 --> 03:52.920 one of the larger nonprime lenders publicly traded non 03:52.920 --> 03:55.680 prime lenders in Canada. We've been in the business for about 03:55.710 --> 03:59.280 15 years give or take, got our start, if you will, in the 03:59.310 --> 04:02.190 leasing business, which we remain active in and across the 04:02.190 --> 04:05.700 country. Really happy to be part of today's panel. Lots of good 04:05.700 --> 04:09.000 dialogue and discussion I'm sure to be had. It is an interesting 04:09.000 --> 04:11.310 time to be a lender in the Canadian market nevermind 04:11.310 --> 04:14.280 globally. So looking forward to exchanging thoughts and views 04:14.280 --> 04:15.420 with my panel colleagues. 04:16.290 --> 04:18.030 Mark Reisler: Great Love the balloon in the background, by 04:18.030 --> 04:18.390 the way. 04:18.630 --> 04:21.330 Jason Appel: Thank you. That just reminds me how old I am. So 04:21.810 --> 04:22.410 thank you for that. 04:23.910 --> 04:25.110 Mark Reisler: Perfect and Jeremy. 04:25.680 --> 04:27.600 Jeremy Kronick: Yeah, thanks Mark. Good morning everyone. And 04:27.630 --> 04:31.620 thanks tal for inviting me to be part of our this panel. So I'm 04:31.650 --> 04:34.200 I'm Jeremy Kronick Associate Director of Research, the CD 04:34.200 --> 04:37.650 Howe Institute. The CD Howe Institute, for those who don't 04:37.650 --> 04:43.320 know, we are a nonprofit that does Economic Research and 04:43.320 --> 04:47.880 advises on public policy. So I run the financial services and 04:47.880 --> 04:51.960 monetary policy research programs there. I'm an academic 04:51.960 --> 04:54.150 by training since my background, I've been at CD Howe for about 04:54.150 --> 04:58.950 six years, focused very much there in the research space on 04:59.640 --> 05:02.820 you know, activity the future of financial services sector. And 05:02.820 --> 05:05.790 then on the monetary policy side, sort of the implications 05:06.630 --> 05:09.810 of the Bank of Canada actions for, for for the financial 05:09.810 --> 05:12.960 services sector and for the macro economy at large, just 05:12.960 --> 05:15.540 really looking forward to being part of this panel a little bit 05:15.540 --> 05:18.930 outside my wheelhouse and some of the sort of specifics around 05:18.930 --> 05:21.210 about lending. But I'll I'll do my best to provide sort of a 05:21.210 --> 05:24.870 macro perspective and some of my views on the overall sector. 05:26.100 --> 05:28.320 Mark Reisler: Jeremy, I think you're gonna be just fine. And 05:28.500 --> 05:32.160 we'll go easy on you. Okay, so why don't we get into this? Why 05:32.160 --> 05:36.570 don't we kick things off FGS, we, we recently just updated our 05:36.570 --> 05:41.010 database, and we're showing now that 191 Different lend texts 05:41.610 --> 05:45.540 inside of the ecosystem in Canada. And when we were going 05:45.540 --> 05:49.260 through a lot of the research, we found that the lender 05:49.260 --> 05:53.940 landscape is really, really only making up about 16% of the 05:53.940 --> 05:57.960 overall market share in the economy today. And that means 05:57.960 --> 06:00.480 that the credit unions, the banks of the world are remain 06:00.480 --> 06:04.410 are picking up the remaining share. So I want to kick this 06:04.410 --> 06:07.320 off. And maybe Jeremy, you could help set the stage for us a 06:07.320 --> 06:12.000 little bit around from a macro level, what's happening in the 06:12.000 --> 06:15.900 lending in Canada right now. We've got the increase in 06:15.900 --> 06:19.140 liquidity because of the government stimulus. Can you 06:19.140 --> 06:22.440 just kick us off? Very high level macro? What's going on in 06:22.440 --> 06:23.280 lending in Canada? 06:24.390 --> 06:25.740 Jeremy Kronick: I mean, I'll just start off with a few 06:25.740 --> 06:29.040 thoughts. I mean, you look at the household and business 06:29.040 --> 06:33.180 credit data. And you look at the month over month numbers, the 06:33.180 --> 06:36.210 year over year numbers, I mean, you certainly see some negative 06:36.210 --> 06:39.690 growth on aggregate month over month, you don't really see it 06:39.690 --> 06:41.670 year over year, which is, which is interesting. And you really 06:41.670 --> 06:44.430 haven't seen it through the crisis, where you do see it when 06:44.430 --> 06:48.180 you break it down further from the aggregate level is really in 06:48.180 --> 06:51.720 the consumer credit side. You know, I think the real estate 06:51.720 --> 06:55.410 sector, obviously, residential mortgages, stayed pretty strong, 06:55.410 --> 06:58.320 in part because the mortgage deferral program, you know, 06:58.320 --> 07:01.290 business credit, certainly month to month, month over month took 07:01.290 --> 07:04.590 took a bit of a hit. Really the consumer credit side to me was 07:04.620 --> 07:09.240 was the most noticeable spot. And so I think it shows, you 07:09.240 --> 07:12.000 know, in terms of where it was a little bit better than perhaps 07:12.000 --> 07:14.640 we thought it would have been at first, I think, to your point 07:14.640 --> 07:18.240 earlier, I mean, the government programs have been have been 07:18.240 --> 07:21.120 huge here and the Bank of Canada's measures have been, I 07:21.120 --> 07:25.380 think, equally as important. They've injected massive amounts 07:25.380 --> 07:28.980 of liquidity into the sector, I think he's been, you know, 07:28.980 --> 07:32.280 responsible for keeping financial markets in pretty good 07:32.280 --> 07:34.740 shape, you saw corporate spreads, spreads spike, and then 07:34.740 --> 07:37.590 come back down after the bank really got involved there. I 07:37.590 --> 07:39.600 think there's some obviously some questions to worry about, 07:39.600 --> 07:41.850 you know, what's going to happen to those programs, when the end, 07:42.210 --> 07:47.130 we saw some delinquencies, the in September sort of start to 07:47.160 --> 07:49.410 creep up, we know that there were some issues even before 07:49.410 --> 07:51.750 COVID. So I think there's some question as to what's going to 07:51.750 --> 07:55.440 happen, when those programs and also what's going to happen when 07:55.440 --> 07:57.720 the term repos roll off the balance sheets, and those 07:57.720 --> 08:00.420 balance sheets start to shrink a little bit, or the bank is going 08:00.420 --> 08:02.490 to get as involved. And so there might be some room there for the 08:02.610 --> 08:05.130 lenders, I could go on. But I'll just stop there. Since we have 08:05.130 --> 08:05.970 three other panels, 08:05.970 --> 08:07.650 Kevin Clark: You know, you know what they'll mark, what's 08:07.650 --> 08:11.100 interesting is that, you know, our industry hasn't really 08:11.100 --> 08:15.300 traditionally looked at market share to sort of drive our 08:15.300 --> 08:20.550 success in the space. I mean, frankly, is as startups and as, 08:22.050 --> 08:25.770 you know, new into the financial services market, financial 08:25.770 --> 08:30.270 technology lenders, it's really about how do we compare from the 08:30.270 --> 08:32.910 previous month? I mean, are we comparing ourselves to 08:32.910 --> 08:35.250 ourselves? are we comparing ourselves to our peer group? 08:35.790 --> 08:38.340 Certainly, we're not comparing ourselves to the broader 08:38.340 --> 08:41.070 financial services stability that's out there with 08:41.100 --> 08:43.410 institutions that have been around for hundreds of years. I 08:43.410 --> 08:47.700 mean, it's, to me, it's, it's about it's about meeting the 08:47.700 --> 08:53.160 needs of cash flow. And yes, serving the the industry. But 08:53.160 --> 08:56.880 market share hasn't really played a role in defining our 08:56.880 --> 08:58.170 position on the map. 09:01.020 --> 09:03.750 Mark Reisler: Jason, same same thoughts and opinions from the 09:03.750 --> 09:04.470 Go Easy said, 09:04.650 --> 09:07.020 Jason Appel: Yeah, I would agree with Kevin. I mean, we I mean, 09:07.350 --> 09:10.770 you know, as we classify the market for nonprime, nevermind 09:10.770 --> 09:13.050 the entire market, I mean, that's sitting X mortgage at 09:13.050 --> 09:16.470 over 230 billion, you know, we have just over a billion dollars 09:16.470 --> 09:20.730 of that we're not even a speck on the on the overall map, and 09:20.730 --> 09:23.670 yet, we're considered to be a large player in the space. So I 09:23.670 --> 09:26.490 would agree with Kevin, we don't tend to define ourselves by how 09:26.490 --> 09:29.100 much market share because the nonprime market at least is 09:29.100 --> 09:31.950 growing at two to 3% annually, which means you're getting five 09:31.950 --> 09:34.860 to $6 billion of new growth entering just into that segment, 09:34.860 --> 09:38.490 nevermind prime near prime or above. So I would agree we don't 09:38.490 --> 09:41.160 define it that way. But as far as overall lending is concerned, 09:41.610 --> 09:45.180 I would say it depends on who you ask. I would say broadly 09:45.180 --> 09:48.480 speaking, the market is still coming back. You know, as a 09:48.480 --> 09:51.210 business. We obviously just reported our numbers a couple of 09:51.210 --> 09:55.350 days ago. We're marginally ahead now where we were last year, but 09:55.350 --> 09:58.590 that's through a lot of creative and very tactical engineering 09:58.590 --> 10:01.770 work. Most of the The market I would say is still hasn't come 10:01.770 --> 10:04.710 back year on year. They're certainly up month by month or 10:04.710 --> 10:06.960 quarter on quarter. And I think that's because we all got 10:06.960 --> 10:10.410 slammed, when COVID hit in March, April, May, and the 10:10.410 --> 10:14.070 excess liquidity that came into the system didn't transform in 10:14.070 --> 10:18.240 my view into additional debt, it transformed into a pause on 10:18.270 --> 10:21.660 additional debt. Insofar as a lot of lenders, or a lot of 10:21.690 --> 10:25.170 consumers rather weren't looking to get more debt, they were 10:25.170 --> 10:28.260 simply looking to stay alive with the debt, they had that 10:28.260 --> 10:31.050 with the different programs that most of the major banks and some 10:31.050 --> 10:34.170 lenders put into place. And what that excess liquidity wound up 10:34.170 --> 10:37.110 doing was lowering the overall debt to income ratio, not by 10:37.110 --> 10:40.590 changing the debt levels by boosting the income levels. So 10:40.590 --> 10:44.700 we as lenders, or auto lenders, as we're so defined, I would say 10:44.700 --> 10:47.070 our business is still rebounding. It's certainly 10:47.070 --> 10:50.490 trending positively, I would say personally, but I still think 10:50.490 --> 10:52.950 we've got a little bit ways to go probably a couple more 10:52.950 --> 10:55.650 quarters, and there might have the fact that the economy is 10:55.950 --> 10:59.910 likely going to enter somewhat of a marked slowdown in q4, just 10:59.910 --> 11:02.730 because we've come up from such a low point in q3, and I'm 11:02.730 --> 11:07.530 talking physical, kind of fiscal calendar quarters. I think the 11:07.530 --> 11:11.130 future looks bright. But you know, second slash third wave, 11:11.130 --> 11:13.830 depending on who you ask, still cast quite a long shadow of 11:13.830 --> 11:19.080 uncertainty. So I'd say we're, but we still have some way to go 11:19.080 --> 11:21.510 to get back to where we were as a as an overall industry, I 11:21.510 --> 11:21.840 would say. 11:23.220 --> 11:25.020 Mark Reisler: And that would love to hear from your end as 11:25.020 --> 11:29.460 well around the state of evaluation of risk evaluation of 11:29.460 --> 11:32.520 people as well as businesses. How's TransUnion looking at this 11:32.520 --> 11:34.710 and yourself looking at the the current market that we're in? 11:35.130 --> 11:36.600 Matt Fabian: I think it's interesting. And I think, you 11:36.600 --> 11:40.500 know, I the Jason's points resonate with me a lot, because 11:40.530 --> 11:43.140 you know, what we've seen, what we saw coming into this crisis 11:43.140 --> 11:46.410 was elevated household debt, right? We heard about it in the 11:46.410 --> 11:49.050 media, we heard about it in the news. And you know, the big 11:49.050 --> 11:53.100 story was always Canadians have more debt than any other g7 11:53.100 --> 11:56.820 Country per capita. Right. So that was already sort of an 11:56.820 --> 12:01.290 issue and a stress on the economy coming into this. My 12:01.290 --> 12:03.510 view had always been, that's only one side of the balance 12:03.510 --> 12:07.230 sheet. You know, wealth and income was also growing at a 12:07.230 --> 12:10.620 pretty good rate. So, again, when you look at that ratio, it 12:10.620 --> 12:13.620 seemed a little bit of line. But the big question coming into 12:13.620 --> 12:17.490 COVID was going to be what happens when sort of this? You 12:17.490 --> 12:22.440 know, the, the shock hits, right with with people already in 12:22.440 --> 12:24.990 debt. And I think Jason was right on in that what we've seen 12:24.990 --> 12:29.820 is, folks just wanted to get through this crisis. Right. So 12:29.820 --> 12:32.100 our financial hardship survey that we put out, that was the 12:32.100 --> 12:36.570 sentiment people were looking at not looking at taking on more 12:36.570 --> 12:38.430 debt, people were trying to figure out, how do I get through 12:38.430 --> 12:41.190 the next month or the next three months? And that was really the 12:41.190 --> 12:43.440 focus. And I think, you know, obviously, the government 12:43.440 --> 12:48.030 relief, stimulus packages were really useful and warranted, I 12:48.030 --> 12:50.310 think the lending community really stepped up there were 12:50.310 --> 12:54.630 about 3.1 million Canadians. But 11% of the credit market took 12:54.630 --> 12:57.900 some kind of deferral. And we're starting to see that run off. 12:57.900 --> 13:01.800 Right, so we're starting to see about 63% of the card portfolio, 13:01.800 --> 13:04.770 the deferrals have started to run off about 54% and personal 13:04.770 --> 13:08.070 loans. And I think to Jeremy's point, we haven't necessarily 13:08.070 --> 13:11.190 seen a material increase in delinquencies, we've started to 13:11.190 --> 13:15.150 see a little bit of a creep up. But it hasn't been a huge sort 13:15.150 --> 13:20.070 of cliff that maybe some people had worried about. And so I 13:20.070 --> 13:23.160 think, you know, it early performance remains pretty 13:23.160 --> 13:25.680 positive. But as you know, a couple of people have already 13:25.680 --> 13:28.800 mentioned, there's a long tail to this. If there's a second 13:28.800 --> 13:32.790 wave, it could put a lot of stress on initial shock on 13:32.790 --> 13:35.130 consumers. And, you know, it's sort of one of those things, you 13:35.130 --> 13:37.440 can get punched in the face once and get up, but maybe not the 13:37.440 --> 13:41.550 second time. Right. So that could be and I see that where 13:41.550 --> 13:46.050 this industry really steps up, right? What happens typically, 13:46.080 --> 13:48.810 especially with the larger players, is they have these sort 13:48.810 --> 13:54.180 of, not always, but there's sort of these uniform underwriting 13:54.180 --> 13:57.780 policies that kick in, right, and you put these cut offs. And 13:57.960 --> 14:00.090 there's folks again, they're trying to get through the next 14:00.090 --> 14:02.160 couple of months, where they're trying to get access to credit 14:02.160 --> 14:04.680 access to liquidity. They might not get it from some of the 14:04.680 --> 14:07.590 traditional channels. And I see this industry really stepping up 14:07.590 --> 14:10.560 and really playing a big role in that that happened in the US, 14:10.560 --> 14:14.430 certainly in the 2008 2019 gave rise really to the FinTech 14:14.490 --> 14:19.410 industry in the US. And so I think I see that here. And I 14:19.410 --> 14:22.050 think, you know, again, with performance, Canadians have 14:22.050 --> 14:24.450 historically been pretty stable in terms of their credit 14:24.450 --> 14:29.010 performance. And so I think, you know, that that bodes well for 14:29.000 --> 14:33.440 Kevin Clark: You know, Matt, the elephant in the room on this, of 14:29.010 --> 14:29.580 the industry. 14:33.440 --> 14:39.680 course, is that the the alternate lenders amongst us 14:39.680 --> 14:43.280 here that have been providing capital into the small business 14:43.280 --> 14:46.520 community and the lower end of the commercial markets for quite 14:46.520 --> 14:51.320 some time, are exactly the ones that, you know, got caught with 14:51.320 --> 14:54.830 the challenge of the COVID experience and the declining 14:54.830 --> 14:59.360 economy at the time and the, as Jason called it, you know, the 14:59.360 --> 15:03.680 offset All the government funds going into the marketplace. And 15:03.680 --> 15:07.310 what was really unfortunate was to your point, noting that, that 15:07.310 --> 15:12.380 the US and in Europe, the distribution of those special 15:12.380 --> 15:15.860 needed funds came through a variety of channels, including 15:15.860 --> 15:19.250 the financial technology channel. And we got overlooked 15:19.250 --> 15:24.020 in Canada, notwithstanding the incredible distribution that we 15:24.020 --> 15:26.810 provide and the capital that we've provided into the market. 15:27.380 --> 15:31.310 And the only real silver lining on that is that we we got noted 15:31.310 --> 15:34.490 that we weren't actually a part of that distribution. And so 15:34.910 --> 15:37.220 we've sort of gotten the highlight the wrong way that 15:37.250 --> 15:40.340 this community does exist and plays a critical role in 15:40.340 --> 15:43.490 supplying capital into the low end of the of the commercial 15:43.490 --> 15:46.520 markets. Yeah, they couldn't agree more. 15:46.520 --> 15:49.910 Matt Fabian: A lot in this industry is, you know, that 15:49.910 --> 15:53.090 stigma, it's, it's not maybe necessarily as prominent as it 15:53.090 --> 15:56.720 was, but that stigma of FinTech is, you know, a bunch of lenders 15:56.720 --> 16:00.380 that lend to subprime. And, and, you know, they're the, you know, 16:00.410 --> 16:02.540 the worst of the worst, and they're kind of in this little, 16:02.810 --> 16:07.220 that a lot of it is based on the ability to build technology and 16:07.220 --> 16:09.590 build platforms and build customer experience and build 16:09.590 --> 16:12.890 speed that maybe doesn't exist elsewhere. Right. And I think 16:12.890 --> 16:17.240 that I agree that I think, you know, those are the attributes 16:17.240 --> 16:20.180 that in a time like this, when speed and you know, time to 16:20.180 --> 16:23.360 decision, things like that are important, could have really 16:23.360 --> 16:27.830 been something that the the, you know, the Canadians could have 16:27.830 --> 16:28.310 leveraged? 16:29.330 --> 16:31.130 Mark Reisler: Yeah, I think it's a bit more than that, though, to 16:31.130 --> 16:34.040 I think it's, I think it's to Kevin, your point, you know, you 16:34.040 --> 16:38.330 have access to a certain set of small medium businesses that are 16:38.330 --> 16:41.420 getting rejected from the big banks that are, you know, maybe 16:41.420 --> 16:47.810 on the near prime spectrum of prime, and by you having that 16:47.810 --> 16:51.350 type of access to that smi or buy go easy having that type of 16:51.350 --> 16:55.280 access to that consumer, I mean, what we're really doing here is 16:55.280 --> 16:58.220 that we're giving a fighting chance to be quite honest with 16:58.220 --> 17:04.010 you to, you know, the plumber out there, or to the lower 17:04.010 --> 17:08.360 income family of four that really needs this. So, I agree 17:08.360 --> 17:11.360 with you that the distribution channels, you know, we should 17:11.360 --> 17:15.140 have thought about this a little bit more hand a little bit more 17:15.140 --> 17:19.160 directly. But maybe you could touch on the type of access that 17:19.160 --> 17:22.520 you do have. And I know that I'm going a little off script here, 17:22.550 --> 17:25.670 but, you know, those, those means that you're reaching out 17:25.670 --> 17:28.760 to the small businesses that you're reaching out to, I'd love 17:28.760 --> 17:32.360 for you to just kind of, give us a give us a sense of of what 17:32.360 --> 17:35.120 that what that looks like in your domain, how you view them, 17:35.120 --> 17:38.750 how you evaluate them, whatever needs you're solving for them. 17:39.290 --> 17:41.300 Kevin Clark: Well, all that, of course, has changed every one of 17:41.300 --> 17:45.140 us on the panel today, we'll have a view that's today and the 17:45.140 --> 17:47.870 view that we had six months ago or eight months ago, and they're 17:47.900 --> 17:51.710 they're probably different. You know, the Reach for capital, 17:51.740 --> 17:55.250 there is a, like the car industry 10 years ago, I mean, 17:55.250 --> 17:58.880 everybody's retooling right to a lower sized organization and 17:58.880 --> 18:01.910 operation and trying to understand how they gain growth 18:01.910 --> 18:05.540 out of today's economic environment. But the reach has 18:05.540 --> 18:09.140 traditionally been broad, whether it's for Jason, or 18:09.140 --> 18:12.620 anybody else in the consumer space and in the commercial 18:12.620 --> 18:15.620 space, that we have always felt ourselves fundamentally 18:15.620 --> 18:18.530 compatible with the larger institutions, because we play in 18:18.530 --> 18:22.520 a in a segment that has been challenged for them. And that we 18:22.520 --> 18:29.060 have found ways to actually provide capital at with a value 18:29.060 --> 18:32.930 proposition that is really well respected by the small business 18:32.930 --> 18:35.570 community, because everybody needs access to capital for 18:35.570 --> 18:38.240 growth. And if you can't get it in traditional ways, you get it 18:39.140 --> 18:42.440 through ours, which is really quite dynamic. And obviously 18:42.440 --> 18:46.070 leveraging all the nuances of data and so forth that we'll 18:46.070 --> 18:50.720 talk about today. But there's been no change in terms of in 18:50.720 --> 18:55.790 terms of broad coverage model that we have today from where we 18:55.790 --> 18:59.420 were eight months ago. I think the difference is there are 18:59.420 --> 19:03.680 certainly, you know, based on people's balance sheets, some 19:03.680 --> 19:06.650 people are trying to refinance down and are really skeptical of 19:06.650 --> 19:09.470 borrowing and for those who have sort of retooled, or, or 19:09.470 --> 19:13.820 happened to be and, and the economic space today where 19:13.820 --> 19:17.120 business is actually okay. You know, there is growth out there. 