Experimental innovation

Matt McCombs has no problem experimenting.

The evidence is clear to those walking through the doors of Vibrant Coffeehouse and Kitchen in Moline, Ill. The coffee shop, which opened in late 2022, sits next to the headquarters of $1 billion asset Vibrant Credit Union, where McCombs serves as president/CEO.

It roasts its own coffee and offers breakfast, sandwiches, soups, salads, ice cream, and more, while also serving as a branding and growth platform for the credit union. McCombs joins this episode of CUNA News Podcast to discuss the unique arm of the business, the importance of engagement, how to turn ideas into action, and his leadership philosophies.

Chapters

• 0:23 Episode introduction
• 1:27 Matt's background
• 4:58 About Vibrant Credit Union and Coffeeshop
• 15:44 How Vibrant Coffeehouse and Kitchen came to be
• 18:56 How the Coffeehouse "hooked" customers and members
• 21:16 Members vs customers
• 22:29 Message the brand wants to get across
• 24:17 How Vibrant brews their own coffee
• 25:21 Vibrant merch
• 26:43 Thoughts on CUs doing something similar
• 28:51 Thoughts on experimenting as a leader
• 31:38 How employees got on board with the coffeeshop idea
• 34:22 How Vibrant stands out
• 37:25 Final thoughts

Transcript

Brock: Welcome to the CUNA News Podcast. I'm Associate Editor Brock Fritz, and we're spending today's episode discussing leadership, creativity, longevity, the changing credit union business model, and the importance of turning ideas into action all through the lens of a credit union coffee shop. Matt McCombs will join me for a wide ranging discussion that starts with his credit union filled childhood and ends with his latest forays as president and CEO of $1 billion asset Vibrant Credit Union in Moline, Illinois.

Matt explains the credit union's path, including a unique idea in 2022 to start Vibrant Coffeehouse Kitchen. "I don't have a problem experimenting," he says. Which is clear when he explains the concept behind the fully functioning coffee house that also serves as a credit union branding and growth platform.

But let's hear it from the expert. Here's Matt explaining the coffee shop and the unique outlook of Vibrant Credit Union.

Brock: first you just want to give a brief intro to yourself Yep,

Matt: yeah, so got a bit of a unique background. My dad actually ran a small credit union growing up. So I've spent really my entire life around credit unions. And my small credit union, I think they were 7 million when he first went down there. And then they have a pretty, pretty good trajectory of growth.

But I spent from, you know, 10 years old on actually working inside the office. And so anytime he needed help with something... Even to the point of, I remember when, when he bought a scanner for the first time and he said, Hey, somehow we have all these documents that are in a storage unit and they somehow get to like, end up on a computer and I need you to figure that out.

And so I remember doing that as a kid. And then I was a teller and a loan officer, ended up running a few offices as they expanded right after, through college and after college. And then had a break from there and ended up going to work for a company called Raddon, So Raddon at the time had just been acquired by Open Solutions, which is now owned by Fiserv. And went to work for them in 2007 in an analyst role and quickly moved into a strategic advisor consulting role. And, Really loved the time there. It was a great company and still they've got a lot of really good things going.

They've gone through a lot of change, but it was a company built on data. And so I really took from, you know, being inside of one institution and understanding some of the ground level aspects of what it was like to work at a credit union to then getting to see what that looked like when you took data spread across, you know, 3000 institutions and seeing like what, you know, what triggers and levers you could push and pull and what it meant and how different business models worked. And so was there was on the road about 190 days a year.

Felt that a lot. We had had our first child. I loved what I was doing, but the opportunity to transition and not be gone that often came up. And so I came to work at the credit union in 2011. At the time, it was known as DHCU, just the acronym had originally been Deere Harvester Credit Union.

And, and so, ironic enough, my dad had ran a Deere credit union in Ottumwa. So, kind of the same you know, base of member aspect and things from there. Completely different organization, but came here in 2011 originally as our EVP in charge of all sales and service. So anything member facing I had responsibility for.

And the CEO was a tremendous leader before me, had been here for 40 years was the one that hired me and really I don't, I don't know that I'd necessarily say he hired me only as the, you know, the chance to be the CEO but he knew he was kind of winding down and was trying to figure out, you know, how to give the board some good options for, for the next leader coming in and he, he really gave me a great opportunity, I think, of over the course of about 18 months, I'd gone from running just the sales and service team to running everything in our business other than compliance and finance.

