Shane Holdaway, CEO of Mission Lane, on Life and Fintech
In this special interview, Shane Holdaway, CEO of Mission Lane, shares stories from his past, where fintech is heading, and his vision for the future.
Before joining Mission Lane, Shane was the CEO of Barclays (US) and President of Capital One (Canada).
Mission Lane is a leading provider of financial technology solutions using a proprietary machine learning system to help people get access to credit.
Their flagship product is a Visa credit card that gives people a chance when most others wouldn’t. It is often used to help people get their first-ever credit card, rebuild their credit history, or have money during emergencies.
As a seasoned executive in the financial sector, with nearly 20 years of experience, Shane has a unique perspective on the current state of fintech and how it is evolving.
Read on to learn more about what Shane had to say.
Shane Holdaway (Q&A Interview)
Q: I know you've been a high-level executive in the banking industry, from companies like Barclays to Capital One. I really want to know, what made you want to get involved in fintech?
Before I joined Mission Lane as CEO, I was serving as CEO of the US consumer business at a major international bank when Nigel Morris, managing partner of venture capital firm QED Investors, whom I had worked with while I was at Capital One, called me out of the blue. Nigel was spinning off a new company called Mission Lane from another company in which he had invested and asked if I would be interested in being the founding CEO.
At first, it seemed an unlikely prospect - Mission Lane was a fraction of the size of what I was running at the time and carried a lot more uncertainty as a brand-new company. But on the flip side, I saw an opportunity to fundamentally change the game for underserved consumers. I was giving up the stability and brand recognition of a large bank in exchange for the chance to build a new, mission-led company on the foundation of modern technology and data science and to be able to move at a much faster pace.
Q: If there was one piece of wisdom you could give to other people in the financial industry to improve their work, what would it be?
Be infinitely sceptical of traditional approaches and business models while also maintaining the deepest reverence for the immutable “laws of physics” of finance (especially in underwriting, funding/liquidity, and customer care). Like the Wright Brothers: they never would have achieved sustained powered flight if they had not bucked tradition in their designs, but they would have likewise failed had they pretended that the law of gravity doesn’t exist!
Q: Congratulations on more than doubling Mission Lane's users year on year, now at 1.6 million users. What are the best ways fintech startups can accelerate their process of gaining new users?
The formula for gaining new users is simple but can be agonising in the execution. First, build a better solution. Second, treat existing customers exceptionally well. At Mission Lane, we leverage technology and data to help us understand consumers’ backgrounds and identify what they need to achieve their goals. Data can give us both quantitative and qualitative insights to allow us to personalise our products and services to each customer. But it is not just about bits and bytes; we also demand superior customer service and train our representatives to listen to and understand each person’s unique situation. We understand that financial empowerment is a journey that not everyone will get right the first time. We aim to work with customers for the long-term rather than providing quick, band-aid solutions or one-time, transactional services.
Q: What excites you the most in the field of financial technology right now? And how do you anticipate things to play out by the 22nd century?
Right now, we’re seeing cloud-based applications for testing, organising and modelling allow us to greatly increase the speed of deploying new insights and rapidly scale them. Customer preferences and digital innovations are changing rapidly, increasing demand for the products and services that meet these wants and needs. New technology enables us to be a “learning machine” that can quickly implement new insights across our growing product portfolio and within our customer experience.
No one can say exactly what the future holds, but looking forward to the 22nd century, I anticipate the biggest changes will be in the speed and humanity of banking. New data sources and constantly evolving software will enable most banking to happen in real-time yet the more technologically advanced we get as an industry, the more I believe consumers will crave a personal connection with those companies they entrust to help with their finances. Fintechs who can achieve extreme advantages on both dimensions simultaneously will be the winners over the next few decades.
Q: Which positive financial innovations do you anticipate in the coming years?
In the coming years, we’d expect to see continued advances in machine learning and causal inference techniques that make processes more accurate, reliable, explainable, and fair. Explainable machine learning methods are vital, as they allow us to explain our decisions more easily (for example, on credit approval or declines). This is not only best practice to avoid bias and serve customers but is also becoming increasingly important to regulators.
Data advances like these build trust, which is extremely important in attracting and retaining customers, who want to ensure their data is used securely and to their benefit; for employees, who need to use data to make decisions confidently; and for regulators and partners, who must be able to trust and verify data and model governance.
