Finding the right fintech partner can allow credit unions to maximize growth and fuel innovation, according to Ben Maxim, chief operating officer at Reseda Group, a credit union service organization formed by Michigan State University Federal Credit Union in East Lansing.
Finding the right fintech partner can allow credit unions to maximize growth and fuel innovation, according to Ben Maxim, chief operating officer at Reseda Group, a credit union service organization formed by Michigan State University Federal Credit Union in East Lansing.
Yeekeng: Welcome back, Ben. To the CUNA News Podcast.
There's a portion of the audience here that's probably not familiar with Reseda Group, even though you've been here a couple times already. So what is Reseda Group? Who are you and what do you do?
Ben: All right. Thank you for having me back.
Uh, Happy to be here. For those of you who haven't uh, met Reseda Group before, Reseda Group is Michigan State University Federal Credit Union's wholly owned CUSO. We were founded with the mission to build better together, for members together. And really what that means is we're trying to bring solutions to credit unions that may not always be either affordable or accessible.
A lot of the work we've seen over the past few years in FinTech we see a lot of these companies. You know, get really popular and grow and scale and then sometimes credit unions get shot out of the picture because a large tech company major bank. VC takes them off the market, really focuses them towards a certain angle, and they don't necessarily consider the smaller financial institutions, including credit unions.
So really what we're trying to do is both build solutions and also [00:01:00] invest in solutions for the credit union space to, to really help bring access for our members and for credit unions to have access to these really great solutions to really help amplify the work we're already doing in this industry.
Yeekeng: Great. And again, we're very happy to have you back on here. So last time we spoke, you touched briefly upon having a portfolio of partners. Can you expand upon that, about Reseda Group? Having a portfolio of partners?
Ben: Absolutely. So we kind of have three different groups of partners. So, we have one, we have two wholly owned companies that are subsidiaries. That one is M3 and the other is Foresight Group. M3 is a digital agency they are working on some very cool stuff for credit unions. They have had Michigan State University Federal Credit Union as a client for a number of years and looking to expand that credit union portfolio.
They also work in other industries as well and also Foresight Group. They are also doing some cool innovative things in the print marketing space, event space and also trying to provide some solutions for credit [00:02:00] unions as well, more directly. Also have been MSU is, FCU has been a big client of theirs for a number of years as well, so they understand the creating space very well.
And also, you know, as, you know, they become part of the Reseda Group family, also starting to understand both of those groups are understanding the FinTech space as well. So a lot of these partners we're working with are also working with these two companies to kind of help get the services they need as startups to kind of take their companies to the next level.
We also have our suite of products. So we have two products in the market right now and looking to bring a couple more later this fall. The two products we have one is OneClick Financial We, it is a personalized marketing solution and a dynamic marketing solution where you as a credit union can host a page and then based on activity of your members maybe they're looking at certain pages on the internet or your site related to auto loans, you can tell they're shopping.
So then you can start to provide them information related to you know, your auto loan offerings and how they can get that from your credit union. Then we also have Evergreen and the financial wellness center that Evergreen. Provides and that, that started as a product at Michigan State University Federal Credit Union as well, [00:03:00] really targeting the university students of Michigan State and Oakland universities and really just a student run blog with content.
Focused on students in your experience with money and that's expanded to now have workbooks for K through, I think about sixth grade, is where we cut off the workbooks, or K through eight. And then we have a lot of digital offerings, podcasts, seminars, webinars, and a bunch of digital content to help you get that same information to your Credit Union as well, and all these solutions are, you know custom label-able, private label-able.
For your brand and solution to offer to your members through your digital channels. And then we also have a suite of about, I think we're up to 24 portfolio companies as well. They are, you know, in a variety of different fields. A lot of them are in digital engagement. Some are doing lending payments, member benefits different things.
Some are focused in the AI space. Some are more in the solutions. Some are in some other, you know, some are just our QSOs that are not in necessarily would be considered a FinTech, but [00:04:00] also great service solutions. Again, to compliment a suite of products to really help you get whatever you need for your, your organization.
