July 9, 2025 • 22 mins
As credit unions grapple with an increasingly digital-first market, the path to growth lies in strategic partnerships, streamlined onboarding, and data-driven cross-sell strategies.
In this episode, host Matt Snow sits down with Kirk Drake—author, entrepreneur, and founder of CU 2.0—to explore how credit unions can stay relevant in a fast-changing financial landscape. Drawing on decades of experience in FinTech and community banking, Kirk shares practical insights on building strategic partnerships, leveraging emerging tech like crypto and transforming credit unions into digitally driven community hubs.
Join us as we discuss:
In this episode, host Matt Snow sits down with Kirk Drake—author, entrepreneur, and founder of CU 2.0—to explore how credit unions can stay relevant in a fast-changing financial landscape. Drawing on decades of experience in FinTech and community banking, Kirk shares practical insights on building strategic partnerships, leveraging emerging tech like crypto and transforming credit unions into digitally driven community hubs.
Join us as we discuss:
- Why credit unions must embrace AI to meet evolving member expectations
- The growing importance of FinTech collaboration in driving innovation
- How shifting consumer behavior is reshaping onboarding and engagement
- Strategies for serving both traditional and non-traditional demographics
- What it takes to future-proof credit unions in a digital-first world
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
Hey, everyone, welcome to another episode of Leaders in Lending.
I'm your host Matt Snow joined this episode by Kirk
Drake Kirk. Welcome to the podcast.
Speaker 2 (00:11):
Hey, thanks for having me all today.
Speaker 3 (00:13):
Kirk a man of many talents.
Speaker 1 (00:15):
I've got your book here with me too, author of
CU two dot zero, founder and owner of that company
as well. I hear you own a winery yet I've
yet to be invited up there, but sounds like you're
involved in a lot. Maybe talk a little bit about
your background, how you got involved with credit unions and
what you're up to today.
Speaker 2 (00:34):
Yeah.
Speaker 4 (00:34):
Sure, Well, first off, you're always welcome, No, no need
for a formal invite. But yeah, So I started working
at a high school bank or started high school bank
about thirty years ago, and then worked for a couple
of different credit unions in the DC area. Somewhere along
the line, spent a short stint at Feisser where it
took I think nine people to approve a three dollars stapler,
(00:55):
and I said that was not my that was not
going to be my place of residence for long, and
then went kind of back on the credit inside for
five six years before starting a couple of different quso's
ongoing operations see wallet. And then maybe seven eight years
ago really kind of got passionate around how do I
really help early stage entrepreneurs that are trying to break
(01:17):
into credit unions and help credit unions who are trying
to really devise a strategy to compete with with and
partner with FinTechs in a more meaningful way. And so
wrote the Crediting two point zero book, which really focused
on digital transformation, followed by an aibook that got publised
a couple of years ago, similar to the Digital Transformation,
(01:38):
but all really around how are you going to incorporate
AI into your credit union and where to really be
thinking about that? And then kind of in that same
Vein was starting the Winery seven eight years ago as well.
So it's been a busy seven eight years, but it's
sort of come out the other end of it and
really happy with where we are today.
Speaker 3 (02:00):
Awesome. Yeah, maybe that's a good place to start.
Speaker 1 (02:02):
When you talk about partnerships or FinTechs and credit unions
working together, why do you think that's a good match?
Speaker 3 (02:08):
What makes that a good partnership?
Speaker 4 (02:10):
Yeah, I think there's two sides of it. I think
the first side of it is, I think there's some
level of it. It's just the reality of new entrants
innovators dilemma, right situation where the FinTechs have the time,
capital and ability to go really really deep on one
particular part of the business. Oftentimes it feels like creditans
are running with your sixty different businesses within that and
(02:31):
so when you can get that specialization, you really find
unique opportunities yield arbitrage, you know, et cetera, or service
in that mode. And then I think on the other
side of it is because creditans are trying to tackle
so many things at the same time and not being
able to kind of really focus deep on any one areas.
One of those areas, it's me it's a real opportunity
(02:53):
to partner with someone who could really make their experience
and their performance that much better by finding the right
partner in that. And then I think the last piece
of it is there's definitely a group of FinTechs that
are actively trying to reach or eat credit unds lunches
into trying to really avoid those by partnering with the
ones who are really looking to help.
Speaker 3 (03:14):
Yeah, I agree with that.
Speaker 1 (03:15):
Is there do you think about that separation in those
trying to partner versus take their business? What do you
think the differentiator there is what causes one fintech to
be in one camp versus another. Yeah, I'll start obviously,
we were more in the partner camp, and we've got
a point of view on how we got there, But
curious like your perspective on that journey.
Speaker 4 (03:35):
Yeah, absolutely, I mean I think a lot of times
we really kind of classified as there's those that want
to eat your lunch, those that want to eat lunch
with you, and those that want to serve you lunch
right and upstart certainly in the not to eat your
lunch camp, And so I think it's usually it comes
down to the recognition that fintech either needs scale and
breadth a number of users, and credit unis are a
(03:56):
great way to partner on that. So that's one angle,
and the other angle is credit UN's being kind of
a downstream distributor where there's a scale and a breadth
that the fintech can get, whether it's on customer acquisition
or particular type of loan or something like that. Where
you know, a credit union sitting in a you know,
a state or a region just can't get enough scale
(04:18):
of that particular type of a product or opportunity, and
so partner at the fintech who can really bring that
scale to that particular loan product, service product, you know,
depositive product, et cetera, ends up being really meaningful.
Speaker 3 (04:32):
Yeah, I think that makes sense.
