In this episode
Rory speaks with Equabli CEO Cody Owens about his company’s end-to-end collections management platform. In a few words, Equabli helps banks and fintech lenders effectively manage collections and recovery of delinquent loans. The platform uses machine learning to optimize strategies and improve performance, resulting in cost savings and better customer outcomes. The company aims to create a healthier financial ecosystem by addressing the underserved sectors of consumer finance and improving transparency in the industry. This comes with a few challenges, namely: scaling the business at the right pace, building trust in the financial system, and overcoming the slow adoption process in the industry. Cody’s key piece of advice for someone entering the fintech space is to have conviction, build trusted relationships, and seek strategic partnerships.
Key takeaways
- Equabli is an end-to-end platform that helps banks and fintech lenders effectively manage collections and recovery of delinquent loans.
- The platform uses machine learning to optimize strategies and improve performance.
- The company aims to create a healthier ecosystem by addressing the underserved sectors of consumer finance and improving transparency in the industry.
- Challenges for Equabli include scaling the business at the right pace, building trust in the financial system, and overcoming the slow adoption process in the industry.
- Key advice for someone entering the fintech space is to have conviction, build trusted relationships, and seek strategic partnerships.
Transcript
Rory Holland
Hey, Cody!
Cody Owens
Hello.
Rory Holland
How are you? Good to see you.
Cody Owens
I’m good. Thanks for having me.
Rory Holland
A pleasure to have you here. I would say welcome to Austin, but Austin is home.
Cody Owens
Austin is home for the last three years.
Rory Holland
Three years.
Cody Owens
Yeah.
Rory Holland
Where were you before?
Cody Owens
Prior to that I was in Spain and then prior to that Bogota and prior to that San Diego.
Rory Holland
Okay, roundabout.
Cody Owens
Roundabout, yeah.
Rory Holland
Any favorite or good stories? Like favorite places?
Cody Owens
Bogota is near and dear to my heart. It’s the first place we lived abroad, but my son was born in Spain and we spent many years in Spain. So Madrid is where the heart is, I would say.
Rory Holland
Yeah. My wife would love to spend some time in Madrid.
Cody Owens
Please do. It often gets bypassed. Everyone goes to Barcelona or other cities, do not leave out Madrid. It’s a must.
Rory Holland
It’s on our to visit list. So our Head of Content is actually a Pennsylvania guy, but he lives in Madrid and he’s been there for years.
Cody Owens
Brilliant.
Rory Holland
Yeah, he loves it.
Cody Owens
Good choice. Excellent.
Rory Holland
And so what part of Austin is home for you here?
Cody Owens
Very close. It’s an area called Mueller.
Rory Holland
Mueller, yeah.
Cody Owens
Yeah. 10 minutes from here.
Rory Holland
Awesome. Good to meet a fellow Austinite. I don’t need to ask you about all the great stuff in Austin, but I will ask you, do you have a favorite food or?
Cody Owens
I mean, look, I’m from California originally, so Austin’s got great Mexican food. You can’t compete with the tacos.
Rory Holland
We had some of that at Fintech House today.
Cody Owens
Yeah, exactly.
Rory Holland
Taco Deli, not bad.
Cody Owens
For sure.
Rory Holland
Good. Well, tell us a little bit about Equabli.
Cody Owens
Sure. So, myself, co-founders, we founded Equabli about three and a half years ago, really assuming that and believing that there’s gonna be another cyclical downturn at some point. And when that happened banks, especially in the fintech space, the new kind of online lenders, the off-balance sheet lenders, especially those who have never had to deal with the rise in delinquencies or charge-offs, would struggle to find the right solutions to adequately serve their customers and to recoup the amounts in arrears. And so, we’ve spent the better part of three years, three and a half years building and now selling an end-to-end platform where we bolt on to the loan management system or the banking core. And we essentially unlock the entire collection and recovery value chain. So at that point, depending on where you’re at or what your specific use case is, you can do everything from early stage digital collections all the way to late stage debt sale, for example. More or less. And… very sexy. The sexy side of Fintech.
Rory Holland
Tell me about the customer base that you serve.
Cody Owens
Any lender for the most part. We’re very focused on, again, in the fintech lending space, the mid-size bank, regional bank, but we also participate in a number of large tier two, tier one RFPs at the moment as well.
Rory Holland
And are they all consumer or business?
Cody Owens
Mostly unsecured consumer debt is where… when we built the platform, it’s really geared towards that, but we’ve started to expand into both secured assets and commercial SMB.
Rory Holland
Okay. So, like auto or?
