Episode Transcript
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SPEAKER_02 (00:00):
Welcome to the CU2.0
podcast.
SPEAKER_00 (00:05):
Hi, and welcome to
the CU 2.0 podcast with big new
ideas about credit unions andconversations about innovative
technology with credit union andfintech leaders.
This podcast is brought to youby Quillo, the real-time loan
syndication network for creditunions, and by your host,
longtime credit union andfinancial technology journalist
(00:27):
Robert McGarvey.
And now, the CU 2.0 podcast withRobert McGarvey.
SPEAKER_02 (00:35):
Exactly what is Room
39A?
It's one at NASA's Kennedy SpaceCenter.
You may have heard of that one,but today we're talking about
Room 39A at CFCU CommunityFinancial Credit Union in
Michigan.
Where past the U2.0 podcast getsTanley Stern service to CEO.
(00:56):
She's launched this Room 39A asa Q Zoe that will offer
subscriptions to its research.
As for what exactly it does, TFCused Room 39A describes itself
this way, a place forpossibility and the unexpected
collide.
We blend the precision ofresearch with human imagination
(01:17):
to unlock new ideas, products,strategies, and opportunities
for companies and brands.
Could this be exactly whatFreddians need today is the
battle with mammoth money centerbacks and fintechs with massive
war chests?
This may be the on the show asBlackwood's stiff to SVP lost
the service chief ideator, Room39A.
(01:40):
The episode explores the Room39A approach to research, how it
decides what topics to pursue,and why believes the credit
union industry very much needsthe kinds of research it is
doing.
This isn't a propeller headshow,don't think it is quite the
contrary.
We dive deeply into gambling.
Sports betting.
And also into questions aboutcredit union sports sponsorship
(02:03):
deals.
It's cool stuff, it's relevantstuff.
It's stuff that can make adifference for credit unions.
Listen up.
So let's start by what is Room39A?
Let's let's define it.
SPEAKER_01 (02:18):
Yeah, yeah.
Room 39A is a QSO that wefounded on a community financial
credit union and provideresearch and insights to the
credit union industry.
And um, our goal is to not justdo research, but then spin up
pilots where credit unions whosubscribe to room 39A can raise
their hand and get involved andlaunch things at their credit
(02:41):
union.
SPEAKER_02 (02:42):
So there would be
two groups.
There would be investor ownercredit unions of Room 39A, and
then subscribers who areessentially customers.
SPEAKER_01 (02:54):
Yeah, as we're
currently structured, it's
wholly owned by CommunityFinancial Credit Union.
Um, but yeah, we invitesubscribers from uh any credit
union to come and help us steerthe research and then raise
their hand for those pilots.
SPEAKER_02 (03:10):
Now, if a credit
union vigorously waves his hand
and said we want to be aninvestor, what would be the
response?
SPEAKER_01 (03:17):
I think you know
we'd be happy to evaluate that.
Uh we just launched this year,so um we're still kind of early
in the process.
But yeah, I think we would, youknow, be interested in
negotiating that.
SPEAKER_02 (03:30):
I imagine task one
for you is to flesh out what
you're doing so it becomesclearer if I'm going to invest,
what am I investing in?
SPEAKER_01 (03:40):
Yeah, yeah.
We want to build um first stepbefore even subscribers is
building that body of researchin those projects.
So that's what we've beenworking on this year, is is just
developing the topics and the uhuh areas of exploration.
And we've got about I think 12white papers in our library at
this point.
So now we're kind of shiftingfrom building to getting
(04:03):
subscribers, and then I thinkinvestment is that final step.
SPEAKER_02 (04:06):
Do you have a white
paper on mergers?
SPEAKER_01 (04:10):
We're working on one
right now.
SPEAKER_02 (04:12):
Oh, all right, all
right.
Yep.
I was doing some research amonth or two ago for a client on
credit union mergers, and Icouldn't find a good current
paper on it.
I found some papers written byan academic, I think at Texas
AM, that were pretty good.
I think they were throughFilene.
SPEAKER_03 (04:28):
Okay.
SPEAKER_02 (04:29):
Uh, but they were
like 15 years old or so, they
were old.
And the landscape has changedwhen you have first tech and VCU
merging.
You go, oh wow, it's a whole newbug in here.
And I couldn't find anythingthat addressed that, nor could I
find any paper that addressedthe the key question of do you
(04:51):
actually increase your businessif you merge?
I you you might think theobvious answer is yes, but uh
from what I could find, it'sthat's not always the case.
So and what are the criteriathere?
So that that's an obviousresearch need.
What what other kind of researchdo you see room 3098 doing?
SPEAKER_01 (05:13):
Yeah, we're looking,
um, we're writing two papers
right now.
Um, one is on that merger andacquisition and and the impact
that has both on theorganization and the employees
itself, um, not to mention thecommunities they serve.
The other topic we're lookingon, we're looking at right now,
we just published this lastweek, was uh grief and money.
(05:36):
So exploring uh opportunitiesfor credit unions to stand with
members when they have thepassing of a loved one.
You know, that ranges from uh,you know, compassion and
providing solutions of need inthat point, all the way up to
things like inheritancemanagement.
SPEAKER_02 (05:54):
Um, did you cover
that at many institutions it
takes months to actually pick upthe money that the will says is
yours?
SPEAKER_01 (06:03):
Not not just that,
but yeah, we even did some
member interviews for that umresearch project and talked to
some um members who wererecalling, you know, periods of
grieving, you know, heard thingslike it took me a month to even
get myself to a place where Icould walk into the credit union
and start to do that work andthen to find out that it's like
(06:27):
a 20-step checklist.
And every institution has theirdifferent list, you know, and
then yeah, you're working withlawyers and wills, and it's it's
very complex, and you're tryingto navigate this in a moment of
your life where you're againfeeling grief and maybe not, you
know, at your best.