Speaker 1 (04:34):
I think the other thing that's interesting to me is
thinking about, just as you mentioned, distribution, so physical versus
digital channels. You know, I've been in banking and financial
services a long time as well and was always surprised
at the number of people like using the branch still
engaged and use those as a touch point into financial services,
(04:56):
Like is that do you think that's like accelerating downward?
Speaker 3 (05:00):
Will that always be a part of the equation, like that.
Speaker 1 (05:02):
Human interaction or how how do you view the like
the trend of that in the near future.
Speaker 4 (05:07):
Yeah, I mean, I think we have some stats that
shows something like seventy percent of consumers are going to
Google to find a loan in the first place, right,
And so if you think about eight thousand banks and
credit unions competing for that that particular keyword or that
particular type of loan, it's a pretty you know, it's
pretty expensive to try and you know, target that. Versus
a fintech that can really own a digital channel of
(05:29):
digital experience and put themselves either in the flow point
of sale piece of it or the right digital you know,
piece of it, they just end up being able to
be much more competitive at understanding and finding those consumers,
pricing them correctly, and then bringing them into the credit
union Versus when a credit union tries to compete in
that space, oftentimes they can't even afford the marketing costs,
(05:53):
let alone you know, the rest of the fulfillment of
the rest of those pieces in there.
Speaker 1 (05:57):
Yeah, very true, And it's funny even like the eight thousand,
I mean, that seems like a huge number and is,
but is even low considering where it was ten fifteen
years ago.
Speaker 2 (06:08):
Sure, Yeah, do you see like the.
Speaker 1 (06:10):
Number of institutions still kind of merging or I hesitate
to like putting the current context of what we're at
the end of April here talking and who knows with
the state of regulation and the government and kind of the.
Speaker 4 (06:24):
The Yeah, a pretty steady you know consolidation over the
last ten years or last twenty years really since I
started working in credit unions, and you know, it's not
like they're going out of business, they're just merging and
becoming healthier and having more scale. But I but I
think it also brings up the you know, the kind
of key piece of Just as much as those distribution
(06:45):
channels are hyper competitive for people that aren't playing on
a national level, your consumers are being in your members
are being targeted on a national level, so you can
be in you know, middle of nowhere America and that
consumer because of the Internet and because of digital accessibility.
It used to be competed with the bank down the
(07:06):
street and maybe a national bank who had some smart
you know, you know, physical mail strategies or something like that.
But now you're competing against everybody who has a digital
footprint in that and that really shifts that that cycle
so that the credit it isn't just competing locally, they're
competing regionally, nationally and in a Britique setting, and that
(07:28):
really shifts the balance to entities that can can understand
and capture that on a much broader basis and put
it directly in front of the consumer.
Speaker 3 (07:38):
Yeah, that's so true.
Speaker 1 (07:40):
I hadn't really thought of that competing on all those
levels now and how hard that would be and kind
of back to the idea of partnering with credit unions again,
like for us at Upstart, I think we did not
want to get in the business of trying to unseat
banks and credit unions who've been building their brands in
the community for hundreds of years and focus on the
technology side, which we're good at. But it did get
(08:02):
me thinking, especially after a conversation with Kurt Lynn recently
who founded and runs Pinwheel, about you know again like
companies focusing on what they're good at or what differentiates
them and kind of building on what you said with
banks and credit unions partnering with FinTechs, like credit unions
have have developed a good relationship or specialty around certain
(08:23):
member groups or you know, select employer groups, so there's
some some tighter reason behind their existence other than just
financial services. And you know, typically those were geography or
employer based. Like do you see that changing today? I
started to do a little thought exercise, like what would
be the community today, Like is it a YouTube influencer?
Speaker 3 (08:44):
Imagine like you give a.
Speaker 1 (08:46):
Little bit away personally with my kids and their age,
but like mister beast, would he start a credit union.
Speaker 3 (08:51):
Is that a community that people would care about.
Speaker 4 (08:53):
Or it's funny? I mean, I certainly think my kids
would jump on that in a second. It would be good,
right like, So I agree, I mean, I do think
it is it is much harder to create those communities
and find those things versus I think they were much
more natural when you had employer sponsorships or other things
in that regard it. And I don't think, you know,
(09:16):
it's it's you know, I think back to my parents
and their kind of banking experience, and you know, my
dad was big into toy trains because that's weird, and
that's what he did. But you know, like, there wasn't
a toy train, you know, operating credit union. But I
suppose there could have been. But if there would have been,
he would have joined it, right or he would have
had He was a cal Tech engineer, so it would
have been cal Tech. But other than that, those are
(09:36):
the only two community things he would have been involved
in Versus today, I probably have twenty or thirty different
groups that I'm involved in, and and and so I
think it really had shifted in the complexity of the
modern consumer, where you know, we.
Speaker 2 (09:53):
Travel a lot more.
Speaker 4 (09:54):
We we network a lot more, we.
Speaker 2 (09:57):
Read a lot more, were exposed to a lot more nuance.
Speaker 4 (10:00):
I mean even I even think back to when I
went to high school in southern Oregon with his community
bank that we started the bank branch with. And you know,
at that point in time, whatever was happening in a
major US city that was tech driven and you know,
front end, you know, leading edge of type of things,
it would show up in southern Oregon about ten to
fifteen years later, right, And that that time frame took
(10:23):
really a long time for a major national trend to
get down to the local, you know, small town America
kind of thing. Going to DC for twenty five years,
coming back to southern Oregon. That gap of when Uber
hit in d C versus when Uber hit in southern
Oregon was about three years, right. And so there's just
a pace of change and a pace of assimilation of
(10:47):
this stuff that just occurs way faster now than it
ever did before. And I think that makes it even
tougher to find those pockets of community.
Speaker 3 (10:54):
You know, in that Yeah, definitely.