Cody Owens
Yeah, auto is the secured asset. Yeah, we’re not doing any mortgage or anything like that at the moment. But I think there’s quite a bit of demand on the SMB side, especially.
Rory Holland
So super interesting what Equabli does and it’s solving a problem. It might not sound sexy to you, but I think it’s solving such a big need. How did you get started in fintech?
Cody Owens
Well, really, through Equabli to be frank. Prior to Equabli, I worked for one of the largest debt buyers in the world, so we would essentially buy the distressed assets off the balance sheet. We had operations in 17 countries, and we would figure out how to recover off that and we did it in a quasi tech forward manner, very analytically, and very consumer centric. And so, my first real dive into fintech was just founding Equabli. And so it’s been quite the transition. From big corp to…
Rory Holland
Kind of learning that, plus a startup.
Cody Owens
For sure. Exactly.
Rory Holland
How’s that been?
Cody Owens
It’s been good. There’s nothing harder than starting a company. There’s nothing more rewarding and exciting and fun than starting a company as well. I think I had a unique decade prior to this, where my primary role was to not only acquire but then transform, optimize, integrate subsidiaries around the world, which is why I lived abroad. And that exposed me to so many different size of companies and levels of maturity from a technology and an analytics perspective and an operations perspective. And so a lot of that’s transferable. I think I had hoped it would be a little bit more of a kind of help me on the starting point, but you can never underestimate what it takes to start something from scratch.
Rory Holland
Yeah, starting a new business. And how did you and your founders meet and from different backgrounds I assume?
Cody Owens
I spent my entire, almost my entire career at my prior company working with and for one of my co-founders, Paul, and when I was first hired in, I spent time with Brandon, they were the CEO and the CFO of that company in particular, and then Manu, the other co-founder and I had worked together throughout my tenure there as well. So we all worked together essentially.
Rory Holland
Yeah. What was the inspiration behind Equabli? What made you want to start?
Cody Owens
Yeah, I think the overarching mission is to create a healthier ecosystem by addressing the late stages of the credit lifecycle that no one has addressed. I mean, it’s a completely underserved sector of consumer finance in particular. And there’s been all this innovation on the front end and yet when a consumer hits a hardship or goes into delinquency, you find very, this kind of a brick wall of antiquation. It’s very archaic beyond that point. So our goal was if we can actually properly address that, if we can improve the customer experience, improve the outcomes both for the customer and the bank that should improve the balance sheet, the P & L as well and hopefully that pays forward to the general credit ecosystem and brings rates down, things like that.
Rory Holland
Oh, I love that. So how, how is it making it a better experience for consumers?
Cody Owens
In a lot of ways, I think the most fundamental, the foundational way is we’re closing a lot of the data gaps. So today there’s an enormous lack of transparency. Lenders, you know, there’s billions and billions of dollars that’s being outsourced or pushed through collections channels. And they have no idea what’s actually driving performance or what that customer experience is. It’s very hard to apply the right level of compliance oversight for those consumers and all that results in a bad experience at the end of the day. So when you start to close those gaps, you can now have very real actionable insights. You know exactly what to focus on. You have a better sense of what your customers need, when they want to be contacted, what the right options are to get them on the path of financial recovery, etc, etc. And it’s hard to do that in today’s archaic structure.
Rory Holland
What about on the business side when you’re working with the institutions? Are they seeing improved collections or better customer experience resulting in some kind of payoff schedule?
Cody Owens
Yeah, it’s basically three things. The first is there’s massive cost savings because of the automation of the platform and so without Equabli, you’re kind of forced to piecemeal together the entire, a lot of technology and teams and outsourcing units, etc. Now with Equabli, you can meaningfully consolidate that and you need less to do more, essentially. And so there’s cost savings. The second thing is you see performance improvement. So, the underpinning of all of our technology is a pretty powerful machine-learning engine and that is consistently trying to, it’s a feedback loop, so it’s consistently taking the information from the client, the lender, all the performance activity on the back end, from all the customer touch points, etc. and it is optimizing the strategies, the time to call, the channel, the vendor, all of these decision points in the recovery strategy and that improves performance. Hopefully, performance is collections, but hopefully that’s also providing the right outcome for the customer. That’s the ultimate goal and kind of the underpinning to the word Equabli. It’s kind of a play on being equitable if you will. So, can we find a win-win here?
