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Upstart Case Study - A 'Breezi' Story

Making applying for a loan a breeze.
AI
Arif Islam
Project: LoneStar
TL;DR: Making the application for loans less cumbersome through an easy breezy digital experience
Status: Discovery
Shipping: TBD
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Problem Alignment

The Problem

One of the business challenges that Upstart (and any lender) faces is validating the identity of those that apply for a loan. This verification ensures that the borrower is not using a false identity to fraudulently receive funds. Today, Upstart has a team of people that review documents provided by the borrower to verify their identity. A few problem areas that we are looking to solve for:
Improving the manual review process at Upstart, so that the manual review is minimal to none
Verification process is taking too long for borrowers resulting in drop-off or churn
Validating the identify for those that apply causes borrowers to churn due not wanting to share personal or financial information
Borrowers want/need money and expect to be approved immediately, when comparing to other lenders

High-level Approach

Hypothesis:

If Upstart could easily identify borrowers during the identification process, it would greatly increase the amount of verifications in a shorter amount of time, resulting in less drop-offs and more approvals.

Assumptions:

Loan Interest rates as low as 2.49%
No fees or costs up front for the borrower
Mortgage rates set for current market price (2.99%)
Co-borrowers are not applicable
Only unsecure loans are applicable
Allow for basis points to be applied for all types of loans
Upstart has an existing partnership with Redfin to pilot Breezi
MALI is a new cryptocurrency that beats SOLANA in terms of speed but doesn’t lose the security it needs to facilitate legal digital financial transactions. It is open-source has can be easily leveraged within mobile or web applications for financial transactions.

Proposed Approach & Business Case

For both borrowers and Upstart’s internal teams, we will introduce a digital platform called Breezi that allows for both the borrower and Upstart team to identify and quickly approve or disapprove a borrower’s request for a loan. This will be a two-sided experience that leverages AI/ML engines in order to pre-qualify candidates as well as highlight metrics for approval teams at Upstart to make quick and accurate decisions on whom to approve outside of pre-qualified candidates. Finally, in order to differentiate from other lender’s like Better or LendingTree, we will also test a pilot in partnership with Redfin and Automobile companies. Additionally, Breezi will introduce an experience that will allow borrowers to upload necessary documentation (e.g. driver’s license), where Breezi will leverage image classification to take information from the license and instantly verify the identify of the borrower.
For the borrower, an individual will provide a certain amount of information, in which Upstart will collect and consume. A soft credit check will perform as well as analysis of spending habits to return a ‘pre-qualified’ approval. Once an approval is made, Upstart will collect the borrower’s bank information to deposit the account. In short, the borrow should be able to experience the following:
Ability to provide personal information
Ability to provide SSN for a soft background check
Ability to upload/scan a valid ID
Ability to choose what type of loan to apply for
Ability to provide bank information once an approval is granted for a direct deposit
Ability to receive official approval letters through email and key notifications
*Ability to pay for a charged service fee, only if approved
For the Upstart team, these users will be receiving all applicants’ data, regardless of immediate approval. They will be able to view insights powered by an ML engine that synthesizes spending habits, consumer’s personal data, and credit history to provide risk assessments that enables faster decision making for the team. In short, the Upstart team should be able to experience the following:
Ability to view borrow information
Ability to view ‘Risk Score’s and assessment
Ability to search for applicants
Ability to receive notifications for pending approved borrowers
Ability to approve or reject a borrower’s applicants
View a consumer’s DTI (Debt to income ratio)
Possible loan programs specific to the consumer’s inquiry and circumstance (e.g. first time home buyer program)
View Basis Points loans for Fixed and Adjustable rates

For Partners (e.g. Redfin, Mercedes etc.) , with whom we have a shared service agreement, will have access to Breezi. The use case here is so that when consumers come in for an in-person experience (e.g. viewing a potential home to purchase), that staff can easily leverage Breezi’s platform to quickly approve borrowers for money and move to the next step in purchasing the asset. In short, staff from our authorized partners should be able to:
Let a consumer use Breezi’s borrower experience
Review limited approval or pending information of a borrower’s application
Present options of different rates for the borrower to select

Goals & Success

In terms of what success looks like for the above proposed solution and problem alignment, it’s important to note which metrics will attribute to the success of our solution. For both the borrower and Upstart team’s experiences, there will be separate success metrics for both. Those are:
Borrower Success Metrics
Metric
Description
Metric Area
Why is it important?
1
Borrower NPS
This will measure our loyalty and brand of the product/service we are offering
Net Promoter Score, Satisfaction with the Product
We can segment on protractors, detractors, and passives into different areas that will help us identify improvement areas
2
Monthly avg. # instant approvals
This will measure the average number of instant approvals per visitor to see how many instant approvals
Fast Approvals
This will help us see how many borrowers on average are instant approved
3
MRR
How much money we charge for this service per applicant on a monthly basis
Revenue
This will calculate how much revenue we are generating for the product we are providing per transaction
4
Monthly avg. # pending approvals
This will measure the average number of instant pending approvals per visitor to see how many instant approvals
Fast Approvals
This will help us see which loans are being applied to the most and which are generating the most revenue
5
Avg. time to complete application
Measure the average time it takes for the borrower to complete the application
Usability
This is a key metric to see how easy it is for a borrower to submit their information
6
Avg. time for instant approvals
Measures avg. time for instant approvals to take affect per borrower
Fast Approvals
This effectively measures the average time for approvals to be granted once an application starts
There are no rows in this table
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rifi

