Project: LoneStar
TL;DR: Making the application for loans less cumbersome through an easy breezy digital experience
Status: Discovery
Shipping: TBD
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:
rifi
Upstart Team Success Metrics
0 Solution Alignment
Who Would Be Using Breezi?
Looking for purchase a vehicle Looking for a personal loan Real Estate Agents (Redfin) Future state: Car Salesmen (Automobile dealerships) 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)
0 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
0
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 ⭐
High-level Diagram Of Data Input and Process
Sample Mocks
⭐For the sake of this exercise, the screens below were created from Figma, just to give an idea
Upstart Team App :
Partner Experience:
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:
⭐Value Prop: we offer the fastest and most secure transactions through the MALI cryptocurrency network, where prequalified borrowers can get approved in seconds. ⭐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
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:
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 Social Media Channels and SEO:
Optimize popular channels such as Instagram, FB, Google etc. advertise and direct potential borrowers to Breezi landing page Open Issues & Questions
Resources