Rory Holland
I’ve never heard it put that way and it should be. It should be equitable. I think one thing that frustrates me as a consumer and also as a business person is there is that, one technically, you’re right, there’s this wall. Once you’re working with an institution and you have some kind of hardship, sometimes it’s self-inflicted, but sometimes life happens, and then suddenly you’re put in over here and you’re disconnected from the system and you have people chasing you down or whatever ways they’re going to collect it; you see it in the car business; it’s not user-friendly by any means. So I love what I hear you saying. It sounds like then doing it in an equitable way. In a sense, you’re solving such a big problem in an elegant way it sounds like, that is machine learning so it’s actually getting better, so is that improvement through machine learning being applied across all your clientele, or is it single?
Cody Owens
There’s some data that cannot be shared across. But generally at a meta level across all the clientele.
Rory Holland
Interesting. Can you give me an example?
Cody Owens
Yeah, I think one very specific example is legal selection. So their, you know, litigation post charge off is a very common recovery strategy. It’s a very important strategy when the consumer has ability but no willingness. They’re generally at some point, you’re going to either sell that debt and the debt buyer is going to litigate that or you’re going to litigate it yourself, there’s kind of no way around it. Now, I think two things happen with the Equabli platform. One, if you’re going to litigate, you’re going to have a much higher level of confidence that you’re litigating the right people at the right time versus kind of spraying and praying if you will. And that’s important from a regulatory standpoint, it’s important for the customers, it’s a very costly channel for the bank. So it’s important. The other thing is by providing the other tools and by providing the analytics that we do, you can absolutely maximize the other channels prior to litigation and hopefully bring that population down.
Rory Holland
Yeah, reduce your litigation.
Cody Owens
Resolve these things without going to the, you know, what I would consider that as a terminal strategy, right? Or selling your debt, too. I think debt sales is another thing. It’s an important channel, again, I’m really focused on the post-recovery side here, or the post-charge-off side on the recovery strategy. But banks often just pull that lever because it’s easy. It’s the easier, it’s seen as the easier channel. It’s liquidity now, but you’re getting cents on the dollar, and you’re foregoing a lot of intrinsic value. There’s data for those distressed consumers that you should be able to utilize upstream in your current operations. It might impact the way you’re underwriting going forward. And also there’s a big population of customers in those debt sales that sell portfolio that are rehabilitable and if you’re able to identify that, and if you have the ability to actually service them, it’s powerful. You can get them back into the lending ecosystem.
Rory Holland
Yeah. It sounds a lot like the credit card turndowns, you have this whole pool of people that might be creditworthy at some point, or they’ve run into a hardship, like you said, and how do you help bring them back through to get them back to health financially without destroying the relationship by sending them into litigating?
Cody Owens
Exactly.
Rory Holland
I love that. What would you say are some of your biggest challenges right now when you think about where you guys are as a business and where you want to go?
Cody Owens
Yeah, I think there’s a lot of tailwinds at the moment because unfortunately, when you look at the consumer statistics, consumers are over leveraged in a major way. They’re credit card debt is at an all time high, balances that are at an all time high, delinquencies are starting to pop, charge off starting to fall through. So that’s creating a lot of demand and urgency, which is great for the sales pipeline, the sales funnel. I think like any startup or new business, that comes with the challenge of being able to deliver. And so it’s just scaling the business at the right pace and velocity with the scale of the growth of the business itself. We’re lucky to be well capitalized at the moment. I think one of the bigger challenges is we’re answering, although it’s not, it’s a generally kind of unknown in the consumer finance space, we’re answering a problem that is now really front of mind for a lot of folks. Not just in the U.S. but outside, and given my international experience, exposure and network, I think one big challenge is just there’s a lot of opportunity for us to capitalize on. But if you cast that net too wide it can have the opposite effect for the business and on growth. So just staying disciplined, staying focused. And yeah, I’d probably say those are the two biggest challenges.
Rory Holland
That’s great. And is there anythig you wish more people knew about Equabli that they don’t?
Cody Owens
I think A, hey, we exist. There’s not a lot of innovation in our space and therefore adoption is relatively slow. That’s actually probably the other challenge I would mention. Just general adoption. Adoption to completion, because I don’t know if we’re gluttons for punishment, but selling SaaS into financial services, those are long sale cycles, difficult sale cycles. And even if you have a way to get that decision made you’re then stuck in the procurement process and the onboarding process, these types of things, so that’s another challenge. But I think because the industry has just remained relatively archaic for so long, not a lot of folks know that there’s new options out there like Equabli. And so there’s a lot of marketing that we need to do to show people that we’re around that someone’s actually trying to address this. It’s part of the consumer lifecycle and we’re ready to work with them.
