Sarah Davies Of Nova Credit On The Future of Money and Banking

An Interview With David Liu

Remember to have some fun along the way — There will always be too much work and at times it will be hard or boring or emotionally charged, but if you can find moments along the way that are fun, where you enjoy being with your colleagues, where you create a memorable experience then you’re working in a good place. If that isn’t happening, find a new place to work!

The way we bank has changed dramatically over the last decade. It was not too long ago when you had to wait in line in a bank to deposit money. Today things are totally different. You can do your banking without ever walking into a bank. In addition, the whole concept of money has changed. In the recent past, money usually meant bills and coins. But today, the concept of money has expanded to include digital currency and NFTs. What other innovations should we expect to see in banking in the short and medium term?

To address this, we are talking to leaders in the banking, finance, and fintech worlds, to discuss the future of banking and money over the next few years. As a part of this series, I had the pleasure of interviewing Sarah Davies.

As Chief Data and Analytics Officer, Sarah leads credit risk and analytics for Nova Credit. She has over 20 years of experience in the financial services sector, serving as an executive leader and innovator in the analytics and decision science field. Prior to joining Nova Credit, she was Senior Vice President of Product, Analytics and Research at VantageScore Solutions, where she led the development of the VantageScore credit scoring models.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started in this industry?

I tend to think I have a rather unconventional background when it comes to the trajectory of my career path. I began in the analytics industry studying management science, statistics and operations research and spent the first five years of my career in the airline industry. The longer I spent in the analytics field, the more I realized that it wasn’t so much messing with data that engaged me but rather it was the power of data to reveal the underlying truth of a situation. The desire to establish a foundation of truth intersected with my faith journey so I began to simultaneously pursue academic experiences in theology as well as analytics — ultimately ending up with a MS in Industrial Engineering and a PhD in Theology. From an industry perspective, I’ve moved from the airline industry to consumer financial services, to credit risk analytics, but throughout these career experiences, I’ve continually sought out roles in data and analytics, always with the mission of finding and establishing an empirical basis or truth from which to build and execute a strategy that simultaneously serves company goals in addition to meeting a societal need.

Can you share the most interesting story that happened to you since you began your career?

During my 12 years with VantageScore, I was part of an amazing team that led the development of the VantageScore credit scoring models, which was the first tri-bureau credit score. In many ways, VantageScore was the ‘David’ to the ‘Goliath’ FICO score, where FICO was the dominant credit risk underwriting tool in the U.S. The VantageScore team worked on so many dimensions to not only prove itself analytically strong, but also overcame an initial lack of brand strength, regulatory anonymity and simple industry inertia. Today, VantageScore is widely recognized as an industry leader in credit scoring with more than 10 billion scores delivered annually to consumers and lenders. Taking the product from inception to one of the most recognized and used scores in the market was an exciting journey to be a part of and definitely a defining moment in my career.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

The practice of theology asks, “how do we live the truth in our lives?” I’ve found that data can be used to bring truth and light into any situation. Connecting my love for theology with my analytical background is what led to my passion for data and what attracted me to my role at Nova Credit as Chief Data and Analytics Officer.

Ok wonderful. Let’s now shift to the main focus of our interview. Can you tell our readers about the most interesting projects you are working on now?

At Nova Credit, we’re on a mission to build a fair and inclusive financial system for the world. We’re disrupting a system that needs to be disrupted through connecting and analyzing financial data for the betterment of citizens. What many don’t realize is that the financial system today excludes consumers NOT because they are high risk and unable to repay a loan but rather because some consumers don’t use credit in traditional or conventional ways. Simply put, if a consumer does not use credit often or hasn’t used credit frequently, they are excluded from today’s system. Our core innovations enable the financially underserved to apply for products and services that they would not have otherwise qualified for. By unlocking the potential of new data sources to expand opportunities for both consumers and lenders, we’re driving the next chapter of change that the industry greatly needs.

How do you think this might change the world?

Over the years the Nova Credit team has built an infrastructure that gives us access to unique consumer-permissioned data, which is the foundation needed to develop a more inclusive global credit ecosystem — a system where credit is available more equally and to those who need it most. These solutions are driving significant change towards the concept of financial inclusion so underserved individuals are treated as equals and are well-positioned to succeed wherever they are in the world.

Providing reasonable access to credit on equitable terms allows a previously underserved consumer to obtain access to an education loan to further their career, to a housing loan that provides them the safety and security of a home or to a fairly priced loan that allows them to financially navigate a challenging life circumstance. These are the opportunities and possibilities that fair and equitable access to credit can provide.

