How to Implement DEI In Your Organization, With Shannan Herbert, the EVP of Inclusive Credit at Stratyfy


“National Community Reinvestment Coalition did mystery shopping and saw that Black and Brown borrowers weren’t contacted by their banks for loan deferrals, for information about PPP loans.”



with guest:

Shannan Herbert
EVP of Inclusive Credit


Episode Summary

More and more organizations are committing to diversity, equity, and inclusion (DEI) policies and practices to build a more diverse and just workplace. This is even more important for financial institutions in their outreach to the communities they serve.

In this episode of The Digital Banking Podcast, Shannan Herbert, the EVP of Inclusive Credit at Stratyfy, explained what DEI means and how to implement it in your organization. She and host Josh DeTar discussed how to improve DEI in an organization, root out bias, and how technology can help with that.

Key Insights

DEI is evolving, so we need to know what DEI means.

Today, more financial institutions are recognizing the value of a diverse workforce and are focusing on advancing diversity, equity, and inclusion (DEI). However, according to Herbert, a focus on DEI means more than just hiring a diverse workforce. Your institution’s Chief Diversity Officer needs to have a budget and actually do something about it. “It’s not just putting Black and Brown faces in predominantly white spaces; that’s not it,” said Herbert. “It’s really embedding some DEI strategy within the overall framework of the organization and having that flow to each one of those departments, to the lending strategy, to policy creation, to approval. Who’s around your approval table when you’re looking at loans when they’re coming in, and when you’re deciding those loans? Going back to the community, having a real connection to community and to capital because that’s what real DEI looks like from my lens; not just the performative, ‘We’re going to do better,’ and then three years later, you haven’t done much.”

How can you improve DEI in an organization?

According to Herbert, making improvements to DEI at an organization is not necessarily about looking at what you’ve done wrong, but at what more you could do right. “That is a real accountability measure that we all should take,” she explained. “It’s looking to see, ‘Where could I have done better?’ It doesn’t mean that I was necessarily doing the wrong thing, but I could have been doing more of the right thing. And so if I could be doing more of the right thing, then I want to know what that is so that I can do it. And I can embed that in my strategy. I can embed that in the way that I create products and services. I can embed that in my marketing. I can embed that in my community outreach.”

Both technology and the human element should be used in the lending process.

Despite many advances in underwriting technology, Herbert claimed that the human element is still essential. “The technology can come in and help mitigate the bias by removing that human factor and increasing objectivity, but that other piece that we’re talking about — the community input — technology may not be able to capture that part of it,” she noted. “I think that there’s a need for both. You can’t let the machine run by itself, and I definitely don’t think that the human can run by itself either because we have too many instances of bias being incorporated into some of those decisions.”

Guest At A Glance

Shannan Herbert
EVP of Inclusive Credit


Find Shannan On:

Herbert brings 20+ years of banking experience to Stratyfy, focusing on providing capital to under-resourced populations. Before Stratyfy, she was the EVP and Chief Credit Officer for City First Bank and Senior Vice President and Director of Loan Review for United Bank. Her impact on Black and Brown communities extends to her work promoting inclusive underwriting programs in the Underwriting for Racial Justice National Working Group and the RMA Community Bank Council. She also serves as Board Chair of Beacon House, a nonprofit organization in Washington, DC, and as Board Vice Chair of Rochdale Capital, a nonprofit community development loan fund in Arlington, Virginia.

[00:00:00] Shannan Herbert: If you are finding bias in your loan policy, if you’re finding bias in your models, this should spark another conversation about why we were able to allow this to continue or to be created at our institution, why was this thing comfortable here? And why did it live here for so long? What within our culture do we need to change? All of these things, it should spark broader conversations.​

[00:01:53] Josh DeTar: Welcome to another episode of the Digital Banking Podcast. My guest today is Shannan Herbert, the EVP of Inclusive Credit for Stratyfy. This episode is gonna be a blast, I can already tell. Shannan just has such a fun energy and a really cool perspective and outlook on life and people and how technology is playing an increasing role in our communities.

[00:02:16] A fun fact about Shannon, when her and her now husband got engaged, family and friends wanted them to have this big elaborate wedding, but that just didn’t feel like them. So, instead, they eloped and got straight on a plane to Marrakesh, and travel and experiencing culture in different forms of community is really a part of their souls.

[00:02:36] They recently did a trip to Jordan to float in the Dead Sea and experience the biblical lands and cultures, and their next trip is to cage dive with sharks in Cape Town, South Africa. It’s this genuine passion for people, culture, and community that has also had considerable direction on Shannon’s personal and professional life in the forms of nonprofit volunteering and the roles she’s taken in Corporate America.

[00:03:03] As a recent entrant to the tech space, she’s bringing her experience and desire to give everyone a fair shot to FinTech. She’s a huge believer in the power of community and the resources and services they can provide, and wants to see that considered as we evolve into a tech-forward industry. So, from traditional banking to so, social justice banking and now to tech, Shannan has lots of great things to talk to us about and lots of incredible experiences to draw on. Shannan, welcome to the podcast.

[00:03:32] Shannan Herbert: Thanks for having me.

[00:03:35] Josh DeTar: You know, I, I thought that this was really a super cool timing in having you on as a guest, and one of the reasons for that is we recently just got back from a huge conference in Washington DC, and it was a Credit Union National Association’s Governmental Affairs Conference, every year, usually in the first quarter of the year in DC, where representatives from all across the country come to hike the hill in, uh, support of credit unions and the credit union movement and mission.

[00:04:04] And so, I think there was close to 5,000 or 6,000 attendees that descended on DC this year, which was super cool to see kind of coming out of post-pandemic that, you know, people are really still committed to coming out and doing this. But one of the things that I thought was really cool was a recurring theme that I noticed through a lot of the keynote speeches to the breakout sessions, to even just some of the conversations we were having with folks at breakfast, is this really big light being shown on DEI.

[00:04:36] And so, I wanted to get just first you to talk us through a little bit of just what, what does that even mean? What is it? And, and kind of, why are we talking about it? And you know, especially when we think about the community-minded financial institutions and community banks, regional banks and credit unions and, and how they service their consumers,

[00:04:58] you know, I think they’ve done a really good job of being inclusive throughout the years, but now they’re just taking a, a little bit harder look at, okay, we, we’ve said that we are, but are we actually living it? And what does that actually mean? And, and how do we, you know, personify that ethos in everything that we do? So, if you could kind of talk us through what this means to you?

[00:05:19] Shannan Herbert: Sure. Absolutely. And I think that DEI has evolved over the last three years. When I think about all of the events that unfolded in 2020 and these pledges from major corporations, government entities, everyone in between, racial equity pledges, solidarity, we’re gonna do better,

[00:05:43] you know, the hiring of chief diversity officers to put these diversity initiatives in place, and there was this big focus on, on DEI, but it was the focus deemed to be at the HR level almost, you know, it was okay. So, we just need to diversify our staff, we need to hire people. Okay. So, now that you’ve hired the people, now what? What are they gonna do?

[00:06:06] What are they here to do? And how does this fit into your overall strategy for the organization? So, if I am, you know, a chief diversity officer, and you hired me and, and I talked to a lot of diversity officers during this time, just to understand what their experience was and how they were doing, you know, if there was support that they needed and, you know, what, what I could do to help.