Speaker 1 (10:57):
And so I continued that thought exercise a bit, maybe
into something a little more reasonable but still newer and
thinking about like crypto or bitcoin. And there were some
credit unions I found, like United Financial Credit Union or
we Street that that talk about those services, Like do
you see any credit unions latching onto communities or you know,
(11:17):
why do people go into two banks and credit unions?
I think it's define that advice or to find someone
who knows something about a complex Yeah, instagrament or system
that they don't understand, like is that our credit unions
getting in the crypto space or something similar.
Speaker 4 (11:33):
Yeah, they're definitely handful that are trying to play in
that space, but I think they're definitely challenged to figure
out exactly how to bring that to market. And again,
you know, how do you take what is an international
product tool and you know, financial medium and create value
at the local level with crypto when it's still not
(11:53):
mostly accepted. You know, it's not like you can go
into your neighborhood winery and use crypto, you know, and
so there's still those types of friction points. But I
think and I think that is the thing that would
drive crypto to the next level from an adoption from.
Speaker 2 (12:09):
A consumer perspective.
Speaker 4 (12:10):
If that local small town had use cases, then you
bring a whole bunch more people into it, right, I mean,
even think about like Amazon, It took Amazon twenty years
to get you know, two days shipping all the way
down to that local, you know level. It wasn't something
that happened overnight. And so I think, you know, when
we think about these various trends, I do think you
(12:31):
bringing up a great point, which is I don't think
a lot of credit unions think about what is the
modern community for younger members.
Speaker 2 (12:37):
Today and how do we tap into that? Right?
Speaker 4 (12:40):
I think they tend to think of it very much
the way it was and whether it's those family values
or you know, whatever it was in the fifties, sixties, seventies,
and that has shifted pretty substantially generationally. And I don't
even know that I can tell you amongst my friends
where that sense of community and tie in would be
if I were to take, you know, my ten friends
(13:01):
in Southern organ were the community is because of that
friend group. But it isn't because we have a shared
religious affiliation. It's not because we have a shared interest
in toy trains. It's not because we have a shared interest.
Speaker 2 (13:13):
You know.
Speaker 4 (13:13):
And it's almost much more life stage community than it
is you know, uh, communal interest in music or something
like that. And I think that's just a really big
shift in how the world operates today.
Speaker 3 (13:26):
Yeah, I think you're right.
Speaker 1 (13:27):
And I think it also shows up in where people
are getting that financial advice, you know, the turn TikTok
or YouTube or you complete strangers with no seeming maybe
credentials but other than their follower size to get that
insight where maybe you would have from your colleagues or
those that shared your.
Speaker 3 (13:43):
Interests because those people were around you. And that's as
far and as fast as information can travel there.
Speaker 4 (13:48):
Sure, And the reality is, who am I going to
trust If we're going to google a complex you know,
thing about how to do a derivative or get an
interest rate swapper, I'm going to ask my dad, right, like,
I mean, it's you know.
Speaker 2 (13:58):
It's yes, he could probably tell me the theory behind it.
Speaker 4 (14:00):
But I guarantee the online education that I can find
in eighteen seconds or a Reddit article is going to
be far stronger and far more credible at the end
of the day. Right, And so it's even that replicates
that shift of I always think about this when I
was a kid, you know, when I was two. My
dad had twenty times in knowledge of me, right, and
when I was ten he had, you know, four times
(14:21):
in knowledge of me. And when I was twenty he
had two times in knowledge of me, and now he
has like one and a quarter, you know, one and
a half times. And as that progression occurs, there's a
pretty significant shift of how you think about expertise and
where do you get where do you go to get
sources of truth and how to navigate the world. And
I think that's where, you know, the reality is, even
(14:44):
that I'm forty seven, if I go online and want
to learn something, I can probably find someone who still
knows twenty times more than me.
Speaker 3 (14:50):
Yeah. Yeah, that's a great point.
Speaker 1 (14:51):
And maybe bringing it back a little bit to the
more practical a topic you and I've chatted about offline
a handful of times, this idea of leading with lending
or life is just getting more expensive, so the need
for credit is certainly more pressure, and I think the
access to credit hasn't kept up with that need. So
getting lenders more comfortable with that being the lead into
(15:15):
a relationship versus the traditional I get the checking account,
or as you said, you walk into the bank, maybe
get your past book savings when you're getting your first
job or allowance and start to save money away to
build that lending relationship. Are you seeing any trends or
people getting more comfortable using a lending product as a
way to get to know someone that their life stage
(15:37):
and build a relationship.
Speaker 2 (15:39):
Do you mean the credit unit or the.
Speaker 3 (15:40):
Consumer more in the credit union side?
Speaker 2 (15:42):
Yeah?
Speaker 4 (15:43):
Yeah, I mean I think, you know, it's always been
the case that I think loans really drive account opening
and some you know respect, because that's that solves a
critical if you want to grow members and you were
trying to do it exclusively on you know, either a
digital foot and or just on a deposit rate basis.
I think I G might be the only one I've
(16:04):
ever seen successfully really crush that, you know, from a
unique perspective, and I don't know that would work again today, right,
They hit this right arbitrage point of online and market
conditions and rate you know, in a unique way. So
the loan piece is usually that's a much better spot
for a consumer to enter because they're usually trying to
(16:25):
do something else that gets them willing to do a
little bit of work to get that thing. You know,
they don't want a car loan, they want a car, right.
They don't want a home loan, they want a home right.
And so when there's some other want, need, desire, emotional
connection to something, them being willing to do some work
and experience in friction to get it is what gets
them to change, you know, behavior or something in that.
(16:46):
And so loans I think are a great indicator of
when that emotional trigger is occurring or that that event
is occurring for the consumer that would get them to
do that extra piece report.