What most excites you about the banking or payments industry as it is today? Can you explain what you mean?

It might be surprising to learn that there’s still over 50 million U.S. adults without a traditional FICO credit score. Because of this, many of these individuals struggle with even basic services that require credit checks such as purchasing a cell phone or leasing a rental property. The growing size of this underserved market in the U.S. is driving more lenders to question how they can better serve and reach this untouched audience. As a result, there is a growing spotlight on how the banking industry can leverage alternative data sources to get a more complete picture of a consumer’s financial profile and not solely rely on the credit score system.

As an industry, we have been slow to adopt new data and analytic technology, but we have to understand that the adoption of new data and methods is an inevitability. And I truly believe that we’re now at the tipping point where the strength of new data, new analytic methods has been overwhelmingly proven, we know how to leverage the data and tools and we can wisely apply the data to solve the challenges facing credit excluded consumers. What excites me most about the industry? That we are on the verge of retiring the term ‘financial inclusion.

What most concerns you about the banking or payments industry as it is today? What would you suggest needs to be done to address that?

As a highly regulated industry, there is generally a lot of red tape in the banking world, and this can be especially true when it comes to the level of control consumers have over the variables that contribute to their overall financial health. To give everyone a fair chance at financial success, we need to introduce more transparency and accuracy to traditional financial services such as credit scoring. For example, until recently, when newcomers entered the U.S. there was no way to automatically translate credit history, so they were immediately considered “credit invisible.” This meant that even if they had a good credit rating in their prior home countries, newcomers had to rebuild their credit history. To address these issues, we’re already seeing a growth in fintech solutions that focus on solving these gaps in the international flow of information and this area will likely continue to be a hotspot in the years to come.

How would you articulate how the concept of money has changed in recent times? Is it really a change? How is it still the same? Can you explain what you mean?

It’s embryonic but we’re seeing newer concepts like buy now, pay later (BNPL) starting to influence the public’s perception of money and in turn, their spending behavior. For a while, consumers, especially from younger generations, were quickly adopting this technology without fully considering the long-term ramifications on their financial health. Since BNPL is still relatively new, the industry is in the middle of determining how to report on these services in the context of credit worthiness and a borrower’s financial obligations. The credit bureaus are each working through how to report and score the data so that consumers using BNPL products are accurately assessed from a risk perspective. The incremental value from the introduction of BNPL into the marketplace is that it has motivated the entire industry to become more flexible and creative in the development of lending products such as these and to ensure that the entire financial service system can effectively and accurately accommodate them.

Based on your vantage point as an insider in the finance industry, what innovations should we expect to see in banking in the short and medium term?

As I mentioned earlier, consumer-permissioned data is a growing concept in the industry because it has the potential to benefit lenders by expanding their applicant pool and generating new opportunities for consumers who were previously locked out of existing financial services. One of the growing areas for this information growth is currently cash flow underwriting, where consumers offer access to their checking and savings accounts in lieu of, or in addition to, traditional credit reports. This gives lenders a more complete picture of a consumer’s financial history and obligations which in turn lets them offer better products and rates based on this information.

How has the pandemic changed the way banks interact and engage with their customers?

During the pandemic, many individuals experienced significant changes when it came to their professional lives. Whether they were temporarily furloughed, laid off, or were one of the many participants willingly leaving their roles as part of the Great Resignation, the pandemic sparked an upheaval in consumers making major life decisions. As a result of the fluctuating income streams caused by these shifts, traditional lenders realized they did not have the most complete view into consumers changing financial profiles. To better support these financial transitioners, more lenders are opening their arms to supplemental data to make it easier to evaluate creditworthy consumers. In fact, 89% of lenders already agree that alternative data allows them to extend their consumer universe.

Digital/online financial services, by the very nature of the pandemic, were almost the sole channel for managing a consumer’s finances. Consequently, consumers have become increasingly comfortable with digitally connecting their data which allows them to both control their data through consumer permissioning but can also vastly expand their eligibility for products and services. Ultimately the consumer will have far greater control over their financial narrative.

In your particular experience, how has the pandemic changed the way you interact with, and engage your customers?

The pandemic made us reassess our customers’ needs and how to better serve them in this environment. With the pandemic halting all immigration across U.S. borders due to the pandemic, less newcomers needed to transport their financial identity. Since then, we have expanded our solutions beyond just newcomers to the U.S. to serve all individuals who feel discouraged by the current financial system. Nova Credit also has deepened its partner bench to include financial services and tenant screening companies to broaden our consumer market and provide an inclusive financial experience to more individuals.