And so I had collections and all of our indirect lending, IT, talent, marketing.. So really kind of got some good exposure quickly in the business and then transitioned really in 2013 into the president role and, and from there it's been kind of a, a whirlwind of, of what we've done, so.

Brock: Yeah, yeah, I was kind of going to ask what's going on at the credit union now, but also if you want to get into maybe a couple of those big changes over the past few years too.

Matt: Yeah, so you know, I'll go back in time and, and give you a little of the history of what we've done, so. 2011, when I arrived, the credit union was actually not making any money and had been shrinking in members and assets. And I think a lot of that you go back through 2007, 8, 9, 10, was a pretty challenging time in the industry.

Ironically enough, in the market that we're in, was not a challenging time. The, the main employers here really were John Deere, which the ag market was still really hot at that point and the arsenal, which made all the ammunition for the military, and we were in the middle of conflict, and so you still had a lot happening there.

So economically, this market was pretty stable. By 2011, when I, when I came in... One of the things I think that happened is, is this market really didn't make some big adjustments in the way they ran their business, which you saw, and I saw consulting from other banks and credit unions across the entire country.

They had to kind of, you know, redevelop who they were 2007, 8, 9. And I think that we got caught on our heels a little bit. And so we, we saw that. The way in which loan pricing had moved, the way in which the deposit market and margins were, we were really struggling. So I spent the first two years really just trying to drive excitement, energy, and growth.

And so we did. I mean, we had kind of back to back years of 30, 40 percent loan growth. Everything was direct to the consumer. We were, we were on the phone calling and driving a lot of business, which was great. When I'd been in about a year into the executive role, senior executive role, started to have some conversations with the team around, you know, where do we need to go?

And the thing that we had looked at is we were sitting on legacy technology. We had a lot of confusion in the market based on our name. So our name being the acronym DHCU, everyone in the town still thought it was Deere Harvester Credit Union. They thought you had to be part of John Deere to be a member.

And John Deere didn't, they had pulled the license agreement from all Deere credit unions. We actually couldn't do anything with Deere, but, but had that acronym. So we really decided we were going to go through kind of a three year process of let's enhance everything. So in 2015, we rebranded as Vibrant.

Went through a pretty big brand campaign of, of becoming Vibrant. 2016, we replaced every piece of technology we had in our organization. From our core system, to our online banking, to every loan origination platform, to our accounting system, to our doc imaging platform. I mean, there wasn't a piece of software that we didn't go through and change in 16.

We came out of that in late 2016, and as an organization, we're kind of watching the way the industry was moving, and we saw mergers really being kind of a big item of what was taking place, and we probably dabbled into that, I think, of, hey, we need to understand how this is going to look, and we had a goal of Over the course of the next 12 months, let's try to see if we can do a merger.

We got a little overzealous and ended up doing 6 mergers in 18 months. Which so 2017 and 18, I would argue, were kind of a merger, you know a lot of small organizations we we went into and had done a lot there. It really expanded our footprint pretty wide and, and in some ways, I'd say looking back.

We probably went a little too fast in trying to make sure we could balance that. And, and so by 2019, we, we kind of had a refocus moment as a company and said, okay, what are the things we're good at and where do we need to kind of manage that? And so we started to really put a plan in place of simplifying the business and started to bring down some of the physical presence that we had that was expanded.

Way too far out. Geography based in 2019, we went from Des Moines, Iowa, all the way to Danville, Illinois, which is almost Indianapolis into Chicago and all the way down to Metropolis, Illinois, which is Paducah, Kentucky. And so we were so, you know, geographically spread out that we just couldn't, we couldn't find a way to manage it.

So we wanted to go through this simplification process. That, that worked out somewhat well, except then 2020 came and the entire world shut down. And so we went through 2020. I think we were the 5th or 6th largest PPP lender in the country. We really kind of looked at that as our opportunity to help small businesses and consumers and so adjusted there.

