Three Years Into My Tenure as OppLoans CEO: What I’ve Learned and Where We’re Going
More than three years have passed since I accepted the CEO role at OppLoans, a Chicago-based fintech startup focused on providing financial options to underbanked customers. In one sense, it feels like it’s been a whirlwind. In reality, it’s taken a phenomenal daily team effort to build the business, deliver for our customers and evolve the conversation about non-prime lending.
Since November 2015, OppLoans has earned an impressive list of accolades. We have:
- Grown our headcount from 15 to 315.
- Appeared on the Inc. 500 list of fastest-growing companies three consecutive years.
- Expanded our footprint nationally.
- Collected 5k+ five-star customer reviews.
- Created a path to establishing credit history for millions of applicants.
I’m incredibly proud of our team; their great talent makes these stats possible. We’ve gone on a journey together that’s been deeply rewarding, even as it has revealed the stark financial reality of the country. Now, at my three-year mark, it’s the right time to reflect on the lessons learned and look to the future of our business.
My background is in financial services and entrepreneurial investing. After graduating from the University of Michigan (Go Blue!), I completed a two-year analyst program with Goldman Sachs before pursuing a career in private equity. While investing, I spearheaded an “Insuretech” thesis that brick-and-mortar property and casualty insurance agencies could not effectively serve small businesses in line with their risk profile. Shortly thereafter, my firm and I co-founded Insureon, the first online insurance brokerage for small businesses. The idea was so compelling, I decided to join Insureon full time as its number two executive. Over four years, Insureon became the fastest growing P&C insurance agency nationally.
When I was approached by OppLoans founder Todd Schwartz to lead his firm as CEO, I was intrigued, but reluctant to leave Insureon—my “first born.” Also, I was unfamiliar with the non-prime consumer landscape and was, frankly, put off by the industry’s negative stigma. But Todd, who saw the original opportunity to transform and elevate non-prime lending, was passionate and persuasive. He and the OppLoans ownership team at Schwartz Capital Group were adamant that they were providing a simple credit product with compassionate service and dignity to the underbanked at a lower APR than storefront lenders.
To be honest, it sounded too good to be true. Historically, the industry has been filled with predatory actors and products. I didn’t believe that there was a viable alternative. So I did my research, expecting to be proved right and move on. But that’s not what happened.
Our customer is the median U.S. consumer. And they are misunderstood.
To my great surprise, I learned that half of Americans have non-prime credit scores,1 57 percent have less than $1,000 in their savings account2 and nearly eight out of 10 live paycheck-to-paycheck.3 This is the reality in America today.
This financial vulnerability can be catastrophic when you’re faced with an unexpected obstacle like a car repair or a sudden expense—be it medical or family-related. In that common scenario, where do you turn? The legacy options are predatory payday loans, title loans and bank overdraft fees (the average APR on a bank overdraft is a jaw-dropping 17,000 percent!4).
Then I started studying credit cards. It turns out, the true cost of non-prime credit cards is not much better. Unlike consumer installment loans, credit cards do not have to include fees in their APR calculations. When fees are added, cards that claim charges of less than 36 percent APRs are much more expensive on an “apples-to-apples” basis.5
As an investor, I learned the best question to evaluate any business is this: Do you create material value for your customers above and beyond their next best alternative? So, does OppLoans offer a better solution? That’s what I needed to know.
Compared to other non-prime options, Opploans products can be a lower cost solution for consumers who do not qualify for traditional financing. All of our products are amortizing, so customers pay down principal with each payment. Furthermore, we report to all three credit bureaus (not every lender does) so that we can enable our customers to build credit and payment history. This is critical to our mission to help the thin-credit population build a more robust credit history.
I learned that non-prime consumers who are locked out of traditional financing are not only used to predatory products, they’re too familiar with appalling second-class customer experiences. The industry stigma is real; I know because I held the same assumptions about the non-prime lending world. I needed to become certain that OppLoans was offering a product and an experience I would be proud to champion. So I sat in the Loan Advocate center and listened to customer calls for hours.
I was shocked. On call after call, I heard customers thank their Loan Advocates for being compassionate, for treating them like a real person and for making sure that they understood the product and the payment schedule. More than once, I heard customers in tears of relief after we helped them through a difficult situation. These are not people looking for a handout. They are hard-working Americans in need who want to, but cannot, participate in the traditional credit economy.
The OppLoans customer is the median U.S. consumer. They’re not a low-income consumer; they are educated and employed, they have bank accounts and they make median wages. It’s just the reality of the country today. Our customer is both misunderstood and trapped by barriers between them and the money they need to manage and advance their lives.
It was clear that the current world of brick-and-mortar lenders could not or would not serve non-prime consumers effectively or with dignity. In November 2015, I made the decision to join OppLoans’ mission to deliver a quality product and experience for non-prime borrowers that helped rather than hurt that population.
As we evolve, we must stay true to our core strengths.
When I came aboard, I was lucky to inherit an industry-leading credit model and best-in-class customer service. Those have always been—and will always be—our bedrock assets. Growth in a lending business means nothing if delinquencies rise and service levels slip.
As we’ve scaled exponentially, we have developed and leveraged best-in-class technology, created a Fortune 100-quality C-Suite and launched new products and services in new geographies. We have also kept true to our core skills. We know that EVERY customer interaction needs to be handled with the same level of care and decency on which we have prided ourselves since the early stages. We’ve also been lucky to partner with a world-class, state-chartered bank to service products they originate nationally.
