By John San Filippo
In what is a recurring feature, Finopotamus, in cooperation with NACUSO, profiles credit union service organizations (CUSOs) that offer innovative technology combined with the credit union ethos of people helping people. This is the second of four installments on the CUSO of the Year winners announced at the recent NACUSO Network conference. The four winners were:
LenderClose – Contemporary CUSO of the Year (recognizes CUSOs with a fintech business model, including non-credit union investors)
Prodigy – Traditional CUSO of the Year (formerly CUSO of the Year before other designations were added)
Zest AI – New CUSO of the Year
Member Driven Technology – Distinguished Service CUSO of the Year (recognizes long-term, consistent commitment to the credit union industry)
Asked to describe the LenderClose value proposition, CEO Omar Jordan told Finopotamus, “Think about the home equity lending process. There's the application. The application goes into the loan origination system (LOS) for decisioning. That begins the processing of the loan. The LenderClose tool integrates into the lending process to provide advanced automation.”
Jordan said that LenderClose can integrate with any LOS, but works best when the LOS has application programming interfaces (APIs) that his company can use to make the necessary connections. “There are algorithms and intelligence in there that use the credit union’s underwriting metrics to achieve this high level of automation,” said Jordan. “What we actually do is give loan officers and loan processors time back and allow them to be a lot more efficient so that they can originate a lot more loans.”
From Private Company to CUSO
Jordan launched LenderClose as a private company in 2015. Upon completing a proof of concept he began marketing the product. By 2017, the company had 27 clients and annual revenue of about $400,000. “That's when I knew, okay. I think I can raise some money here to help me elevate this thing,” said Jordan.
At the time, Jordan wasn’t thinking of converting to a CUSO, but he couldn’t ignore the fact that all 27 of those initial customers were credit unions. Around that time, he met Nick Evens who was then president of The Veridian Group (Veridian Credit Union’s CUSO) and is currently CEO of credit union investment CUSO Curql Collective. Evens introduced Jordan to NextLevel Ventures, a venture capital firm in Iowa that, among other things, is the driving force behind Curql. This all led to investment in LenderClose by the $1.5 billion Collins Community Credit Union of Cedar Rapids, Iowa, and the $96 million Serve Credit Union of Des Moines, Iowa.
“That happened in March of 2018,” noted Jordan. “That was our series A round of funding and that’s when we became a CUSO.” He added that LenderClose completed its Series B round in March of 2021, with additional investments by Collins Community and Serve Credit Union, as well as several other credit unions around the country.
“We're passionate about investing in the credit union movement and investing in technology for credit unions,” said Jordan. “We’re here to disrupt the disruptor,” he continued. “There are fintechs out there that are competing against credit unions because they think they can disrupt the status quo. Our mission, our objective is to make sure we bring technology solutions to allow credit unions to disrupt the disruptor.”
A New CUSO Model
As noted, LenderClose was named NACUSO’s Contemporary CUSO of the Year. This is the first year the Grand Rapids, Mich.-based organization has presented such an award. On LenderClose becoming the first-time recipient, Jordan said, “This year NACUSO stopped the bus and thought to themselves, okay, there's a different type of CUSO here that we're starting to see. There are people like Nymbus, Payrailz, LenderClose, Posh, that are doing truly disruptive things and bringing tremendous value to credit unions. They're raising capital in a unique way, too, unlike your traditional CUSO.”
According to Jordan and confirmed by NACUSO, at 508 attendees, this year’s NACUSO Network conference was the most well-attended ever and contemporary CUSOs had a lot to do with that. “I think the high attendance reflected the credit union movement towards innovation and entrepreneurship,” said Jordan. “For them to support entrepreneurs – not just LenderClose – just for them to be there, continuing to invest in fintech and people and innovation – that told us a lot.”
Jordan concluded with a strong message to credit union executives: “You're now at a decision point. You're going to either let the competing fintechs eat your lunch, or you're going to partner with fintechs and disrupt the disruptors. That's it. That's the only decision you have. So, what are you going to do about it? Unless you get behind fintechs that are non-competing, that are friendly, like LenderClose and all the others that want to help elevate your member experience and your processes, it's really going to be bad news.”