[00:06:30] And, um, the common theme was I was hired to do this job, but I wasn’t given a budget, I don’t have any staff, I don’t really know what I’m supposed to be doing. And so, there was no clear direction, they were just hired, check the box, we did it, now let’s move on. And so, I think now, I mean, there was, uh, stories that came out a couple of weeks ago,

[00:06:51] all of the research that has been done to look at DEI efforts over the last three years and where they are, and you see that chief diversity officers have been affected by recent layoffs, these positions aren’t coming back, DEI efforts have cooled at a lot of organizations, and I think what folks are starting to see, especially in the spaces that you’re talking about in financial, in the financial services sector, we put these measures in place,

[00:07:17] we hire these folks, but we still have a large segment of our population that’s unbanked or under-banked, we still have lending disparities in black and brown communities, we’re still showing some of these things that we thought we were going to be able to solve for by diversifying our staff. So, what went wrong, and where do we need to improve?

[00:07:36] How do we get better? And there are ways to do that, and there are organizations that are doing that now, but it’s, you know, really rethinking what DEI means, it’s not just putting black and brown faces in predominantly white spaces, that, that’s not it, it’s, it’s, it’s really embedding some sort of DEI strategy within the overall framework of the organization and having that flow to each one of those departments, to the lending strategy, to policy creation, to approval,

[00:08:12] who’s around your approval table when you’re looking at loans, when they’re coming in, and when you’re decisioning those loans? Again, going back to community, having a real connection to community and to capital because that’s what real DEI looks like from my lens,not just the performative, we’re going to do better, and then three years later, you really haven’t done much.

[00:08:35] Josh DeTar: Can I just say, I’m so glad you said this, I kind was like, I kind of felt that same way, and, you know, I’ll share with you, I recently got some kind of validation of this, too. But I’ve felt like a lot of this in, you know, I’m not picking on anybody, and I’m not even saying in our industry, like, looking just globally, like a lot of companies just did some lip service.

[00:08:53] They’re like, “Oh, yeah, yeah, we did the thing, like, we did, you know, our Instagram profile, it went black for a day, so we did the thing.” I’m like, “Cool, did any of your policies change? Did how you behave change? Did, did anything else change?” And you audit it, and you’re like, no, absolutely nothing changed. And I’d be really curious

[00:09:13] Shannan Herbert: That’s right.

[00:09:13] Josh DeTar: to see someone go in and actually do an audit of all of these major companies that made a lot of these statements and see how many of ’em, like you said, actually followed through, and the real example I’ll give you is I had really good personal friend who’s not in our industry, and I won’t name names, but trust me, it’s a name of a company you would all know.

[00:09:32] He was hired to be a diversity officer, and he was recently laid off, and I was talking to him about it, and he was like, yeah, I was kind of glad, and it worked out because same thing you were just saying, he wasn’t given the budget, he wasn’t given the tools, and more importantly, he wasn’t given the authority and the power to actually affect the change. So, he would find areas where they could actually be better, and he would go and make the change, and nothing would happen.

[00:09:58] Shannan Herbert: Yeah, I, you know, that is a common theme and something that I’ve heard from other former chief diversity officers in addition to the things that, that you mentioned, I mean, not being able to hire a staff and not being given the resources to do what was necessary, even having anyone as just support within the organization to help get initiatives through.

[00:10:26] So, this ind, one individual that I spoke with had a, a, kind of a framework. Okay, so here’s what I think should happen and every time she went to the powers that be to present her framework, she was told, “Okay, well, we’ll get to it,” or “Not yet.” It wasn’t made a priority. The priority was getting her in that place and having her face on the website, but anything that she tried to push through was not made a priority. So, within six months, she was looking for another job.

[00:10:56] Josh DeTar: That sucks.

[00:10:57] Shannan Herbert: Yeah.

[00:10:58] Josh DeTar: Yeah, you know, and so, that’s what I thought was really interesting as I was listening to some of the different conversations at that conference, you know, we’ve seen a lot of just the acronym floating around in the industry lately of DEI, and I heard a lot of conversations about it at the conference.

[00:11:16] And, you know, what I heard from a lot of people was, especially the, this was a credit union specific conference, but like, the credit unions have, have always tried to put a focus on just, it’s people helping people, right? And there’s, there’s no description of people, like, people just, blanket statement, we help people.

[00:11:35] But I think they also just realized in, you know, some of their own self-audits of some of their practices and processes that what were we doing to really ensure that we were not only just not being biased as it came up, but we were, like, proactively trying to do things to promote this, and I think that’s where the conversation has kind of shifted to, is it’s not, like, you know, I’ve used the example before where, if it’s really obvious that this is your culture and you make the statement, then it makes sense,

[00:12:08] it jives, but, you know, if an oil company comes to me and says, they’re like, “Oh, yeah, you know, the most important thing to us is the environment.” I’m like, “What?” You know, you’re kind of full of crap, like, the most important thing to you is profits, and we’re digging up some dead dinosaurs to burn, and like, we’ll deal with some of this stuff, and we’ll, you know, we’ll put up some solar panels, too, at the same time.

[00:12:26] But, but, you know, when a credit union says something, like, they care about, you know, being inclusive of all people, that, that jives for me, but they’re still looking at just how can we be more proactive to make sure that we’re going out to serve the underserved.

[00:12:40] Shannan Herbert: Yeah, and I think this is an important conversation to have with a lot of financial institutions because while we may think that our efforts are inclusive, while we may think that we are doing the right thing, when we do that audit, when we take a step back and look at the numbers, we may find that the numbers and the data tell a different story.

[00:13:07] And so, that’s what we have to reconcile, and I think that it’s a real accountability measure that we all should take, you know, it, looking to see, all right, where, where could I have done better? It doesn’t mean that I was necessarily doing the wrong thing, but I could have been doing more of the right thing.

[00:13:24] And so, if I could be doing more of the right thing, then I wanna know what that is so that I can do it, and I can embed that in my strategy, I can embed that in the way that I create products and services, I can embed that in my marketing, I can embed that in my community outreach. So, it, it’s something that I think has to be done,

[00:13:45] you know, anytime you start talking about strategy, you know, you, you have to ha, you have to incorporate this kind of conversation or this level of feedback into that conversation, you know, listening to your community, what’s landing, what’s not, and then making those appropriate changes.

[00:14:06] You know, one of the things that, when I talk to small-business owners, one of the, the frustrations is lenders coming in, or financial institutions coming in and telling communities what they need instead of listening to communities about what they want, you know? And so, it’s, uh, we don’t want these things that you’re selling, Mr.

[00:14:28] Banker, we, this is the real need over here, so listen to us, we’re, we’re giving you the road map, we’re telling you how to reach us, and you’re not listening. So, I, you know, there, there’s still a lot of work to do, but I am encouraged by the bankers that are really taking a proactive fence on this and, and are saying, “Yeah, we can do better, we want to do better, show us how.”

[00:14:53] Josh DeTar: You know, I really love the way you said that, it’s not necessarily that we’re doing wrong, it’s just that we could do more right. And I think, you know, we have perfect examples of where wrong has absolutely been done, right? Where there is absolute bias and underwriting and, you know, black or brown-owned businesses may not get funded simply because of the, you know, color of the owner’s skin.

[00:15:17] And that is a hundred percent unequivocally, objectively wrong. And we can say that’s where we’ve done wrong, but maybe there’s just, hey, we’ve done right by, it’s not, we’ve objectively looked at the loan and is this a loan that we should fund, yes or no? And gone about the process.

[00:15:34] But are we actively going out and saying, “Hey, we’re here, and we want to help this community because we’ve heard there’s a need from this community for more of X, Y, Z, and we want you to know, like, we support that and we are here for you.” And I think, if I could put words in your mouth, like, that’s kind of what you’re saying is like, there are obvious times where we’ve done wrong, but there’s also the less obvious of just times where we could do more right.