And um, so yeah, that's that'sjust an example of uh one of the
(06:50):
topics, but I mean, wide rangeof of topics um and that we've
published today or that we havein flight.
I'm happy to either give moreexamples or um yeah, just let me
know if it would be helpful torun through.
Yeah, yeah, yeah.
Give one more example.
One more example.
Let me think of my favorite one.
(07:10):
Um we did we did one this yearon um decoupling, and it was
around um members who are goingthrough divorce and you know,
again, lack of uh compassionsolutions, um, process uh for
members as they're going throughthat life event.
(07:30):
We did two focus groups um withuh members and non-members that
were, you know, had justrecently gone through divorce or
were in the process of that.
So took all the gaps andopportunities that came out of
that focus group and publishedsome, published a white paper
with, you know, kind ofidentifying where financial
(07:51):
institutions fall short, um, uhpotential for solutions in that
area and opportunities forpartnership.
SPEAKER_02 (08:00):
Well, I think
memory's right, divorce and
serious illness are the twopotentially most financially
devastating events in a person'slife.
SPEAKER_01 (08:11):
I think uh I think
that sounds uh correct.
And um, yeah, I mean, just thefocus group, just hearing the
amount of time and money thatwas spent, you know, in that
process.
You had people that maybe had alife plan that got completely
up-ended through this this eventin their life, right?
And trying to, again, have morethan a checklist, or I guess you
(08:34):
just have to start over type uhsolution uh for memories is is
what we explored in that paper.
SPEAKER_02 (08:41):
So what what gap are
you you trying to fill?
You know, and room 39a?
Why does room 39a exist?
Presumably there's a gap in thelandscape.
What is it?
SPEAKER_01 (08:54):
Yeah, I think there
is a gap in the landscape around
research.
You mentioned like yourdifficulty of finding, you know,
a white paper or at least onethat was published within the
last decade.
And so what we aim to do at Room39A is um have our subscribers,
you know, steer us and say,these are the topics we want to
learn more about.
(09:14):
And we have the infrastructurebuilt to quickly, you know, set
up those member interviews,those focus groups, and deliver
insights.
We do that in 90-day cycles.
So that divorce or decouplingwhite paper that I mentioned,
from the time we got the idea tothe time we delivered the white
paper and the solutions, and wedid a webinar, was 90 days.
(09:38):
Um, so that's what we aim to dois just rapidly identify these
trends or these opportunitiesfor credit unions and deliver uh
white papers.
And we try to do it in a fashionthat's easily digestible.
These white papers tend to befive to 10 pages long.
Um, so you know it's it may notlook like some of the academic
(09:59):
research that's often cited andout there.
It's really meant for any leaderin the organization to be able
to take and um you know quicklyput an eye, you know, put
something into action or make achange at their organization to
address those needs.
Or, like I said, raise theirhands for the pilot opportunity
that best follows.
SPEAKER_02 (10:20):
Did that white paper
explore the um role of the board
in a merger?
SPEAKER_01 (10:27):
That so that white
paper is still being um written
on mergers.
So we were just um my callbefore this was actually we're
still doing interviews, but um,yeah, we we do that a hint, a
hint, and you can take it orleave it.
SPEAKER_02 (10:45):
Yeah, but my
research tells me that the wild
card in a lot of mergers is theboard, particularly in the
acquired institution, not theacquiring institution, because
they ain't gonna have boardseats.
Some of them will do anythingthey can to block that merger,
right?
Yeah, yeah, yeah.
SPEAKER_01 (11:03):
I've uh I've been
through a a merger, we would
call it in the industry, amerger of equals.
SPEAKER_02 (11:10):
Everybody says that.
I'm I'm I'm an old guy.
I've heard this, I've heard thisfor 40 years.
It's never true.
It is never true and never willbe true.
SPEAKER_01 (11:18):
Yeah, and uh yeah,
just you finished my story.
Um, you know, the the board, thethat the um institution now, you
know, I don't think any of thoseboard members from the slightly
smaller credit union, you know,remain through the merger.
And so yeah, even even thesethings that are framed as like A
(11:40):
plus B equals C tend to often umnot take that shape.
And that's what drives the fearand I think the resistance, you
know, sometimes even when amerger might might be the best
step for those twoorganizations.
SPEAKER_02 (11:52):
Yeah, I'm not
actually throwing rocks at the
board members.
It's just my research telling methat wow, sometimes these people
do everything to undermine it.
And is that is that executingthe fiduciary responsibility of
a board member?
I'd argue it doesn't it is not,right?
But that doesn't mean I'm sayinglet's get get the handcuffs and
(12:13):
throw them to jail.
SPEAKER_01 (12:14):
No, no, I didn't
hear I didn't hear that from
you.
Yeah.
SPEAKER_02 (12:18):
So we can talk about
this with other credit unions.
What's the reaction?
This is something we need.
Tell us more.
What you know, what's whatwhat's happening?
SPEAKER_01 (12:30):
Yeah, right now um
it's been very exciting being at
events like C2.0.
Um, a lot of feedback we gotcoming out of that event was
like, yeah, this is just what weneed.
You know, um, we're looking forinsights that are digestible and
actionable, I think are the twowords that I I hear most often.
So um we're excited about theearly market feedback to room
(12:54):
39A.
And um I think as we continue tobuild out not just our research
library, but some of those pilotopportunities, um, yeah, we're
we're uh bullish on theopportunity to grow it in this
industry.
SPEAKER_02 (13:07):
I'm thinking, and I
might be wrong.
If you think about it, there arequite a few consulting firms
that spend a lot of time lookingat um basically big banks.
I'm not aware of any consultingfirm that spends a lot of time
studying credit unions.