But even in that mode, we were still thinking through how could we make our business, you know, significantly more streamlined and simplified. And I would tell you that I think 2021 Really kind of was the culmination of us looking at you know, coming out of the pandemic, how is the world going to change and the part about that, Brock, that I think we really looked at as an organization is the consumer's mindset for what they need financial institutions for is dramatically different than what it was five years ago, let alone, you know, go back 10, 15, 20 years ago, and the point of that is we really started to believe that if you look at what Community Bank and Credit Union's business model has been, and, and I would use this as the, as kind of the, the overall, not, not that there's not outliers underneath it but our business model has ultimately been being kind of the great aggregator of consumers business, and what I mean by that is, if you know, 20 years ago

Banking was hard, and it was hard to have your, your services at multiple places, right? I had to physically write a check and mail it in. I would have to call or go and stop at a place to understand what my balance was, and, or to withdraw money, or to manage things, or to move money, and, and that was a challenging process, and community financials were really built upon we were going to be relatively good, not great at anything, but relatively good at a lot of things.

And we're going to make this process easier to aggregate your business together. And I think it was a great business model through the 80s, the 90s, the, you know, the early 2000s, but what's And I think it's accelerated obviously during the pandemic is consumers need to have an aggregator in a business isn't necessary anymore.

And I think we're seeing that. Rocket Mortgage was probably the first one that cracked that where they said, you know, you know, hit button, get mortgage. And all of a sudden they took over the market, you know, share in a matter of two years. Consumers thought, hey, it's easy for me to go and just pay my bill online.

I don't need to worry about where my mortgage is actually held. And then you see it with. You know, indirect auto lending picking up and how consumers are moving and now with Venmo, how I can move money from person to person in a different way. And, and the reality is, right, consumers have moved to this as their aggregator.

And we, we started to say, well, how do we play in that space as an organization when our value proposition has been in the past being You know, adequately good at providing services, but we needed you to do everything with us, right? Like, if I didn't get Depth of Wallet with you, the challenge in that would ultimately be I'm only making a little bit of money in order to provide to the cooperative, right, from every little product.

But if I start to lose the products that are maybe a little more profitable, my model starts to break. And as an industry, I think the model breaks when you look at it in a bigger way. And, and so, We, we kind of took the concepts of this simpler model and this fragmentation of banking that's coming in and said, how do we, how do we play in that space?

And so the coffee shop ultimately was the first step of that of If consumers no longer need a physical presence and they don't need a great aggregator, we needed to find a way to, to figure out how do we get on the front end of a transaction instead of the back end of a transaction, right? And, and that was one of the challenges that we had in banking is.

Banking for, for a business model, we're the thing that comes with the product. We're not the thing you actually want. No one wants an auto loan. No one wants a mortgage. No one really wants a checking account. They want a car or a house or the ability to buy things, right? You don't want to go and get a new checking account.

And so we, we started looking at how do we get on the front end of this. Transaction and build a relationship direct with the consumer, not with something that they have to have, but with something that they choose to have. And, and so when we looked at a number of retail businesses, ultimately there was this idea that, you know, when you think of a coffee shop.

A coffee shop today is ultimately one of those things that is still central or essential into a community from a gathering point. If you, if you think about, well, why do you go to a coffee shop? You go to a coffee shop today when you're by yourself and you need to get some work done and you're wanting a different place to go.

You go there when you have a friend you want to meet. You go there when you want to meet with your spouse and grab a cup of coffee or lunch, or you have a group of... 10 individuals that are, you know, all part of some group or association and they want to get together. It's, it's a gathering point where people still congregate.

It's, it's part of a community. The other aspect about a coffee shop that we really enjoyed was that not only is it a central point, but it has low barrier of entry for someone to try, right? When you think about a coffee shop in a lot of ways you're willing to try out a new coffee shop anytime.

But you have a tendency to go back to the same one that you build loyalty with. And so it's got this really unique value proposition from an engagement standpoint that everyone's willing to try a new one, but they quickly build loyalty around where they go and where they enjoy to be. And so as a gathering point, that was ultimately where it was.

From a business model, what we looked at was if we could start to build engagement through the coffee shop. We can build a loyalty program to start to collect data and information and find out what bank products work best for certain individuals. So instead of us trying to build it as the aggregator, so Brock comes in, I'm not trying to have Brock come in and say, Hey Brock, you need to get a checking account, a direct deposit, an auto loan, and a mortgage.

