By John San Filippo
There was no shortage of technology content at the 2023 CUNA Governmental Affairs Conference (GAC). Tech companies represented the majority of exhibitors on the trade show floor. There were also plenty of technology-focused sessions, many of which, one might argue, had little to do with governmental affairs.
Choosing which conference sessions to attend is always a challenge. One strategy is to target relevant panel discussions. These sessions feature multiple experts on a given topic, providing a broader perspective. Finopotamus sat in on three tech-oriented panel sessions.
The Power of Fintech in Unifying the Credit Union System
This session, sponsored by CUNA Mutual Group, consisted of the following panelists:
Brian Kaas, President and Managing Director at CMFG Ventures
Ronny Chapman, Senior Vice President, Fintech Solutions at CUNA Mutual Group
Chad Collier, Founder & CEO at CarSaver
Sarah Martin, CEO at Pulsate
Kaas, who moderated the session, opened by assessing the financial services landscape. “We see brutal competition coming from three different angles,” he told the audience. “You've got all the fintechs trying to take credit union members away. You have the big banks spending billions on technology. And then you have this new phenomenon around embedded finance, with non-financial players starting to offer financial services.” To “level the playing field,” he added that credit unions must embrace the idea of fintech partnerships.
Kaas posed this question to the panel: “With credit unions really focused on growing loans and especially in this environment, growing deposits, what are some of the ways that fintechs can support credit unions achieving these goals?”
According to Chapman, credit unions and fintechs each have a “superpower” that the other doesn’t. “I'll always say the best ‘credit union’ in the U.S. is Costco and Costco's member-based organization,” said Chapman. “Most members might say [Costco’s superpower] is the best price, but if you really dig under the covers of the Costco model, it's trust.” In contrast, he said that while consumers may not necessarily place great trust in Amazon, they do appreciate the convenience.
Chapman explained that the top priority for fintechs is consumer convenience. “What [credit unions] have to do in this fintech world is make convenience a priority.” He said that fintech partnerships can deliver greater member convenience and be deployed quickly. The end result is a trusted environment that delivers great convenience to members.
Collier expanded on the idea of member trust. “It's a digital-first economy today and especially with major transactions,” he noted. “The majority of consumers are starting online and with online, trust and transparency are critical. There's not a more trusted entity than credit unions.” The problem, he said, is that as consumers begin their online purchase journey, credit unions often aren’t represented.
“I think there's an opportunity for the credit union to be a trusted entity at the beginning of that transaction by being embedded in these digital tools and helping member all the way through the transaction,” he added.
Martin pointed that success of any fintech partnership depends, in large part, on making members aware of the new offering. “Your teams spend weeks, months, sometimes as much as a year implementing a new digital product and it's costly and you're losing out in other opportunities when you do that,” said Martin. “Making sure that when you launch a new product and making sure that your members know about that when they need it is so important. [Members} need to know that it's there so that they can utilize it. The more services they take from you, the more likely they will be to have you top of mind when they're making their next decision.”
Advancing Credit Unions on Their Digital Journey
This panel consisted of:
Barb Lowman, President at CUNA Strategic Services
Mark Sievewright, Founder at Sievewright & Associates (now part of SRM)
Angela Moran, Chief Information Officer at Orange County’s Credit Union
Carma Parrish, CEO at NorthPark Community Credit Union
Kent Lugrand, President/CEO at InTouch Credit Union
These panelists are among the 41 participants in the Credit Union System Digitization Working Group, a group organized by CUNA in 2021. “The idea,” explained Lowman, “was to pull a group of folks together from across the industry, from across the system and talk through, now that we're starting to come out of COVID, we've learned a lot about how credit unions need to be able to serve their members and what part of their digital journey a lot of credit unions are on. And then equally as important, how can credit unions advance along that digital journey?”
Lowman’s first question was for Sievewright. “Maybe just share a little bit with the group about why this work is so important, not just for credit unions in a certain asset segment, but for credit unions of all fields of membership, demographics, asset sizes. Why is this body of work so important to keep them relevant?”