I guess Callahan, but they'rethey're they're more
data-driven, it's more narrowfocus.
SPEAKER_01 (13:30):
Yeah, yeah, and uh
Callahan uh our first
subscribers, so um it's it'skind of interesting to um think
about that.
But one of the things that theirleader, John Jeffries and I
talked about was you know theability to pair qualitative and
quantitative data.
I think Callahan does a greatjob of you know visualizing the
(13:51):
call report and helping creditunions better understand, you
know, um how to leverage thatdata and make peer comparisons.
And um I think John's done agreat job of elevating that
organization to do more umon-site consultation like you
referenced.
But typically we see in ourindustry a lot less of that than
(14:13):
we do um, you know, in some ofour banking counterparts where
you know they're bringing inDeloitte or some of these kind
of household names to providethat level of strategy.
So what we aim to do is again,just um that that type of
research takes a ton of work andinfrastructure.
We've got that built.
And rather than have 4,500credit unions all try to do
(14:36):
that, you know, can we cometogether collaboratively and um
do some of that researchtogether?
SPEAKER_02 (14:43):
Bring 4,500 credit
unions together, and I don't
think too much is gonna result,to be honest.
It's uh argument, yes.
You need someone to lead the wayhere.
SPEAKER_01 (14:57):
Fair point.
You know, I think um uh not all4,500 will will be in the place
to um receive value from 39A,but I'd like to think whether
it's you know BECU or FatherKramer credit union with three
employees, you know, that um,you know, those that would be
interested in identifying thesetopics and exploring them
(15:20):
alongside of us, you know, we'dwe'd love to return value to
them.
SPEAKER_02 (15:24):
And what kind of
payment structure is there for
credit unions that want toactually research?
SPEAKER_01 (15:31):
We offer monthly
subscription and we uh we have a
tiered by assets.
Um so for our smallest creditunions, those that are under$399
million in assets, um, it's$399a month.
Um, all the way up to, you know,our largest credit unions would
pay$1,500 a month.
(15:52):
Um but yeah, we don't lockpeople into multi-year um
agreements, and and we reallytry to um position this as
something like, you know, giveus a shot and let us be your
insights department, let us helpyou drive your strategic
planning, your board offsiteswith content.
SPEAKER_02 (16:13):
And that fee is gets
what?
Access to all of the publishedresearch?
SPEAKER_01 (16:18):
Yep, all my research
are recorded focus groups.
Um, and then they can um raisetheir hand and take part in the
pilots that we launch.
SPEAKER_02 (16:26):
And I suppose you
would welcome suggestions from
them about topics, notnecessarily that you would do
them, but you would beinterested in hearing the
suggestion.
SPEAKER_01 (16:35):
Yeah, our our plan
is to you know identify topics
of exploration and allow thecommunity to to steer those
through voting.
So, you know, here's here's sixtopics uh for Q1 of 2026 and let
us know um where you'd like usto focus our research efforts.
And um, you know, that way we'vegot some ability to make sure
(16:57):
it's important for us that we'renot exploring things that are
easy to find on Google.
We really want to push theboundaries of ways that credit
unions are helping their membersand and push credit unions to
think outside the box a littlebit.
SPEAKER_02 (17:11):
I would I would
assume that you're also gonna
focus on topics that enoughcredit unions are interested in.
You know, for instance, areenough credit unions interested
in uh cannabis banking?
Oh, if I were making decisionsright now, I'd say no.
Uh, there's a handful that are,but they're very interested in
it.
But 4,000 credit unions arerunning in the other direction
(17:33):
as fast as they can.
Uh so and and the same thingwith crypto, which some people
say we should be a heck of a lotmore interested than stablecoin.
I maybe we should, but it'sgonna be hard to convince credit
unions to be interested.
SPEAKER_01 (17:52):
Yeah, I think it's a
fair point.
Um, and what we do and weidentify topics, you know, we
really lean on, you know, ourteam, uh, having Tansley
Stearns, our CEO, attached tothe um project, having George
Hoffheimer, you know, previouslya Philine Research.
I feel like we have a good pulseon you know what those issues
(18:13):
are for credit unions.
Um but yeah, the two youreferenced, like both both super
interesting research projects,but probably um too niche for us
right now to focus on.
So we haven't, you know, um doneresearch to date on crypto or
cannabis banking, those twoexamples you gave us.
Um we're really, you know, rightnow thinking about topics around
(18:38):
standing with members in darkmoments in life, um, and also
trying to think about creditunion interventions to help with
cash flow, just given some ofthe economic um uh constraints
or um factors that we we see inthe data right now.
Elaborate on that.
Um, yeah, uh on the founderpart.
SPEAKER_02 (18:59):
Um, yeah, on the
cash flow issue.
SPEAKER_01 (19:03):
Gotcha.
Yeah.
So when we're thinking aboutdifferent research topics, you
know, one of the questions weask ourselves is is what's
keeping credit union members atup at night or what's keeping
credit union executives up atnight?
And I think a lot of creditunions right now, you know,
we've gone through a few yearsof balance sheet um constraints
(19:24):
and trying to um help ourmembers through times of
inflation.
And so as we think about, youknow, research topics, how can
we help credit unions make adifference um in areas of life
that really matter to theirmembers?
Um again, cannabis banking, it'ssuper interesting research, but
I don't think that's keeping theaverage American up at night.
(19:48):
It's definitely keeping someAmericans up at night,
particularly those who work inthat industry.
But I think there's some moremacro type issues that you know
are worth uh exploring.
Uh the example I gave aboutdivorce, you know, there's
millions of Americans that aregoing through that any given
day.
And so if we can provide asolution and some research there
(20:09):
that can help the credit unionmovement better stand with
members in that dark moment inlife, I think that's more
impactful.