And we're always looking for the opportunity to fill those gaps. And, and the product team at Proceed is also looking to help make connectors to help make it easier for credit unions and these pro partners in our portfolio in all of that to be more easily integratable. More quickly so you can get up and running and really focus on servicing your members and we can kind of handle the technology piece for you.
Yeekeng: Well, that sounds like a great lineup of products and services. One that really caught my ear was the, your work going towards students because I wish I would have gotten a lot of like financial advice in school, which I didn't get too much. And I, I think a lot of people my age and a lot of younger people can relate to that.
Ben: absolutely Just to comment on that, I think that's something that a lot of people are finding as they're entering adulthood. I know my friends included, you know, we didn't get it in high school. We didn't get it growing up. That used to be a part of, I think, some of the home economics classes that used to be.
I used to teach people some basic, you know, business math or personal finance. That's not [00:05:00] happening. So we're trying to help fill in the gap. And a lot of states are now really looking to, you know, promote financial literacy and make it a graduation requirement. So we're trying to be. That's the, the source of information based on those curriculums as they're published in that Evergreen solution to really help help credit unions be that trusted partner of the school districts in their kind of, in their communities as well.
Yeekeng: So how can credit unions maximize their growth and innovation potential with the right FinTech partner?
Ben: Absolutely. So, you know, Innovation can mean a lot of things to a lot of different people. A lot of people think, you know, what is Elon Musk doing? What does Steve Jobs get up to? You know, they created these really great technological solutions, but they also, that technology enabled a lot of use cases, a lot of other businesses to become successful.
What Reseda is trying to do is something similar, where we're helping, Partner. We're helping to create an ecosystem of partners that work together to help credit unions try things at, at any scale. So, you know, we work with $50 million credit unions. We work with $20 billion credit unions. You know, we have solutions for, for everyone in there.
And we really just want to [00:06:00] find the right things and, and some of what we're trying to provide. You know, a lot of the, the stuff. Happening to receive it was more things that we were finding at Michigan State Federal Credit Union Could do things well, and we wanted to give back to the creating industry.
We know we're better if we all work together So, you know, there's a lot more scale that we have so we wanted to find a way to help bring those solutions Help quite often will test one of those partners out or a test out a product MSU FCU And then bring it to market commercialize it make it more ready ready for sale ready for use by other credit unions and, and really helps speed to market for other credit unions.
And that's, that's really the opportunity. I like to define innovation as I talk about it as, you know, making things better today than it was yesterday. And a lot of these solutions allow you to get a quick win. You can put something in place, you can build upon it, but a lot of 'em have kind of almost ready to go solutions with a little bit of configuration and, and marketing work to, to really share what the solution is with your team and then you can take it from there and let it grow as you grow.
And it can really help be a. Accelerator for some of the [00:07:00] things you're already doing. And I think that's really the key. As you're looking at innovation, look at the things you're doing while on your credit union, the things you're exploring, and look where a partner makes sense, you know, and something that you understand or are trying to do, you're going to have a lot of understanding of what that partner could look like for you.
And, really find what's a good fit, find a good company fit as well. And that's what we found to be successful, you know, at MSUFCU and a lot of these companies, you know. really understand Credit Unions. And a lot of the, the FinTechs are now as they learn about Credit Unions understand that we're all mission aligned.
You know FinTechs were usually founded to solve what they perceived to be a broken issue In the banking system, the financial system, credit unions were also founded with that same mission. MSUFC was founded in 1937 Because, you know, people related to MSU faculty, staff could not get loans because they were shut out of the banking system.
So they created a credit union in order to enable, you know, access to financial services that were not happening in the traditional [00:08:00] banking market. This kind of collaboration we're doing today, and we've seen this take off in a number of different areas in the past couple of years. You know, credit unions and fintechs are partnering together because we have similar values and we're trying to solve the same things.