And you're sitting here going like, I, like, I don't want to do all of that, right? I'm used to being able to download an app and just do the one thing. I don't want seven things at once. Right as I go through. And so we were able to start to look at it from a loyalty program where we could target and actually work with with each individual for one product that we think is best for them.

And so we've really kind of simplified our product offering down to try and target it to where we're only going to be really good at a handful of items instead of trying to offer everything out there, which allows our banking products to become. Much more FinTech like, where we're really good at something, rather than trying to be average at a lot of things.

Brock: First, did you have like a blueprint to go off of when doing this or did you kind of freestyle it?

Matt: Yeah, you know what I, what I'd say is I think Capital One with their cafes at least gave the, the idea that, hey, this, this does have relevancy, right? So it, it ultimately, with the credit union owning the coffee shop, and we looked at it in multiple ways at first of, do we partner with another business and have another business run this?

But the, the goal wasn't just to drive traffic, because if you drive traffic... That's one thing. And yes, it's nice for your brand, but if you still have a bank office that no one wants to walk in, but they're going to the coffee shop, I don't know that that really does much for you other than maybe pays you rent on your real estate.

We were really interested in, in the data and the relationships that we could build in the future. And so ultimately a partnership kind of went out because if it was someone else's business and someone else's customer. It didn't work well for us to be able to manage the data for a lead generation source.

And so we, we put it into a CUSO, the credit union owns it, and what it really was, was how do we use it as a lead source for future growth on the banking side? And so we looked at Capital One a lot. We ended up doing, doing a tour around Capital One. We went into a lot of coffee shops, tried to find things from there.

Ironically enough, while I was going to college, I helped an individual open a coffee shop. We reached out to him. He had sold those businesses. He ended up coming on board for two years in a consulting role for us to kind of help in there. So he had experience running a 6 7 chain coffee shop that was out there.

So that was a, a great step into managing it from there. And one of the things that we, we said right up front to our board and to the team as we kind of built this out was the coffee shop as a standalone has to be able to be has to be a well run business that people want to come back to. If we turn it into an experience that is really built into banking heavy, you aren't going to find repeat, you know, users or customers of the coffee shop.

It needs to be a place that. That becomes the loyalty aspect for our communities that we're serving in. And so we've been kind of fortunate to build in that model. Today we have about 300 customers a day that come in every single day. And it's an area where the coffee shop, in our one location, the coffee shop has to provide value that people want to come in.

And so that was... That's kind of the model that we went off of and then thought that banking has to really be a very personalized One on one approach of from the data not from a hard sale when you walk into the coffee shop No one wants to come into a coffee shop or get lunch and say, you know I'm sitting down having lunch and you're bombarding me for products.

I got that's not what I'm interested in but Individuals are, and we've seen this with the rise of, of direct target marketing, you know, via digital. Individuals do actually appreciate when you target them for something they actually want and need. If you're trying to blanket sell them, that it turns people off.

But if you talk to me about something that is relevant for me, you know, there's a very different approach there.

Brock: Yeah, so what's that look like, I guess? How do you get to that point?

Matt: Yeah. So, you know, we, we wanted to put, call it, you know, the hook of what's the reason in an early step. So as we're enhancing kind of our own process, and that's, that's kind of the stage we're in. The early steps that we wanted right out the gate were what's the reason someone would self-identify, I should do more with you.

Okay. Right. And that was the first, first step into this. So the benefit for our existing members or for someone to become a member, is that when you utilize a Vibrant card, you get 20 percent off your entire order, right? And that's a big enough amount that when you look at you know, average orders for us sitting in the 12 to 15 you know, an order range, if you come back two or three times a week, which is what most folks do, that starts to add up into real money.

And so the 20 percent off was really our first target. So the way that we have it set today is, if you come into the coffee shop, you don't have a Vibrant membership or a Vibrant card, you can quickly scan a QR code, and under two minutes you can basically go through the process of becoming a member, applying for the card, getting it, and by the time you sit down and finish your meal, We actually have a Dropbox that your card is sitting in and you get sent a code to go and pick that up.

And so that's, that's the first step. Now, we're in, we're in enhancement phase today where our goal is, is that by the time you sit down, it's actually digitally issued right to your phone. And so that will be coming in the future. It's, it's, we're actually developing our own app today to build that entire model in.

