Sramana Mitra: How many community banks are in your customer base?
Jeff Grobaski: We’ve got a little over a thousand community banks now. We are integrated into over 40 bank systems. We are able to speed the time-to-close without increasing the cost.
Sramana Mitra: How long have you been doing this?
Jeff Grobaski: We are a second-time startup. We started right before the last recession. It was a terrible time to be a FinTech startup. It was right before the crash in the mortgage crisis in 2008. We had a little false start at that point. We got out and got into 100 banks. It was a tough time to be working with banks.
One of the interesting things that came out of that was one of our banks wanted to help out the healthcare providers and their community. There was a ton of talk on the federal level about fixing healthcare. Every day, people are ending up with bills that they simply cannot afford.
We worked with one of our bank customers to create a new portion of our platform to allow people of any credit profile to qualify for a patient loan at a low interest. This is to avoid high interest, credit card bills, collections, and medical bankruptcy.
Sramana Mitra: That thinking of a community bank providing affordable loans to their community consumers, is that part of what you are bringing to a larger portfolio of community banks now?
Jeff Grobaski: That’s right. When we go talk to our banks, we tell them, “Hey, we added this ability for you to help your healthcare providers. With our loans, they are patient-directed, automatically approved, low cost, and they significantly reduce the default rate for the patient and healthcare providers.”
Every community bank that we talked to jumps at that concept. The larger banks are making a lot of money on the interest on credit cards, so to them it doesn’t sound like a solution. It’s taking money out of their successful lines. That is where community banks have a slightly different approach than larger multinationals.
Sramana Mitra: What other trends are there? In the community banks where you have already implemented this and have been up and running for a little while, how many of those have been doing this?
Jeff Grobaski: What we see is a couple of trends that we didn’t expect. One, we have a lot of people who use the platform are on a fixed income. They end up with a high deductible health plan. Those folks want to pay their bill, but maybe they don’t have access to a few thousand dollars.
Some deductibles are around $10,000. They don’t have the cash. The healthcare providers, on their side, need to be paid. The way the deductible works is they don’t get anything from insurance until they collect the deductible.
That trend is driving more people to find a way to effectively finance their healthcare deductibles. Credit cards, high interest rates, and compounding interest make it a difficult proposition for paying a bill that is reaching your monthly limit.
Sramana Mitra: This is relevant. It is an important solution that you are providing. You did not answer my question about how many banks are already far enough along to see data.
Jeff Grobaski: We have 50 banks that are far enough along to see year-over-year data. We have a lot of customers who signed up recently, especially with the paycheck protection act and banks having to close their branch. This has caused a lot of banks to use our solutions.
Of the banks that we have 2 to 4 years of data on, we are seeing low default rates. Even though we don’t perform any credit verification on the borrower, our default rate is still under 10%. When we get people to sign up for auto-pay or direct deposit, our default rate is under 2%.
Sramana Mitra: How many consumers are availing of this facility through community banks?
Jeff Grobaski: Thousands of thousands. There are a little over 100,000 people who have taken use of this. It’s been remarkable. We continue to add additional borrowers every day. Healthcare providers and healthcare situations over the last eight months have been tricky, because you have a lot of people who are ending up with bills for their COVID treatment.
While healthcare insurance is paying for a lot of that, there is still some portion that is left out. For example, if you need an ambulance ride because you were in such a bad spot with COVID, that part is not covered by insurance premiums. That is still a lot of out of pocket expenses that patients are being surprised with.