[00:15:59] Shannan Herbert: Yeah. And I think there’s another piece of that, that can’t be overlooked, and that is, you know, sitting in the wrong, okay, fully acknowledging the wrong and recognizing that the harm that was done to the community because of that harm is something that is still very much on everyone’s mind, right? So, you go into a community after all the wrongs been done, and you act like it never happened, and, hey, we’re here,

[00:16:27] you know, it’s like, well, yesterday you just punched me in the face, and so now you wanna be my friend, you know, like. So, you, you have to, there’s a, balance there where you have to say, okay, we recognize that there has been a trust breakdown with between, you know, maybe the, the financial industry and this community,

[00:16:47] but we’re here to make things right, we’re here to make things better, and this is how we built community trust. One of the examples that I was exposed to through my work with Underwriting for Racial Justice was a, a bank that was using a community approach to loan approvals where they had a loan committee made up of com, actual community members.

[00:17:12] So, when a lone came to their committee for approval, you had community weighing in on that decision. That’s the voice that you want at the table, that’s the voice that you want helping to inform the way that decisions are made because if I live in that community, I can tell you, oh, yeah, I’ve used this business for the last 30 years,

[00:17:33] my family uses this business, the, you know, the every, I know that this business owner is trustworthy, I know that this business owner is dependable, I know that they’re gonna deliver on their promises, almost like a letter of recommendation from the community.

[00:17:49] Josh DeTar: Hmm. That’s cool.

[00:17:50] Shannan Herbert: Instead of, yeah, instead of having people around the table that have never lived in that community, have never worked in that community, have never bought goods and services in that community, you actually have that voice coming in and helping you make that decision, telling you why that business is necessary for that particular community. I thought that was just a remarkable idea and one that, again, connects community to capital.

[00:18:19] Josh DeTar: That’s really what I think fascinates me so much about this conversation with you today, is how do we start to look at how that morphs with technology, right? Because, you know, I’ve used this example, my own personal example on the podcast many times of, you know, there was a point in my life where if you looked at me on paper, I was a risk, I was a bad idea,

[00:18:43] like, steer clear from that guy, and somebody at a credit union took a chance on me. Because, because they knew who I was as a person, and they knew that by taking that chance on me, that I was gonna care so much about making sure that I lived up to making them proud of taking that chance on me,

[00:19:02] that I, I was gonna let nothing screw that up. But that’s really hard to see on paper sometimes. And if you look back at just some of our antiquated systems for how we do things, like loan processing, for example, a lot of times it’s a checklist, right? And it’s a really small checklist, it’s what’s their credit score?

[00:19:23] How much money do they have in their account? How long have they been with our institution, right? And I know I’m overly simplifying it, but I’m trying to make a point here, right? Which is that sometimes you just don’t have enough data points, right? And so, then that extra data point can be the community says, no, my family’s been shopping at this business for 30 years.

[00:19:43] And, you know, we can vouch for them, and that can mean something. And so, how do you use that to augment the on-paper data that you have? And then as we start to have more access to more data, to more attributes, how do you use technology to then look at a larger subset of information than anyone human is ever gonna have to make really, really smart decisions?

[00:20:08] Shannan Herbert: Yeah. So, I think that, well, the first step is just understanding the foundation of the lending process, and bankers know it as the five C’s of credit, it’s kind of, you know, banking 101. And one of those C’s is character. And so, what you’re talking about is, you know, the evaluation of your character,

[00:20:29] are you gonna be able, are you a good credit risk based on these things that, that you just mentioned? And there are a lot of ways that bias can creep into that assessment of character. And so, you think, you know, would technology be a good replacement for the human factor in assessing character, right?

[00:20:53] That upfront measure of is this borrower a, a good credit risk? And I think that with any decision, technology is going to be a, a great benefit, but I still think that there’s a human element that’s needed for these other things that we’re talking about, right? So, the, the technology can come in and help mitigate the bias by re-removing that human factor

[00:21:22] and increase objectivity, but that, that other piece that we’re talking about, like, the community input. Technology may not be able to capture that part of it. So, I still think that there’s a need for both, you can’t let the machine run by itself, and I definitely don’t think that the human can run by itself, either, because we have too many instances of bias being incorporated into some of those decisions.

[00:21:49] Josh DeTar: Yeah. See, that’s what I mean, like, this is where this starts to, like, you pull one thread, and it just starts going crazy because, you know, you think about, okay, so let’s use, you know, your five C’s example in character and, you know, how you judge someone’s character, maybe different than how I judge someone’s character.

[00:22:05] And, you know, many of our long-term listeners know, ’cause they, every once in a while, hear him in the background snoring, I have a French Bulldog and so, you know, if one day you told me, you’re like, “Ah, you know, I don’t really love French Bulldogs, they kind of snore.” And I socked that away in my memory,

[00:22:19] and you came to me for a loan, and I was like, “You know what? I don’t like her character, I don’t trust her, she doesn’t like my dog.” Um, you know, so we have these, even just silly little biases that we’ll pick up on, but this is where it gets really, like, so now we say we’re gonna use technology to help solve for that. Well, what if I write the tech?

[00:22:41] Shannan Herbert: That’s right.

[00:22:42] Josh DeTar: Right? And it’s like, okay, so I’m gonna use technology to make sure that we’re unbiased in our lending, but the guy who wrote it doesn’t like people with purple hair. And so, he wrote in the code, be completely unbiased, unless they have purple hair, then no dice, no loan for them, right? Then your program’s gonna automatically spit out biased decisions.

[00:23:03] Shannan Herbert: That’s right. So, if the data used to train the algorithm is biased, then you’re gonna get the same outcome, and the problem with that, and again, going back to the small-business community that I’m in frequent conversation with, and these are primarily black and brown small-business owners, you know, they’ll get these denials from their banks and the responses,

[00:23:26] well, “I was put through some algorithm, and I don’t know, they just told me no, and I don’t know why I was turned down.” And so, to me, that calls for greater transparency in the algorithm in that model, right, and which is very helpful for me being new to tech, new to this space.

[00:23:43] I need to understand what’s going on behind that model, I don’t need a black box or, you know, something that’s unknown, working behind the scenes, creating these, these outputs, and I don’t have any idea about what’s going on there. And I think that, that greater transparency and explainability as part of this conversation and using technology is what we need for any of the models that are used.

[00:24:05] So, that way as a small, black business owner, I can walk away feeling comfortable that, okay, I was turned down, and I was turned down for these reasons, and now I have something to build on, I can go and correct, I can go and fix the things that are driving my approval rate down, or, you know, I know as the user that maybe my system is biased because this doesn’t make any sense now that I’ve seen what the output is.

[00:24:30] So, I think that there are benefits there to having that, that explainability and that transparency as part of any model, especially when you’re talking about bias and trying to find bias and mitigate for bias.

[00:24:43] Josh DeTar: That’s a really good point, too. Just being able to actually expose some of that process to the actual end person can help with that because, you know, I may think that I was turned down for this reason, and that may not actually be the reason at all that I was turned down, and maybe it’s, you know, my business loan was turned down, and if I’m given transparency, it says, “Will you return down because your costs over the last month were significantly higher than they had been in the past, and we see that you’re overspending?”

[00:25:13] And then I can respond and say, “Well, yes, that’s true, but I’m a business owner in, you know, Minneapolis, and I own a small hardware store, and it’s about to become snow season. Last year I ran out of de-icer, I could have sold way more, but I ran out, so this year I pre-stocked a ton, so my costs are up, but I’m expecting to sell all of that de-icer.”

[00:25:38] Right? And maybe that then turns into a conversation where they go, oh, well, so that’s good to know, maybe that now should not be a factor into why we turned you down, but, you know, the machine, quote-unquote, machine just saw, like, that my costs all of a sudden went up and they saw that maybe I wasn’t disprofitable of his business.