In my work in the telecom space, I’m very interested in the importance of user experience. How much of your interactions have moved to digital such as chatbots, encrypted messaging apps, phone, or video calls? How has this shift impacted the user and customer experience?

Like many organizations, the pandemic shifted our internal operations, and the majority of our team’s collaboration and communication activities have since been primarily driven by digital tools. As a bi-coastal team, we have always embraced digitally driven collaboration, but it was accelerated by the pandemic tenfold. Nova Credit welcomed more than 40 new “Novans” to the team in 2021. As our team continues to grow, the emphasis on virtual tools will continue to drive collaboration, which has helped accelerate the onboarding experience and made sure the new joiners are embedded into our culture and mission from the start.

If you could design the perfect communication feature or system to help your business, what would it be?

As grateful as I am for tools such as Zoom and remote working, there simply isn’t a substitute for working in a live community setting where communication is experienced verbally and nonverbally.

Fantastic. Here is the main question of our interview. What are your “5 Things You Need To Create A Highly Successful Career In The Modern Finance, Banking and Fintech industries?

1. Find a mentor — We’ve come a long way in the fintech world when it comes to women in leadership positions, but there is still progress to be made. My experiences in the church kickstarted my passion for helping other women rise up to fill leadership positions. A major part of that is having mentorship resources available that can give actionable advice and cultivate professional growth. I remember very clearly an event at a local church where several young women who were visiting were informed that they could not be a leader or teach at the local church because the Bible “disqualified” them. The look of confusion and dismay on their faces was something I’ll never forget. How could it possibly be the case that someone is disqualified from being a leader because of their gender? Whilst I’d never allowed myself to feel disqualified by my faith, I realized from the experience that many women might not even allow themselves to believe they could be leaders in their field. From that point on, I’ve made it a personal mission to encourage and mentor any woman to help them realize their potential in whatever field they choose.
2. Don’t be afraid to explore new avenues — I’ve worked in the financial services industry for a long time, and I recommend to anyone that wants to do the same to not get stuck in one corner. I’ve worked at a variety of different companies and roles and these experiences have helped me accumulate a wealth of first-hand knowledge that has fueled my career and how I approach each position. As much as I have the data and analytics space, one of the most challenging and rewarding growth experiences for me occurred when I took over the marketing operations team at First USA bank. We were a team of over 300 people, diverse backgrounds, skills, and roles. I really had to stretch beyond my ivory tower experiences of being a ‘data nerd’ to becoming a leader who led based on relationships, trust, transformational values and passion. I had to put myself in my team’s shoes who didn’t think or talk like I did but were just as effective if not more effective at their jobs than I ever could be. It was an entirely new career experience for me, but one that I’m incredibly grateful for as it shaped my entire approach to leadership.
3. Find a mission you believe in — I was initially drawn to Nova Credit because of the company’s mission and how the work they were doing was directly impacting the definition of financial inclusivity. By having a clear value-driven vision that I was aligned with, I can see how the work I am doing is contributing to this goal and that just continues to inspire me every day. I’ve had the opportunity to work in many great companies and along the way had some amazing successes. At the end of the day though, when you’re ready to step away from your career it won’t be about how much money you made, what your title was or how many people reported to you. It will be whether what you did made the world a little bit better for others around you, whether it was the people you worked with or the people your company serves. Nova Credit’s mission is herculean, but we measure the benefit of what we do, one consumer at a time. When you understand our impact on a personal, individual level, you find a sense of accomplishment and fulfillment that is indescribable.
4. Recognize the importance of moving laterally in an organization — We can get so caught up in career promotions and climbing the corporate ladder that we lose perspective on the fact that what happens along the way builds character, skills, perseverance and courage. Navigating the pandemic and the economic impacts required our leadership team to really dig deep into their experiences and what they have learned throughout their careers in order to help the company navigate through the turbulence.
5. Remember to have some fun along the way — There will always be too much work and at times it will be hard or boring or emotionally charged, but if you can find moments along the way that are fun, where you enjoy being with your colleagues, where you create a memorable experience then you’re working in a good place. If that isn’t happening, find a new place to work!

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

I think the idea is already out there. It is the ‘pay it forward’ idea of being kind to someone as a result of someone being kind to you. The math of the idea is phenomenal — if everybody really did this then how quickly would we see a change in daily life experiences across the globe? We’d see a global cultural shift for the better. I mean how hard is it to be kind to another person today?

How can our readers further follow your work online?

I’m active on LinkedIn and Nova Credit news can be found on our site.

Thank you so much for the time you spent doing this interview. This was very inspirational, and we wish you continued success.