And so, you know, a lot of the enhancement of. How we can target one to one is, is really kind of our next step of this, of this exciting phase. So we've got two things we're working on. We're expanding the coffeehouse, so we've got our second location that opens up in August in Des Moines. We have a third location that will open up in December.

For that as well, but while we're doing that to get the coffee house going as our lead source We're really working on building an app that will roll out later this year That will automatically as you use it for your loyalty program allows us the ability to kind of target one to one in there Sure, instead of making it a bank heavy app It's really about loyalty and engagement where I can target and actually interact Brock with like you In a way that enhances your experience and doesn't again feel heavy and bank

Brock: Yep, that's great. That sounds cool. Do you know, I don't know if you have the numbers or anything, but just an estimate maybe on like the 300 people that come in a day, how many are new or how many are already members?

Matt: So, so the exciting part, you know, we put our first coffee house actually it's in, we, we moved into a new headquarters this last about a year and a half ago. And so our headquarters is a unique building. We, we were able to buy a Sam's Club that had closed and remodeled the Sam's Club into our corporate building, which is a, a, a pretty unique space to start with.

And the coffee shop sits right off of the front of that. And so it's open to the public right there. We weren't quite sure. We thought it'd be probably about 40 members to non members is where we really figured in our first location. It's actually been two thirds non members. So almost two thirds of the individuals that come into the coffee shop are not an existing member of Vibrant.

And so when you think of it from a lead source, it really is a pretty exciting aspect. And even in our kind of manual process today of how you can apply for an account and then we use the Dropbox, we're opening about 10 new accounts a week. That come from that, that process, which is, you know, a pretty good first step.

Brock: I guess, I mean it's all about creating a feel and stuff probably too. What, what do you go for in there? What's the, what do you try to get across about the brand?

Matt: Yeah. Yeah. So it really is about engagement, right? And I think it was ironic. I was in a meeting yesterday in the, in the coffee house with a marketing consultant we had used years ago and was just traveling through. And what he told me right away is, you know, I've been sitting here watching and people watching here is fascinating because somehow you, you've built a brand.

That is inclusive enough that you get 15 year olds that are walking through here in a pack, right, talking and laughing and having fun and interacting. And you can contrast that with, you know, a group of seven, you know, 70 year olds that are having kind of their coffee clutch. So, what I would say is, is the brand that we've been trying to go for is very much one that has you know, energy and excitement.

But it creates a space and we've built it in a way. And then the future ones are still built this way. It creates a space that it's comfortable that if you're coming in and you've got headphones on and you're working, you don't feel pressured like you have to leave. But if you wanted to come in and meet with 10 or 12 individuals and, and laugh and joke and, and get together that works as well.

So it, it if you would, if you would mix, in my mind, the Panera, like, food options. With what Starbucks used to have before they went to a lot of their mini stores. Okay. It kind of creates that environment overall. Cool. So we sell as much food as we do drinks.

Brock: Oh, nice. Just classic breakfast options or?

Matt: Yeah, nope, it's soup, salad, sandwiches. Oh, okay. Lunch is by far our busiest time. And so we, we sell by far the, the vast majority of our time is between about 1030 and 2 o'clock is when we, we have our biggest kind of peak volume.

Brock: Okay. So I was just thinking about the different things you had to add with people to cook that food and I think you brew your own coffee and

Matt: We do, yeah, we roast all of our own coffees. Very cool. We've got yeah, we have we do all that here at our existing building. So we've got a big commercial coffee roaster. We go through, in our one location, we go through about 800 to 900 pounds of coffee a month. Wow. Is how much coffee we go through in our one location.

So we, we have a. Individual who is about 60 percent dedicated to coffee roasting today. When the second location opens, we'll become 100 percent dedicated to coffee roasting. We're in the middle of developing our own flavors. So we're kind of going through the flavoring process. We source all of our beans and then we, you know, we roast everything here.

We have our own mixes and blends that we already utilize. And a lot of that is, you know, we're the coffee businesses. It's not quite even a year old for us, so we're still, you know, continually learning and developing and tweaking the menu where we need to, and but it's been, it's been really fun to kind of watch, watch the excitement towards that in such a short period of time.