19:17.120 --> 19:19.460 And we're funding that and underwriting that growth, which 19:19.460 --> 19:23.510 is actually quite exciting. We might be down 50% from pre 19:23.510 --> 19:26.360 COVID. But I wouldn't say we were down in terms of the 19:26.360 --> 19:28.910 industries that we're trying to cover. I mean, even in the food 19:28.910 --> 19:32.120 and beverage space, there is business being done. And money 19:32.120 --> 19:36.320 is going out the door to support small businesses, but I'll stop 19:36.320 --> 19:38.960 there and let maybe Jason's got comments on the consumer side. 19:39.200 --> 19:41.240 Jason Appel: Yeah, I mean, we're probably not different than 19:41.240 --> 19:44.390 that. Obviously, you know, my perspective is is and I think I 19:44.390 --> 19:48.350 said this before, when we Kevin, I sat on the CLA panel that 19:48.350 --> 19:52.190 occurred last fall, you know, a good risk manager nevermind a 19:52.190 --> 19:55.250 good revenue manager or any business leader is planning and 19:55.250 --> 19:58.970 managing their portfolio to perform well in bad times, and 19:58.970 --> 20:01.130 the time to take those jobs. swings and make those 20:01.160 --> 20:04.460 modifications is generally in good times. Because those bad 20:04.460 --> 20:07.490 times when they come, they tend to, you know, hit you upside the 20:07.490 --> 20:10.850 head like nobody's business. Now in this particular recession, we 20:10.850 --> 20:13.310 all got a little bit of a break in the form of government 20:13.310 --> 20:16.700 stimulus in the form of lender deferral programs, in our case 20:16.700 --> 20:19.370 in the form of having ancillary products that provided our a lot 20:19.370 --> 20:21.860 of good portion of our customers with additional coverage to help 20:21.860 --> 20:25.070 them pay their bills. But that doesn't mean we we weren't 20:25.070 --> 20:28.130 modifying our underwriting on our credit along the way, and I 20:28.130 --> 20:31.640 think with this particular recession has taught us is that 20:31.640 --> 20:33.560 you can't take those kinds of things for granted, you've got 20:33.560 --> 20:36.770 to be dynamically adjusting your criteria, because I would tell 20:36.770 --> 20:39.890 you the best time to grow share, not that we play our game by 20:39.890 --> 20:43.130 growing share, I'm like Kevin, and other lenders, the best time 20:43.130 --> 20:45.170 to actually grow your business is coming out of a recession. 20:45.560 --> 20:47.600 Because in this environment, you're going to pick up 20:47.600 --> 20:49.880 disenfranchised individuals where the banks are going to 20:49.880 --> 20:52.160 choose or the credit unions are going to choose or even a large 20:52.190 --> 20:55.670 auto lenders are going to choose not to want not to want to lend. 20:56.060 --> 20:58.670 And that opens up a huge opportunity for small business 20:58.670 --> 21:02.660 and consumer focused lenders to say, Hey, give us a try. Here's 21:02.660 --> 21:05.540 our experience. We can underwrite you, there's a price 21:05.540 --> 21:07.430 to for that underwriting, obviously, because it carries a 21:07.430 --> 21:11.090 certain risk return ratio. But we're now able to service you in 21:11.090 --> 21:13.370 the past where your bank has basically said, Yeah, I can lend 21:13.370 --> 21:17.000 you up to here. And after that, you know, the tail is gone, and 21:17.000 --> 21:18.920 you got to go somewhere else to find your money. Oh, and by the 21:18.920 --> 21:22.160 way, keep paying me on time, or else, I think in this type of 21:22.160 --> 21:24.170 environment, it's an opportunity for the lending space to 21:24.170 --> 21:26.840 actually grow its presence in the market. And that's going to 21:26.840 --> 21:29.870 take a combination of a little bit of support from the funding 21:29.870 --> 21:33.080 overseers to keep our businesses afloat. And our willingness to 21:33.080 --> 21:35.270 be a little bit more dynamic when it comes to changing our 21:35.270 --> 21:37.610 underwriting approaches. And to be a little bit more creative, 21:37.610 --> 21:40.550 because that growth is there to be taken. Notwithstanding 21:40.550 --> 21:43.040 certain industry sectors are gonna feel it. But there is 21:43.040 --> 21:45.050 plenty of growth out there, you just got to be willing to take 21:45.050 --> 21:48.200 that risk price for it and figure out creative ways in how 21:48.200 --> 21:49.940 you want to underwrite it, that'd be my view. 21:51.380 --> 21:56.180 Mark Reisler: Yeah, and I love the the comment around, we need 21:56.180 --> 21:59.990 to change our way of evaluating or enhance the way of our 21:59.990 --> 22:05.000 evaluating, and adjudicating and overall underwriting. Where does 22:05.000 --> 22:08.960 data come into this play? Where does the use of alternative data 22:08.960 --> 22:13.430 sources come into play? There's a lot of fintechs coming into 22:13.430 --> 22:17.690 the market, providing, you know, connections into hundreds of 22:17.690 --> 22:22.340 different API's vast amount of ways of connecting the consumer 22:22.340 --> 22:27.080 as well as the SMI into the non traditional data sources, is 22:27.080 --> 22:31.610 that a tool that we could also start looking at, evaluate 22:31.610 --> 22:36.140 people, evaluate companies evaluate organizations 22:36.140 --> 22:36.650 differently. 22:41.180 --> 22:44.360 Jason Appel: I'll start, and I'd certainly welcome feedback, I 22:44.360 --> 22:46.940 believe the way in which we can differentiate ourselves as a 22:46.940 --> 22:50.930 group is to be a little bit more creative. In our particular 22:50.930 --> 22:55.340 instance, it's about old data. We've been consuming, for 22:55.340 --> 22:59.510 example, banking data now since about the mid year of 2017. And 22:59.510 --> 23:02.930 as we announced in our press release, yesterday, in 23:02.930 --> 23:05.510 September, we launched our first generation of banking models 23:05.930 --> 23:08.570 that now assess and evaluate customer's credit risk in 23:08.570 --> 23:11.930 combination with credit bureau data, application related data, 23:11.930 --> 23:14.810 and so forth. And that's giving us an opportunity to tap into 23:14.810 --> 23:16.790 segments of the market, we would not have traditionally been 23:16.790 --> 23:19.880 willing to underwrite or approve, in some cases, were 23:19.880 --> 23:22.130 lending to individuals exclusively on the basis of 23:22.130 --> 23:25.880 their banking information. And in not having a credit history, 23:26.030 --> 23:29.480 or a little credit history, ie a thin file or an imperfect credit 23:29.480 --> 23:32.060 history, and that they've got a blip or two, either a past 23:32.060 --> 23:35.360 bankruptcy or, or some worst kind of rating ever, that a 23:35.360 --> 23:38.750 typical bank would instantly shy away from so for our business, 23:38.780 --> 23:42.260 it's all about the data. And the one because we can't necessarily 23:42.260 --> 23:44.780 always compete on price, we can't necessarily always compete 23:44.780 --> 23:47.690 on distribution. The banks and the credit unions tend to have 23:47.690 --> 23:52.160 that area, well, well in hand. So you know, one of our 23:52.160 --> 23:56.390 differentiators is we like data we play in the data. And you've 23:56.390 --> 23:59.030 got to start acquiring purchasing and investigating and 23:59.030 --> 24:02.690 validating that information quickly, because it's going to 24:02.690 --> 24:05.060 take a while to figure out how to go out and use it to get 24:05.060 --> 24:08.150 those customers to come to your door. So I would say it starts 24:08.150 --> 24:11.180 with data. It starts with being creative on how you use data, 24:11.210 --> 24:13.730 whether that's reformatting great data that we get from our 24:13.730 --> 24:16.490 partner TransUnion. And looking at some of their new algorithms 24:16.490 --> 24:20.000 and formulas, finding other data like from banking, figuring out 24:20.000 --> 24:22.970 how web based data comes into play, leveraging stats can base 24:22.970 --> 24:25.220 data, it could go on and take a whole hour and just talking 24:25.220 --> 24:28.130 about data. But there's, there's plenty of that opportunity. And 24:28.130 --> 24:31.820 I would say as a as an industry group, we can lead in that space 24:31.820 --> 24:35.900 because the banks unfortunately, are not as able or willing to 24:35.900 --> 24:37.730 play in that space in the same way that we are. 24:38.870 --> 24:41.270 Kevin Clark: And Mark, you know, it's not without its risk 24:41.270 --> 24:47.960 because the data that we that we discover and mine and the 24:47.960 --> 24:52.880 hypotheses that we put together takes time to figure out I mean, 24:52.880 --> 24:55.370 it's not like it's instantaneous. You have to 24:55.370 --> 24:59.180 actually put it into the marketplace and underwrite and 24:59.240 --> 25:03.500 and monitor performance and that's over the life of a of an 25:03.500 --> 25:08.390 existing relationship in its own and over the life of a portfolio 25:08.390 --> 25:12.110 for proper analysis. And that's to Jason's point. I mean, you 25:12.110 --> 25:16.130 start in 2017, only now you start to really know what you've 25:16.130 --> 25:19.730 done right? And what you've done wrong. And the cost and exposure 25:19.730 --> 25:23.780 and risk to that is significant. And that's, that's hard for 25:23.780 --> 25:26.630 smaller businesses in this space. And then that's probably 25:26.630 --> 25:30.140 got a view on this for sure. But you know, we're all pulling all 25:30.140 --> 25:34.250 kinds of data and exploring it. But at the end of the day, one 25:34.250 --> 25:38.390 has to wait for the portfolio to perform, to know whether the 25:38.420 --> 25:43.160 data is applied properly, and can be used in an underwriting 25:43.160 --> 25:47.840 capacity and win the day over time on making good decisions. 