And that's why we've chosen tosteer the research in that
direction.
SPEAKER_02 (20:18):
Now, why isn't this
work being done or is it being
done by America's credit unionon one hand, uh NCUA on another
hand, uh Phileen for a thirdexample.
SPEAKER_01 (20:37):
Yeah, I I think some
of this work is being done, and
um, I just think more of itneeds to be done, you know.
So um on any of those specifictopics, I'm I I'd have to do
some research myself to see whathas been um published to date.
But I think oftentimes, youknow, credit unions are are
credit union rate associationsare um narrowly focused on um
(21:02):
some of the issues on CapitolHill or um you know credit
unions themselves maybe focustheir research into balance
sheet initiatives and and theirown product promotions.
There's so much um on the plateof any credit union executive
team.
And so we're blessed to have aninsights department here at
(21:23):
CFCU.
And, you know, it's my honor tolead that, one of the teams I
lead here.
And not every credit union isfortunate enough to have um that
type of in-house research goingon.
And so that's our goal of Room39A is to provide that um for
any credit union that's willingto raise their hand and join us
(21:43):
um because we we think it'stable stakes.
And if we're gonna continue toevolve and meet the needs of the
consumer, we need to be doingthat type of first-person
research uh with those consumersand developing solutions on the
backside of it.
SPEAKER_02 (21:57):
What's the uh FTE
count in the insight group at
CFCU?
SPEAKER_01 (22:03):
I think that team
has five employees today, and
that includes both thequalitative and quantitative
stuff.
That being said, there's otherindividuals that don't work
directly in insights that umprovide value to room 39A,
whether it's you know, the eventplanning and logistics, whether
it's the marketing of it, right?
(22:24):
So there's there's additionalresources, but yeah, we're um
we're we're hoping to continueto grow that that group to be
more robust.
And I do think that's unique.
You know, we're about$1.5billion in assets, 18th largest
credit union in Michigan.
So we're not the largest creditunion by any stretch of the
(22:45):
imagination.
So hopefully that can help framethe importance of insights.
We we think at CFCU, listeningis our superpower, and it's what
it's why we can be first tomarket in so many ways.
We believe it's what gives usthe edge um when it comes to
spinning up new solutions.
And I shared some of those, Ithink, at the event you
(23:06):
attended, where we've been, youknow, first to market and able
to diagnose these these issuesand get a solution out there
quickly.
For instance, you gave theexample at the CE 2.0 event
around going through ourtransaction data and seeing the
outflows that were going togambling and sports.
SPEAKER_02 (23:25):
Oh, yeah.
No, that was that was that wasthat blew my mind.
SPEAKER_01 (23:29):
Yeah, yeah.
SPEAKER_02 (23:30):
And all I can say is
that the the your your your
members must be terrible,terrible, terrible gamblers
because they seem to lose morethan they win.
Yeah, yeah.
I mean, you're you're supposedto the the book lives on the
middle.
It's you're you're supposed tobalance dollars on saying win,
dollars saying lose.
(23:51):
And in there, if you set theright line, there's gonna be
money for you.
Uh whereas you seem to have alot of people just playing lose.
SPEAKER_01 (24:00):
Yeah, yeah.
And um maybe maybe that's theperformance of some of the local
teams.
But I I think the bigger thingthat plays into that, Robert,
and I've done a a bunch ofresearch on this, is that a lot
of the sports books don'tincentivize the type of bet
you're talking about, which is astraight bet.
And it's so, you know, there'sminus 110 odds for for this
(24:23):
team.
SPEAKER_02 (24:24):
And you know, the
New York Times or Washington
Post yesterday or today has astory about how so much of this
stuff they they you win there,it's an easy, easy bet.
You win.
Then they say, okay, why don'tyou parlay this into something
because it's an impossible bet.
It's absolutely impossible towin on the parlay.
You have to pick like fivethings right.
SPEAKER_01 (24:44):
It's it's really
interesting social science.
So what they're playing into isthe same thing that drives
people to buy a lotto ticket.
And it's yeah, winning winningfive bucks because you pick the
Mets versus the Yankees is onlyso exciting.
And through boost and promotionsand um other types of campaigns,
(25:04):
they really incentivize theirplayers to, yeah, string
together three legs of a samegame parlay, or string together
five legs of and now when youlook at the statistics of that,
you're yes, of course, the potand the the chance to win bigger
is there, but the likelihood ofall those events and outcomes
(25:24):
happening is dramatically less.
SPEAKER_02 (25:26):
And so that's why
you'll buy lottery tickets,
exactly.
Yep, and so someone wins thatlottery sometimes.
Someone does, but those storiescome on astronomical.
SPEAKER_01 (25:37):
Yeah, and if you if
you were to go on the fan duel
or DraftKings social media, youknow, they share the the big
stories of the big winners.
Look at this guy, he pickedthese 10 games all on a Sunday
from his couch, and now he's gota hundred thousand dollars.
But we're not here.
(25:58):
Yeah, but obviously theoverwhelming majority of folks.
They're still in the Nissan,though.
SPEAKER_02 (26:03):
Maybe that's been
repossessed too.
SPEAKER_01 (26:06):
Maybe, yeah.
So that's that's just oneexample again of of where I'm
gonna do it.
SPEAKER_02 (26:10):
What was the point
of that research?
What what were you aiming to todo?
SPEAKER_01 (26:13):
Oh, it yeah, and
that's the beauty of research
too, is sometimes you can getstarted on one thing and end up
in a completely different space.
I was actually trying to look tosee if there was a rewards
partner that we could identify.
I thought if we could like finda local retailer that our
members seem to spend theirdebit card at that we could
offer some sort of promotion orincentive, cash back, you know,
(26:35):
with with that retailer.