Speaker 1 (16:58):
Yeah, and then how do you see eating is take
advantage of that so or maybe compare and contrast the
good and the bad, or like those can memberships in
that environment?
Speaker 4 (17:08):
Yeah, in general, I think you know, I think this
is an area where credit unions have not kept up
with kind of the digital acquisition strategy. So we tend
to think of consumer, you know, indirect consumer coming through
one of these third party channels. They come in, they
join the credit union, and then we send them a
welcome kit, not recognizing that they came in from a
digital channel in the first place, right, And so you know,
(17:30):
a physical, tangible welcome kit is probably not the thing
to match that. It's sort of like I'm sure we
all of those people where we you know, we send
them a text message orn email and they call us
and leave us a voicemail and we're like.
Speaker 2 (17:40):
No, no, I texted you.
Speaker 4 (17:41):
I expect you to respond to text right, Like it's
it's weird to me if you call me back after
I text you, right, unless you're my brother who calls
me to make sure that I got the voicemail or
text me to make sure that I got the voicemail.
Speaker 1 (17:52):
Right.
Speaker 2 (17:53):
Multichannel approach, Yeah, exactly.
Speaker 4 (17:56):
And so I think when we think of that from
an indirect respective of something like forty percent of members
close their accounts one hundred days later because they didn't
feel that engagement. They didn't they didn't see a digital
onboarding process that really aligned with the small step things
that they need to do.
Speaker 2 (18:12):
The other piece.
Speaker 4 (18:13):
But I think that's really shifted is someone needs to
go into a bank and you'd sit down and you
fill out the form and they would do it all
and you'd sit at the desk for an hour and
then at the end of it, you get your check,
you get your debit card, you know, whatever it is,
and you kind of walk out and I think consumers
today don't have that hour time, so they're expecting to
do that onboarding and small five minute distracted you know,
things between their Facebook feeds, you know, the Instagram posts.
Speaker 2 (18:35):
They want to do those small little things.
Speaker 4 (18:36):
And I think that that digital onboarding gives the ability
to give them small micro tasks that onboard them that
don't require this huge commitment of things, you know, to
do all up front. And you know, I think if
people are going to do the work of switch, they
want to do it on their terms, their timeline, you know,
et cetera. And just because you sent them one email
that they didn't notice doesn't mean that they don't want
(18:57):
to do it. It's just the timing of that email
wasn't right.
Speaker 3 (19:00):
Yeah, that's a great point.
Speaker 1 (19:02):
I hadn't thought of it in that way, the idea
of micro tasks, or if you combine that with I
know this is true in my personal life as well.
But you know, no one wants to talk to a
live customer service rep until you want to.
Speaker 3 (19:14):
And then you want that person immediately.
Speaker 1 (19:16):
And so how do you create that almost concierge like
service as a credit union to guide people through the
steps let them do it. On their time, but you
know you're there helping nurture them along. I think could
be really important.
Speaker 4 (19:28):
Yeah, I'll give you a great example that occurred recently.
I had two different credit unions that were clearly encouraging
mobile wallets, and both encouraged me to put my credit
card in my mobile wallet, only about ten years after
mobile wallets really kind of became a thing in my mind.
Speaker 2 (19:40):
But either way, they finally got around to it. They
in sented me to do it.
Speaker 4 (19:44):
I put my both cards in and then I went
and tested the mobile wallet and both of them declined
the first transaction because it's the first transaction, it's a
high fraud risk. Well, the flip needs to be true,
which is the first time your consumer try something. It
needs to work one hundred percent of the time. You
can put the fraud controls on number two through ten, right,
put on that first one. You're better off just waving it.
Speaker 3 (20:02):
Yeah, totally.
Speaker 1 (20:03):
And so how how does a credit union, you know,
navigate stuff like that, because back maybe back to the
partner idea, you know, build those customer relationships through technology
that's maybe new to them or haven't thought through those
use cases.
Speaker 3 (20:17):
How do you even begin to.
Speaker 1 (20:19):
Find a partner to know where your gaps are. It
seems like that would be just a daunting analysis paralysis
kind of exercise.
Speaker 2 (20:27):
Yeah, I think. I think there's a couple different ways.
I think A, you can put the lens on.
Speaker 4 (20:30):
I need to find a partner that is going to
do this naturally in my mode and kind of strategy
and align with a digital onboarding experience and a process
that is these micro components and aligns with that. So
I think, A, that's super important. They need to have
the tools and the capacity and the wherewithal to recognize
(20:52):
these are individual you know, experiences and journeys and your
your your systems and your processes need to be to
find at that individualized basis so that if I mean,
I can tell you like every time I Credit Union
says enroll in these statements, when I'm already enrolled in
the statements, I want to poke myself in the eye
and be like, how do you not know I'm enrolled
in need statements? Especially because if I forget and I
(21:13):
go log in and it tells me I'm in rolled
in statements, I'm like, now I'm even more frustrated that
I did this five minute thing, and it's you know,
and it's almost brand Uh, it's a reduction in the
value of your brand when you don't treat and understand
the consumers you know, spot in that process. And so
I just think that's a continual thing credit is to evaluate.
Speaker 1 (21:35):
Yeah, totally totally agree. Well, I know we've covered a
lot already. Are there things you think that we've missed
or you want to make sure we highlight in terms
of you know, partnership, cross selling, you know, onboarding consumers,
any anything.
Speaker 2 (21:49):
Yeah.
Speaker 4 (21:50):
I think I think that you know, understanding that first
hundred days and understanding the digital tools and the analytics
that you need to help drive that in which partners
can really help you there is key. I think the
second piece really is also understanding what are the other
pain points and opportunities that are just low hanging fruit
in there to help the consumer migrate, right, So not
be just you know, how do I help them going
(22:10):
through this process, but if they move a car loan
over to me and I noticed they have this other
loan that I have a better rate on, that's your
opportunity to grab that business and make that super simple
as well, and not just asking the same fourteen questions
either right right.