[00:25:57] Shannan Herbert: Yeah, yeah, I mean, you think about, like, credit scores for instance, and we know that credit scores are inherently biased, and there are a lot of CDFIs that, and community banks that have gone, moved away from looking at scores and letting scores be the gatekeeper and really looking at the information contained within that credit report.

[00:26:18] And so, I think about, you know, some of the small, black and brown business owners that I’ve encountered over the course of my career that have had lower than what would be traditionally acceptable credit scores. But when you talk to these individuals and, and really understand why the credit scores are lower than what is traditionally acceptable, you’ll hear stories like, well, I had to self-fund my business because I couldn’t get financing anyplace else.

[00:26:43] And so, I had to take out personal debt because I had to buy inventory, I had to support payroll, I had, you know what I mean? And so, it’s this cycle that keeps continuing. So, the score is always gonna be low because I have to fund my business.

[00:26:55] Josh DeTar: Because I keep having to do the same process.

[00:26:57] Shannan Herbert: Exactly.

[00:26:57] Josh DeTar: Because I keep, yeah.

[00:26:59] Shannan Herbert: Exactly. And so, that’s where that human element has to come in, you need a human to be able to say, yes, this is, you know, here’s what the machine is saying, but now we have to work together, and I have to be able to look at this data and say, “Does this make sense?” That’s, you know, that explainability part,

[00:27:16] now I can go back to my customer and have a, a very informed conversation, they can walk away feeling like, I get it, we’ve established trust, and that’s how the relationship starts to be built. There was a guy that I was, did a, a presentation with a few weeks ago, he’s been in business for, I think he said 15 years, he does not have a relationship with a bank, no banking relationship whatsoever.

[00:27:41] Josh DeTar: Wow.

[00:27:42] Shannan Herbert: And, yeah, and, which was just shocking to me because I’m like, “Okay, you’ve been in business for 15 years, no one has reached out to you?” And he said, “Well, you know, some bankers have, but not really.” And he had no desire and didn’t think that it was something that was worth his while,

[00:28:00] and this is a, a small, black business owner. And so, you know, again, going back to that conversation about build, how you build trust, how you build those relationships, how you engage with customers that have really short memories and remember, you know, if, even as things unfolded, you know, real time, they remember, things that have been done in their communities,

[00:28:23] how do you recover from that, and how do you build that trust while acknowledging that harm has been done? And so, I, I think that there’s still some work to be done there, but as we move into more innovation and technology and these, these systems are coming into play, transparency, and explainability are going to be really, really key to building those relationships.

[00:28:47] Josh DeTar: You know, I want to come back to that, Shannan, what you were just talking about, how do you build trust with people that have been kind of burned in the past? I think that’s a lot of the conversation that’s happening right now, especially in financial services, especially with community banks, regional banks, credit unions.

[00:29:02] They’re like, “Hey, look, we may not have even been the ones to burn them, but like, our industry has burned them. So, how do we build trust with people that have had trust burned?” But before I do, I, I, I wanna also go back to something that you were talking about, which is just kind of the systemic of this that happens as well.

[00:29:21] And, you know, you were kind of talking about the credit score. I wasn’t really taught about credit score as a kid, right, I grew up in a family of intelligent people and just never gotten any of this stuff passed down to me. And so, I had to start from scratch, but I still started in a much better place than a lot of people.

[00:29:40] My son is not even two, and I’m doing everything in my power to cheat this system for that boy, like, I’m like, hey, you know what, like, it is what it is,I gotta fight in the ring for my, for my kid. So, I’m gonna do everything in my power to set him up, so he is not even two, he’s an authorized signer on my credit card ’cause he’ll start building his credit history, right?

[00:29:59] Those are things that my parents didn’t know, they didn’t do for me, I do, so I’m gonna do for my son. But how many people in communities don’t have this information at hand? This is not something that’s been passed down, these are not families with generational wealth that are teaching their children from minute one how to maintain generational wealth.

[00:30:22] We’re just struggling to get out of the, you know, the process that we’re in today, like you said, like, I’m, I’m, why is my credit score low? ‘Cause I keep taking out personal loans ’cause you keep denying my business loan. So, I keep coming back to where I am, like, as those things continue to happen, and there’s one, not a change in how the industry does things, but two, there’s not a change in how we educate people and communities on how the system even freaking works in the first place. We’re gonna continue to face these challenges.

[00:30:51] Shannan Herbert: Yeah. Yeah. And, I mean, this is such a large topic because I think that there are a number of players involved in this ecosystem if you will. So, you have community and where does the education begin? And I, I think about my first finance teacher, and it was my mom,

[00:31:12] you know, my mother would sit me down at the table while she was balancing her checkbook and writing out the bills. And so, she showed me how to budget and explained all these things. My mother wasn’t a finance major, she was an opera singer. And so, in between, you know, performing, she’s sitting down with her kids and showing ’em how, you know, how to do these things.

[00:31:32] But there are also lots of organizations, I’ve worked with several that have, have created financial literacy programs, for better or for worse, but financial literacy programs to really help educate those communities where this knowledge isn’t taught, or this type of education isn’t taught in schools or otherwise.

[00:31:55] So, you, you do have some school systems now that are incorporating this financial literacy as part of the curriculum, I don’t know that it’s widespread, I know that here in, in Maryland, I think in Prince George’s County, it’s part of the curriculum now where kids are taught about this. I’ve done, the financial literacy courses that I’ve done have been specifically focused on credit, and I’ve done those in predominantly black high schools because I recognize that there’s a knowledge gap there,

[00:32:25] and I want those kids to be well-equipped with all of the information that they need to make the best decisions possible as they’re thinking about their futures. So, you have that piece of it, but then there’s the banker piece as well and the responsibility there to really understand where those biases show up in

[00:32:49] that decision, the decision-making process. So, if we think about credit scores and the example that I just gave, and being able to get behind numbers and really ask those questions and understand scenarios and situations and why things aren’t going to look the same for everyone. So, if you’re evaluating everyone in the same box, but we’re all starting at different places on the field, then we’re not all going to receive the same outcomes. And so, that’s

[00:33:12] Josh DeTar: Yeah, that’s a super good point.

[00:33:14] Shannan Herbert: Yeah, you know, that’s where the adjustments have to be made, but you have to have that going in understanding, and that has to be part of the credit training, that has to be part of, you know, when you’re bringing in new analysts, when you’re training lenders, when you’re looking at your approvers, that has to be part of their training, their understanding when they’re looking at loans and evaluating borrowers.

[00:33:37] Josh DeTar: Yeah, that’s a really good point. It’s that bias of expecting someone to know something because you know it, right? And especially when we’re talking about topics that aren’t, like, you know, really in the forefront of conversations, and that, topics that are difficult to ask questions about, right?

[00:33:54] Like, I don’t know, as you were talking, I was thinking about, you know, it’s kinda like having the financial education class, and like, the sex ed class, right? Like, both are really important, and most people agree, they kind of want to learn about those things, but nobody really wants to admit it.

[00:34:10] And you definitely don’t wanna be the one that asks the question, right? And so, there’s almost even this, you know, you’re having a meeting with a banker talking about a loan product, and you have a question, and it may not even get asked because it’s very obvious that their demeanor is saying, “You’re supposed to already know this.” And you just, you don’t want to feel stupid for asking the question.