But again, I was just shocked tosee the the um the sportsbooks
and the gambling website so highup the list on those debit and
credit spends.
And so that's that's just agreat example of you're looking
for one thing and the researchtakes you in a whole completely
different uh angle.
So yeah, we had no um plans tolaunch a gambling alternative
(27:01):
product or some sort of um, youknow, promotion tied to a sports
team.
It just kind of fell in my lapas I was I was researching
something else.
But again, having an insightsand innovation department, you
know, we were able to kind ofquickly um spin up an idea,
forge a partnership, get all theapprovals that were needed, and
(27:22):
launch something like trulyunique in the market.
SPEAKER_02 (27:25):
What was that?
SPEAKER_01 (27:26):
That was called our
One Pride CD.
And so that was uh theopportunity for members to back
the Lions in a no-risk way.
And so the rate started at 2%.
Uh folks could invest um as muchor as little as they'd want.
I think we had a$100 minimum onthe account if memory serves,
and we had someone invest acouple hundred thousand dollars
(27:48):
in it.
Um, and every time the Lionsscored the first touchdown of
the game, um, that product'srate would go up 25 basis
points.
And so I believe both seasons weended at 5.25%.
Um, but obviously a lot of funalong the way.
And, you know, got to celebratewith our members, our local team
here, the Detroit Lions, whenthey would score that first
(28:08):
touchdown, they knew their ratewas going up.
And the beauty of the productwas again, even if the Lions
never scored all season, um,they were still gonna make that
2%.
And so, unlike the sports booksthat kind of incentivize
behaviors that are detrimentalto your finances, we knew that
everyone that placed a bet withus was going to come out a
winner.
SPEAKER_02 (28:30):
Yeah, I'm glad you
elaborated on that.
Because as I said, I just readthis article about the parlay
bets that are unwinnable as faras I can tell.
I mean, uh technically you thereis a way to win, but the odds
are stacked against you.
Yeah, I'm sure that it doesn'texplain.
So you your betters are notnecessarily worse and stupider
than other betters.
They're just betting on thingsthat can't be won.
SPEAKER_01 (28:53):
So there's there's a
lot of behavioral science that
go into why the sports books dowhat they do.
And um, I can tell you, evenfrom when we started on this
research, the incentives and thepromotions that are tied to
these parlays and same-gameparlays with again a bunch of
different outcomes that need togo right.
(29:13):
It's it's night and day fromwhere it was even two, three
years ago.
It's it's honestly all you seewhen you open one of these apps
now.
And it's because they they knowthat's the best business for
them.
There's only so much money to bemade.
SPEAKER_02 (29:27):
I listen to that.
I listened to some college uhfootball games on the radio, and
I hear these Ask for sportsbooks that basically says, hey,
you know, come on down to blahblah blah.
You can have a hundred dollarsfree to gamble here.
And I'm I'm thinking now, okay,there has to be a real upside
(29:48):
here for them.
They figure I'm gonna be such afool that I'll just wind up
spending a thousand dollarslosing most of it.
I mean, it you're not gonna giveme a hundred unless you're gonna
make some money on the back.
SPEAKER_01 (30:01):
Yeah, and those
types of behaviors are like
really where I want credit unitsto be thinking more about like
what excites your membershiptoday and you know what what
brings them joy, what gets themum checking those apps night and
day, and you know, try to try toredevelop your deposit product
(30:22):
line to match that.
And I think I gave this exampleat the event you and I were both
at, but doesn't that's notexclusive to sports.
You know, you can you couldthink about um things tied to
the weather or just you know theflip of a coin.
Um that type of of chance andexcitement is engaging and more
engaging, I think, than some ofthe legacy products and services
(30:45):
that banks and credit unionshave offered that that feel
pretty stale to the to a largesegment of consumers.
So um I'm not suggesting that wehave our members put all their
money into those types ofaccounts, but when you have
those opportunities,specifically with like those
local ties or partnerships,really think deeply about like
(31:07):
what you can do to make thatmore than uh just a one-time
transaction where they open upthe account and never hear from
you again.
Like, what can you do to keepthe member uh excited and
checking back constantly andengaged throughout your entire
relationship with them?
SPEAKER_02 (31:24):
Well, you're
definitely onto something where
there is all kinds of meaning inthe data if you look in the
right places for the rightthings.
And I remember this was someyears ago.
I was having a conversation witha guy from a very big bank
credit card issuer, and he toldme that they were exploring in
(31:47):
data to see if there werepredictive factors that could
tell them this couple and coupleis heading towards a divorce.
And I said, Why?
And he said, Well, divorce ishighly correlated with credit
card default.
So maybe we would reduce the thebalance available to them.
Maybe and he said this was allit wasn't fully baked, but they
(32:10):
were collecting the data to seeuh if there were so are you
sending a lot of flowers to anaddress that's not your home
address and not where your wifeworks?
Okay, that might be a clue.
Uh, you're spending a lot ofmoney in motel rooms in the same
city where you live.
Now that might be a clue.
That's the kind of stuff theywere looking for.
And I don't know where it cameout.
(32:30):
He did say a concern they hadwas that their credit card
holders would go ballistic atthis perceived invasion into
privacy.
unknown (32:39):
Yeah.
SPEAKER_02 (32:40):
Whether you were
spending nights in motels
locally or not, you would justsay you shouldn't be doing that.
This is like Orwell, it's 1984.
Yeah.
SPEAKER_01 (32:50):
Yeah, I I understand
that concern.
And you know, I think there's amiddle ground.
But what I do know to be true iscredit unions are not leveraging
the data they have andspecifically the transaction
data they have.
I think it's a really um tellingum data point that we all need
to be considering in productdevelopment and campaign
(33:11):
development.
And yeah, you need to make sureyou're good stewards of that.