Yeekeng: That's great. I love that. Innovation defined as just being better today than yesterday. I feel like a lot of people are intimidated with innovation, having to have this big idea that changes everything, but the little steps matter too. So that may lead into the next question. A change can be hard, especially for a credit union, but they need to evolve and adapt their current offerings.
To do that, innovation and a digital strategy have to be a priority. How can a credit union prioritize these when most have limited resources?
Ben: Absolutely. So maybe one thing, you know, before we moved and created Reseda Group on our innovation lab, you know, innovation was kind of everyone's job. So when everything, something becomes everyone's job, it's no one's job, right? So there was no champion. There's no one to move things forward. You know, we [00:09:00] as busy credit union professionals have a lot to do every single day to take care of our members.
You know, random things came up, they need addressing. And sometimes the, the things that can help us move forward and Sometimes actually be beneficial to our jobs, optimize, you know, some of the workflows and processes we have. We just don't have time, time to focus on them. So really setting aside either a group of people, a committee, one individual, whether it's full time, part time, part of their, their role really allowing them the space.
to explore these ideas and figuring out a percentage. One, one concept that I really liked to share and I learned it from a book called Loon Shots by a Safi Bakal. It's available on Amazon if anyone's interested in reading more, but it was really impactful as I was starting down this kind of path where there's this concept in there about artists and soldiers and it really is about balancing two parts of your, your business.
Right. So there's the kind of the core business, the machine that drives it. That's the products and services. You know, the loans, the deposits that we, we always talk about needing and wanting more of that funds all the other [00:10:00] things and that works well, you know, sometimes you don't need more than that, but at some point, you know, regardless of your business and how solid that business model is You, at some point, will need to innovate, change it, or you, you know, you just won't, won't survive.
You know, you can last for 50 years, but maybe you won't make it to 60. So, there's this concept, and really your soldiers are the ones who are kind of soldiering on keeping that core part of the business going. And then there's your artists who are kind of figuring out the future, what comes next. And you kind of need that solid business core in order to make those investments into, you know, your artists, into the future, into innovation.
And then, that innovation then, Eventually is no longer innovation. It becomes part of the core business and then feeds it back into the cycle. And there's this complimentary mix before. And in the book, they talk about Steve jobs and kind of his appreciation when he came back the second time to Apple for those soldiers and how much they needed when he was first there.
And part of the reason Apple kind of. What's because, you know, they really leaned into innovations, all that matters, you know, the core part of the business, who cares about that? And they even had what they called the DMZ in between the [00:11:00] buildings where those different parts of the company worked. And they didn't cross that line, you know, and they really just favored it when he came back.
He had learned some lessons in between and really the focus being, you know, both engines feed each other and it's important to focus on both. So really what we figured out at our MSUFCU, and I recommend anyone else doing this as well, is figure out what is the percentage of your time you want to focus on kind of innovation, creating the new, making things better.
And then what do you still need every day to kind of keep that core business operational and running. And that could be, you know, 5 percent to start, 10 percent to start. You know, at MSUFCU we kind of settled on a 20 80 mix and that seems to work quite well. For us, but yeah, that's something that can also ebb and flow throughout the year.
There may be great opportunities like a merger or a core core, you know, change or digital banking or something big. Maybe you have to take a step back, but if you think about it, some of those things are also making things better than they were. So you can almost consider that innovation away and setting the foundation for doing the next step as well.
So really it's about setting aside the time, dedicating time and effort, [00:12:00] and being purposeful with how much time you're willing to dedicate to it.
Yeekeng: I love that concept of the artists and the soldiers and having to create that balance. Sometimes it's pretty hard.
So how can partnering with a fintech or multiple fintechs help a credit union remain focused?
Ben: Absolutely. So I think the one, the one thing, you know, again, we all have limited resources, you know, and you know, we do things well, but some of the things that FinTechs have figured out are something that they do very well. That's their whole core business. You know, we probably, you know, we could do it maybe, but we wouldn't do it.
