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“Open Banking Initiatives Democratize Access To Bank Capabilities” with CEO Jeff Zhou of Fig Loans

I had the pleasure to interview Jeff Zhou, CEO of Fig Loans. Fig partners with nonprofits to provide affordable financial products to…

Open banking API CEO Fig Loans

I had the pleasure to interview Jeff Zhou, CEO of Fig Loans. Fig partners with nonprofits to provide affordable financial products to borrowers by aligning their business model with the customer’s financial health. Jeff was recently selected as a visionary by the New York Times for his work on Fig. Prior to Fig, Jeff worked at the Boston Consulting Group, received his MBA from the Wharton School and BS in Chemical Engineering from MIT.

Thank you so much for doing this with us! What is your “backstory”?

I am proudly born and raised in Buffalo, NY. My entrepreneurship career starts in middle school. I had two businesses. The first made and sold funny t-shirts for competitive swimmers. I made them on Custom Ink and sold them at swim meets between races. The second was on eBay and sold digital items I had earned in this online video game. I loved that my weekend gaming could pay for things like my first skateboard and hundreds of Auntie Anne’s pretzels. My entrepreneurship was relegated to the backburner when I received a scholarship to boarding school and then college. I started my career at The Boston Consulting Group where I learned an immense amount about business strategy and operations. As I got more settled into the role, my urge for entrepreneurship kept coming back. I teamed up with two colleagues from work and we tried to create a cloud-based white pages for the world. When this didn’t work out, I went to business school with the sole intention of using the time to start new businesses. I met my current co-founder John at the PennApps hackathon a week before school started. Our first project was a game called Llama Run and over the next two years we would earnestly try (and fail) to launch three other ideas. About three months before our graduation, we decided to give it one more go with Fig and the rest is history!

What do you think makes your company stand out during these disruptive times? Can you share a story?

Complete mission alignment! Every company has a mission, but sometimes they aren’t fully integrated into the business objectives. A company’s business objective will always be to generate return, while the social mission can be anything from improving access to drinking water, to making it easier to get a reasonable loan. When these two missions are not aligned, it can cause internal conflict. That’s because social mission activities have real costs, and companies have limited dollars.

At Fig, our mission is building a bridge from bad to good credit. Our objective is to help customers qualify for traditional credit products. When our customer’s graduate to better credit products, the banks, credit card companies, and credit unions that receive our customers pay Fig a referral fee. Fig as a business tries to maximize our referrals. Not coincidentally, the best way to maximize referrals is to maximize our customer’s credit score. When our business objectives and social mission are one in the same, the company no longer has to make tradeoffs and that singular focus allows us to stand out.

What advice would you give to other CEOs or founders to help their employees to thrive?

We need to be better managers. I think as founders we too often underinvest in our development as managers. When starting out, we focus on the tasks because the survival of the company is at stake. This quickly becomes routine: expand to new markets, write this code, deploy a new feature, launch a marketing campaign, go faster. However, as the company becomes more stable, we’re still focused on the tactical and that translates to our employees. By helping our employees thrive across the board, I think we can unlock even greater benefits for the company.

Can you share what you believe will be the “Top 5 Fintech and Banking Trends Over The Next 3 Years” (Please share a story or example for each.)

While I can’t speak to all five, I believe three of the top trends in Fintech and Banking over the next 3 years will be Real-time payments, Open banking APIs and Deep subprime credit.

Real-time payments radically improve our customer’s ability to manage their cashflow and account balances. Today, there is a delay (sometimes up to 3 business days) between making a payment and when it shows up in your account balance. This means customers managing tight budgets jump through a series of mental hoops to reconcile all the places they’ve spent money and if those providers are reflected yet in their balance. The result is a significantly tougher time avoiding expensive overdraft and returned payment fees.

Open banking initiatives democratize access to bank capabilities. This opens a flood gate for fintech innovation because Fintechs get direct access to core bank infrastructure. Sometimes we are completely dependent on the bank.For instance, one of our banks could not change single entries in a file, they had to delete the entire file. The process to change an entry was to call the bank, they would call a back-office department to cancel the entire file (with no written confirmation on our end) and then we would upload an entirely new file, praying the original was actually canceled. Imagine being in the grocery store checkout line, needing to swap an item and being told you must first speak to the manager, who dumps your cart out, and then says you can now refill it from scratch with the one changed item you wanted. From a bank perspective, open banking initiatives will be revolutionary because it turns banks into platform providers, allowing them to capture new revenue streams from the innovative fintech products built on their platform.

Deep subprime credit will be a trend in the next 3 years because deregulation of banks and new underwriting technologies significantly reduces the barriers to entry. Today, banks do not lend under 600 and alternative lenders rarely below 580. However, 1/3 of Americans have scores below 580. There is immense potential in deep subprime lending, but historically regulation and risk have keep banks out. Over the next 3 years, banks will face less regulatory scrutiny with the new Senate Bill, allowing them greater flexibility to pursue innovative products. Additionally, new underwriting technologies like Open bank APIs allow providers to access higher quality data and make better credit decisions than ever before. Combining these structural changes with today’s yield curves creates a perfect storm of capability and interest for deep subprime lending to takeoff.

Can you please give us your favorite “Life Lesson Quote”?

“It is what it is.” I don’t remember where I learned this quote, but it’s carried me through many of my toughest challenges. There’s often not much we can do to change events that have already happened, so devoting energy to them doesn’t really move the needle. Facing tough conditions, I’ve found it best to just accept the situation, figure out what comes next and start doing it!


You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

Unacknowledged acts of kindness. Do things to help other people that they may never know you did. It could be as small as standing up a fallen bike or taking out the trash, I think if we all did a little more it would be a very cool world to live in.

Originally published at medium.com

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