And, you know, I like to saythat let the data inform your
hypotheses or your experimentsversus reaching out to member A
and saying, hey, I saw these sixtransactions and I'm making this
assumption about your life.
You know, maybe it can help youwith targeting, maybe it can
(33:32):
make you feel more confidentabout bringing a solution to
market like ours, you know,something that's never been
tried before.
I think that's that's the waycredit unions can better use
that data and steer clear ofsome of those 1984 type
concerns.
You know, we didn't um we didn'tsingle anyone out and say, hey,
we know you're sports gambling,so try this thing.
(33:54):
But we did target that messageto people that we knew had those
transactions because we knewthey were the types of members
that would be excited by chanceand excited by you know a
partnership with the localsports team and uh you know,
maybe eager to try this newthing out with us.
SPEAKER_02 (34:11):
What's the um
biggest credit union that you're
participating with or toparticipating in room 39A?
SPEAKER_01 (34:19):
Our our the biggest
uh subscriber we have right now
is Galleon and Associate.
So yeah, we're we're stilllooking for uh new credit unions
to join Ring 39A and uh reallyhitting uh this budget season
hard to start to build up thatsubscriber list.
SPEAKER_02 (34:36):
Well, for a big
credit union, the the amount
you're talking about is not abig deal.
SPEAKER_01 (34:43):
Yeah, I I think um
for us right now it's all about
brand recognition, just gettingour name out there, making sure
people know who we are, uhdifferentiating ourselves from
some of the other um researchCUSOs or entities that exist in
the market, trying to evenourselves try to think through
our evolution of you know wherewe can be most useful to the
(35:04):
industry.
So I I do agree.
Like I think our pricing is isfair.
And uh we were just talkingabout betting.
I think we're asking creditunions to place a small bet on
us and again, not locking theminto any sort of five-year deals
to do so.
Um, and so I I feel confidentthat we'll um pick up market
share and uh really start ummaking a big impact here in the
(35:28):
industry yet this year.
SPEAKER_02 (35:30):
Well, this is
probably budget season and many
credit units, right?
SPEAKER_01 (35:35):
I know it's it's in
mind.
That's what I was doing uhearlier this morning.
So yeah, I know um this is uhprime time for us, and that's
why you and I cross paths.
We're definitely hitting theevent circuit hard right now and
uh just um introducing ourselvesto the industry because you're
right.
This is the this is the time toget into that 2026 budget.
SPEAKER_02 (35:56):
So when you go to
other what other kinds of events
are you going to?
SPEAKER_01 (36:00):
Yeah, we've got a
few coming up.
We're gonna be um with a groupcalled BD Now uh in Portland,
May, uh October 28th to the30th.
Um, and this is an event put onby Julie Ferguson.
And we're gonna be talking aboutum forging partnerships.
So getting out of the typicalsetting up a table and handing
(36:20):
out tchotch keys, but really howdo you drive um member
activation through partnerships?
So that same example I was justtalking about earlier is a is a
great example of a partnershipwe forged with uh our local
Detroit Lions, and we'll betalking about that there.
And then we've got Venture Techcoming up uh the first week of
(36:40):
November, I believe November 4thto the 6th, we'll be down in
Frisco, Texas.
Um, a lot of the circle creditunions attend that event, and
we'll be looking to um share ourstory at that event and
hopefully um uh have a few newcredit union subscribers coming
out of our time in Texas.
SPEAKER_02 (37:00):
So if I'm a credit
union who's a subscriber and I
say your sports betting thingintrigues me, would you share
the how-to of doing the datasearch?
SPEAKER_01 (37:14):
Definitely, yeah.
I I've um been talking aboutthat product on stages for uh
probably a year and a half now,and I really invite the industry
to um try things like that.
At Room 39A, we're all abouthelping credit unions evolve and
elevate their game.
And so, yeah, there's no umconcern from me in terms of um
(37:38):
sharing the the T's and C's,those are out and available on
our website, or even goingthrough my process of um, you
know, how I uncovered that.
I mean, I'll just share it withyou here today.
You know, I just asked for alist of our top 20 or our top
100 um retailers by spend fordebit and credit cards.
(37:59):
And I think if you're not doingthat at a credit union today,
like that's a great thing to do,whether it's relative to this
project that we were talkingabout or just better
understanding your membership.
That's a really key data pointand something I think most
credit unions could prettyeasily get to.
But yeah, I think those areinteresting moments specifically
for you know, credit unions thatoperate within a single
(38:21):
community or a single state, youknow, like how can you um
provide rewards that arerelevant to your members?
SPEAKER_02 (38:28):
You know, um it's so
hard to and this is where
research comes in.
I I did a podcast a month or twoago with a company called Prize
Out that has a cash cash backfeature.
And I asked them to get put acustomer on the show, you know,
a user of the card.
And they put a woman, singlemom, factory worker in, I
(38:51):
believe, Indiana, and uh uh andshe was talking about the joys
of like having an extra 25 bucksto spend uh at Walmart.
And many people might say, whocares about that?
This to her was massivelyimportant.
It was mass.
This is the difference betweenbuying herself a little treat
(39:13):
and just spending all the moneyon her kids, which she was
mainly doing.
Yeah, it was like and you hearthat and you almost want to cry.
You say, This is I wouldn't havethought wouldn't have thought of
that a million years.
But yeah, and that's whereresearch and focus groups come
into my mind.
You hear opinions that aren't inyour own social circle, aren't
in your own mind.
SPEAKER_01 (39:34):
Yeah, I I think
that's a hugely important point.
And um, you know, I think fortoo long um the banking industry
has been shaped by theexecutives, right?
And like their needs and wants.
And I think there can be a realdisconnect with uh the consumer.