Well, it's not what we eat and breathe every single day. You know, we don't wake up thinking about. Whatever the fintech is, you know, they're also able to move quickly, you know, and explore things that maybe we can't do in a highly regulated environment. Now, that's where the partnership needs to come in, where we help them see how they fit in, where the regulations compliance need to be strong as well for us to actually work together, but use them as your R& D, use them to accelerate things.
And I think another thing you can look at, too, is, you know, if you were to [00:13:00] hire someone, if you were to try to. Buy a software solution, you know, how much time and expense would it go into making that solution or figuring out that product or, you know, a lot of, a lot of fintechs are helping us unlock data and a lot of us have data science teams, business intelligence team or analysts that are doing this work as well.
But the FinTech already has the model built. Right? So if you want to try to build the same model or think you can build the same model, well, what is your time and effort and what could you be doing instead? And maybe it's actually cheaper to just buy the off the shelf version today from the FinTech.
And then, you know, you can get a leg up and you can go quicker and really it's about speed to market and really, you know, I think they also do a great job of unlocking data that we already have and we're struggling with data governance and other things. They figured out how to simplify it and kind of either unlock it for our members directly, direct to consumer or for us to better take better action serving our members as well.
So I think there's some categories there where, you know, there's a great opportunity in the short term as well.
Yeekeng: this next set of questions are kind of like a [00:14:00] checklist of what to do when a credit union wants to partner with a FinTech partner. So what do credit unions need to take in account when considering FinTech partners?
Ben: Yeah, absolutely. So I think number one, find a fintech that has founders that fit your culture, fit your personality. You know, they understand you and want to partner, right? A lot of these companies are looking for a start. They're looking for a first client or a second client or looking to scale and they want to create something that's, that's, you know, Positive, making a positive impact for your members for the world.
And they're open to feedback. They want to get their product in front of members. And quite often it's great to start with a pilot. And if they're willing to do that, you can try it out. They get feedback, you can help guide them along the way. You know, and I think the other thing too, to be, a cognizant of.
You know, you're not signing a core contract, you know, this isn't a team that has legal agreements that have been worked on for 20, 30 years. This is a team that's just starting out their learning and be flexible in how you approach that. You know, they may [00:15:00] not have a SOC 2 yet, but they have, you know, plans to get there.
You know, so you just have to mitigate some of the risks. It's involved in accessing member data. You know, we end up, you know, offering, you know, pilots with de identified data to try it out and then to put them in full scale. Well, then you go ahead and then you make the connections, you do the full deep dive due diligence, you know, like you would with anyone else.
You still got to do the due diligence, but you have to right size it for what is the use case, how are you functioning, you know, and also understanding that these, this is a company that's, that's new. And they're, they're trying to figure it out and they're, they're well intended. So, you know, find someone who's well intended, willing to work with you.
And if they're missing something or not doing what you need them to do, they should be open to taking that feedback. And you should also be open to hearing maybe what they're strong at and trying to help you solve as well.
Yeekeng: So you mentioned doing a pilot a few times. Tell us about running successful pilots. You've shortlisted potential partners. Now what?
Ben: You want to have a champion at your credit union, someone who can own it. You can think of them as a product owner, pilot owner, if you already have product owners doing something [00:16:00] else, but they're truly the product owner. So they're the ones who bring in all the other people.
So they bring in marketing, they bring in the tech people, they bring in the, if it's payments thing, bring in the people from payments, if it's business. People from business lending, whatever it is, but that's kind of the single point of contact. They bring in the right people, leverage, you know, space. And again, we all have limited resources, so figure out what percentage people can give and figure out who you actually need to run this day to day and who just needs to be a, hey, they pop in for a meeting here or there to kind of give some feedback.