Because we know our customer, we overemphasize best-in-class customer service. OppLoans clients come to us in moments of need. They are dealing with a financial emergency that likely impacts all other areas of their life: from what they’re able to provide their children, to being able to afford to physically get themselves to work. It’s critical that we furnish responsible products to customers who have the ability to repay them, but also that we do it with an absolute minimum of hassle and an unmatched customer experience. Our products come with manageable payments made over longer terms than payday lenders because we care about our customers’ ability to repay the loan they borrow. That’s why I’m so grateful to the thousands of customers who leave us five-star reviews and comments on Google, the Better Business Bureau and other social media platforms. They tell our story better than we can and we’re grateful that they want to share their positive OppLoans experiences with others.
It isn’t always easy to maintain a smile and positive demeanor while helping our customers responsibly navigate financial turmoil. I know this because I’ve experienced it firsthand. Personally, my most important moment at the company came when I jumped on the phones to help answer calls during an incredibly busy transitional period. It was frightening and challenging. But it gave me a totally new appreciation for what our Advocates do best: address desperate situations with compassion and meaningful solutions.
It’s also vitally important that we don’t take advantage of customers in their time of need. Our products are expensive and should only be used if a customer does not qualify for better options. So what do we do to ensure that customers don’t end up borrowing through our platform solely because we have a fast approval process? Today, we are the only lender and servicer in the non-prime segment that gives applicants the ability to search for lower APR solutions before submitting an application through OppLoans.
OppLoans is a platform that guides non-prime borrowers to the best credit option for them—sometimes that means another product with a different provider. We’ll lose that business but it’s what’s best for the customer.
Financial education is also a major part of our value proposition. Our free online personal finance curriculum, OppU, generates tremendous content to help anyone better understand how to improve their financial health. This includes easy-to-understand videos on how to improve your credit score and budget more effectively.
If we continue to take exceptional care of our employees, they will keep delivering for our customers.
As our business has grown, we’ve been honored to pick up numerous “Best-Of” workplace and culture awards. OppLoans has been named:
- A Glassdoor “Best Workplace” two years in a row.
- “One of the Country’s Best Workplaces” by Inc. Magazine.
- A “Top Chicago Workplace 2018” by the Chicago Tribune.
I’ll admit that prior to my experience at OppLoans, I always thought that “Best Place to Work” rankings and culture awards were overrated. I could not have been more wrong. The last three years at OppLoans have shown me that when people are excited to come to work, they do great things, including driving outstanding customer service.
We have elected to control our growth so that we can constantly ensure we are prioritizing an excellent customer experience. In our industry, one negative customer interaction can have lasting repercussions. So, we need to make sure that every customer conversation is flawless. For these reasons and more, we’re continually reinvesting in company culture and creating a home for Chicago’s best to do their best work.
I’m unbelievably proud of not only these best-in-class customer rankings but the fact that our employees love working here. Our Glassdoor rankings and awards are clear evidence that we have created a top-one-percent culture and that’s a big reason for our success. We’re dedicated to taking care of our people, not only because that means they’ll take care of our customers, but because it’s the right thing to do.
Where we’re going next…
We may already be the only lender and servicer in the non-prime segment to proactively guide prospective customers toward lower cost solutions with other lenders, but we aren’t stopping there. We are engineering new initiatives designed to graduate our best customers out of our category and into near-prime products with lower rates. That kind of real customer advocacy is emblematic of who we are and it’s the easiest way for us to quantifiably demonstrate that our customers are qualifying for more traditional borrowing options.
But, of course, it’s easy for me, as CEO, to believe in OppLoans, our people and our mission. That’s why I always encourage people both inside and outside of the business category to not believe a word I say. Instead, listen to the OppLoans customer. They tell our story best!
When you can go to Google or any social media site out there and read our outstanding reviews—that makes my job very easy. Sure, we can think we’re great, but when you have the third-party validation from customers, it tells us that we’re on the right track.
Over the next three years, OppLoans will become the global preeminent financial services company for the non-prime consumer. That means new products and new geographies, all without sacrificing the bedrock values of the business—our credit stability and customer satisfaction.
If you’re interested to learn more about OppLoans, explore our company culture or visit our careers page to see what we’re up to and how you can help make a meaningful difference in the financial lives of everyday Americans.
- Meni, David. “The Importance of Credit Reports & Credit Scores for Building Financial Security.” https://prosperitynow.org/files/PDFs/Credit_Fact_File_07-2016.pdf ProsperityNow.org, July 2016.
- Elkins, Kathleen. “Here’s how much money Americans have in their savings accounts.” www.cnbc.com/2017/09/13/how-much-americans-at-have-in-their-savings-accounts.html CNBC.com, September 13, 2017
- Reich, Robert. “Almost 80% of US Workers Live from Paycheck to Paycheck. Here’s Why.” www.theguardian.com/commentisfree/2018/jul/29/us-economy-workers-paycheck-robert-reich. TheGuardian.com, July 29, 2018.
- O’Connell, Brian. “Our Stupid Bank Overdraft Purchases Come With 17,000% Interest.” www.thestreet.com/story/12927545/1/our-stupid-bank-overdraft-purchases-come-with-17000-interest.html TheStreet.com, October 28, 2014.
- “Truth in Lending Act.” https://files.consumerfinance.gov/f/201503_cfpb_truth-in-lending-act.pdf Consumer Financial Protection Bureau, April 2015.