Digital Bank Brings Special Treatment To Debt-Strapped Doctors

Physician, heal thyself — financially. Student debt in times of financial stress can be a crushing burden. That’s especially true for individuals who have chosen careers in the medical profession, where the average medical school debt can top more than $215,000.

It’s a different set of circumstances and a different debt structure than non-medical student loans. Knowing that and seeing an opportunity to give back to the heroes of the pandemic, Northeast-based KeyBank has taken action.

In an interview with PYMNTS, Jamie Warder, executive vice president and head of Digital Banking at KeyCorp, said that a new digital bank geared toward healthcare professionals can help them chart a new path toward financial health. Laurel Road, which operates as a KeyBank brand, last month announced the debut of the bank Laurel Road for Doctors, which targets physicians and dentists.

In a press release, the firm said that the digital bank can help these medical professionals tackle financial services tasks, such as paying down student debt and planning for their financial future.

Warder noted that in the months after KeyBank bought Laurel Road two years ago, the goal had been to leverage student loan refinancing tied to the healthcare and medical communities. (Laurel Road began originating student loans in 2013 and to date has helped professionals refinance more than $7 billion in federal and private school loans.)

“The tricky part was expanding what Laurel Road could do nationally for the medical community and figuring how we could leverage KeyBank’s infrastructure to do that so that we were not starting from scratch,” said Warder. “Laurel Road grew up a digitally native company … and we’ve been integrating some of those best practices right back into KeyBank.”

Those best practices have fostered a strategy-targeted scale, he said, where the world is becoming more digital by the second and where traditional financial institutions (FIs) have to expand outside of their current branch-based footprints.

Laurel Road for Doctors represents a timely offering because healthcare workers as a group were hardly immune from the financial impact of the pandemic, he said. Many suffered from the reality that most elective procedures generally stopped for several quarters. Many doctors and dentists are small business owners, and their practices shuttered for months before seeing a return of at least some patient traffic.

It might be no surprise, then, that financial wellness is top of mind. In a survey of medical professionals conducted by Laurel Road, as many as two-thirds of doctors plan to be more financially focused this year and beyond in an effort to improve their financial security, as measured against 2020. He said targeting the combined KeyBank/Laurel Road efforts to the medical community helps craft a message that can be beamed into elevators in medical buildings and in hospitals — and kickstarting a constant dialogue with the community illuminates what’s important, financially, to healthcare professionals.

“It’s understanding their psyche, it’s understanding how they view the world,” said Warder.

Medical professionals have needs that are fundamentally different than other white-collar professionals.

Warder said the biggest difference might be a debt profile and earnings profile that, “when you put those two together don’t look like anybody else. There’s very few individuals in the world that’ll have $200,000 in debt for their first four years of professional life and only $50,000 of earnings … but after four years jumps to $250,000 in earnings.”

Drilling down a bit, he said Laurel Road creates financial products that help doctors and dentists navigate debt, yes, but also build emergency savings.

“That might seem hard to do,” he said. “But the more you create an emergency savings, the more we’re going to decrease the rate on your student loan.”

He noted, too, that the Student Loan Cashback Credit Card offers users 2 percent cash back to pay down student loans with most loan servicers. Laurel Road’s Financial Insights tool offers personalized data and guidance that allows doctors to compare against peers in similar specialties to get a sense of benchmarks on salary and debt while they improve their financial literacy.

Part of that continuum of services is enabled by the fact that Laurel Road and KeyBank share technological infrastructure, which enables them to tailor their product development and marketing efforts.

“KeyBank has invested heavily in open banking over the last five to seven years,” Warder told PYMNTS. “And that open banking, hybrid cloud infrastructure has really allowed us to then customize on top of it, allowing us to do a lot more, faster.”