[00:34:34] Shannan Herbert: Yeah. Well, and, you know, I think that there’s some responsibility, as well, on the part of the lender, and this is one of the things that, uh, we’ve been working on through the Underwriting for Racial Justice group, this part of our special purpose credit program,

[00:34:50] but really thinking about technical assistance for borrowers and what that means and what it looks like, it’s, if you have a first-time borrower, right? So, someone who’s never borrowed money before, they’ve never had a relationship with the bank, there are going to be things that they just don’t know,

[00:35:06] and the expectation shouldn’t be, we give you the money, and then in 12 months when you show up for your review, everything looks awful, and we don’t know what happened, and now we’re never gonna lend to you again, or we’re not gonna do this type of lending in this community, and, you know, so that, so now you can create this, this narrative about risk where

[00:35:27] I think that there is a responsibility for lenders, and there are some lenders that are doing this, and they’re doing a really, really good job at it, but a responsibility for lenders to handhold those first-time borrowers, you know, you, you think about your child and giving them their first bike, you know, you put training wheels on the bike, you hold the back of the seat,

[00:35:50] you don’t just get, put ’em on a bike and send ’em down the street so they can come home with a broken arm or, you know, leg because you know what is needed from a training perspective, from an easing in perspective, and making folks feel comfortable with this new money that they’ve received and checking in and making sure things are going well and making sure that they have somebody to look back to, to, you know, am I doing this right?

[00:36:16] You know, is this what you need? That kind of thing. So, I think that there’s a lot of room for improvement in this area. And again, having talked to small-business owners, that say, you know, I never hear from my banker, I don’t know what’s going on, they don’t know what’s going on with me, I don’t know what’s going on with new products,

[00:36:36] we saw this with PPP and the research that was done by the National Community Reinvestment Coalition, where they did mystery shopping and saw that, you know, black and brown borrowers weren’t contacted by their banks for loan deferrals, for information about PPP loans. So, there, I mean, there’s still a lot of work that has to be done from an outreach perspective and just, you know, from a, a, overall support for the small-business community.

[00:37:03] Josh DeTar: Back to kind of what you’ve been talking about throughout this whole time, I, I think this is also one of the areas where augmenting with technology can have a really positive impact, right? You know, one of the things that’s come up over a couple of episodes that I’ve had of this podcast, and I just thought was really an interesting topic, was this idea that people don’t lie to the computer.

[00:37:25] And so, you know, somebody gave me the example of, you know, you go into your doctor, and your doctor says, “All right, Josh, well, we want to know, you know, as we evaluate your health, like, do you drink too much coffee? So, how much coffee do you drink a day?” You best believe I’m not gonna tell that guy how much coffee I actually drink, like, right in front of him.

[00:37:45] I’m gonna tell him I drink a cup of coffee a day. And then, what was interesting was, you know, they made a comment that then what will happen is I’ll go home, and I’ll google, “Is a gallon of coffee too much coffee in a day?”

[00:37:59] Right? And so, I’m putting the real truth into Google, and, and I’m kind of maybe sheltering what I’m sharing with my doctor because I’m, I’m afraid of what the response will be, and, and I may be intimidated by the response coming from a human, but if Google comes back and it’s like, yeah, dude, a gallon coffee is too much coffee a day, like, you should probably think about limiting your coffee consumption.

[00:38:22] Like, okay, cool, maybe I should think about limiting my coffee consumption. Which is a lie, sorry, Google, I’m not limiting my coffee consumption. But, um, you know, kind of same thing applies here, right? Like, maybe this is an area where not only people will feel a little bit safer to ask some of those questions, but also our lenders can actually do a better job of being proactive in maybe a less scary way, right?

[00:38:46] And we can reach out to some of our business owners and say, “Hey, you know, help us update, like, what is the status of your business? And then, we could even make some recommendations.” Like, “Oh, hey, we actually see, you know, if you were to actually help pay down this credit card, we could actually reduce your interest rate on this product,

[00:39:04] and over the lifetime of that product, it would save you X amount of money, and oh, by the way, here’s a financial literacy course tailored to helping you understand how to start by paying down that credit card so that we can move to the next phase of this process.”

[00:39:19] Shannan Herbert: You’re absolutely right, you’re absolutely right, I mean, I think that we have a, a very unique opportunity with everything that I’ve seen in the short amount of time that I’ve been here, but everything that I’ve seen to really re-frame the way that we think about risk and the overall customer experience. We can create products, we can create services, we can create different ways to communicate with our borrowers that are more inclusive.

[00:39:52] And again, go back to building that trust, I want to feel as a small business owner that you care about me, I wanna feel that you are my partner, we’re partners in this, and if I don’t feel like you’re my partner, if I don’t feel like we have a relationship, then we won’t, we just, we, we simply won’t. And what that does then is prevent me from coming back to you asking for more capital, asking for help.

[00:40:21] So, now I’m not being transparent at all, I’m not telling you any of my needs, and I’m going to maybe predatory stores for financing, which is not what we want at all. So, or I just don’t do anything, and then my business suffers, fails, and that was it, you know, and I had all of my capital, all of my, my equity tied up in that business is gone, and now my chance of building generational wealth is, is gone as well.

[00:40:47] Josh DeTar: Yeah, that’s a good point, I think, I never thought about it that way, but, you know, you think about some of the predatory lending businesses, and I think a lot of what they have built their success on, they’re inclusive is all get out,

[00:41:02] they’ll screw anyone, right? And I think they’ve built their marketing around that, they’re like, “Hey, no judgments here, no questions, we’re not even gonna check your credit. You want 500 bucks? I got you.” It comes at 300% interest, and and we’re gonna never let you get out of this, but we’ll get you in.

[00:41:23] And so, I would not be shocked if, yeah, if you’ve been burned by the traditional system, you’re like, “Hey, you know what? I know who will accept me, it’s these predatory lenders.” And then, to your point, it puts you into this vicious cycle that you can just never get out of.

[00:41:37] Shannan Herbert: Never get out of it, yeah, you can never get out of it, and that’s what we, we all want to avoid that. And so, we have to start doing better, knowing that that’s where our borrowers will turn, let’s use the technology to our advantage, let’s create these programs, let’s get people in the door, let’s build that trust, build those relationships, and then move forward because we know what happens if we do nothing.

[00:42:00] Josh DeTar: Yep. Again, this goes back to, you know, who’s writing the tech though, and I think that’s what’s, that’s what’s so fascinating to me is, there almost has to be, like what you were talking about with the, you know, the community-minded approach to approving loans, right?

[00:42:13] There almost has to even be a community-minded approach to who’s writing this algorithm. What are the biases that are baked into this algorithm? And then, who has the ability to audit it later? What level of transparency are we sharing back to the consumer saying, “Hey, our bot said you’re not getting the loan,” or “You’re getting the loan at 10%, and Josh got it at 5%.”

[00:42:38] Why? Why did he get preferential treatment? Having that transparency and having an auditable record of that can help kind of keep that honest, I guess.

[00:42:49] Shannan Herbert: Yeah, and I think that we are going to see, you know, with these models, audit requirements, model validation requirements for banks that are, that are using them, I mean, they, they should be validating their models anyway.

[00:43:06] But anything where there’s, a particular reg associated with it, you know, something where there could be a Reg B violation, fair lending, a co, something like that. I think that, you know, those kind of models should be tested very frequently, but there has to be some sort of audit when you’re, and a monitoring of that model to detect bias because two years down the road is almost too late

[00:43:31] once you’ve, you know, you found, like, okay, so my system’s been running for two years, and now there’s this bias problem that’s been here forever. But actually having something to monitor that model to detect the bias and show the user where it is so they can correct it, you know, we don’t want it to get out of hand, so show me where it is, let me correct it, and then monitor my system going forward so that it doesn’t come back because we know what happens, again, if it’s there and how many borrowers are not being reached because of this bias in the system.

[00:44:03] Josh DeTar: Yeah. Well, and that goes along the lines of when, you know, one of the things that you were talking to me about previously was just how kind of digitizing a manual process, and then saying, “Well, we, we have AI doing this for us now, therefore we’re unbiased.” Well, hang on a second, like, if we’re talking about, you know, one of the other big initiatives that’s happening in our industry, which is this digital transformation idea.