Upstart Team Success Metrics
Metric
Description
Problem Area
Why is it important?
1
Avg. review time for applications
Measures the average time it takes to review non prequalified applications per borrower
Team Efficiency
This will help us see if Breezi helps speed up the process
2
Monthly avg. of non-prequalified applications that are approved by team
Measures avg. monthly applications that are manually approved by the team
Team Efficiency
This will help see how many applications are being reviewed manually vs automated by Breezi
3
OSAT
Overall satisfaction with Breezi to analyze and review applications/process
Product Delight
Let’s us know the team is satisfied with Breezi
4
WAU
This will measure Weekly Active Users with the team
User Engagement
This will help us pinpoint drop-offs or spikes of engagement for the Upstart Team
There are no rows in this table
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Solution Alignment

Who Would Be Using Breezi?

Potential Borrowers
Looking for a new home
Looking for purchase a vehicle
Looking for a personal loan
Upstart Team
Real Estate Agents (Redfin)
Future state: Car Salesmen (Automobile dealerships)
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The Borrower Experience

For the provider experience we want to focus on a few key areas:
Faster Approvals for prequalified candidates
Increased Conversions for when a borrow has officially agreed to borrow money from Upstart
Brand & Loyalty so that potential borrowers are aware of Upstarts value and delightful experience, especially against competitors

⭐For the sake of this exercise, let’s assume the delivery team + cross-functional stakeholders met to size/discuss each feature in order to assign the RICE score ⭐
Borrower Features (Epics)
Feature
Description
Problem Area
RICE Score
1
Loan Selection
As a borrower, I’d like to be able to apply for a loan specific to a type of loan, so that I can borrow money from Upstart specific to my needs
Fast Approvals
10000
2
Provide Income and Personal Information
As a borrower, I’d like to provide income and personal information so that Upstart can verify my identity
Fast Approvals
10000
3
Instant Approvals
As a borrower, I’d like to get a instant approval, so that I can access loan money faster
Fast Approvals
10000
4
Provide Bank Information
As a borrower, I’d like to provide my bank information to Upstart, so that I can receive a direct deposit once my loan is approved
Fast Approvals
10000
5
Leverage MALI crypto
As Breezi, I’d like to leverage MALI’s cryptocurrency infrastructure, so I can process borrower transactions faster and get money into their accounts with haste
Fast Approvals
9000
6
Receive notifications
As a borrower, I should receive notifications from Breezi, so that I can be aware of important updates
Borrower Engagement
9000
7
Upload valid ID
As a borrower, I should be able to upload a valid ID, so that Breezi can verify my identify faster
Fast Approvals
10000
8
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Veriff
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As Upstart, I’d like to integrate Veriff into Breezi, to allow for faster verification of borrowers
Fast Approvals
9000
There are no rows in this table
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The Upstart Team Experience

For the Upstart Team experience, we will want to focus on a few key areas:
Improving application processing times for borrowers
Assess pending applications for borrowers
Making recommendations to potential borrowers who have pending applications

⭐For the sake of this exercise, let’s assume the delivery team + cross-functional stakeholders met to size/discuss each feature in order to assign the RICE score ⭐
Upstart Approval Team Epics
Feature
Description
Problem Area
RICE Score
1
Login and Account Setup
As an approver, I’d like to be able to log into Breeze, so I can view applications that need approval
Login and Registration
10000
2
View Pending Applications
As an approver, I’d like to be able to view pending applications, so that I can manually approve/reject them
Borrower Application Processing
10000
3
Search for Applications
As an approver, I’d like to be able to search for borrowers, so that I can quickly find borrowers I am looking for
Borrower Application Processing
10000
4
Review Risky Applicants
As an approver, I’d like to see borrowers who have been tagged as ‘risky’ and reasons why, so that I can make effective decisions quickly
Borrower Assessment
9000
5
Approve or Reject Borrowers
As an approver, I’d like to approve or reject borrowers, so that I can instantaneously let them know if their application status
Borrower Application Processing
9000
6
Borrower Analytics and Scores
As an approver, I’d like to see analytics and scores based in inputs and historical data, so that I can make effective decisions for pending applications
Borrower Assessment
9000
7
Notifications
As a borrower, I’d like to see important notifications from Breezi, so I know when to be informed and/or take action
Engagement
9000
There are no rows in this table
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The Partner Experience

