Upstart Digital-First Model

“The only thing useful banks have invented in 20 years is the ATM.”
– Paul Volcker

That Barclays upgrade with a PT raised from $130 to $230 appears to have contributed to investor confidence.

In the conference call Upstart CEO Dave Girouard spoke about the companies transformation to a digital-first model that will redefine banking in the 21st century.

Upstart Holdings, Inc. (UPST) Q2 2021 Earnings Call Transcript

"In June, we announced that Upstart is moving to a digital-first model, where most Upstarters can live and work anywhere in the U.S. We came to this decision for a few reasons.

First, we’ve shown we can work well remotely as a team. The arguments against remote work tend to be historical rather than backed by real facts or data.

Second, the tech world feels like it’s on a multiyear transition toward work-from-anywhere, and we want to be ahead of the curve.

Third, we believe the benefits of in-office work can be captured in just a few well-considered days together each month.

And fourth, given the scale of our ambitions and the talent we need to aggressively pursue our goals, we need to tap into talent across the entire country. The good news is Digital First has paid immediate dividends to our recruiting efforts.

Though we announced this plan just a couple of months ago, over a third of our job offers in the past few weeks have been to candidates outside our footprint. And we’ve seen an acceptance rate of 80% to these offers, a dramatic improvement over what we’ve seen historically.

Digital-first is not just a reaction to the last year and a half. It’s a sign that we intend to create one of the largest and most impactful fintechs in the world."……

The Four Levels of Digital Lending

…three core principles for accelerating digital lending transformation… :

  1. Look through the lens of the actual consumer experience;
  2. Avoid the trap of just digitizing your existing manual origination and underwriting processes;
  3. Use digital lending strategically to help grow your existing household relationships and expand into new households in your bank footprint.…

The CEO covered some investor concerns during the conference call: the long term story, catalysts, working from wherever… which also contributed to investor confidence.

i especially like that it is important to Upstart management to Avoid the trap of simply digitizing old FICO scores and other ways of evaluating the customers credit worthiness.

Instead, Upstart is strategically, ;^) using their artificial intelligence to assess loans by looking at over 1,000 data points to provide a decision, usually instantly… ‘redefining banking in the 21st century.’

Thanks to all for your contributions to this board and for giving me a place to share some of today’s homework.

Best, kevin c
long of UPST
please click my screen name for disclosed holdings