[00:44:30] Well, if all you’re doing is taking your paper form and putting it on an iPad, you’re not necessarily digitally transforming, and if you’re taking your current policy and just putting it into an AI engine, it’s probably not making it any more focused on DEI, right? Like, if your paper policy says, “Deny loans to people with purple hair,” and then you have an AI engine come in and you tell the AI engine, “Look at our models for how we do approvals and then do it with AI,” well, what’s it gonna do?

[00:45:04] It’s gonna discriminate against people with purple hair because that’s what your policy that taught its behavior said to do.

[00:45:12] Shannan Herbert: So, this starting point should be, well, okay, so there are a few, few things. One, starting point should be the rigid rules that are in place, so those policies, that credit box that’s in place now, looking at that for hidden bias, and we can go back to, again, five C’s of credit,

[00:45:30] where does bias show up in each one of those five C’s? How does that show up in my loan policy now, right? So, we can look at it from that angle, and then we evaluate the model. Where is bias showing up in my model? If my model was trained on these rigid rules that were in place, now I need something to show me in my model where that bias is showing up.

[00:45:51] But the other part of it, and going back to the conversation about DEI, if you are finding bias in your loan policy, if you’re finding bias in your models, this should spark another conversation about why we were able to allow this to continue, or to be created at our institution, why was this thing comfortable here?

[00:46:11] Why did it live here, and why did it live here for so long? What within our culture do we need to change? What within, you know, the way that we interact with one another and communicate with one another, it, all of these things, it should spark broader conversations. This kind of work cannot be done in a silo,

[00:46:27] you can’t, we found bias in the loan policy, our work’s done here, time to move on to something else. No, it’s here. So, where else is it? Let’s find the other places where it exists, and now let’s fix it, let’s go to the core, and if that means a top-down approach, wherever it is, let’s root it out, let’s fix it within the entire organization so that we can make sure that we’re operating in this true spirit of DEI.

[00:46:51] Josh DeTar: Ooh, that’s spicy, I like it. No, you’re that, seriously, though, I mean, that’s a great point, like, if we uncover the bias, just fixing it doesn’t actually fix it, you do it, you have to ask the question like, why was this allowed to live here?

[00:47:10] You know, I’m, I’m using my silly example, but just, if our CEO doesn’t like people with purple hair and wants to deny their loans, that’s a problem, we have to have a conversation, that can’t be allowed to live because if we just uncover the policy that says we’re gonna deny loans to people with purple hair,

[00:47:30] where else has that bias that, that CEO, where has that permeated throughout our entire organization? Where has that morphed into the culture of the types of people that, that CEO has maybe hired and put in place to oversee other policies, to see other departments? That’s a good point ’cause just fixing one problem, well, you gotta look at, you know, the source of it and say, “Did we actually do something to solve for, why was this allowed to live here?” I like that.

[00:47:59] Shannan Herbert: Absolutely. It’s not a one-and-done, this is something that is continuous. So, you find it, you root it out, you fix it, and then you, you monitor it to make sure it doesn’t come back, but that is enterprise-wide. It can’t have a singular focus.

[00:48:18] Josh DeTar: You know, I think something that is worth saying, too, though, is, you know, sometimes these things are not necessarily overtly malicious either, right? And, you know, again, I’ll, I’ll throw myself under the bus. I would like to think that I care about this, that actually try and be proactive in my life about, you know, being inclusive, about caring, about equality,

[00:48:43] but I’m human, and sometimes I get it wrong, and sometimes I screw up, and sometimes I say really stupid things that I regret later. My hope is that I have a heart that cares about it and wants to go back and fix the root of the problem. And, you know, I’ve had very open conversations with people over the years who’ve made comments to me and said, “Hey, you know, just FYI, like, you should be aware of this.”

[00:49:03] Like, awesome, that’s really important, thank you for that feedback. But I think, you know, as you look at this as an organization, it, it doesn’t necessarily mean that, like, you’re a terrible person, right? Sometimes there are, sometimes there are just some really crummy people out there, and that’s a bummer.

[00:49:20] But sometimes also, too, it’s just same thing, our own uneducated biases, right, or things that have been passed down from generations to different people that you may not even be aware of. And so, I think these are really good things to think about as you think about the policies in your organization.

[00:49:38] Okay, so we uncovered like this. So, why was this allowed to live here, and what are we gonna do differently about it? And if your organization is responding with, “Oh, gosh, we can’t believe that this lived here, we gotta fix this, let’s go look for other things that live here that are like this.” That’s very different than, “Oh, shucks, we got caught, like, how do we hide that one?”

[00:49:57] Shannan Herbert: Right, yeah, you, you never want the “Oh, shucks, we got caught,” conversation. That, that, that’s not it. And you are not alone in how you think because there are a number of us, myself included, you know, I haven’t always gotten it right, and I, I recognize that, but once you, you know better, you do better.

[00:50:17] And so, when you see it, and you’re able to recognize it and say, you know, this isn’t right, I know this isn’t right, not only does it not feel right, it’s just, it’s not right on, from any lens, and how do I fix it? How do I change things? There’s a book that I’ve just started reading, it’s called, what,

[00:50:39] it’s a workbook, it’s called Do the Work! by Kate Schatz and W. Kamau Bell, and it, it’s an anti-racist workbook, and I’m doing this workbook with a book club, it’s a diverse book club, but we’re doing workbook together. But it gets to what you just spoke to. How do I do the work? How do I find my lane?

[00:50:57] And how do I figure out, like, what that looks like? What’s comfortable for me? Where have I gotten it wrong in the past, and how do I make those corrections within my own life so that I’m being impactful so that I’m helping people because I think that’s what we all want to do? As I’ve mentioned to you, I never saw my work taking this sort of turn, and me being involved in this,

[00:51:20] but now that I’m here, I absolutely love it, and I’m always looking for ways to do more, you know, how, how else can I lend my voice to something or my lived experience to something because I want to make sure that the things that I may have experienced, the next person doesn’t have to, or the things that are present today that can be changed,

[00:51:40] I want, let’s change those, I wanna work with someone that can help me change those things, or if no one’s doing it, then I’ll pick up the man, so I’ll do it, to change those things to make it better for my kids and their kids, they shouldn’t have to go through the same things that we are going through.

[00:51:55] So, that, I mean, and so, I hear what you’re saying, but it happens, and it has happened to all of us where we’ve gone back and said, “You know what? I could have done better there, I didn’t make the best decision here, but now that I know I’m gonna make the best decisions going forward.”

[00:52:10] Josh DeTar: What you said just made me think back to, I, it was profound enough that I actually remember it word for word, walking to and from my hotel in DC to the convention center for that conference we were talking about earlier,

[00:52:23] there’s a building that was under construction, this huge drape over it to protect it from the elements as it was under construction, and written on it in giant words was, “So long as generations change, but my struggles stay the same, I will remain a feminist.” And I thought that that was really, really profound in the sense that, what you were just talking about, right,

[00:52:47] like, if the generations keep changing, but the struggles don’t, then we’re not learning, and we’re not coming at it with the right heart, and like, what you were saying, I think the heart actually has a really big role to play here because we are human, we’re not perfect, we make mistakes,

[00:53:02] we may look back on the way we were, the way we thought, the way we did things in the past and go, ah, you know what? I’m really glad I do that differently now. And even as, you know, institutions look at their policies and their practices and even global companies, and we look at things like having, why are movements so important?

[00:53:21] Because sometimes they demonstrate that while we inherently may not be doing wrong, there’s more good that we could do, or we could just think about this a little bit differently, and as long as we have the right mindset and the right heart for, hey, I just wanna be better than I was yesterday, and I know tomorrow I won’t be perfect either, but I do wanna look back on did we make progress?