And then who needs to be core, core to the team. So kind of form your core team. It can be a small team. Pick a timeframe as well. So some pilots. You can get a successful pilot done, operated, and you can collect enough data, and depending on how long it takes to get off the ground, that's kind of between you, how fast you can move, and how fast the company can move, but to actually measure the success of the pilot, some of them can be measured within a month, some of them take six months, some of them take a year.
It really depends how much data you want to collect to make your decision. So kind of know that up front and set some success criteria, [00:17:00] ROI. Or at least an ROI where you break even. So what would it take? How many members do we need to use this platform? You know, if it's bringing in deposits, how many deposits per member?
How many deposits overall? If it's bringing in certain types of loans, how many loans are we trying to bring in? Some of these are actually just going to be kind of member benefit engagement pieces. So figure out how you're measuring engagement. Is it net promoter score? You know, is it other things? So what are the metrics you're always using?
And how do these Pilots tie back to moving the needle on something there. And then figure out what does it look like to scale it as well. So you launched it to a thousand people or a hundred people to pilot and then all of a sudden you liked it and you want to move forward. Is there still and ROI when you put it as scale for all your members?
And then another recommendation as your going through the pilot as well test it out with your employees. Make sure the employees know what this thing is. If they get to use it they're more likely to recommend it to your members. Organically. If they get excited about it cuz they had a chance to try it.
We have found the hard way that if, you know, you don't do this communication with employees, all of a sudden they're telling [00:18:00] members, Oh, I don't know what that is, you know, I wouldn't try that. You know, and then you kind of get this negative experience. So as you're doing these, you know, you can make a more positive impact with the, the pilot and your members by, by running it through employees first and then going to members second.
Yeekeng: You may have answered part of this question already, but what should realistic short term and long term goals look like for accrediting and running a pilot program with the FinTech?
Ben: Absolutely. So yeah, we talked about maybe timing and what might make sense there, but I think some other things you want to do early on is set success metrics. That could be adoption. That could be hard ROI, financial numbers, like let's say you're doing something that's supposed to bring in deposits.
Well, how many deposits do you want it to bring in, in the pilot frame? So you have 500 members who try it. You wanted them all to bring in 10 each. Did that happen or was there an overall total or did you see success towards that? Sometimes while you're running the pilot, you get close to a number and you have to make a.
Judgment Call, if you liked it and think you can do some more marketing efforts, more promotion to get it there, you know, and that's also stuff to course correct along the way while you're running the pilot. So if things don't seem to be moving as [00:19:00] quickly as you think, that's the opportunity to also experiment with how are you promoting it, where are members getting access to it as well, and you kind of use those throughout.
Also do some surveying Or, you know, in some fashion with your members using it, so you kind of get some qualitative data to kind of go with some of the quantitative. So, how are they using it? What do they feel about it? Do they want to use it? But you also, you have to have a mix, because, you know, people will tell you they love something, but if they never once opened it, or they used it once and never came back to it, well, it's kind of hard to maybe justify some of the expense sometimes.
So really, making sure to understand, do the members like it? Are they going to use it? And really, you got to create metrics around kind of three areas when you're measuring these things. It's about desirability, so again, do the members want it, feasibility, can we support it, and viability, you know. What is this going to bring into the credit union long term, and can our employees, you know, ultimately support, support this thing moving forward?
So, and without all those three, you know, if you've got two of the three, you're usually going to fail. So, especially that, that first one, desirability. You can create all this great stuff, and if it's targeting your [00:20:00] members, and your members don't want it, it doesn't matter how much time or effort you put into it, it's the wrong thing for your credit union.
Some, some of these have a target of your employees. Again, if they're not wanting it, they're rejecting it, there's a reason for that. So, you know, that's an important component to, to making this successful.
Yeekeng: And how do you make the leap from pilot to partnership?
Ben: Absolutely. So again, very key to set those success metrics at the beginning because if you don't have goals, the goalposts are always moving and it's now going to be a gut decision. Did I like, and you're going to, did I like these people? Did I personally like it? You know, versus what were the numbers actually telling me?