25:49.010 --> 25:50.960 Matt Fabian: Yeah, I agree. I think, you know, one of the 25:50.960 --> 25:53.660 things we're seeing is, obviously, more data is always 25:53.690 --> 25:57.890 better in terms of being able to make a decision, the type of 25:57.890 --> 26:00.710 data, the quality of that data, the frequency of that data are 26:00.710 --> 26:04.700 all, you know, obviously things that would impact your ability 26:04.700 --> 26:08.870 to make better decisions. Certainly, what we've seen from 26:08.870 --> 26:11.780 this industry is a willingness to experiment, we've seen a huge 26:11.780 --> 26:14.900 willingness to get into things like machine learning AI, and 26:14.900 --> 26:18.590 adopt those kinds of technologies a lot faster than 26:18.590 --> 26:21.560 maybe the traditional banks, although they're doing it, I 26:21.560 --> 26:24.500 think there's a lot of risk rules, risk policies and things 26:24.500 --> 26:27.650 like that, that maybe prohibit how far, you know, they're able 26:27.650 --> 26:32.900 to actually deploy those things. I think what we're starting to 26:33.470 --> 26:38.870 look at is how you use that data in the context of, you know, not 26:38.870 --> 26:41.450 only the breadth of it, but I think just also how you use it 26:41.450 --> 26:44.630 for for other things like looking at identity management, 26:44.630 --> 26:47.300 fraud, all those kinds of things that, you know, traditional 26:47.300 --> 26:50.750 credit data or traditional data that you've seen might, you 26:50.750 --> 26:53.510 might have ingested it and used it for one thing, but you can 26:53.510 --> 26:55.940 quickly look at it and say, hey, you know, put a different lens 26:55.940 --> 26:58.280 on it. And it's useful across a couple of things. And I think 26:58.280 --> 27:02.300 that's what, you know, companies, certainly, like the 27:02.300 --> 27:04.370 ones on this panel, certainly, like a lot of folks probably in 27:04.370 --> 27:07.640 the audience are able to do because they're a lot more agile 27:07.670 --> 27:10.010 in terms of their ability to pivot and adopt, but I think 27:10.010 --> 27:13.490 Kevin's point is very well taken that it's a lot of test and 27:13.490 --> 27:17.240 learn. And it's a lot of experimental design and a lot of 27:17.240 --> 27:20.360 rigor around trying to figure out as we bring in these new 27:20.360 --> 27:24.440 views, or this new data, you know, how far do you go before 27:24.440 --> 27:27.980 your, you know, unintentionally increasing your risk? And how do 27:27.980 --> 27:30.980 you? How do you test those things? Right? And how do you 27:30.980 --> 27:33.500 build those types of scorecards and other whatever you're trying 27:33.500 --> 27:36.290 to do? I think the other thing that's going to happen over the 27:36.290 --> 27:39.410 next couple of years is, you know, with the continued 27:39.410 --> 27:44.450 evolution of however open banking looks in Canada, those 27:44.450 --> 27:46.280 data sources are gonna become more and more and more 27:46.280 --> 27:49.430 prevalent, right, and consumers are going to drive a lot of 27:49.430 --> 27:55.730 that. And so, you know, again, the caution would be once these 27:55.730 --> 27:59.330 kind of tabs open up understanding, you know, how you 27:59.330 --> 28:02.390 use it, and what the relevance is to your business is going to 28:02.390 --> 28:04.820 become critical, because there's going to be more and more 28:05.120 --> 28:06.830 opportunities to leverage that. 28:07.940 --> 28:11.300 Jeremy Kronick: So that sort of story I was gonna jump in with 28:11.330 --> 28:13.640 about open banking, because I mean, I do think listening to 28:13.640 --> 28:17.360 all of you guys talk about about data. I mean, it strikes me that 28:17.360 --> 28:20.330 when we think about Paul, this is my macro had, again, you 28:20.330 --> 28:23.090 know, we think about policies that governments should be 28:23.090 --> 28:26.150 thinking about in terms of the recovery. You know, boosting 28:26.150 --> 28:29.960 productivity is really a critical part of how we're going 28:29.960 --> 28:33.560 to move and close the output gap. Over the next couple of 28:33.560 --> 28:36.260 years. And, you know, the open banking thing, from my 28:36.260 --> 28:38.000 perspective has been frustrating, because it's been 28:38.000 --> 28:40.670 so slow, right. And to your point, all, you guys made the 28:40.670 --> 28:44.510 same point around speed, and the time it takes to take all that 28:44.510 --> 28:48.320 data and turn it into, you know, a portfolio that that benefits 28:48.320 --> 28:52.700 the borrower benefits you and we really were falling behind way 28:52.700 --> 28:55.760 behind what other jurisdictions are doing with respect to open 28:55.760 --> 28:59.420 banking, that I think we have to continue to push. And I know, 28:59.450 --> 29:01.550 the government just came out the other day with their 29:01.850 --> 29:04.790 announcement about moving to the second stage. And I put up the 29:04.790 --> 29:07.790 paper a couple of months ago with a colleague at Queen's 29:07.790 --> 29:10.670 University on on sort of what how we view the implementation 29:10.670 --> 29:14.150 of open banking, but, you know, for me, for me, above all else, 29:14.150 --> 29:16.880 just get it going, you know, like, get it get it pushed 29:16.880 --> 29:20.660 forward. So that there is this ability to take this data, use 29:20.660 --> 29:24.650 it and really turn, you know, a slow growth recovery, and 29:24.650 --> 29:26.600 perhaps move it along a little faster. 29:27.770 --> 29:29.810 Jason Appel: I mean, if you want to, if you want to tap into, you 29:29.810 --> 29:33.410 know, underserviced or underbanked, pardon the pun 29:33.410 --> 29:36.620 segments, you've got to be willing to play in that space. 29:37.010 --> 29:40.730 You know, again, having been in there now for three years. I 29:40.730 --> 29:43.670 will tell you, there is a richness and a robustness of the 29:43.670 --> 29:46.820 data there that has multiple applications, not just for 29:46.820 --> 29:50.900 credit for loyalty for cross promotion, for partnerships. 29:50.900 --> 29:54.440 It's extraordinarily valuable. And even if I look at markets, 29:54.950 --> 29:57.470 you know, for example, in the UK, where open banking is 29:57.470 --> 30:00.740 prevalent, it's only to an extent where that information 30:00.740 --> 30:03.230 has now been started to be integrated into, let's say 30:03.230 --> 30:06.500 credit bureaus, which adds some value. But I will tell you 30:06.500 --> 30:09.200 getting getting the customer to provide the access to their, 30:09.230 --> 30:15.230 their transactional data history is a wonderful tapestry, if you 30:15.230 --> 30:18.350 will, into how they're managing their affairs and not so that we 30:18.350 --> 30:20.690 can go in and predatory lending. That's the summer we're talking 30:20.690 --> 30:22.070 about, we're talking about going in there and giving these 30:22.070 --> 30:25.010 customers value added services that aligned to what their 30:25.010 --> 30:27.920 behaviors suggest that they ought or should be doing. And 30:27.950 --> 30:30.320 you can get a lot of that, as I said before, from things like 30:30.320 --> 30:33.980 credit bureau or application data, things like open banking, 30:33.980 --> 30:36.680 or things like banking data, in general, or other sources of 30:36.680 --> 30:40.490 wealth, well articulated, well defined data, are extremely 30:40.490 --> 30:43.220 powerful in that they just give you an insight into the customer 30:43.220 --> 30:46.400 that you know, how they may be managing their credit in general 30:46.400 --> 30:49.790 just cannot provide because there is often a dichotomy 30:49.790 --> 30:52.010 between how customers manage their credit and how they manage 30:52.010 --> 30:53.840 the cash flow, any small business owner will tell you 30:53.840 --> 30:57.380 that. So it's very interesting that that source of information, 30:57.410 --> 31:01.460 again, among other types, will change the landscape. And I 31:01.460 --> 31:04.580 would argue it's a race to the finish, insofar as who can ever 31:04.610 --> 31:07.100 tap and leverage that information. First note without 31:07.100 --> 31:09.950 taking some risks, will really be able to open up new segments 31:09.950 --> 31:11.750 of the market that the traditional players in this 31:11.750 --> 31:14.000 segment just won't be able to match right away. And that's 31:14.000 --> 31:16.640 what makes it interesting, challenging and exciting all at 31:16.640 --> 31:17.120 the same time. 31:18.230 --> 31:21.530 Matt Fabian: Yeah, there's this riff, it's a tangent, but 31:21.530 --> 31:25.700 there's this myth that there's this real tight correlation 31:25.700 --> 31:30.470 between credit risk and income or wealth. And it's, it's, we've 31:30.470 --> 31:33.290 proven in different markets, that that's not necessarily the 31:33.290 --> 31:36.650 case. You know, there are very wealthy people that are doctors 31:36.650 --> 31:39.500 that are just, you know, distracted and bad at managing 31:39.500 --> 31:42.410 their credit, and our credit scores are okay. And there's 31:42.410 --> 31:45.620 people that are subprime. There's subprime for a reason. 31:46.100 --> 31:48.530 And there are people that are low income that are super prime, 31:48.560 --> 31:52.190 because they have to be right, they, they only have they know, 31:52.190 --> 31:54.080 they have limited access to credit, given their income 31:54.080 --> 31:56.360 level, or their business is just emerging, if it's a small 31:56.360 --> 32:00.620 business. And so they have to be super diligent. And so, you 32:00.620 --> 32:02.900 know, in some cases, it's inverse. And I think having 32:02.900 --> 32:06.980 those different views, as Jason said, you know, you can look at 32:06.980 --> 32:09.410 credit data, and it gets you so far, but if you can get into, 32:09.590 --> 32:11.540 you know, what are they actually doing under the covers? What are 32:11.540 --> 32:14.090 the transactions look like? And they actually are, you know, 32:14.090 --> 32:19.190 pretty, pretty reliable, and pretty good risk, and it opens 32:19.190 --> 32:22.340 up avenues in terms of how we might approach and have 32:22.340 --> 32:25.040 discussions with both customers and businesses. 32:26.030 --> 32:28.250 Mark Reisler: Yeah, I've been spending the last couple of 32:28.250 --> 32:31.580 months diving deep into better understanding, you know, the 32:31.580 --> 32:34.460 pains and the unmet needs of this, me and the consumer in 32:34.460 --> 32:38.720 Canada. And really, the top of the list across the board from 32:38.750 --> 32:42.800 from citizens is around financial literacy is around, 32:42.830 --> 32:45.350 you know, the additional and it's good timing, because we are 32:45.350 --> 32:51.350 in financial literacy month in Canada. And the constant 32:51.350 --> 32:55.430 feedback is I, you know, the quote that stands out to me is I 32:55.430 --> 32:58.760 wish my lender provided more support and understanding my 32:58.760 --> 33:03.320 finances my cash flow helping me rather than just providing the 33:03.350 --> 33:08.390 access and authorization to that to that loan. So I think you hit 33:08.390 --> 33:12.710 the nail right on it with with the idea of how can we use this 33:12.710 --> 33:20.810 data not only to lend out to a potential near prime or subprime 33:21.200 --> 33:24.890 consumer SME, because we're evaluating them differently. But 33:24.890 --> 33:27.230 what are the additional support features that we could actually 33:27.230 --> 33:29.990 offer this person to ensure their success to ensure their 33:29.990 --> 33:33.410 growth from a business perspective and a consumer 33:33.410 --> 33:39.140 perspective? So I love that I'm going to pivot us a little bit 33:39.140 --> 33:43.160 towards understanding what's keeping you up at night, a 33:43.160 --> 33:47.270 little bit. So Jeremy, would love to know, kind of what's the 33:47.270 --> 33:51.020 one or two things that are keeping you awake right now? 33:53.420 --> 33:57.170 Jeremy Kronick: Yeah, I mean, so while the American elections 33:57.170 --> 33:58.850 probably, you know. 33:59.580 --> 34:01.380 Mark Reisler: I should have guessed that that was the easy 34:01.380 --> 34:01.620 one. 34:02.640 --> 34:04.710 Jeremy Kronick: Well, listen, I mean, the reason the reason it 34:04.710 --> 34:07.080 is, I mean, there's obviously the component of just, you know, 34:07.080 --> 34:10.410 watching the, maybe the most important democracy in the world 34:10.410 --> 34:14.880 kind of blow up in, in smoke here. But but more importantly, 34:14.880 --> 34:19.560 I mean, from a Canadian economy perspective. I think, you know, 34:19.770 --> 34:24.780 it would it would benefit us tremendously. If the gridlock in 34:24.780 --> 34:27.780 the US would end and they pass a stimulus bill. Right. I mean, I 34:27.780 --> 34:30.360 think that the lack of a stimulus bill, they're a real 34:30.360 --> 34:34.410 serious one. It's created a massive hole in that economy. 