Brock: That is. And then merch, right? You've Added that too?

Matt: Yeah, so we, we have a, we have a, a merchandise section of the coffee house. Ironically enough, we sell about 5, 000 a month of merchandise to the public. So out of our, again, our one location that's there. So, you know, go back to what, what in the very beginning when we think about, you know, in, in our mind, this fragmentation of banking, right?

And, and that it's, it's no longer the aggregation. It's very much the lines of business. And I think in any aspect of, of that. Brand becomes more and more critical, right? And how do you create a brand that gives you the opportunity to be successful and then helps reinforce that opportunity over time? And so the, the, the idea that we're able to, you know, create a spot that not only do people come back in for coffee or for food or for energy drinks, but they actually are coming in to buy merchandise is, is a pretty exciting thing.

Brock: Yeah, that's gotta be pretty unique. I'm assuming your merch numbers were much lower before the Coffee Huff. Yeah. Cool. So

Matt: Yeah, we really didn't sell anything publicly before that. Our employees have always been pretty big users of our merchandise. I mean, we go through a lot to our employees. It's just been kind of the brand and excitement of what we have. But it's picked up steam pretty heavily here with the

Brock: it's obviously pretty darn new still. Has anyone reached out to you about doing something similar?

Matt: I've had a handful of credit unions that have showed up to kind of look at it. Yeah. Not, not that I, I think people are trying to, Mimic it and by all means one of the things I would say with us for the years that I've been here We've always been kind of an open book Then that probably goes back to my consulting days of you know, I don't think that anything has to do with the idea I think it has to do with execution.

So we're always willing to show what we do. What works what doesn't work? I think that's a healthy part of our industry and I love that about credit unions what What I've been probably more vocal on over the course of the last year or two my colleagues in the industry or to anyone out there is I think that the model that we're running is, is showing signs of distress, and I don't know that that's going to change.

Sure. Which, which means. You don't have to go and, you know, build a coffee shop or build something in that space. But you do have to figure out where your niche is. You do have to figure out what are those things that are going to differentiate you from elsewhere. And, and arguably, I think the, the real hard look for most credit unions, and I would, I would contend this for community bankers as well, that if, if you go back to like the Pepsi challenge, right, of credit unions out there.

If you took the name off and the brand off and the colors off of most of the advertisement of what you do, is anyone going to really know the difference between you and most of the other banks or credit unions in the market? And arguably, I think the hard answer is no, right? And, and so it's, it's not that people should reinvent themselves all the way through, but I do think they have to look at, you know, why would someone choose us?

And the, the model that, you know, credit unions always lived on was, was our service, right? We're, we're good people delivering that. The, the challenge in the data today is, and accelerated through the pandemic, consumers preference today has already moved to, to big banks, and they've shown that. And a lot of it has to do with the ease of technology.

It's not that they're looking to big banks as their PFI. They're looking at it because they can quickly and easily. Handle the one or two things that they want. 

Brock: So, when you get those ideas what kind of drives you to actually take them to that next level, you think? Because some people think of things and then just let it go.

Matt: Yeah. That's probably a trait I've always had. Yeah. In general is I, I don't have a problem experimenting. And I think the hardest part in that bracket in a lot of ways is leaders in general. Tend to get punished for experimentation, not rewarded, unless it works. Right? But the thing about ideation and actually implementing ideas is that a lot of them aren't going to work.

Right? This is a lot like, it's a lot like baseball. Right? And, and if you're batting, if you're batting, you know, 400, you're definitely going to the Hall of Fame, right? And, and at the end of the day, from an ideation standpoint, a lot of things don't work. So you know, one of the traits that I've probably, I just have always had is I tend to, to think through things out loud.

And so it, it becomes really important for me to have really good, talented people around. Sure. I will throw ideas out pretty frequently and often and, and I use it as a spot to be able to start to shape those. And so even when you think about the coffee shop today, when the coffee shop for us is very much in the early phase, right?

So we spent, you know, 18 months before we ever launched it, really working through a lot of thoughts and ideas with it. We spent the first year kind of refining it, but we'll still spend the next two or three years tweaking and modifying and going through that. And, and it's just a part of, we don't look for perfection right away.