Q: It seems your company's primary focus is around providing credit building products; why is such an offering important from a sustainability perspective?
At Mission Lane, we know credit-building products are important because so many consumers are left out of mainstream financial services -- or have to pay very high rates to participate in the mainstream -- due to low or nonexistent credit scores. But we also provide a suite of services for customers, including debit, credit, and income management tools, and we plan to roll out more services specifically tailored to our customer segment.
Our first product was a credit card, which customers like because of its flexibility, ubiquity, and credit-building potential. Many of the customers we serve are not just looking for a second chance; they haven’t even been given a first chance. We aim to put them on a path toward financial empowerment by offering them transparent and reasonably priced credit and other financial products without hidden fees or confusing terms.
Another area we care about a lot is financial education. The foundation of financial education is helping consumers who are new to credit understand how the system can work for them instead of against them. But even with more established consumers, keeping up with the rapidly changing world of financial products and services can be a dizzying endeavour! How does a customer differentiate and find what works best for them among all the new options coming available each year? We have developed our own content to help customers at different stages in their learning curve, and we are also partnering with our users to help them share their stories and hard-won advice with others in our community. This is all in the name of helping customers figure out what to do next in their financial journey.
Q: Legacy sources of credit ratings have made access to finance harder for disenfranchised communities in the past, what makes your proprietary machine learning system for credit ratings unique?
We do not use traditional credit scores like FICO in our underwriting. FICO is useful for categorising segments of customers and cross-referencing with other companies, but we have found that incorporating new data sources -- as well as getting more granular with traditional data -- gives a much sharper picture of a person’s credit situation. The most powerful data insights are those we generate through endless cycles of proprietary, systematic testing.
Equally important is how we organise our data and ourselves. We make sure our data insights are not siloed into one unit but rather integrated through every aspect of our business. At many companies, data teams act as ticket takers, fulfilling requests by different teams. At Mission Lane, we ensure that data is a core competency across all business units, allowing us to continually improve not only underwriting processes but also product development, customer experience, and other areas.
Q: What are the opportunities and threats of artificial intelligence in the financial services industry?
Data and AI can have benefits across marketing, acquisitions, fraud, and operations by making decision-making faster, cheaper, and more accurate. Many processes can be automated, thus reducing expensive and time-consuming manual reviews and helping to identify priorities based on predicted business impact. Automation can help make businesses more efficient and scalable by freeing up capital and increasing resilience, leading to sustainable business models that align profitability with customer benefit.
However, innovation does not come without threats of risks that must be addressed. A core issue cited across the board with AI is inadvertent bias and the black box effect. The black box effect is the difficulty in explaining decisions produced by an AI model to the person who is impacted by that decision (for example, an applicant for credit who may see their application declined by an AI model).
It’s also important to not get seduced by innovation for innovation’s sake and forget to spend the time needed to deeply understand what customers actually need. We have seen this happen in the fintech industry where AI and automation have been used to reduce the workload for companies and customers. But in some of the segments we serve, customers who are living paycheck-to-paycheck want to have a measure of direct control over inflows and outflows, so over-automation can leave them feeling anxious. So, it is important to always remember that we are serving human beings with distinct and nuanced needs; we are not just optimising algorithms.
Q: Please summarise your life in 3 words.
Road less travelled
Q: What is next for Mission Lane in the coming five years?
In the future, we plan to expand our offerings to provide a comprehensive suite of banking and financial products and services that serve those who don’t typically have access to quality financial products. Some of the products we plan to offer within the next five years are debit products and a product specially geared toward gig workers, a growing sect of underserved individuals. With each of these new products, we aim to expand financial inclusion and help more individuals build their financial futures.
Q: Last, what is the one thing you want everyone to know about Shane Holdaway?
I grew up in the Los Angeles area to hardworking parents and am the third of six children. Our family didn’t have much, so I had to earn scholarships and work part-time jobs to pay my way through college and graduate school. Whatever we lacked in material possessions, my parents more than made up for in the values they taught and instilled in me—hard work, integrity, and respect for others of all backgrounds, colours, and creeds. I strive to bring these lessons to work every day as CEO of Mission Lane.