34:34.410 --> 34:37.770 And and and, you know, it's not I don't worry too much about the 34:37.770 --> 34:40.650 US going into a bigger deficit at the moment, I don't think 34:40.650 --> 34:43.050 we're going to be stuck crowding out private investment and 34:43.050 --> 34:45.360 seeing interest rates and inflation go up anytime soon. So 34:45.600 --> 34:48.210 we need that spending. And I think that would benefit the 34:48.210 --> 34:52.740 Canadian economy immensely. If that happens, so that I mean, 34:52.740 --> 34:57.540 that's one and, you know, we had a session yesterday at CD Howe 34:57.540 --> 34:59.820 on the end of the mortgage deferral program and what that's 34:59.820 --> 35:03.930 going look like. And there seem to be, you know, not necessarily 35:03.930 --> 35:08.010 a ton of worry, per se, but but as you guys pointed out, I mean, 35:08.010 --> 35:10.620 there's, there's there's different segments, right, we 35:10.620 --> 35:14.610 don't have tremendous data on the distribution of, of who's 35:14.610 --> 35:18.180 really at risk in different, you know, not only parts of the 35:18.180 --> 35:21.480 country, but also, you know, across different sectors across 35:21.480 --> 35:24.630 different income spectrums. And so I do worry about how that's 35:24.630 --> 35:27.780 all going to play out when when these when these programs sort 35:27.780 --> 35:29.820 of start to come to an end, I think, you know, Liberal 35:29.820 --> 35:33.480 government doesn't seem to be necessarily too concerned about 35:33.480 --> 35:36.210 spending. So it doesn't it does seem like they're going to 35:36.210 --> 35:40.470 continue to stimulate how they do that is a big question, but 35:41.520 --> 35:46.380 but I do worry, I worry about how you know how it's gonna go 35:46.590 --> 35:48.870 with the American economy, even once we decide is going to be in 35:48.870 --> 35:51.120 the office, and then I worry about the end of some of these 35:51.120 --> 35:51.810 programs. 35:52.590 --> 35:54.840 Mark Reisler: Yeah, I read your article in The Globe and Mail 35:54.840 --> 35:58.500 the other day around the the impact that it's going to have 35:58.500 --> 36:02.040 in our exporters in our in our particular our Smee exporters in 36:02.040 --> 36:05.670 Canada, the larger exporters will figure it out. And they'll 36:05.700 --> 36:10.080 they'll understand a way around it. But those smaller exporters 36:10.080 --> 36:12.120 that ship technology in particular software in 36:12.120 --> 36:16.440 particular. That's that it was fascinating. I encourage 36:16.440 --> 36:18.780 everybody to go read that article that that you 36:18.780 --> 36:26.370 contributed to Kevin from from an SME standpoint. And and, you 36:26.370 --> 36:29.640 know, the state of lending right now what's what's keeping you up 36:29.640 --> 36:31.740 at night? What's what's, what's the hardship? 36:32.790 --> 36:36.960 Kevin Clark: You know, I think it's about I mean, the election 36:36.960 --> 36:38.610 is one thing, and it's interesting, you know, the 36:38.610 --> 36:42.810 100,000 Coronavirus cases a day in the US is another which means 36:42.810 --> 36:46.170 the border is going to stay shut, which means we need to 36:46.200 --> 36:49.680 continue to be more or less self contained in so many ways in our 36:49.680 --> 36:53.580 Canadian market. And for me, it's really about whether or not 36:53.640 --> 36:57.510 we can just continue to edge forward from an economic growth 36:57.510 --> 37:01.950 perspective. Because our business relies on, you know, 37:01.950 --> 37:05.100 the need for capital to sustain and to grow companies. And 37:05.100 --> 37:08.430 that's that's what we do we provide that capital, and we do 37:08.430 --> 37:12.540 it quite monolithically. I mean, we are not a broader financial 37:12.540 --> 37:16.080 services organization that can live off fees on operating 37:16.080 --> 37:19.020 accounts like the banks, can we have to put money out the door? 37:19.050 --> 37:23.970 And so what's interesting to me is, where does the ebb and flow 37:23.970 --> 37:27.780 go with economic growth across Canada? And what markets are 37:27.780 --> 37:31.050 going to be there? The GTA has always been, you know, the 37:31.050 --> 37:35.070 engine for Canada, what's happening in Alberta with a $35 37:35.070 --> 37:38.910 oil price? And like, it's all very, very interesting. And 37:38.910 --> 37:41.730 that's sort of what keeps me awake at night quite seriously. 37:41.730 --> 37:45.240 It's just where does the volume come from? You know, we're 37:45.240 --> 37:49.950 running at probably 50% of pre COVID. And that's not that and 37:50.070 --> 37:53.580 we're inching back day over day or month over month to sort of 37:53.580 --> 37:57.900 see gains. But that's what we want to see happen. And we all 37:57.900 --> 38:01.530 want to see business grow and do all the things we'd like to do 38:01.530 --> 38:05.250 to feel good about a growing economy. And it's just 38:05.250 --> 38:09.660 concerning that, you know, will another wave come back? And, you 38:09.660 --> 38:13.080 know, we are proudly Canadian flag waivers here, we and we 38:13.080 --> 38:15.900 should be globally, right. We've done all the right things, 38:16.560 --> 38:19.080 generally, and everybody's got an argument on what we could do 38:19.080 --> 38:21.540 better, perhaps. But at the end of the day, we look pretty good 38:21.540 --> 38:25.620 globally. We have to keep our discipline so that we can keep 38:25.620 --> 38:28.560 our businesses going. And that's what we're trying to do. So 38:28.620 --> 38:30.000 that's sort of what keeps me awake. 38:31.920 --> 38:33.600 Mark Reisler: Understandably, Matt, what about you? 38:34.620 --> 38:36.150 Matt Fabian: Yeah, that's a bit of that. I think, you know, 38:36.150 --> 38:38.100 there's a couple of things that were I don't know, if it's 38:38.100 --> 38:40.350 keeping me awake at night, but I think it's really interesting 38:40.380 --> 38:43.350 is, you know, I think both Jeremy and Kevin already 38:43.350 --> 38:47.580 mentioned, at a macro level, you know, some of the things we're 38:47.580 --> 38:51.480 interested in is, and this all ties into, you know, that quote 38:51.480 --> 38:53.610 unquote, new normal, right? What's that going to look like? 38:53.610 --> 38:57.600 And, you know, from a, from a macro perspective, how do some 38:57.600 --> 39:00.720 of these sectors make it out of this? Right, how does tourism 39:00.780 --> 39:05.490 and travel and, you know, some of those other sectors that have 39:05.490 --> 39:09.720 been, like, incredibly impacted by this make it out? And from a 39:09.870 --> 39:12.810 small business perspective, right, we've seen them get hit, 39:12.900 --> 39:15.000 and we hear over and over, they're just getting hammered. 39:15.000 --> 39:17.310 Right? So how to, how did they pull out of this? And what does 39:17.310 --> 39:20.850 that mean for long term employment? How does that look, 39:20.880 --> 39:25.950 you know, affect structurally, sort of Canadian sectors across 39:25.950 --> 39:29.220 different regions? Again, you know, if you want to turn it 39:29.220 --> 39:32.700 back to the election, depending on what happens, you know, 39:32.700 --> 39:35.250 there's pipeline issues and things like that and green 39:35.250 --> 39:38.670 policies that are all going to affect potentially, you know, 39:38.670 --> 39:42.000 Alberta and oil prices and things like that, that, you 39:42.000 --> 39:44.160 know, so there's, there's a lot of that and then when you think 39:44.190 --> 39:47.190 even just take it down a notch to the consumer, what do they 39:47.190 --> 39:49.200 look like right, more more and more people will be working from 39:49.200 --> 39:52.140 home. A lot of branches are talking about, you know, 39:52.140 --> 39:55.530 shuttering or eliminating branch, you know, physical 39:55.530 --> 40:00.330 branch, brick and mortar and kind of reducing that So 40:00.360 --> 40:02.310 everyone, you know, everyone thinks the lesson learned for a 40:02.310 --> 40:05.250 lot of people was, you know, digital footprint. And so how 40:05.250 --> 40:08.220 does that change banking and, and then taking it kind of full 40:08.220 --> 40:11.370 circle back to what I think a lot of folks from, you know, on 40:11.370 --> 40:13.770 this panel and also in our audience are interested in from 40:13.770 --> 40:16.860 the lending FinTech world? How do they take advantage of that? 40:16.890 --> 40:20.490 Right? How do we, you know, they certainly have the agility and 40:20.490 --> 40:23.520 are probably a lot more digitally aligned to that new 40:23.520 --> 40:27.240 normal. And how do you get that? And, you know, you think about 40:27.240 --> 40:29.820 this, this this industry, and I think we talked about at the 40:29.820 --> 40:32.790 beginning, right, it, you know, there was an opportunity through 40:32.790 --> 40:36.150 this crisis to really emerge and really fun this industry and 40:36.150 --> 40:39.870 really support it and get it moving. You know, again, I take 40:39.870 --> 40:45.270 it back to 2008 2009, right, in 2010. In the US, fintechs made 40:45.270 --> 40:50.580 up about 1%, of total personal lending in the United States. 