Speaker 1 (22:24):
Yeah, great, yeah, I think great advice, great place to end,
you know, appreciate the time.
Speaker 3 (22:28):
Is always always good to catch up a bit.
Speaker 1 (22:30):
And maybe we'll do a follow up episode live from
the winery sometime.
Speaker 2 (22:35):
Sounds great, that'd be awesome.
Speaker 3 (22:37):
All right, well, thanks again, Kirk,
Hey, everyone, welcome to another episode of Leaders in Lending.
I'm your host Matt Snow joined this episode by Kirk
Drake Kirk. Welcome to the podcast.
Speaker 2 (00:11):
Hey, thanks for having me all today.
Speaker 3 (00:13):
Kirk a man of many talents.
Speaker 1 (00:15):
I've got your book here with me too, author of
CU two dot zero, founder and owner of that company
as well. I hear you own a winery yet I've
yet to be invited up there, but sounds like you're
involved in a lot. Maybe talk a little bit about
your background, how you got involved with credit unions and
what you're up to today.
Speaker 2 (00:34):
Yeah.
Speaker 4 (00:34):
Sure, Well, first off, you're always welcome, No, no need
for a formal invite. But yeah, So I started working
at a high school bank or started high school bank
about thirty years ago, and then worked for a couple
of different credit unions in the DC area. Somewhere along
the line, spent a short stint at Feisser where it
took I think nine people to approve a three dollars stapler,
(00:55):
and I said that was not my that was not
going to be my place of residence for long, and
then went kind of back on the credit inside for
five six years before starting a couple of different quso's
ongoing operations see wallet. And then maybe seven eight years
ago really kind of got passionate around how do I
really help early stage entrepreneurs that are trying to break
(01:17):
into credit unions and help credit unions who are trying
to really devise a strategy to compete with with and
partner with FinTechs in a more meaningful way. And so
wrote the Crediting two point zero book, which really focused
on digital transformation, followed by an aibook that got publised
a couple of years ago, similar to the Digital Transformation,
(01:38):
but all really around how are you going to incorporate
AI into your credit union and where to really be
thinking about that? And then kind of in that same
Vein was starting the Winery seven eight years ago as well.
So it's been a busy seven eight years, but it's
sort of come out the other end of it and
really happy with where we are today.
Speaker 3 (02:00):
Awesome. Yeah, maybe that's a good place to start.
Speaker 1 (02:02):
When you talk about partnerships or FinTechs and credit unions
working together, why do you think that's a good match?
Speaker 3 (02:08):
What makes that a good partnership?
Speaker 4 (02:10):
Yeah, I think there's two sides of it. I think
the first side of it is, I think there's some
level of it. It's just the reality of new entrants
innovators dilemma, right situation where the FinTechs have the time,
capital and ability to go really really deep on one
particular part of the business. Oftentimes it feels like creditans
are running with your sixty different businesses within that and
(02:31):
so when you can get that specialization, you really find
unique opportunities yield arbitrage, you know, et cetera, or service
in that mode. And then I think on the other
side of it is because creditans are trying to tackle
so many things at the same time and not being
able to kind of really focus deep on any one areas.
One of those areas, it's me it's a real opportunity
(02:53):
to partner with someone who could really make their experience
and their performance that much better by finding the right
partner in that. And then I think the last piece
of it is there's definitely a group of FinTechs that
are actively trying to reach or eat credit unds lunches
into trying to really avoid those by partnering with the
ones who are really looking to help.
Speaker 3 (03:14):
Yeah, I agree with that.
Speaker 1 (03:15):
Is there do you think about that separation in those
trying to partner versus take their business? What do you
think the differentiator there is what causes one fintech to
be in one camp versus another. Yeah, I'll start obviously,
we were more in the partner camp, and we've got
a point of view on how we got there, But
curious like your perspective on that journey.
Speaker 4 (03:35):
Yeah, absolutely, I mean I think a lot of times
we really kind of classified as there's those that want
to eat your lunch, those that want to eat lunch
with you, and those that want to serve you lunch
right and upstart certainly in the not to eat your
lunch camp, And so I think it's usually it comes
down to the recognition that fintech either needs scale and
breadth a number of users, and credit unis are a
(03:56):
great way to partner on that. So that's one angle,
and the other angle is credit UN's being kind of
a downstream distributor where there's a scale and a breadth
that the fintech can get, whether it's on customer acquisition
or particular type of loan or something like that. Where
you know, a credit union sitting in a you know,
a state or a region just can't get enough scale
(04:18):
of that particular type of a product or opportunity, and
so partner at the fintech who can really bring that
scale to that particular loan product, service product, you know,
depositive product, et cetera, ends up being really meaningful.
Speaker 3 (04:32):
Yeah, I think that makes sense.
Speaker 1 (04:34):
I think the other thing that's interesting to me is
thinking about, just as you mentioned, distribution, so physical versus
digital channels. You know, I've been in banking and financial
services a long time as well and was always surprised
at the number of people like using the branch still
engaged and use those as a touch point into financial services,
(04:56):
Like is that do you think that's like accelerating downward?
Speaker 3 (05:00):
Will that always be a part of the equation, like that.
Speaker 1 (05:02):
Human interaction or how how do you view the like
the trend of that in the near future.