“Here's my take on why this is so important for everyone,” responded Sievewright. “The disruption that we're going to see in the next five years will make the last 15 look slow. Let's just let that settle a minute. The disruption that we're going to see in the next five years will make the last 15 look slow. And at the center of that disruption is technology. And for credit unions to have a viable, relevant future, they are going to need great technology. And to get to great technology, you're going to need to have a digital transformation plan. I don't care how big or small you are, you're going to need it. And that great technology and digital transformation, if done well, can turn the caterpillar into a butterfly.”
“You have a progressive member set who embraces technology and you've met them where they want you to serve them, or you're a little further along in that journey probably than some of the rest of us,” said Lowman, turning to Lugrand. “But how do you see this work helping you lead InTouch Credit Union forward even beyond where you are today on your digital journey?”
Lugrand started by polling the audience. “How many individuals in this room have a smartphone? Raise your hand,” he said. “That's the difference,” seeing virtually all hands raised, “and because of that technology, because of that difference, because of the tremendous growth in payments and the ability to share data, to communicate and to move money around, that's the reason why credit unions have to become digitally savvy – to stay relevant because the country is going to move forward whether we stay relevant or not.”
Lowman then asked Parrish about NorthPark Community Credit Union’s decision to move to all-digital with no branch presence. “I'm the baby in the room at $43 million,” said Parrish. “What I've learned the most about small credit unions and the failure of small credit unions is that they tend to play defense. I played basketball through college. You don't win basketball through defense; you win by scoring.”
Parrish explained that “scoring” became her approach to running the credit union. “What I started to see was probably the same thing as everyone, no matter what your asset size, and that's the point that the people coming into your branch are doing transactions. We're going to go on offense and we're going to train our members to do their transactions virtually. Then we're going to go on offense and we're going to get out in the community and we're going to be transformational, not transactional.”
“Even large credit unions don't have unlimited resources and unlimited budgets to implement all of the technology strategies that they want to prioritize,” said Lowman as she turned to Moran. “How do you go about that? How do you determine what technology could drive the most value for your members? And how do you balance what you need to do to keep that technology up to date for the credit unit with those other efforts for your members?”
“We've been in this kind of pressure cooker to improve member experiences, decrease our costs, create efficiencies and be creative and deliver all these innovative solutions,” said Moran of the $2.5 billion credit union. “We’re focused on that speed of innovation and also have a delivery model that will allow us to be agile and execute quickly.”
Moran explained that the credit union’s top priority is always member experience. “We have an enterprise portfolio and project management office,” she said. “They keep us on track, but really our focus is on digital experiences. We utilize the Forrester Research customer experience – we call it member experience model – to score all of our initiatives. That is how we make a determination on what are those things we are going to choose next. We've really embraced this concept of design-centric thinking, really designing from the outside in.”
Technology Trends to Watch
The panelists on this session were:
Siva G. Narendra, CEO & Co-Founder at Tyfone, Inc.
Jennifer Werner, Chief Marketing Officer at CSI
Arun Ahuja, Vice President at Paymentus
Allen Jingst, Chief Revenue Officer at Coviance
The off-stage GAC moderator asked each panelist to describe what they see as the most impactful technology trends.
“I don't think our ecosystem can innovate like big tech,” said Narendra. “We are generally fast followers at best. That said, there are three things that you should pay attention to. One is FedNow, two is CFPB (Consumer Financial Protection Bureau) enforcement of section 1033 the Dodd-Frank Act, and three is open banking. Those three things are really actionable in the next year to three years, because if you don't do it, you'll be left behind or you'll be fined.”
“I think one of the big things I see is, technology cannot replace strategy,” asserted Jingst. “I think a lot of credit unions will jump from one technology solution to the other without really a strategy organization to deploy it. As more credit unions are embracing various technology partners, they need to ensure the right strategic outcome. It’s not losing sight of what you're actually trying to accomplish.”
“I would totally agree with that,” added Werner. “Making sure you understand what your risk assessment appetite is and making sure you have a good partner that can help you assess where you are today, what tools you have and what do you need to make sure you’re mitigating any risks that are out there, especially with public cloud and artificial intelligence (AI) that are creating more interconnecting points that can open you up to greater risk.”
“I would actually agree and disagree a little bit on this one,” said Ahuja. “I definitely agree that opening banking and faster payments are very important – things that you want to look at and keep an eye on and try to get on that train as soon as possible. But at the same time, look for partners that are nimble. Cause what you think today may not be what actually ends up coming tomorrow.”