And that's why that type offirst-person research is so
(39:54):
important to what we do.
Um, yeah, uh at CFCU, forinstance, we we focus on moms,
teachers, and students.
That's our um target market.
And I was a student half a lifeago.
I've not yet been a mom or ateacher, you know, and so the
idea that I'm gonna design aproduct that's gonna meet their
(40:15):
needs is pretty far-fetched.
But that's why we regularly, youknow, get focus groups of moms
together and we put productconcepts or potential partner
ideas in front of them to getthat feedback.
Would this be useful?
Because again, just to yourpoint, the things that you and I
might find beneficial orvaluable um don't always match
(40:37):
what the consumer is lookingfor.
And so we really try to helpcredit unions have a framework
of like how to facilitatesessions like that.
You know, we create kind offocus group in a box or kits and
things that they can go and talkto their members with.
Um, or like I said, if if theydon't even have the capacity to
do that, we we record oursessions and they're welcome to
(40:59):
watch those and glean insightsfrom them or take the insights
that we um elevate out of them.
SPEAKER_02 (41:04):
How hard is it for
you to do a focus group that
produces relevant information?
SPEAKER_01 (41:10):
Um, I would say it
was hard in the beginning.
Um, but like anything, you justget better, you hone your craft.
One thing we've been blessedwith is the ability to bring in
outside experts, specificallyearly on, to facilitate that.
Um, I've actually participatedin focus groups.
I've been on the other side ofthe table, set of research
facilities and observed the waythat they were facilitated.
(41:33):
And uh again, having theopportunity to work alongside
some of those experts.
Um, what was once a challenge isnow kind of just second nature.
And uh yeah, I always feelexcited in the days leading up
to a focus group because I knownot only are we going to get the
three questions answered thatare really keeping us up at
night, but we're also gonnauncover three things that we
(41:55):
never would have thought of.
And sometimes the focus groupabout decoupling and divorce
will actually yield an ideaabout cash flow or better
financial education in theschools or you know, things that
weren't even on topic.
Because the beauty of itcompared to a survey is I can
ask those three, four follow-upquestions that are gonna really
(42:16):
get us to an opportunity.
SPEAKER_02 (42:18):
Yeah, I've I've
watched a few focus groups that
I still remember one I watched.
This was a video of a meeting.
Uh watch this at the CaliforniaNevada League meeting, and uh
guy was asking, it was justyoung people, early 20s.
So you're interested in joininga credit union?
Nah, can't I don't belong to aunion?
(42:39):
Nah, I don't like credit.
And it was just down the line,it was like so negative.
I said, I said, man, you guysgot a marketing problem here.
You gotta recognize that thismarketing problem is immense.
SPEAKER_01 (42:51):
Yeah, that's that's
a real problem in our industry.
And I know folks have even toyedaround with, you know, is the
name credit union more harmfulthan beneficial.
SPEAKER_02 (43:01):
That's why a lot of
credit unions are taking the
name credit union out of theirname.
SPEAKER_01 (43:05):
Yeah.
You know, the if you really wantto get brutally honest, answers
in a focus group, which is whatI'm always looking for.
I don't need, you know, peopleto pat me on the back or say
we're doing great if there'sopportunity to improve.
But um, we've done focus groupwith students, particularly like
middle and high school students,will give you the straight
truth.
They won't pull any punches.
And if something, I'll put it intheir words, is stupid or makes
(43:30):
no sense or is a horrible idea,you know, they'll they'll tell
you that.
And they won't, you know, umfeel any embarrassment or shame
about being honest.
Um, so it's interesting to see,having done a lot of these now,
how different groups sometimesyou have to really dig in to get
to what's helpful and truthful.
Um, whereas others, like thatexample I mentioned with
(43:51):
students, they'll they'll justtell you right off the cuff.
SPEAKER_02 (43:56):
Are you aware of any
credit union that's taken your
idea for that Detroit Lions C Dand implemented it themselves
locally?
Not necessarily, hopefully notin Michigan.
SPEAKER_01 (44:07):
But uh No, not not
in Michigan, not nationwide.
And I don't understand thatbecause it's a good idea.
Yeah, I think so too.
I I think you know, we'vediscussed how we how we could
maybe put that in a box and andtry to socialize it.
I have a lot of credit unionsreach out to me and do, you
know, a 30-minute callexplaining it.
And I've spoken on, you know,different stages talking about
(44:28):
it too.
But I just I don't know if it'suh taboo or if it's like fear of
being associated with somethingthat's quote unquote negative,
but I've yet to see someone uhleverage that yet.
But I I do think eventuallyyou're gonna see a lot more of
that.
You know, the industry's beentalking about gamification and
how do we reach the youngergeneration.
(44:50):
And I think we're really on tosomething with with that
offering.
So um, you know, sometimes itjust it just takes time for
those things to develop orconfidence.
SPEAKER_02 (44:59):
Yeah, I did a show
three or four months ago with a
mid-sized or small credit unionin uh Ohio that actually has a
deal with the the ClevelandBrowns.
And they have a branded cardthat's aimed primarily at kids.
It's uh it's a little browniecard, I think they call it.
It's uh and very popular,apparently.
(45:22):
So credit unions like deals withwith sports teams, things,
things that revolve aroundsports.
Some people think it's anexcessive think about thinking
about that, but given thepopularity of sports, I'm not
sure it's excessive.
SPEAKER_01 (45:39):
Yeah, yeah, I think
there's definitely some
opportunity there.
And um, for creditings of allsizes, like, you know, how can
you make this fun with thecollege in your town, right?
Yeah, right.
Yes.
You know, again, if if sportsaren't your thing, but you're in
a community that gets 80 inchesof snow, like some of our
northern branches, like how canyou play into that, right?
(46:01):
Like there's there's a bunch ofdifferent ways to engage your
members.