Speaker 4 (05:07):
Yeah, I mean, I think we have some stats that
shows something like seventy percent of consumers are going to
Google to find a loan in the first place, right,
And so if you think about eight thousand banks and
credit unions competing for that that particular keyword or that
particular type of loan, it's a pretty you know, it's
pretty expensive to try and you know, target that. Versus
a fintech that can really own a digital channel of
(05:29):
digital experience and put themselves either in the flow point
of sale piece of it or the right digital you know,
piece of it, they just end up being able to
be much more competitive at understanding and finding those consumers,
pricing them correctly, and then bringing them into the credit
union Versus when a credit union tries to compete in
that space, oftentimes they can't even afford the marketing costs,
(05:53):
let alone you know, the rest of the fulfillment of
the rest of those pieces in there.
Speaker 1 (05:57):
Yeah, very true, And it's funny even like the eight thousand,
I mean, that seems like a huge number and is,
but is even low considering where it was ten fifteen
years ago.
Speaker 2 (06:08):
Sure, Yeah, do you see like the.
Speaker 1 (06:10):
Number of institutions still kind of merging or I hesitate
to like putting the current context of what we're at
the end of April here talking and who knows with
the state of regulation and the government and kind of the.
Speaker 4 (06:24):
The Yeah, a pretty steady you know consolidation over the
last ten years or last twenty years really since I
started working in credit unions, and you know, it's not
like they're going out of business, they're just merging and
becoming healthier and having more scale. But I but I
think it also brings up the you know, the kind
of key piece of Just as much as those distribution
(06:45):
channels are hyper competitive for people that aren't playing on
a national level, your consumers are being in your members
are being targeted on a national level, so you can
be in you know, middle of nowhere America and that
consumer because of the Internet and because of digital accessibility.
It used to be competed with the bank down the
(07:06):
street and maybe a national bank who had some smart
you know, you know, physical mail strategies or something like that.
But now you're competing against everybody who has a digital
footprint in that and that really shifts that that cycle
so that the credit it isn't just competing locally, they're
competing regionally, nationally and in a Britique setting, and that
(07:28):
really shifts the balance to entities that can can understand
and capture that on a much broader basis and put
it directly in front of the consumer.
Speaker 3 (07:38):
Yeah, that's so true.
Speaker 1 (07:40):
I hadn't really thought of that competing on all those
levels now and how hard that would be and kind
of back to the idea of partnering with credit unions again,
like for us at Upstart, I think we did not
want to get in the business of trying to unseat
banks and credit unions who've been building their brands in
the community for hundreds of years and focus on the
technology side, which we're good at. But it did get
(08:02):
me thinking, especially after a conversation with Kurt Lynn recently
who founded and runs Pinwheel, about you know again like
companies focusing on what they're good at or what differentiates
them and kind of building on what you said with
banks and credit unions partnering with FinTechs, like credit unions
have have developed a good relationship or specialty around certain
(08:23):
member groups or you know, select employer groups, so there's
some some tighter reason behind their existence other than just
financial services. And you know, typically those were geography or
employer based. Like do you see that changing today? I
started to do a little thought exercise, like what would
be the community today, Like is it a YouTube influencer?
Speaker 3 (08:44):
Imagine like you give a.
Speaker 1 (08:46):
Little bit away personally with my kids and their age,
but like mister beast, would he start a credit union.
Speaker 3 (08:51):
Is that a community that people would care about.
Speaker 4 (08:53):
Or it's funny? I mean, I certainly think my kids
would jump on that in a second. It would be good,
right like, So I agree, I mean, I do think
it is it is much harder to create those communities
and find those things versus I think they were much
more natural when you had employer sponsorships or other things
in that regard it. And I don't think, you know,
(09:16):
it's it's you know, I think back to my parents
and their kind of banking experience, and you know, my
dad was big into toy trains because that's weird, and
that's what he did. But you know, like, there wasn't
a toy train, you know, operating credit union. But I
suppose there could have been. But if there would have been,
he would have joined it, right or he would have
had He was a cal Tech engineer, so it would
have been cal Tech. But other than that, those are
(09:36):
the only two community things he would have been involved
in Versus today, I probably have twenty or thirty different
groups that I'm involved in, and and and so I
think it really had shifted in the complexity of the
modern consumer, where you know, we.
Speaker 2 (09:53):
Travel a lot more.
Speaker 4 (09:54):
We we network a lot more, we.
Speaker 2 (09:57):
Read a lot more, were exposed to a lot more nuance.
Speaker 4 (10:00):
I mean even I even think back to when I
went to high school in southern Oregon with his community
bank that we started the bank branch with. And you know,
at that point in time, whatever was happening in a
major US city that was tech driven and you know,
front end, you know, leading edge of type of things,
it would show up in southern Oregon about ten to
fifteen years later, right, And that that time frame took
(10:23):
really a long time for a major national trend to
get down to the local, you know, small town America
kind of thing. Going to DC for twenty five years,
coming back to southern Oregon. That gap of when Uber
hit in d C versus when Uber hit in southern
Oregon was about three years, right. And so there's just
a pace of change and a pace of assimilation of
(10:47):
this stuff that just occurs way faster now than it
ever did before. And I think that makes it even
tougher to find those pockets of community.
Speaker 3 (10:54):
You know, in that Yeah, definitely.
Speaker 1 (10:57):
And so I continued that thought exercise a bit, maybe
into something a little more reasonable but still newer and
thinking about like crypto or bitcoin. And there were some
credit unions I found, like United Financial Credit Union or
we Street that that talk about those services, Like do
you see any credit unions latching onto communities or you know,
(11:17):
why do people go into two banks and credit unions?
I think it's define that advice or to find someone
who knows something about a complex Yeah, instagrament or system
that they don't understand, like is that our credit unions
getting in the crypto space or something similar.