[00:53:44] Shannan Herbert: Right. Right. And I, you know, progress for me may look different than progress for you, right? But I think that we’re all working toward the same goal, we, we all want that, that same thing at the end of it, and baby steps may be good in, in some places, and giant leaps and jumps off the cliff may be better in other places.

[00:54:11] But knowing what your lane is and where you can contribute, you know, finding that spot, there’s a space for everyone, everyone has a space, just finding that spot and figure out what it is.

[00:54:22] Josh DeTar: Yeah. Well, and this ties back to what I wanted to, I put a pin in it, I said, I want to come back to this, like, how do you go back and build trust with folks whose trust has been broken?

[00:54:33] And, you know, I’d like to think that this is some of the answer to it, right? Is admitting fault, admitting where maybe in the past we haven’t done the best job, being transparent and showing the actual steps that we’re doing to be better in the future, but I’d be curious to get your take on, you know, especially in terms of the conversations that we’ve had today,

[00:54:56] and specifically even just around some of the lending processes and how people have truly not gotten their fair shake, like, how do we as an industry say, “Hey, we’re gonna do different, and here’s how,” and how we build trust back.

[00:55:12] Shannan Herbert: Yeah. So, the first thing is what you just said, you know, admitting when, where you’ve gone wrong, where we, you may have gotten it wrong, but then, really listening to what those community needs are and working to find solutions that address those needs,

[00:55:31] I think about the creation of all of the different special purpose credit programs, Bank of America, JP Morgan, they have theirs, that are specifically designed to address these concerns that we’ve been talking about. And that’s a, a great first step, you know, it’s saying, look, I recognize that there have been some inequities here, and we’re trying to make things right through these loan programs,

[00:55:59] creating community outreach, feedback loops maybe, you know, something where you’re, you actually have that community voice as part of your decisioning, as part of your information loop, as part of that advisory council or board. So, you’re really hearing what the community needs, what’s important to them,

[00:56:23] and I know that they’re different chambers of commerce and, and, you know, different cities and, and that’s helpful, but outside of the chamber, so if you’re not involved there, how else are you connecting? What other community activities or centers are you going to? What other community leaders are you connecting with?

[00:56:40] Because one of the other things that some of the small business community will report back is, you know, they’re not aware of grants that are available to them, they’re not aware of certain programs that are available to them. Well, the lenders may be if they’re connected to those community sources that have those grants or those city officials that are responsible for administering those grants and those programs.

[00:57:03] And so, really having that connection so that, okay, maybe this loan isn’t the right fit for you, but this grant is, this could help you with this business need that you have. So, again, I’m your partner, I’m not just your banker, I’m your partner, and this is how we build that relationship and that trust.

[00:57:20] I’m not just here to sell you a product, I’m here to make sure that the business that you are operating will be successful, will thrive your, it’s, I’m going to do what I can from my seat as a banker to make sure that you have the resources that you need to the best of my ability, to be successful and continue to, to serve the community.

[00:57:41] Josh DeTar: That’s cool. I like that. That’s a cool way to actually demonstrate that you care, right, is to put in the work and say, “Hey, I’ve actually looked for, you know, different ways to help, support your unique circumstance,” and, you know, again, we’re, we’re only people, and sometimes we only have so much information at hand, but like, proactively searching out different programs, different grants, different scholarships, different tools, different ways of accomplishing things.

[00:58:08] And this is another way that, you know, technology can help us to aggregate those things and put more things at our fingertips, but being able to actually be aware of the different programs to help people out is a, a really cool way to demonstrate more than just lip service.

[00:58:21] Shannan Herbert: Absolutely. I think, you know, because one of the arguments is, okay, well, all that sounds great, but who’s gonna do it? We don’t have, you know, we, we will need to hire 20 more people to do all the things you’re talking about. And, you know, we don’t have the staff to be able to do it, and that’s where I definitely think technology can come in and help to, um, augment some of these processes and, and help bankers get to the things that they need.

[00:58:47] But, you know, again, being mindful that technology isn’t, technology and human holding hands, walking down the sidewalk together, that’s what, what we want, that’s how we can be most effective.

[00:58:59] Josh DeTar: Yeah, technology’s not the silver bullet.

[00:59:02] Shannan Herbert: Mm-hmm, yeah.

[00:59:03] Josh DeTar: I’m gonna ask a very loaded question for you, but I want to just kind of tee this one up for you, but like, why should community financial institutions care, like, what’s the positive impact that actually putting a focus on DEI is gonna have?

[00:59:20] Shannan Herbert: Well, I think that it helps you reach those under-banked, those unbanked customers that we know fall into categories where DEI efforts are aimed, you know, when having diverse voices around a loan approval table only helps when you are considering financing for diverse business owners,

[00:59:46] you know, I, there has to be a perspective there, there has to be a voice there that mirrors the voice of that community that you’re serving, that business owner that you’re serving, and if you don’t have that, then that perspective is, is lost. I can’t tell you how many times, you know, just bringing my own lived experience to a loan decision or to underwriting helped with the richness of the analysis or the conversation.

[01:00:16] And I saw that with a lot of my colleagues as well, being able to personally connect to something that was before you for approval or for recommendation or analysis, it, it may be experienced a lot better from an underwriting perspective, but also from a, a customer perspective. That connection, again, being able to, to have a conversation with that borrower, that business owner on a level that was beyond just the, the bank and the loan, and the, you know, really, really connecting on a, a somewhat personal way, that, that’s why you need,

[01:00:53] that’s why you need DEI, that’s why it’s important to have, not just a diverse workforce, but one where you have people, again, at the approval table with a voice and a voice that is being listened to, not just, “Hey, I’m here, I showed up.” But one where if I say something, you’re hearing me, you’re considering that, it’s part of the strategy going forward, it’s part of the way that we do business it, and it’s not just lip service.

[01:01:21] Josh DeTar: Yeah. I think, you know, when we talk about wanting to evolve our businesses, right, and to grow and to do more, too, you know, I talk about this even with my own team, I don’t want a, want a bunch of mes on my team. When I’m doing hiring, like, if you’re exactly like me, that’s a problem because then if my team is just a bunch of mes that look like me, act like me, think like me, talk like me, do things like me, then I’m not getting any new perspectives,

[01:01:51] and there’s probably gonna be very little growth that comes from that. I like a team that pushes me and challenges me, and thinks differently than me, and when I pose an idea, they bring an opposing idea. That’s how we grow, that’s how we evolve. And so, you know, bringing in diversity of thought and opinion is super beneficial just from an even trying to evolve standpoint.

[01:02:13] And I agree, I think it’s super cool to see how, you know, different companies have done more than just lip service, and I wouldn’t be surprised if you can actually even see that in the tangibles.

[01:02:23] Shannan Herbert: Yeah, yeah. I would love to see something like that just to, you know, be able to track it, I know it’s out there somewhere, I just haven’t seen it. But to be able to track that, you know, this is what we did, this is, these are the outcomes, you know, we’ve increased production or revenue, and these are the reasons why we’ve been able to do these things. The, the diversity of our customer base has increased, and even from a pay equity standpoint, you know, we can start having those conversations as well.

[01:02:54] And, you know, and I know that there are organizations that are doing it, and it’d be great to see some of that data and use that as blueprint for those organizations that haven’t quite figured it out.

[01:03:05] Josh DeTar: Yeah. I think that’s one of the things that’s really fun and cool about our industry, too, right, is, if Coca-Cola Institutes, an amazing DEI program, gimme a lot of cool benefits that are gonna come out of that, don’t get me wrong, right? But if one of the tangibles that comes out of it is they sell more Coke, they sell more Coke, if a credit union implements it, and ultimately what comes out of it from the tangible is they service more loans,

[01:03:32] and those loans, or to more minority-owned businesses and the communities that they service, and all of a sudden, you have a more thriving, healthy, financially stable community, like, that’s rad, that’s a pretty cool impact.