And I think what it really comesdown to is doing that type of
listening and understanding, youknow, what is what are your
members passionate about?
Like what are the things and thecauses that they are proud of,
and then trying to play intothat.
If you're trying to like forceit to a community that's not
(46:23):
engaged with that team or thatschool or that that cause, it
you know, it'll only be sosuccessful.
SPEAKER_02 (46:29):
You know, I'm a
credit union and I come to you
and I say, could you would youdo research on the costs and
benefits of relationships withwith sports teams?
And I want to look at stadiumsponsorship, stadium naming
rights, a co-branded creditcard, and a third option that I
(46:51):
can't quite think of right now.
Yeah, would you do that?
Would you be interested in that?
SPEAKER_01 (46:56):
I think I think
that's interesting research.
Yeah.
SPEAKER_02 (46:58):
I um because a lot
of credit unions are exploring
this, but they don't have aresearch basis to say, oh, well,
here's the pitfalls, here's theplus side, uh, here's what we
need to think about.
SPEAKER_01 (47:13):
Yeah, yeah.
And I I think that's interestingresearch.
And what I would hope to dothrough that research is add in
some of that room 39A flavor ofum maybe besides just slapping
your name on a stadium, likewhat are other ways that you can
embrace the passion and theenergy of that fan base, maybe
through your products or yourevent activations?
(47:36):
You know, I think a lot of timesthe only research that's
involved in those types ofnegotiations, Robert, are coming
from the uh entity that's goingto collect your sponsorship
dollars.
And they're saying, oh, you'llhave this many impressions, or
you know, we have this manypeople that drive by the sign or
the the stadium uh every day.
(47:56):
So that's why you should invest,you know, this money.
I could see a research paperthere where you could look at
the performance maybe before andafter and measure, you know, the
impact that it has.
The difficult thing in in someof that type of um research is
uh many of these credit unions,you know, that's not their only
play, right?
And there's, you know, they'rebuilding new branches, they're
(48:17):
they're going through a merger.
There's so many other variables.
So it's it's tough to sometimestease out like what is
specifically driven by thissingle campaign.
But I don't I don't hate thetopic idea because I do think
you know there's many creditunions that are signing up for
that.
And again, I I think you got totake it that next step and find
those engagement points or thosethose ways to align your
(48:40):
products to those umpartnerships.
I think that's like the realsweet spot.
SPEAKER_02 (48:45):
Well, also you could
research uh the NFL, MLB,
National Hockey League, they allhave restrictions on what you
can do, which might not bementioned to you while you're
discussing this and dreamingabout oh, we can do this and
this and this.
Well, that might be specificallyprohibited.
And I'm not saying anybody'sconning anybody, it's just no
(49:07):
one asked the question beforethey signed the contract.
SPEAKER_03 (49:10):
Yeah, if you're
excited.
SPEAKER_02 (49:12):
And they you would
have been told, no, you can't do
that.
But you don't ask, you're notgonna find out.
But if doing research on thatcould be really useful because
there's so much interest in thisright now.
SPEAKER_01 (49:24):
Yeah, there is.
And um, you know, I think withany partnership, whether it's a
naming rights deal or a smaller,you know, type of partnership,
you really want to find umorganizations that are um kind
of on the level playing field.
You know, if if a credit unionis sponsoring something and
(49:45):
they're the 20th largest sponsorfor that organization, but for
the credit union, it's by fartheir biggest expenditure.
Your priorities or your it mightbe the most important thing to
your strategy, but if you don'thave that alignment with the
partner, you might not get theservice or you might get stuck
in the um legality concerns thatyou mentioned and not being able
(50:07):
to live that partnership asfully as you had hoped when you
signed the deal.
So, you know, I think when welook at partners, you know,
we're always trying to find umuh partners that are on the
rise, you know, um, because webelieve we're growing and on the
rise and try to like findsomeone who's growth-minded and
walk that path with them.
SPEAKER_02 (50:30):
You're you're right.
And in many of these sportsdeals, this credit union gets
the title the official creditunion of the blah blah blah.
Now, what if Chase, ManhattanBank, Chase, JP Morgan Chase, is
the official banking partner?
Huh.
Who do you think has moreweight?
(50:50):
You everybody's walking aroundsaying, Well, we're the official
credit union.
That's that's a cool thing, butit might not be quite as
important as you think.
SPEAKER_01 (50:58):
Yeah, yeah, that
might translate into some
smaller uh recognition.
SPEAKER_02 (51:02):
In any event, to
wrap this up, I'm a big fan of
what you're trying to do.
I do think the credit unionindustry has been hampered by an
incredible amount of data, by alack of an incredible amount of
data.
If it had an incredible amount,I think that'd be a great thing.
Uh, and they're makingdecisions, flipping coins, which
(51:23):
is unfortunate.
Because you're and the creditunions are playing against some
big wealth research operationslike the Money Center Banks and
some many of the fintechs.
These guys got research to burn.
Yeah.
Yeah.
And research will make adifference.
Before we go, think hard abouthow you can help support this
(51:47):
podcast so we can do moreinterviews with more thoughtful
leaders in the credit unionworld.
What we're trying to figure outhere in these podcasts is what's
next for credit unions.
What can they do to really,really, really make a difference
in the financial scene?
Can't all be mega banks, can it?
It's my hope it won't all bemega banks.
(52:07):
It'll always be a place forcredit unions.
That's what we're discussinghere.
So figure out how you can help.
Get in touch with me.
This is rjmegarvey at gmail.com.
Robert McGarvey again.
That's rjmeggarvey at gmail.com.
Get in touch, we'll figure out away that you can help.
We need your support, we wantyour support, we thank you for
(52:27):
your support.
The C U 2.0 Podcast.