Speaker 4 (11:33):
Yeah, they're definitely handful that are trying to play in
that space, but I think they're definitely challenged to figure
out exactly how to bring that to market. And again,
you know, how do you take what is an international
product tool and you know, financial medium and create value
at the local level with crypto when it's still not
(11:53):
mostly accepted. You know, it's not like you can go
into your neighborhood winery and use crypto, you know, and
so there's still those types of friction points. But I
think and I think that is the thing that would
drive crypto to the next level from an adoption from.
Speaker 2 (12:09):
A consumer perspective.
Speaker 4 (12:10):
If that local small town had use cases, then you
bring a whole bunch more people into it, right, I mean,
even think about like Amazon, It took Amazon twenty years
to get you know, two days shipping all the way
down to that local, you know level. It wasn't something
that happened overnight. And so I think, you know, when
we think about these various trends, I do think you
(12:31):
bringing up a great point, which is I don't think
a lot of credit unions think about what is the
modern community for younger members.
Speaker 2 (12:37):
Today and how do we tap into that? Right?
Speaker 4 (12:40):
I think they tend to think of it very much
the way it was and whether it's those family values
or you know, whatever it was in the fifties, sixties, seventies,
and that has shifted pretty substantially generationally. And I don't
even know that I can tell you amongst my friends
where that sense of community and tie in would be
if I were to take, you know, my ten friends
(13:01):
in Southern organ were the community is because of that
friend group. But it isn't because we have a shared
religious affiliation. It's not because we have a shared interest
in toy trains. It's not because we have a shared interest.
Speaker 2 (13:13):
You know.
Speaker 4 (13:13):
And it's almost much more life stage community than it
is you know, uh, communal interest in music or something
like that. And I think that's just a really big
shift in how the world operates today.
Speaker 3 (13:26):
Yeah, I think you're right.
Speaker 1 (13:27):
And I think it also shows up in where people
are getting that financial advice, you know, the turn TikTok
or YouTube or you complete strangers with no seeming maybe
credentials but other than their follower size to get that
insight where maybe you would have from your colleagues or
those that shared your.
Speaker 3 (13:43):
Interests because those people were around you. And that's as
far and as fast as information can travel there.
Speaker 4 (13:48):
Sure, And the reality is, who am I going to
trust If we're going to google a complex you know,
thing about how to do a derivative or get an
interest rate swapper, I'm going to ask my dad, right, like,
I mean, it's you know.
Speaker 2 (13:58):
It's yes, he could probably tell me the theory behind it.
Speaker 4 (14:00):
But I guarantee the online education that I can find
in eighteen seconds or a Reddit article is going to
be far stronger and far more credible at the end
of the day. Right, And so it's even that replicates
that shift of I always think about this when I
was a kid, you know, when I was two. My
dad had twenty times in knowledge of me, right, and
when I was ten he had, you know, four times
(14:21):
in knowledge of me. And when I was twenty he
had two times in knowledge of me, and now he
has like one and a quarter, you know, one and
a half times. And as that progression occurs, there's a
pretty significant shift of how you think about expertise and
where do you get where do you go to get
sources of truth and how to navigate the world. And
I think that's where, you know, the reality is, even
(14:44):
that I'm forty seven, if I go online and want
to learn something, I can probably find someone who still
knows twenty times more than me.
Speaker 3 (14:50):
Yeah. Yeah, that's a great point.
Speaker 1 (14:51):
And maybe bringing it back a little bit to the
more practical a topic you and I've chatted about offline
a handful of times, this idea of leading with lending
or life is just getting more expensive, so the need
for credit is certainly more pressure, and I think the
access to credit hasn't kept up with that need. So
getting lenders more comfortable with that being the lead into
(15:15):
a relationship versus the traditional I get the checking account,
or as you said, you walk into the bank, maybe
get your past book savings when you're getting your first
job or allowance and start to save money away to
build that lending relationship. Are you seeing any trends or
people getting more comfortable using a lending product as a
way to get to know someone that their life stage
(15:37):
and build a relationship.
Speaker 2 (15:39):
Do you mean the credit unit or the.
Speaker 3 (15:40):
Consumer more in the credit union side?
Speaker 2 (15:42):
Yeah?
Speaker 4 (15:43):
Yeah, I mean I think, you know, it's always been
the case that I think loans really drive account opening
and some you know respect, because that's that solves a
critical if you want to grow members and you were
trying to do it exclusively on you know, either a
digital foot and or just on a deposit rate basis.
I think I G might be the only one I've
(16:04):
ever seen successfully really crush that, you know, from a
unique perspective, and I don't know that would work again today, right,
They hit this right arbitrage point of online and market
conditions and rate you know, in a unique way. So
the loan piece is usually that's a much better spot
for a consumer to enter because they're usually trying to
(16:25):
do something else that gets them willing to do a
little bit of work to get that thing. You know,
they don't want a car loan, they want a car, right.
They don't want a home loan, they want a home right.
And so when there's some other want, need, desire, emotional
connection to something, them being willing to do some work
and experience in friction to get it is what gets
them to change, you know, behavior or something in that.
(16:46):
And so loans I think are a great indicator of
when that emotional trigger is occurring or that that event
is occurring for the consumer that would get them to
do that extra piece report.
Speaker 1 (16:58):
Yeah, and then how do you see eating is take
advantage of that so or maybe compare and contrast the
good and the bad, or like those can memberships in
that environment?
Speaker 4 (17:08):
Yeah, in general, I think you know, I think this
is an area where credit unions have not kept up
with kind of the digital acquisition strategy. So we tend
to think of consumer, you know, indirect consumer coming through
one of these third party channels. They come in, they
join the credit union, and then we send them a
welcome kit, not recognizing that they came in from a
digital channel in the first place, right, And so you know,
(17:30):
a physical, tangible welcome kit is probably not the thing
to match that. It's sort of like I'm sure we
all of those people where we you know, we send
them a text message orn email and they call us
and leave us a voicemail and we're like.