[01:03:45] Shannan Herbert: Yes. That is what we want, we wanna be able to follow the diversity initiative to the loan, to the community, and then what happened as a result of that loan in that community.

[01:03:56] So, if I make that loan and I create an affordable housing project, okay, great, now what’s next? Now I’ve created like a daycare, and there’s a grocery store that went in. And so, now we’re talking about community wealth building and, you know, and, and keeping resources within that community and really building generational wealth.

[01:04:14] That’s the story, that’s the story, and it started here with this, you know, changing the way that we think about diversity, equity, and inclusion at our organization, rooting out bias and then letting that drive the strategy through to get to that community piece, that would be beautiful. I can actually picture, I can envision that, and like, like, I’m picturing this

[01:04:34] Josh DeTar: I’m just like, I’m so sorry for the people listening in because they don’t get to see how big your smile is, it’s like literally filling my whole screen right now, just seeing you get excited about this.

[01:04:45] Shannan Herbert: No, ’cause I can,

[01:04:46] Josh DeTar: But that’s what, yeah, well, that’s what’s so, I mean, again, this is what’s been so neat about doing this podcast, right? Is I just, I don’t know if I would’ve met you otherwise, and now I get to see just how exuberantly passionate about topics like this

[01:05:03] there are, you know, across the board and just how many people are out there that are really trying to make actual differences and provide value to the communities that they serve, and I don’t know, I totally nerd out on this stuff now, now I just absolutely love this podcast ’cause I get to see exciting people doing exciting things and, I mean, literally just watching your face right now gave me exactly that, like, it’s just so cool to see people out there, like you, doing what you’re doing.

[01:05:28] Shannan Herbert: Yeah, I appreciate that, I mean, it’s, again, you know, not a place where I thought I’d end up, but once I started researching and learning more, it was, you see, something, say something kind of thing, like, I couldn’t turn back,

[01:05:42] you see it, and you want to learn more, and then how can I do better and how can I make this better? And what do, you know, how do I help you make these things be what they’re supposed to be? So, lots more work to do, though.

[01:05:56] Josh DeTar: Yeah. Well, do you have any kind of parting advice for a community FI that’s either well along their journey or maybe even just starting their journey to think about how do we do better? How do we put more of a focus on DEI?

[01:06:12] Shannan Herbert: Yeah, you know, I think that the first step is to evaluate where you are on that journey because everyone’s not at the same place, and we recognize that, right? Some people have just started, and maybe they tried to start, but it didn’t work out, and so they stopped, and it stalled, and it was deprioritized, and other things happened, and they don’t really know what to do now.

[01:06:35] I would say revisit, you know, because the other part of it that no one talks about, and we talk about the diversity officers leaving, we talk about so many other things, but what about the employee experience? So, is everyone’s trying to hold onto talent or find new talent, think about those employees that are on the, that are on the receiving end of failed DEI initiatives where they thought things were going to happen and things were gonna change, and then nothing happened.

[01:07:01] And then they see their chief diversity officers leaving and not being replaced, think of the message that you’re sending to, to staff that were, that had high hopes that things were going to be better. So, you know, I would say just from an overall culture and talent management perspective, really think about putting those things in action, but then also from a, a lending perspective,

[01:07:25] you know, just having that diverse voice at the table, helping to craft policy, helping to figure out that next market to set up shopping or that next community to create a program for, it’s necessary to have people from those communities around your table, helping to drive those conversations, helping to drive strategy.

[01:07:50] And those people are out there, they exist, they are qualified, they are ready to work, but the environment has to be hospitable as well. So, again, going back to that DEI strategy and the inclusiveness of the organization, that’s how you get the talent in there, that’s how you get the changes, and start to build on those community trust initiatives that you and I discussed.

[01:08:15] Josh DeTar: No, that’s great advice. Thank you. You know, I’d like to also just use this platform real quick to make one statement, you know, I kind of touched on this earlier, and I said, I’m human, and I make mistakes, but I would like to formally say right here that I do care. And so, I wanna say it right here, if you’re listening, and if you feel like I haven’t done a good job, or maybe I’ve done or said something that I shouldn’t have, I want to own those things.

[01:08:42] And so, my email is, hit me up, and let’s have a conversation because I do care about being better than I was yesterday. So, Shannan, this has been an absolute pleasure to talk with you, and literally, I’m telling you, like, I’m gonna walk away from this just in a lighter mood just from your smile and your enthusiasm on this episode. But before I turn you loose, can I ask you two final questions?

[01:09:05] Shannan Herbert: Absolutely.

[01:09:05] Josh DeTar: Um. So, first off, you know, where do you go to get information on what’s happening in our industry?

[01:09:12] Shannan Herbert: Yeah. So, several sources. I like The Financial Brand, I do scan LinkedIn, to, you know, to get all of the, the latest updates, periodically. But I’m also on a number of different forums. So, the Opportunity Finance Network Forum, I get news there, NCRC, they also have, uh, news that they publish, which is phenomenal. There’s also a Risk Management Association Forum that I receive updates from. And then, Next City is another publication that I enjoy reading.

[01:09:47] But I try to just stay in contact with my small-business friends because they’re the ones, you know, boots on the ground, what are you seeing, what are you experiencing, what are those things that need to change? And if there are things that need to change from a technology standpoint, okay, I have resources now, so let’s brainstorm and let’s think about how we put some tech behind some of these issues that you’re experiencing and work with banks to maybe implement some of those things. So, you know, it’s news publications, but then real-time, real people, feedback that I use as well.

[01:10:21] Josh DeTar: I feel like I almost should have expected that answer out of you, of just talking to people, I love that. But the other one that I also, I feel like I almost should have expected out of you, and I really like that you brought up, is the forums

[01:10:33] because one thing that’s really cool about a forum is that it’s not just singular transmission out messaging, it’s an opportunity for people to actually collaborate and discuss and have conversations, and especially when we’re talking about, you know, topics this big, this intense, this important, being able to actually have dialogue with people is a, is a really phenomenal tool for that. So, I love that you brought up forums, that’s a great, great recommendation.

[01:10:57] Shannan Herbert: Yeah, yeah. No, they’ve been very helpful, and I can see how people are thinking and what those conversations look like, and again, tying it back to solutions. So, here’s a problem that everyone is having, and no one has a solution for it, how do we figure out what that solution is?

[01:11:14] Josh DeTar: Yeah. Well, if people want to have that conversation with you or they want to have conversations with you about any of the topics we’ve discussed today, if they wanna learn more about you, some of the work that you’ve done, or if they wanna learn a little bit more about Stratyfy, how can they do all of those things?

[01:11:29] Shannan Herbert: I can be found on LinkedIn, Shannan Herbert is my LinkedIn name, and Stratyfy, we, we have a website, and we’re also on LinkedIn, so both are accessible.

[01:11:42] Josh DeTar: Awesome, and we’ll have links to those on the homepage of the website for the podcast as well. Okay, but again, Shannan, first off, just thank you for being you and just this energy and enthusiasm that you have for big, important conversations that just we as a globe need to be having. I’ve had an absolute blast, I’ve learned so much. Thank you so much for coming and being a guest on the podcast today.

[01:12:05] Shannan Herbert: Oh, I appreciate it. And thank you so much for having me.

[01:12:09] Josh DeTar: Thanks, Shannan. Have a great day.

[01:12:10] Shannan Herbert: All right, you, too.

More From Our Partners

Go to Top