40:51.120 --> 40:55.350 Eight years later, they make up 40%. By 2018 2019, they made up 40:55.350 --> 40:59.700 40%. And a lot of that was the aftermath of their crisis, 40:59.730 --> 41:02.790 right. And here we are in another one. And I think, you 41:02.790 --> 41:05.070 know, Kevin, and Jason probably live this day in LA people on 41:05.070 --> 41:08.730 the phone, live this day to day, but I was just reading a stat 41:08.730 --> 41:13.350 yesterday, the top 25, private capital firms in the US are 41:13.350 --> 41:18.390 issuing about $800 billion in debt, or in capital, right? That 41:18.390 --> 41:20.760 number is significantly smaller in Canada. So how do you how do 41:20.760 --> 41:23.610 you fund how do you how do you build that wholesale market to 41:23.610 --> 41:27.840 support kind of this growth? And, you know, and how, you 41:27.840 --> 41:30.540 know, the emerging things like, you know, the the big guys, like 41:30.540 --> 41:33.540 the big tech companies that, you know, the the fam guy, guys, 41:33.540 --> 41:38.430 and, you know, we just heard this week, Apple acquired Moby 41:38.430 --> 41:41.520 wave $400 million. And so those, you know, those big players are 41:41.520 --> 41:44.520 coming in, right, and in some cases already here. And so what 41:44.520 --> 41:46.410 does that look like? And so I think it's really interesting, 41:46.410 --> 41:48.690 we're in a really interesting time, because I think the 41:48.690 --> 41:53.880 economy's impacted, the consumer dynamic, and behavior is being 41:53.880 --> 41:57.090 impacted. And that ultimately affects the market. So I think 41:57.090 --> 42:00.120 the interesting thing here is, how does this all evolve? And as 42:00.120 --> 42:03.660 we kind of the smoke clears, you know, what does the world look 42:03.660 --> 42:08.220 like, from a from from a banking and lending perspective? I think 42:08.220 --> 42:11.010 it's going to be different. I think it's going to be better. 42:11.820 --> 42:15.780 It's just, you know, I think there's a lot of right now, just 42:15.780 --> 42:18.960 a lot of sort of circling the wagons and kind of getting 42:18.960 --> 42:21.420 through it. But, you know, as Kevin and Jason have both said, 42:21.420 --> 42:25.260 there's, you know, there's an opportunity to emerge for a lot 42:25.260 --> 42:25.830 of growth. 42:26.490 --> 42:29.340 Mark Reisler: Yeah, it sounds like you're, I mean, I hear 42:29.340 --> 42:32.400 uncertainty from from what you're saying, there's a lot of 42:32.430 --> 42:37.890 unknowns that that are gonna emerge from this, but maybe, 42:37.920 --> 42:40.380 Jason, what you what you could do is start to talk a little bit 42:40.380 --> 42:43.830 about what's going to be certain what's going to be sustainable, 42:43.830 --> 42:46.140 it's going to be certain over the course of the next three to 42:46.140 --> 42:50.100 five years, as we come out of COVID. And we move into, you 42:50.100 --> 42:53.040 know, I'm not gonna say pre COVID state, but what can we 42:53.040 --> 42:57.570 depend on? Right, rather than a lot of the uncertainty talk that 42:57.570 --> 42:59.250 we can't really forecast? 42:59.480 --> 43:02.045 Jason Appel: Yeah that's a great question. Well, the one thing we 43:02.094 --> 43:05.202 depend on is our data. I can't control what the economy does. I 43:05.252 --> 43:08.310 can't control what Amazon and Apple do. Even if I wanted to, I 43:08.360 --> 43:11.567 don't think any of us could, you know, the economy has said table 43:11.616 --> 43:14.773 stakes conversation at the best of times, nevermind in the worst 43:14.823 --> 43:17.585 of times. So I'd say the one thing that you know, we can 43:17.635 --> 43:20.447 control as lenders, quite frankly, is to be very specific 43:20.496 --> 43:23.456 around the segments we want to play in, and to be just laser 43:23.506 --> 43:26.663 sharp, focused on trying to mind and understand the behaviors of 43:26.712 --> 43:29.426 what goes on within those segments, first and foremost, 43:29.475 --> 43:32.287 from the customer's perspective. So understanding how the 43:32.337 --> 43:35.149 customer's thinking is evolving, whether that's a race to 43:35.198 --> 43:37.616 digitization, or a simplification of underwriting 43:37.665 --> 43:40.526 or the elimination of retail bricks and mortar. Again, I'd 43:40.576 --> 43:43.782 have views on all three, I won't get into them here. But you have 43:43.832 --> 43:46.841 to understand how you see those and decide if you're going to 43:46.891 --> 43:49.949 make those bets, and in which places you're going to play. And 43:49.999 --> 43:52.515 then you have to figure out well, what insights and 43:52.564 --> 43:55.623 strengths can I pull from the information I already know about 43:55.672 --> 43:58.632 the customers I've dealt with in the past? Is that likely to 43:58.682 --> 44:01.691 continue? And then what other insights do I need to go gather 44:01.740 --> 44:04.947 about those customers to be able to reach more of them and target 44:04.997 --> 44:07.463 them more effectively, notwithstanding whether the 44:07.513 --> 44:10.621 government gives them a handout, whether or not Apple or Amazon 44:10.670 --> 44:13.680 decides that they want to get into, you know, by now Pele pay 44:13.729 --> 44:16.689 later type lending programs, you've got to really decide who 44:16.738 --> 44:19.649 you want to lend to for how long? And what your risk return 44:19.698 --> 44:22.856 trade off is. And I think those are the certainties that I would 44:22.905 --> 44:25.915 tell you that as a lender or as a member of a lender, I think 44:25.964 --> 44:28.924 are within our control. And you've got to decide how you can 44:28.973 --> 44:31.934 laser sharp focus your efforts on tackling those rather than 44:31.983 --> 44:34.943 necessarily being concerned about or worried about where the 44:34.992 --> 44:38.150 future lies, I have those themes concerns that my colleagues do, 44:38.199 --> 44:41.357 probably as much as anyone does, but I don't control them. But I 44:41.406 --> 44:43.873 do control the risk return levels that the company 44:43.922 --> 44:47.079 operates, or at least I'm one of many who sets those boundaries. 44:47.129 --> 44:50.237 I do control the aggregation and the insights and the analytics 44:50.286 --> 44:53.246 into our data to figure out what that's telling me about the 44:53.296 --> 44:56.404 company. humor. And I'm using a lot of third party information, 44:56.453 --> 44:59.265 whether it's coming from people like TransUnion, or other 44:59.315 --> 45:02.472 lenders or forums like these, to serve as information hubs as to 45:02.521 --> 45:05.531 what I think the future might look like. And then I'm placing 45:05.580 --> 45:08.442 a very, very hopefully well educated and well founded bet, 45:08.491 --> 45:11.402 that that's where the market is going to go. And, you know, 45:11.451 --> 45:14.608 provided you've got the funding support, which will be the other 45:14.658 --> 45:17.766 thing that may or may not keep some lenders up at night to back 45:17.815 --> 45:20.923 you in that strategy, then it's all about execution. So I would 45:20.973 --> 45:24.130 say, you know, execution risk is the other thing that you should 45:24.179 --> 45:27.189 really obviously try to control within your own organization, 45:27.238 --> 45:30.346 whether you're a small lender or a large lender is, when you're 45:30.396 --> 45:33.356 committed to going up going after particularly strategy, you 45:33.405 --> 45:36.365 just have to see it through and be prepared to commit to the 45:36.415 --> 45:39.424 positives or the negatives that might come with the risk that 45:39.473 --> 45:42.581 goes with it. Because there will be times where you're going to 45:42.631 --> 45:45.196 scrape your knee, I will tell you that from personal 45:45.246 --> 45:48.156 experience. And there are going to be times where that nice 45:48.206 --> 45:51.314 scraping exercise is going to be the best education you've ever 45:51.363 --> 45:54.274 asked for. And it will inform you to make a better decision 45:54.323 --> 45:56.938 going forward. So I think those are things, you know, 45:56.987 --> 46:00.046 somatically, that I think we as lenders have to think about as 46:00.095 --> 46:03.154 we move forward is to try and understand the market as best we 46:03.203 --> 46:05.917 can place really well and understood better use data to 46:05.966 --> 46:08.926 inform our decisions. And going back to something that Kevin 46:08.976 --> 46:11.788 said, and we support this and violently agree is test and 46:11.837 --> 46:14.797 learn as often as you can, and just don't test on it all the 46:14.847 --> 46:17.955 time, that you're putting all of your money at risk. But you've 46:18.004 --> 46:20.816 got to test around the edges to figure out where the next 46:20.865 --> 46:22.050 opportunity is gonna be. 46:22.050 --> 46:25.736 Kevin Clark: You know, you know, what's interesting, Jason, it is 46:25.807 --> 46:30.274 that, you know, to your point, as long as your customer base is 46:30.345 --> 46:34.386 growing, and you're doing what what you just articulated. 46:34.457 --> 46:38.853 There's a tremendous future out there three and five years for 46:38.924 --> 46:42.468 your firm and for ours and others. I think the the 46:42.539 --> 46:46.722 interesting point that got caught up that we kind of missed 46:46.793 --> 46:51.118 over a little bit as around the education piece, because, you 46:51.189 --> 46:55.727 know, we're a 35 person company serving across Canada, how do we 46:55.798 --> 46:59.697 actually add education to the process? And where should 46:59.768 --> 47:04.235 education really start because the small business owner, or the 47:04.305 --> 47:08.205 consumer who is looking for capital to refinance, or to 47:08.276 --> 47:12.388 grow, or to improve your quality of life? How do they make 47:12.459 --> 47:16.642 decisions on what the right product is, and there's so much 47:16.713 --> 47:21.250 out there, and so many different products are actually trying to 47:21.321 --> 47:25.504 solve for the same need, it's really quite interesting. And 47:25.575 --> 47:30.042 often, I think, certainly in the commercial world, the borrower 47:30.113 --> 47:34.438 ends up with the wrong product. And it may be that they don't 47:34.509 --> 47:38.975 have choice. But also there's an education factor that or if we 47:39.046 --> 47:43.371 could add education, if the if the if the masses that use our 47:43.442 --> 47:47.909 products and services knew more, and those that don't knew more 47:47.979 --> 47:51.808 about us, we'd be even improving, we'd be so much more 47:51.879 --> 47:56.204 improving our own positions in our in our market shares or in 47:56.275 --> 48:00.600 our in our space, and our peer group. And the public would be 48:00.670 --> 48:04.995 better off, but we're still not as well known as we could be. 48:05.066 --> 48:09.391 And we have so much to offer in terms of education. It's just 48:09.462 --> 48:13.574 it's a really hard piece to scale. You know, to try to get 48:13.645 --> 48:18.041 out to everybody, you know, how do we do that? How do we help? 48:18.112 --> 48:20.310 Because we all want to do that? 48:21.300 --> 48:26.100 Mark Reisler: Yeah. I hear you loud and clear. And yeah, I did 48:26.130 --> 48:29.490 glance over the financial literacy and education topic. 