For the Partner experience, we will want to focus on a few key areas:
Allow for possible customers to quickly get approved so they can take the appropriate next action
Instantaneously allow for borrowers to see different options
Severely limit the amount of input for a partner
⭐For the sake of this exercise, let’s assume the delivery team + cross-functional stakeholders met to size/discuss each feature in order to assign the RICE score ⭐
Partner Features (Epics)
Feature
Description
Problem Area
Rice Score
1
Login and Access Breezily
As a partner, I’d like to access the Breezi Partner application, so that I can allow consumers to give input
Login and Access
10000
2
Review Options to Present to Borrowers
As a partner, I’d like to present different finanial loan options to buyers, so that I can easily discuss and convert them to purchase
Borrower Conversion
10000
3
Quick Approval
As a partner, I’d like for borrowers to be instantly approved, so that they can put up the necessary upfront costs
Borrower Conversion
10000
There are no rows in this table
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High-level Diagram Of Data Input and Process
Breezi (1).png
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Sample Mocks

⭐For the sake of this exercise, the screens below were created from Figma, just to give an idea
Upstart Team App :
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image.png
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Partner Experience:
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image.png
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Product Strategy & Monetization

Who Will We Sell Our Product To?

Though our product will service as a B2C and a B2B product, we will primarily sell out product to the following ‘businesses’ and consumers:
Borrowers
⭐Value Prop: we offer the fastest and most secure transactions through the MALI cryptocurrency network, where prequalified borrowers can get approved in seconds.
Partners
⭐Value Prop: through the Breezi borrower experience, we offer a service to home loaners, automobile dealerships, and more to offer flexible purchase options and fast on-site prequalified approvals.

How Does Breezi Make Up For Costs?

Costs & Revenue


Known Costs
Dev build time for updating training model with new inputs and adjustments to algorithms
Web/Backend build time for building out client-facing applications and consuming ML model
DEV time to incorporate MALI cryptocurrency transactional systems
Social Media Campaigning and Advertisement costs (GTM costs)
UX/UI resourcing throughout Ideation > Execution
Product Support

Revenue Streams:
At a high-level we would sell Breezi via a service level agreement or contract agreement with partners. We will also charge a service fee per consumer, for the key value prop of providing instantaneous financial transactions within minutes via MALI crypto technology. This will enable us to:
Receive revenue directly from prequalified borrowers who agree to Upstart’s loan arrangements
Receive revenue from our partners (e.g. Redfin, Mercedes)

Other Benefits:
Easier penetration into high-value markets such as Mortgage, Auto loan & lease and Personal loan:
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image.png
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Partnerships will enable more brand exposure and connect drastically improve Customer Acquisition in each of the high-value markets.

Channels

Partnerships:
Real Estate companies that deal directly with home buyers
Automobile companies and dealerships
Banks
Social Media Channels and SEO:
Optimize popular channels such as Instagram, FB, Google etc. advertise and direct potential borrowers to Breezi landing page
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Open Issues & Questions

⁠
Add a topic
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Questions & Unknowns
Questions
Author
Upvote
Downvote
1
Is the partnership route opportunistic to them enough to purchase our product?
AI
Arif Islam
2
Do we already have an ETL mechansim to make sure data is normalized when consuming additional sources
AI
Arif Islam
3
From a legal persepctive, do we have to consider/abide by any new rules
AI
Arif Islam
4
What types of loans will we offer and what will we not?
AI
Arif Islam
5
Are we resourced enough Across the AI/ML, Engineering, and UI/UX team?
AI
Arif Islam
6
We don’t really know how much users are really willing to pay for his service
AI
Arif Islam
7
How much training and hiring will we need to do for the approval team?
AI
Arif Islam
8
In order to verify identity faster, can we leverage the AI/ML platform to scan a valid ID to speed up the process
AI
Arif Islam
There are no rows in this table
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Resources

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Average U.S. Consumer Debt Reaches New Record in 2020
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What Are Basis Points and How Do They Affect Your Mortgage?
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Problem Alignment
The Problem
High-level Approach
Hypothesis:
Assumptions:
Proposed Approach & Business Case
Goals & Success
Borrower Success Metrics
rifi
Upstart Team Success Metrics
Solution Alignment
Who Would Be Using Breezi?
The Borrower Experience
Borrower Features (Epics)
The Upstart Team Experience
Upstart Approval Team Epics
The Partner Experience
Partner Features (Epics)
High-level Diagram Of Data Input and ProcessBreezi (1).png
Sample Mocks
Product Strategy & Monetization
Who Will We Sell Our Product To?
How Does Breezi Make Up For Costs?
Costs & Revenue
Channels
Open Issues & Questions
Questions & Unknowns
Resources
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