MK Decision is a tech company on the rise. Founded in 2015, the San Diego-based company offers an online loan application and security platform designed to help community banks compete. BankBeat talked to CEO Har Rai Khalsa about the company’s approach to online lending and its new partnership, launched in February, with Bankers’ Bank, Madison, Wis.
Q: What’s your approach to creating an online borrowing service for community banks?
Har Rai Khalsa: Many community banks are losing borrowers online. And they are losing these borrowers due to antiquated websites, paper intensive processes and manual, judgmental underwriting. What MK has done to solve these problems is to focus on building simple and beautiful borrowing experiences that educate and inform the borrower. We have a completely paperless process with digital signatures and two-factor authentication. We also do “out of wallet” questions for identity verification via the credit bureaus’ public records. We give the community bank customer a modern user experience.
Q: How does the security of your system improve upon existing options?
H.R.K.: We’ve created two proprietary security products. The first is called App Shield, which restricts or prohibits applications, for example, from a known derogatory customer. We work with the bank to load all derogatory customers into our system. And if such a customer applies we are then able to issue a stock adverse action letter at the point of application versus going all the way to the credit bureau when it’s a customer we already knew was derogatory on other accounts.
The second product is called Fraud Track. This scans a bank’s database in our loan origination platform and looks for suspicious activity. It also scans applications as they come in. It’s looking for things like an application being submitted faster than a human could possibly submit. If we know an average application takes three and a half minutes to fill out, but we see an application submitted in 20 seconds then we know some type of bot is auto populating data. We’re building this so all of our community bank customers can flag fraudsters in their system. So if we see one pop up in New York, and we have their alias and IP address, phone number, etc., and we see them pop up again in, say, California, we can alert that community bank that this applicant has already been flagged as a fraudster in our network. We’re focused on bringing community banks together to prevent fraud.
We also stress an old-fashioned method for community banks to use to prevent fraud — make a verbal verification call. Get a customer on the phone. Talk to them a little bit. Verify some personal information. And once you feel comfortable that this is the person they say they are, go ahead and issue the loan.
Q: It’s interesting that with all this great tech, an analog component still goes a long way.
H.R.K.: It’s not just about building a high tech approach but a high touch approach. Decisions that used to take days can now be made in seconds. That time is now available to focus on customer service.
Q: Do small business loan or credit card applications present special challenges?
H.R.K.: While the value proposition is different, the experience for retail customers and small businesses on our platform is homogenous. But for small businesses we can add the ability to upload extra stipulations the community bank desires, like the last three months of merchant statements, or the last few years of tax returns. We provide the portal to upload those types of documents. We are looking into some partnerships where we’ll be automating the import of a Quickbooks file.
Q: Describe your partnership with Bankers’ Bank.
H.R.K.: Bankers’ Bank has 100 community bank partners that they work with on credit cards. These banks all sell their credit card assets to Bankers’ Bank. All of those banks will have MK credit decision systems and pages on their websites. Not only were they looking for automated underwriting, but they were also looking for a modern customer experience. One other thing that made this partnership happen was our ability to scale our user interfaces to be personally designed for all of the agent banks, or unique interfaces for all 100 banks. It feels like the customer is applying for a credit card from that community bank even though at the end of the day Bankers’ Bank will be doing the collections, servicing and the like.