48:30.240 --> 48:33.180 But one of one of the key insights from from the work that 48:33.180 --> 48:36.510 we've been doing is, you know, you have this small business 48:36.510 --> 48:39.990 coming into into focus for you. They're going through the 48:39.990 --> 48:43.140 application process, wouldn't it be great to say to them that 48:43.170 --> 48:45.750 what you actually need is invoice factoring or account 48:45.750 --> 48:50.640 receivable financing over working capital loan? Wouldn't 48:50.640 --> 48:54.000 it be great to tell them exactly what product they that they're 48:54.000 --> 48:58.140 able to best utilize and circumstances that they have? 48:58.650 --> 49:01.590 And I think that this is where, you know, a combination of 49:01.590 --> 49:04.590 consumer and open consumer directed finance, open banking 49:04.590 --> 49:10.020 data coming in fast evaluation of it, algorithmically looking 49:10.020 --> 49:13.380 at them from a cohort analysis and saying, You look very 49:13.380 --> 49:17.790 similar to, you know, these 20,000 other people, right? We 49:17.790 --> 49:20.280 know that these 20,000 Other people can use a product like 49:20.280 --> 49:23.310 this, instead of choosing a product, like why? 49:23.520 --> 49:26.584 Kevin Clark: Well, so many of them are compatible. I mean, the 49:26.646 --> 49:30.273 point you make about an invoice discount I mean, there's a 49:30.336 --> 49:33.838 working capital that helps produce the product, and then 49:33.900 --> 49:37.590 there's a discounting that helps get your cash forward from 49:37.652 --> 49:41.342 selling it. I mean, this is nothing new. It's that I think, 49:41.404 --> 49:44.969 I think there's just a lack of knowledge generally in the 49:45.031 --> 49:48.471 marketplace. And the reality is we're actually all more 49:48.533 --> 49:52.285 compatible and and absolutely could be working more together 49:52.348 --> 49:56.162 as a broader specialty finance industry than we do today. And 49:56.225 --> 50:00.102 maybe that's maybe that future is out there that there is some 50:00.165 --> 50:03.917 m&a within our space at some onpoint as we all mature in our 50:03.979 --> 50:07.481 environment, and Jason could mean he's the leader in his 50:07.544 --> 50:11.546 field, he could be tackling the commercial markets at some point 50:11.608 --> 50:15.548 and see how it all goes. And we could be doing the same in part 50:15.610 --> 50:19.488 in the consumer space. And the plethora of different financial 50:19.550 --> 50:23.552 tools sort of comes through, you know, supporting your customer. 50:23.615 --> 50:27.367 That's really traditionally how it how it grows. And so it's 50:27.429 --> 50:31.119 it's hard to say, but I think, I think leaders that will be 50:31.182 --> 50:35.059 around like Go Easy in in five years, we'll see some expansion 50:35.121 --> 50:38.873 to their products and services, we will continue to see some 50:38.936 --> 50:42.313 decentralization from the monolithic growth of the big 50:42.375 --> 50:45.940 banks that will always be there. But there is going to be 50:46.002 --> 50:49.191 increasing, increasing opportunity for the likes of 50:49.254 --> 50:52.943 specialty finance to grow, especially with open banking, as 50:53.006 --> 50:56.695 it does come it will take time. And I think that's actually 50:56.758 --> 51:00.573 exciting of sort of decoupling some of the financial services 51:00.635 --> 51:04.450 activities, without losing the regulatory pool that we always 51:04.512 --> 51:08.640 have in the Canadian market. I think it's actually quite exciting. 51:08.760 --> 51:10.950 Jason Appel: Yeah, it's one of the it's one of the trends, I 51:10.950 --> 51:14.040 recently read a great report, I can't say the name because I 51:14.040 --> 51:16.020 can't remember the name of it too many reports. But it talks 51:16.020 --> 51:18.210 about this concept that that Kevin has mentioned called added 51:18.210 --> 51:22.110 what they call added value lending, which is we basically 51:22.110 --> 51:24.300 are in the business of lending money. That's why we make our 51:24.300 --> 51:27.900 spreads. That's how we justify our coming into being. But there 51:27.900 --> 51:30.450 is quite an emergence of a trend in other markets, the US in 51:30.450 --> 51:33.390 particular, whether that lending relationship is not defined 51:33.390 --> 51:36.810 exclusively by the lending transaction itself. It's more 51:36.810 --> 51:39.960 defined by everything that goes on around that transaction, one 51:39.960 --> 51:43.620 of which could be this notion of helping customers along a 51:43.620 --> 51:47.130 spectrum, if you will, which includes having a diversified 51:47.130 --> 51:49.320 set of products that maybe you as a lender don't have, but you 51:49.320 --> 51:51.750 can connect them too. So partnership takes on a different 51:51.750 --> 51:55.050 role. So companies like Sofi, and other organizations in the 51:55.050 --> 51:58.200 United States have gone away just from being these once in a 51:58.200 --> 52:02.100 blue moon transactional lenders to wrapping these other bells 52:02.100 --> 52:05.850 and whistles around the services they offer. And I think I think 52:06.030 --> 52:08.880 that's one of the things that we as a as an industry group can 52:08.880 --> 52:12.960 think about, because it is an emerging trend. And as consumers 52:12.960 --> 52:16.860 become more sophisticated into and demand more of us as lenders 52:16.860 --> 52:20.580 and just simply access to capital, I think that's a space, 52:20.580 --> 52:24.660 we could think about how we play more aggressively, because it is 52:24.660 --> 52:27.840 a point of differentiation. And I would argue in some way 52:27.840 --> 52:30.630 shapes, the organization of organizations that figure that 52:30.630 --> 52:34.320 out, have a leg up on those that don't, because you can't always 52:34.320 --> 52:37.470 keep on on scale, you can always compete on access or cost of 52:37.470 --> 52:39.840 capital, you've got to differentiate yourself in some 52:39.840 --> 52:42.240 other way and giving a different perspective to that consumer 52:42.390 --> 52:45.060 might just be that way. And it's something that we as a group 52:45.060 --> 52:45.990 might want to think about more? 52:47.010 --> 52:49.524 Jeremy Kronick: Mark can I just jump in just just a few things 52:49.579 --> 52:52.968 popped into my head because the conversation has gone in a few 52:53.023 --> 52:56.029 different places, since you asked the original question 52:56.084 --> 52:59.145 about certainty, you know, I think, you know, my view is 52:59.200 --> 53:02.535 going to be certain that the the traditional risk metrics for 53:02.589 --> 53:06.143 financial institutions are going to make it difficult for them to 53:06.197 --> 53:09.696 lend, you know, even once we get this recovery going. So I mean, 53:09.751 --> 53:12.703 to me, there's a huge opportunity for you guys to, you 53:12.757 --> 53:16.092 know, to tailor your products in different ways. Like, I just 53:16.147 --> 53:19.481 really think there's going to be a lot of space, and a lot of 53:19.536 --> 53:23.034 working capital was wiped out as a result of this. And so to me, 53:23.089 --> 53:26.533 there's just a huge opportunity on that end, you know, all this 53:26.588 --> 53:30.032 data conversation that was also made me thinking this my second 53:30.086 --> 53:32.984 point around around issues around HIPAA, and, and the 53:33.038 --> 53:36.318 digital charter and all these, you know, all these policies, 53:36.373 --> 53:39.544 and that have sort of started but aren't quite complete. I 53:39.598 --> 53:42.550 think there's some missing pieces around these privacy 53:42.605 --> 53:45.885 issues. That I think, you know, perhaps it just needs a push 53:45.940 --> 53:49.274 from from organizations like yours that are really, you know, 53:49.329 --> 53:52.827 that, that use that data in such a productive fashion, you know, 53:52.882 --> 53:56.217 for the economy. And then the third thing is Kevin mentioned, 53:56.271 --> 53:59.387 it was, you know, regulation. And and, you know, the open 53:59.442 --> 54:02.339 banking story is going to be super interesting from a 54:02.394 --> 54:05.838 regulatory perspective, because in other jurisdictions have one 54:05.893 --> 54:09.282 or maybe two regulators don't have that here, right? You have, 54:09.337 --> 54:12.671 you know, not only do you have fragmentation, geographically, 54:12.726 --> 54:15.569 you have fragmentation functionally in the financial 54:15.623 --> 54:18.848 services sector. And so what does regulation look like, for 54:18.903 --> 54:22.183 the digital space? That is a huge question that that I think 54:22.238 --> 54:25.627 needs to be spent, there needs to be a lot of time spent on by 54:25.682 --> 54:29.235 everybody who thinks about these things. Because without it, it's 54:29.290 --> 54:32.406 not clear to me that you're going to get all the benefits 54:32.460 --> 54:35.795 from an open banking, right, because it's in other countries, 54:35.850 --> 54:39.020 it's really open financial services. Right. But here, it's 54:39.075 --> 54:41.863 not. It's not it can't be because of the regulatory 54:41.918 --> 54:45.690 structure. And so I think a lot of thought needs to be put into that. 54:46.500 --> 54:48.420 Matt Fabian: Yeah, I think we're seeing that right. We're seeing 54:48.660 --> 54:50.760 in the discussions that are already happening at a federal 54:50.760 --> 54:54.000 level. I think you know, the we're getting to the idea that 54:54.000 --> 54:57.090 one size doesn't fit all right, government needs to modernize 54:57.090 --> 55:00.840 financial regulations to better encourage innovation. In the 55:00.840 --> 55:04.590 Canadian marketplace for sure. And I think there's, you know, a 55:04.590 --> 55:07.110 lot of belief that there's considerable room for for 55:07.140 --> 55:09.960 innovative policy reforms, especially around fintech. 55:09.960 --> 55:13.920 Right? So, opportunity zones, regulatory exemptions for p2p 55:13.920 --> 55:16.260 lending, including small businesses, things like that. 55:16.260 --> 55:19.200 And I think those are things that are starting, like those 55:19.200 --> 55:23.220 conversations are starting to happen. And they're necessary, 55:23.250 --> 55:27.750 right, they're necessary to support the industry and kind of 55:27.750 --> 55:29.130 create that that structure. 55:30.360 --> 55:33.770 Mark Reisler: I just want to pause there before I open it up 55:33.844 --> 55:38.515 to the panel. So the Q&A box has not been filled. Great time to 55:38.589 --> 55:43.259 start asking some questions in here, from the participants from 55:43.334 --> 55:47.708 the audience. And then as they come in, I'll just I'll just 55:47.782 --> 55:52.378 throw them out there. But as as the audience is writing those, 55:52.452 --> 55:56.752 those Q&A questions, if there are any, maybe maybe what we 55:56.827 --> 56:01.275 could do is just start thinking about a parting thought. 