Speaker 2 (17:40):
No, no, I texted you.
Speaker 4 (17:41):
I expect you to respond to text right, Like it's
it's weird to me if you call me back after
I text you, right, unless you're my brother who calls
me to make sure that I got the voicemail or
text me to make sure that I got the voicemail.
Speaker 1 (17:52):
Right.
Speaker 2 (17:53):
Multichannel approach, Yeah, exactly.
Speaker 4 (17:56):
And so I think when we think of that from
an indirect respective of something like forty percent of members
close their accounts one hundred days later because they didn't
feel that engagement. They didn't they didn't see a digital
onboarding process that really aligned with the small step things
that they need to do.
Speaker 2 (18:12):
The other piece.
Speaker 4 (18:13):
But I think that's really shifted is someone needs to
go into a bank and you'd sit down and you
fill out the form and they would do it all
and you'd sit at the desk for an hour and
then at the end of it, you get your check,
you get your debit card, you know, whatever it is,
and you kind of walk out and I think consumers
today don't have that hour time, so they're expecting to
do that onboarding and small five minute distracted you know,
things between their Facebook feeds, you know, the Instagram posts.
Speaker 2 (18:35):
They want to do those small little things.
Speaker 4 (18:36):
And I think that that digital onboarding gives the ability
to give them small micro tasks that onboard them that
don't require this huge commitment of things, you know, to
do all up front. And you know, I think if
people are going to do the work of switch, they
want to do it on their terms, their timeline, you know,
et cetera. And just because you sent them one email
that they didn't notice doesn't mean that they don't want
(18:57):
to do it. It's just the timing of that email
wasn't right.
Speaker 3 (19:00):
Yeah, that's a great point.
Speaker 1 (19:02):
I hadn't thought of it in that way, the idea
of micro tasks, or if you combine that with I
know this is true in my personal life as well.
But you know, no one wants to talk to a
live customer service rep until you want to.
Speaker 3 (19:14):
And then you want that person immediately.
Speaker 1 (19:16):
And so how do you create that almost concierge like
service as a credit union to guide people through the
steps let them do it. On their time, but you
know you're there helping nurture them along. I think could
be really important.
Speaker 4 (19:28):
Yeah, I'll give you a great example that occurred recently.
I had two different credit unions that were clearly encouraging
mobile wallets, and both encouraged me to put my credit
card in my mobile wallet, only about ten years after
mobile wallets really kind of became a thing in my mind.
Speaker 2 (19:40):
But either way, they finally got around to it. They
in sented me to do it.
Speaker 4 (19:44):
I put my both cards in and then I went
and tested the mobile wallet and both of them declined
the first transaction because it's the first transaction, it's a
high fraud risk. Well, the flip needs to be true,
which is the first time your consumer try something. It
needs to work one hundred percent of the time. You
can put the fraud controls on number two through ten, right,
put on that first one. You're better off just waving it.
Speaker 3 (20:02):
Yeah, totally.
Speaker 1 (20:03):
And so how how does a credit union, you know,
navigate stuff like that, because back maybe back to the
partner idea, you know, build those customer relationships through technology
that's maybe new to them or haven't thought through those
use cases.
Speaker 3 (20:17):
How do you even begin to.
Speaker 1 (20:19):
Find a partner to know where your gaps are. It
seems like that would be just a daunting analysis paralysis
kind of exercise.
Speaker 2 (20:27):
Yeah, I think. I think there's a couple different ways.
I think A, you can put the lens on.
Speaker 4 (20:30):
I need to find a partner that is going to
do this naturally in my mode and kind of strategy
and align with a digital onboarding experience and a process
that is these micro components and aligns with that. So
I think, A, that's super important. They need to have
the tools and the capacity and the wherewithal to recognize
(20:52):
these are individual you know, experiences and journeys and your
your your systems and your processes need to be to
find at that individualized basis so that if I mean,
I can tell you like every time I Credit Union
says enroll in these statements, when I'm already enrolled in
the statements, I want to poke myself in the eye
and be like, how do you not know I'm enrolled
in need statements? Especially because if I forget and I
(21:13):
go log in and it tells me I'm in rolled
in statements, I'm like, now I'm even more frustrated that
I did this five minute thing, and it's you know,
and it's almost brand Uh, it's a reduction in the
value of your brand when you don't treat and understand
the consumers you know, spot in that process. And so
I just think that's a continual thing credit is to evaluate.
Speaker 1 (21:35):
Yeah, totally totally agree. Well, I know we've covered a
lot already. Are there things you think that we've missed
or you want to make sure we highlight in terms
of you know, partnership, cross selling, you know, onboarding consumers,
any anything.
Speaker 2 (21:49):
Yeah.
Speaker 4 (21:50):
I think I think that you know, understanding that first
hundred days and understanding the digital tools and the analytics
that you need to help drive that in which partners
can really help you there is key. I think the
second piece really is also understanding what are the other
pain points and opportunities that are just low hanging fruit
in there to help the consumer migrate, right, So not
be just you know, how do I help them going
(22:10):
through this process, but if they move a car loan
over to me and I noticed they have this other
loan that I have a better rate on, that's your
opportunity to grab that business and make that super simple
as well, and not just asking the same fourteen questions
either right right.
Speaker 1 (22:24):
Yeah, great, yeah, I think great advice, great place to end,
you know, appreciate the time.
Speaker 3 (22:28):
Is always always good to catch up a bit.
Speaker 1 (22:30):
And maybe we'll do a follow up episode live from
the winery sometime.
Speaker 2 (22:35):
Sounds great, that'd be awesome.
Speaker 3 (22:37):
All right, well, thanks again, Kirk,
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