You know, we all try to be data driven organizations. This is no time to not do that as well. It's just sometimes smaller scale numbers. So, you know, if you're expecting 2, 000 people to sign up for something and 80 sign up, well, that probably isn't the thing that people want. You know, and, and, but on the flip side, if you're expecting a hundred and a thousand sign up, well, hey, you know, there's something there and then you start to look at some of the other metrics, you know, what is the sentiment, you know, from the members.
So, you know, we [00:21:00] surveyed a bunch of members, you know, 80 percent positive sentiment there. That's a good sign. That's a product they like, you know, also looking at some of the hard. Numbers that we get our breakeven point that we created at the beginning and then also look at, look at what does it take to operate, operationalize something, you know, so great, we can make it work on a small scale, but what if it's now something that you need to put into the call center or into every branch, what does it look like to actually take it and put it there?
If it's something you're launching a digital, what is the plan? To roll it out and you do need to have a rollout plan just like you would anything else and you know, over communicate and make sure you don't just do a big splash launch, but how do you care and feed it after it goes into that final, you know, final resting place of digital or in branch or call center or employee experience, you know, if you don't care and feed it, it will die over time.
It'll get a good big splash. Love it. But then if it doesn't kind of get the care and feeding, just like anything else, you know, it struggles. So, you know, the transition, you know, it, You know, we have found success at MSUFCU with [00:22:00] having, you know, an owner from the business be a part of the pilot the whole way.
So if you kind of can identify where this is going to land, make sure that person is a stakeholder all the way throughout, because then it's a smoother transition. And if you can't do that, figure out how to get them in towards the end of the project so it's not a cold stop and then a restart.
Yeekeng: What will a true partnership with a FinTech be like? What will it look like?
Ben: Yeah, absolutely. It really will feel different than a vendor relationship. There are some things that you just buy. You don't really have meetings with them. You just check in every so often. Oh, it's time to renew the contract. Did we meet? SLAs, whatever you're asking for, you know, and then there's partners, right?
So a lot of these companies are early stage. They have an idea. They have a working prototype. They have a working solution. They have one or two other clients. They may be from another industry getting into credit unions as well. You know, and they should, if they're a true partner, they should feel receptive and open to your feedback.
You should also, though, feel open and willing to give feedback and receive feedback from them as well. Partnership is a two way street. [00:23:00] So, you know, if it doesn't feel like, you know, you want to support them and promote them, you know, because you, you like the experience, you like what you're getting, you like the team you're working with, you know, it's not going to feel right, you know, and there's some gut feeling to that, but there's also, you know, This, you know, kind of thought that, you know, and a lot of it's that, how does that feedback work?
Are they responsive when you say, Hey, this isn't working or, Hey, you know, my security Dean needs you to make this change. Do they make that change? Do they say, Oh, I don't need to do that. You know, we're, we're just a FinTech, you know, we don't need to worry about that. Well, you know, they should be responsive to your needs just as much as you are to them.
So yeah, part partnership, you know, is more than just that standard, standard vendor relationship. And it's definitely something you can feel. And a lot of these companies, especially if they formed a CUSO have, have formed a CUSO knowing a little bit enough about credit unions to understand that they want to be aligned with credit unions.
And to do that, they want to work with credit unions and they just, they just feed like, you know, they soak up the feedback. They just like, it gives them [00:24:00] energy to, to have these conversations with us. Absolutely.
Yeekeng: Great. Anything else you'd like to add? Any closing statements?
Ben: Yeah. So, you know, I think, you know, as you're, you're looking and exploring FinTech partnerships, there are thousands and thousands of them there. Reseda Group has kind of found the best of, best of breed in some areas. So we are trying, trying to do some of the legwork and hopefully allow credit unions to take advantage of the work we've done both with, you know, Reseda and then also with MSUFCU and kind of share that out to the industry.
We are trying to create. A portfolio of products and companies and investments in our portfolio that really build a suite of products that can help any credit union of any size be successful.