111 56:01.349 --> 56:05.871 thought one opinion, one look, one forecast, about how we see 56:05.945 --> 56:10.468 the lending space for the all lenders for the lead techs that 56:10.542 --> 56:15.213 are listening on this going into the next five years. Matt, you 56:15.287 --> 56:16.770 want to kick us off? 56:17.430 --> 56:21.180 Matt Fabian: Sure. I think, obviously, the one word, I'd use 56:21.180 --> 56:24.180 this change, right? So I've already said it, there's, 56:24.210 --> 56:28.440 there's going to be a change in the consumer dynamic. We know 56:28.440 --> 56:30.930 just from, you know, the new generations entering the 56:30.930 --> 56:33.090 consumer market, they bank differently, they think about 56:33.090 --> 56:38.070 finance differently. And so I think there's going to be and 56:38.070 --> 56:40.440 you know, there's, that's what's driving things like open 56:40.440 --> 56:43.950 banking, right, that kind of that kind of thinking, that kind 56:43.950 --> 56:48.960 of consumer demand. So I think that's going to shape how this 56:48.960 --> 56:53.730 industry emerges. I think this industry is very well positioned 56:53.730 --> 56:57.780 to excel in that space. And so, you know, I feel very confident 56:57.780 --> 57:00.690 that this kind of lending FinTech, whatever you want to 57:00.690 --> 57:05.100 call is, is going to be a high growth industry, I think it's 57:05.100 --> 57:09.600 just, you know, we need to we need to be able to support it in 57:09.600 --> 57:14.340 terms of capital regulatory, and, you know, Jason's note 57:14.340 --> 57:17.400 about, you know, organic and inorganic expansion, right. And 57:17.400 --> 57:20.430 I think, I think that's gonna happen. And I think that over 57:20.430 --> 57:23.160 the next couple of years, there's gonna be more and more 57:23.160 --> 57:25.800 prominence, because, you know, those younger generations that 57:25.800 --> 57:27.660 are on their mobile phones, or those businesses that are 57:27.660 --> 57:30.060 starting up, they're looking for solutions that maybe the 57:30.060 --> 57:34.500 traditional avenues don't allow, you know, they're actively 57:34.500 --> 57:37.680 seeking that. And I think that's going to drive the appetite. 57:39.570 --> 57:42.930 Mark Reisler: Oh, we got we got one question that came in in the 57:42.930 --> 57:46.350 last two minutes here. So I'm going to read that before I turn 57:46.350 --> 57:52.920 it over. So there has been a lot of discussion on old data, how 57:52.920 --> 57:56.460 this is central to the FinTech lenders sector, can you give 57:56.460 --> 57:59.910 some examples of innovation sources of old data in the 57:59.910 --> 58:05.490 market now and what data we need moving forward? So Jason, Kevin, 58:05.520 --> 58:09.690 I'll turn to you guys, because you're more in this space right 58:09.690 --> 58:12.270 now. And then Matt, would love your opinion afterwards. 58:12.450 --> 58:15.000 Kevin Clark: Sure, I'll kick it off. I mean, Jason's the, 58:15.060 --> 58:18.540 Jason's got a lot more under his belt in terms of risk than I do. 58:18.540 --> 58:21.720 But I will tell you that the best data comes out of the 58:21.720 --> 58:26.100 historical performance of our own book. And that is hugely 58:26.100 --> 58:29.160 important. And that's the hardest piece is, in fact, the 58:29.160 --> 58:33.510 barrier to entry into our business is really not capital 58:33.540 --> 58:36.780 and innovation, it's actually getting a hold of data to build 58:36.780 --> 58:41.220 a proprietary credit box. That's really the challenge. And so, 58:41.250 --> 58:46.530 you know, data data, the use of data is hugely important. How we 58:46.530 --> 58:50.190 deal with that is driving hypotheses on that data, through 58:50.190 --> 58:55.350 historical review of performance on our own book, that's that is 58:55.350 --> 58:59.640 effectively how we have leveraged data in the early days 59:00.090 --> 59:05.160 of my of my business. We bought that data, we bought it from the 59:05.160 --> 59:10.050 Bureau's to help us try to establish some protocols on what 59:10.050 --> 59:13.080 we will look for and how we will manage and then as the business 59:13.080 --> 59:17.790 grew, we used our own data to provide for the software that we 59:17.790 --> 59:22.890 use through judy.ai. Frankly, Jason, your thoughts? 59:26.970 --> 59:29.105 Jason Appel: I just came off mute, sorry. Yeah. So I loved 59:29.153 --> 59:32.190 your summary. I would say having the ability to access and mined 59:32.238 --> 59:35.038 data, statistically evaluate using good techniques, testing 59:35.086 --> 59:37.554 and learning writing good hypotheses, and rigorously 59:37.601 --> 59:40.544 following them, and not letting them fall to the wayside is by 59:40.591 --> 59:43.439 far and away. One of the most important approaches as far as 59:43.487 --> 59:46.097 data itself, you know, we've talked about banking data, 59:46.145 --> 59:48.803 that's a no brainer. I think there are there are several 59:48.850 --> 59:51.698 other sources of, of consumer related data that people would 59:51.745 --> 59:54.735 love to put their hands on. It's just it's somewhat problematic 59:54.783 --> 59:57.773 to figure out how to do that in a way where Customer experience 59:57.821 --> 01:00:00.621 can be seamless. What I mean by that is, is when a customer 01:00:00.668 --> 01:00:03.374 approaches your doorstep and wants to borrow money, or at 01:00:03.421 --> 01:00:06.222 least talk about borrowing money, you would ideally love to 01:00:06.269 --> 01:00:09.259 get that full range picture of that customer. And you'd love to 01:00:09.307 --> 01:00:11.870 be able to get that once. And once only by getting the 01:00:11.917 --> 01:00:15.002 customer's consent to ingest all that information. Well, there is 01:00:15.050 --> 01:00:17.992 as yet no one simple location where you can do that you got to 01:00:18.040 --> 01:00:20.983 call a credit bureau, maybe you got to call a banking partner, 01:00:21.030 --> 01:00:24.068 like a plant or a flame stipple in their banking data, maybe you 01:00:24.115 --> 01:00:26.631 got a partner with a utility company like or activity 01:00:26.678 --> 01:00:29.431 aggregator, like an urgent and to get the utility data in, 01:00:29.478 --> 01:00:32.374 you've got to figure out a way to get all that information in 01:00:32.421 --> 01:00:34.604 in one experiential loop. Because if you do it 01:00:34.652 --> 01:00:37.642 sequentially, it's not that you can't get that information, but 01:00:37.690 --> 01:00:40.585 the customer experience is going to absolutely stink, and the 01:00:40.632 --> 01:00:43.243 customer won't have the patience. And more importantly, 01:00:43.290 --> 01:00:46.185 they're going to be concerned about why do I need to give you 01:00:46.233 --> 01:00:49.081 all this stuff just to figure out if you can lend any money. 01:00:49.128 --> 01:00:51.976 So I would say the other really interesting source for me of 01:00:52.023 --> 01:00:54.871 data is web data. And by web data, I don't mean social media 01:00:54.919 --> 01:00:57.482 data. That's interesting. I'll be at fraught with some 01:00:57.529 --> 01:00:59.997 interesting loopholes and conundrums. I won't bother 01:01:00.045 --> 01:01:02.750 getting into here. But just the simple notion of how your 01:01:02.798 --> 01:01:05.598 customer interacts with you digitally, if we're all talking 01:01:05.645 --> 01:01:08.398 about building these grand digital ecosystems, I would say 01:01:08.446 --> 01:01:11.436 there isn't for an organization yet that I've seen, at least in 01:01:11.483 --> 01:01:14.236 the Canadian market, that's figured out how to capture all 01:01:14.284 --> 01:01:17.131 of those data points, and then mine them for the purposes of 01:01:17.179 --> 01:01:20.074 determining their predictive power, whether it be for credit, 01:01:20.122 --> 01:01:22.874 whether it be for loyalty, or any other matter. And to me, 01:01:22.922 --> 01:01:25.770 that's the next great frontier that I'm looking at is how do 01:01:25.817 --> 01:01:28.665 you be able to grab that web data by the, you know, wherever 01:01:28.712 --> 01:01:31.608 you want to call it, ingest it, and then assess its value and 01:01:31.655 --> 01:01:34.645 worth. So that would be another example. I think that's, that's 01:01:34.693 --> 01:01:37.446 waiting for us lenders, those of us who have built digital 01:01:37.493 --> 01:01:40.483 ecosystems, and even for those of us who have, I will submit to 01:01:40.531 --> 01:01:43.426 you, we can do a much better job of doing it. Because lending 01:01:43.473 --> 01:01:46.464 itself as a discipline involves pricing, and most risk involves 01:01:46.511 --> 01:01:49.311 a whole bunch of things. But this whole notion of capturing 01:01:49.359 --> 01:01:52.302 information properly about how you interact with the consumer, 01:01:52.349 --> 01:01:55.244 that's a whole other data set that you don't necessarily have 01:01:55.292 --> 01:01:58.282 to be the world's greatest risk manager to do. But you're gonna 01:01:58.329 --> 01:02:01.082 need a lot of smart people to figure out how to track that 01:02:01.130 --> 01:02:03.883 information, and then put it into your ecosystem. So those 01:02:03.930 --> 01:02:06.351 would be a couple of opportunities, I would outline 01:02:06.398 --> 01:02:09.436 for the, for the people who are looking to make a difference, go 01:02:09.483 --> 01:02:12.189 after your web data and figure out how to mine it because 01:02:12.236 --> 01:02:15.274 there's a there's a treasure, a treasure trove there. And here's 01:02:15.321 --> 01:02:17.979 the other thing that's not governed by regulation, those 01:02:18.027 --> 01:02:20.542 are customers direct interactions with you. So we all 01:02:20.590 --> 01:02:23.627 talk about open banking and what it might mean, customers fairly 01:02:23.675 --> 01:02:26.665 transact with you over the web. That's your data. Right? That's 01:02:26.712 --> 01:02:29.703 something that you can mind and you can own. It's just figuring 01:02:29.750 --> 01:02:32.550 out what it looks like and how you can leverage it. I think 01:02:32.598 --> 01:02:33.690 that's the opportunity. 01:02:36.900 --> 01:02:40.368 Mark Reisler: Tal's Tal's giving me the the shoulder saying wrap 01:02:40.437 --> 01:02:44.668 it up, Mark. I just wanted I just want to thank the panelists 01:02:44.738 --> 01:02:48.691 for for great conversation today. Very insightful. I want 01:02:48.761 --> 01:02:52.507 to thank CLA, for hosting and TransUnion for being the 01:02:52.576 --> 01:02:56.460 sponsor. I was I learned a lot today, and it was a great 01:02:56.530 --> 01:03:00.969 conversation. So thank you. I'll tell I'll let you kind of close 01:03:01.038 --> 01:03:02.010 this off here. 01:03:02.640 --> 01:03:05.624 Tal Schwartz: Well, those those are some great concluding 01:03:05.694 --> 01:03:09.512 remarks, Mark. So I'll just say thank you, everyone for 01:03:09.581 --> 01:03:14.024 attending and other CLI session. We'd love to obviously have you 01:03:14.093 --> 01:03:17.911 back at the next one. And thank you to our esteemed and 01:03:17.980 --> 01:03:22.007 incredibly thoughtful panelists for a great discussion and 01:03:22.076 --> 01:03:25.616 again, to TransUnion for supporting FinTech lending 01:03:25.686 --> 01:03:29.504 innovation, and the CLA. So thank you very much. Have a 01:03:29.573 --> 01:03:31.170 great rest of your day.