PaymentsJournal
Welcome to the PaymentsJournal podcast. I’m your host Ryan Mac. In today’s episode we’re going to be talking about consumer lending. To help me with that conversation I have Brent Turner MetaBank’s Executive Vice President and Head of Consumer Lending. Brent, welcome to the podcast!
Brent Turner MetaBank’s Executive Vice President and Head of Consumer Lending
Thank you.
PaymentsJournal
Many of us in the industry have historically known MetaBank [Meta] as a prepaid company, but I know it’s grown to be a bit much more. Can you introduce Meta and talk about how it’s grown beyond prepaid?
Brent Turner MetaBank’s Executive Vice President and Head of Consumer Lending
Sure, Ryan, thank you. MetaBank is a pioneer in financial services. We offer industry-leading payment fintech and financing solutions that help businesses grow and give consumers a lot more flexible options to manage their money. We work with high-value niche industries like the rapidly growing prepaid debit card business. We also work with technology adopters to grow their businesses and build more profitable relationships. Part of our continued focus on financial services and expansion to include more of the population led us to the tax refund space. We offer programs, technology, and refund advance products that allow tax preparers to provide taxpayers with funds quickly based on the refund that they’re expecting to get back. This growth led Meta to specialty consumer services and the decision in 2016 to purchase a platform that provides the total solution for the refund advance product. It also then includes the platform for marketplace lending, and as a result Meta’s consumer lending platform was birthed.
PaymentsJournal
What provided the spark for MetaBank’s interest in expanding into the consumer lending space?
Brent Turner MetaBank’s Executive Vice President and Head of Consumer Lending
Well, MetaBank had several relationships and had actually expanded in the credit space a little bit in the late 2009–2010 era. Those programs were more pilot programs and never really got scale. But if you look at the deposit base that Meta has grown over the years due to its prepaid debit card program, there’s just a tremendous asset on the balance sheet to deploy and rather than keep that asset in a marketable securities portfolio earning a 3% return on assets, which is still pretty nice in this market, we look at other ways to deploy that capital in the various different vehicles that give higher-yielding products. One of those is going to be consumer loans, or packaged consumer loans.
PaymentsJournal
As we’ve seen from some data, consumers don’t exclusively go to banks for loans anymore. They get them from a variety of places. What has this meant for the business side, and where do banks still fit into this picture?
Brent Turner MetaBank’s Executive Vice President and Head of Consumer Lending
I agree with you. I think there’s a lot more credit options available for consumers today. Whether it’s online, or at the point of sale, there’s just a lot deeper relationships out there with consumers that are nonbank or not traditional bank. So today if a consumer’s looking for credit, they’re not typically going to a bank branch, walking in, and asking for a loan. But the banks can still provide a tremendous amount of resource to lenders today or to marketing partners, if you will. There’s these channels that have developed where customers or consumers are interacting on a daily or weekly or monthly basis with a particular partner and banks can plug into those partners. That’s where the whole marketplace lending boom has happened over the last five years.
PaymentsJournal
MetaBank recently announced an agreement with CURO [Group Holdings Corp.] to launch a new line of credit products for underbanked consumers. Can you tell us a little bit about why it’s important to serve this group?
Brent Turner MetaBank’s Executive Vice President and Head of Consumer Lending
Yes. We announced this agreement with CURO, one of the larger short-term credit providers to underbanked consumers in the country. They’re one of the best out there. And together in the coming months we’re going to launch this new line of credit that we believe to be more flexible than others in the market and very transparent. We plan to release this product under a new joint brand. We think that this is a very important product for the consumers that are underserved today because they’re going to be able to control their cost of borrowing. The way that we apply these fees is very transparent, very easy to understand, and extremely beneficial to the consumer based on other options available to them.
PaymentsJournal
Before we wrap up here: Consumer lending is a rapidly growing field. How do you expect to see it continue to grow and innovate over the next couple years?
Brent Turner MetaBank’s Executive Vice President and Head of Consumer Lending
It’s a very large industry, and I think that over the next few years you’ll continue to see technology create a driving force behind lending decisions. What I mean by that is there are a lot of different data sources out there besides just a FICO score, besides just pulling a credit report and using that score in order to determine whether the consumer gets a loan or not. There are many different data sources you can choose that will help to not only underwrite the consumer and give you more predictability of repayment but also who’s more likely to respond. So I think what you’ll see is a lot more technology ventures entering the space and partnering with bigger and bigger banks.
PaymentsJournal
As we take a look at 2018 and beyond, what would you say you are most excited about seeing within the consumer lending industry?
Brent Turner MetaBank’s Executive Vice President and Head of Consumer Lending
I think convenience. If I could just sum it up in one word, it would be convenience. What I really love about, as I mentioned earlier, the technology that’s playing in the space, it does nothing but drive additional convenience and options and choices to consumers. To me, I think that’s the way we win in this economy: Just drive the most convenience at the best price.
PaymentsJournal
Excellent. Well, thank you very much, Brent, for taking the time today to speak to us about consumer lending, and we hope to have you back on the podcast real soon.
Brent Turner MetaBank’s Executive Vice President and Head of Consumer Lending
Thank you, Ryan.