Rory Holland
I suspect the story you’re getting, the folks that learn about you are raising their hands and saying yeah that’s super interesting, but then from the hand raisers into the pipeline, the velocity of the pipeline to actual integration, adoption, utilization. Yeah, I get it.
Cody Owens
We love working with the fintech lenders, they generally work a little bit faster. The technology is a bit more advanced so it’s easier to connect in with our APIs and things like that. As you start to move up with scaled businesses though that velocity just will naturally slow at some point.
Rory Holland
Yeah. Couple of questions left. One is trust. And I want to frame that for you; trust is at an all time low, particularly for those of us in the financial industry and particularly where you’re at when people are having a hard time and there’s not a whole lot of propping up for people that run into circumstances. I mean, sometimes that’s self-inflicted and they’re not great to work with and they might at some level deserve where they are, but for those people that aren’t and despite that, trust in society is at all time low too. So when you think about Equabli and what you guys are doing and what we’re doing as a whole, and I see a lot of benefits for what you’re doing from a consumer standpoint and a business standpoint, how do you see us in this industry being able to build more trust in the financial system and restore some of the faith that I think people have lost?
Cody Owens
That’s a great question. It’s one that I actually will walk away and chew on for a while, but the thing that pops into my head immediately is transparency. I think there’s such a lack of transparency, generally speaking. I mean, look at T’s & C’s in general. Sure, it’s there, but you know.
Rory Holland
You sit there and read the 8 point font.
Cody Owens
You know, two little font. But transparency across the entire kind of process. And so I think the more that we tackle that, that will naturally create a higher level of trust.
Rory Holland
Yeah.
Cody Owens
There’s stuff going on right now with late fees and things like that as well, which are obviously having a pretty major impact on the lenders themselves, but I think that will actually probably do well for the trust factor.
Rory Holland
Probably build it. Yeah, for sure. I love that, transparency. Ok, last question is you’re in a unique spot in the sense that one, you’re a founder; two, you’re newer to the space. There’s a lot of founders I talk to who have been at it a long time but haven’t really done their own thing. What advice might you give someone that’s thinking about coming into the fintech space?
Cody Owens
Interesting. I’d say, first and foremost, let me just focus on what I think’s gone well for me, and I would say try to replicate this, and there’s been plenty of challenges as well, but one thing I’m very lucky to have are great founders, deep relationships. There is trust there and I hear time and time again of these horror stories where things just kind of fall apart at the founder level of people separating. And I can’t ever imagine that happening with my founding group, I guess never say never, but we’re very lucky to have history and trust and I think that’s very important. I think the second, I’d say, is when you start to take on investments as well, you need to think strategically about those investments. What value beyond the check are they going to add? And there’s a trust factor there as well with those folks. So again, we’ve been very lucky with especially the VCs that we’ve brought on, all are strategic in nature, all have added much more value than just the check. And I’ll go kind of back a bit on this, but I think the other very important thing is you have to be convicted, very convicted about what you’re doing, because you’re going to be demotivated, you’re gonna be exhausted, you will not celebrate a victory for more than 30 seconds until you’re bombarded with the next challenge that you have to overcome. And so if you don’t have that conviction, you’ll never be able to persevere. You’ll run out of steam and that’ll be the end of it.
Rory Holland
Man, I love that. So, conviction, good relationships, trusted relationships. I’d say smart money, but that’s not really doing it justice, I think strategic partnerships. There’s one thing that I’ve heard today with all of our Fintech House conversations, and it all comes down to relationships and community. Those are two human things that I think just permeates this industry. And at the Fintech House, for those that are listening and seeing us on video, who can’t see or hear the what sounds like 100 people downstairs. The social aspects and community aspects of the fintech industry to me is really soul-filling to know that these people, folks like you and others in the industry of all varieties of different skills and backgrounds doing different types of things, are all in community to try to make the financial lives of the businesses and the consumers they serve better.
Cody Owens
Yes.
Rory Holland
Through all the challenges and the regulatory and everything, societal things, everything else.
Cody Owens
It is so refreshing. And I’ve spent my entire career at large banks or my last role, a big corporation, big debt buyer, and it is so refreshing to actually participate in this broader ecosystem where they are doing exactly what you said. And the mind share, the relationships that you’re able to build in this space, it’s phenomenal. After 24 years in consumer finance, suddenly I’m being reinvigorated by all this.
Rory Holland
Yeah, that’s great. Oh man, I love what you’re doing at Equabli. Thanks so much, super fun talking to you. I know you’re in Austin, we’ve got to get together.
Cody Owens
Yeah, I’d love to.
Rory Holland
All right, thank you so much!
Cody Owens
Yeah, you got it. Thank you.