We actually look for action, and if we can put action in motion, we're okay with the things that need to adjust. Now the, the challenge in it is It, when you do things different and new, you open yourself up for criticism and, and I think that's the hard part that we, we have as an industry and as leaders we, we get really nervous about criticism, right?

And, and I think that's the challenge that we're going to have in when our business model is under, you know under duress criticism is going to come no matter what you do. Sure. And I, I get a little worried that the industry is going to. Watch performance wane and and use the well, it's not just us.

It's the entire industry as the excuse and Instead of going guess what but what are we going to do about it? Right? Because at the end of the day, I believe that you know any CEOs responsibility is to the longevity of the business, right? My, my role ultimately is to make sure that Vibrant is successful into the future, right?

Not just today. And that means everything I have to think about and do as an organization is about how do we build to the collective good of the company, the community we serve, the members we serve, and to the charter in the long run.

Brock: Yeah, you mentioned criticism. I'm just kind of curious, did, were employees confused by why the coffee shop, or did you have to kind of explain the model to them?

Matt: Yeah, I, you know, in the beginning, I, I think as we were talking out loud about it and really going through kind of the thought. We've probably built a culture where our, our employee base recognizes that, hey, we're going to look at things a little bit different. And, and when you go through explaining the idea that it just using, using a little bit of simple data and then in some ways, some common sense, right?

Is as an industry and as an organization, the last, you know, 10 years we've watched branch transaction volume fall, right? And. Over the last two or three years, exceptionally fall, right, as we went through it, and ironically enough, 2020 ultimately led to probably the biggest holdouts on some of that digital transformation of the member base.

Actually being the ones that have embraced it the most in some ways that that was because it would be what would have been considered the most vulnerable through the pandemic, right? And, and so we found that a lot of our members that were maybe a little hesitant to going down the path of utilizing a digital first mentality are the ones that didn't want to ever come back into a branch once they changed.

And, and so you know, when you start to explain that and think, okay, well, if the branch model goes away. And as an organization, if we're left to compete digital first, the reality is credit unions as an industry are in, in a lot of trouble. We are not built right now to be competitive enough in a digital first environment.

And enhancing our digital capabilities will, will help a little. But when the consumer's choice in a digital first model goes across the, you know, the entire globe of where they can look for opportunities, we're not built for that. Yeah. We're, we're not only not built for it, we are, we are decades behind, not just, you know, months behind, we're decades behind, and trying to catch up in a short period of time is going to be challenging, and so, although yes, we have to become digital based, you better still think about how you, how you get an inflow of people into the model, and, and so the technology has to be there, but you still need to have, why you, right?

And so, just because you have a digital model, It still has to be YU, and I think my biggest challenge is we get lulled to sleep a bit in this industry because the revenue is built off of what we did yesterday, not what we need to do tomorrow. And so it's easy to think about our existing members, which is an important group we have to serve, but we can't forget about the members we need tomorrow.

Brock: Yeah, there's a lot of, a lot of new people coming in, so. what is your like elevator pitch, I guess, for why, why Vibrant these days?

Matt: Yeah. Yeah. So, you know, the lead source that we ultimately today are looking at is, and again, we've really fragmented the business. And so, we've tried to say, how do we get someone to interact with us? from a community standpoint in a way that they can try us out. And our belief is very few individuals in our, in our community are unwilling to try out what we do through the coffeehouse.

If we can get you to come through the coffeehouse and get you to want to come back, I have a very high opportunity of being able to get you to want to take a 20 percent discount. Right? And how, how you'll end up wanting a loyalty program as we go through. Which then allows me the ability to think about banking for what you need.

Not for just trying to blast, you know, blast it across everything in there. And so, the, the... The coffeehouse for us is really, is really there for serving two, you know, main purposes. It's a brand driver that individuals, when we go into a market, will quickly be able to know who our brand is. They may not think about us even in banking, but they'll at least understand and know the brand in a quick period of time, right?

Even in, in markets as big as like a Madison, it doesn't take long if there's a couple of new restaurants or coffee shops that come in, you will hear that name because... That's, word of mouth travels. People talk about new places that are stores or restaurants, but they don't talk about new banks that come into a place, right?

And so, how do we get our brand out there, even at just a high level of brand recognition, to give us an opportunity? Two, the data source that comes through allows us a really different way to target than just, you know, blasting out. You know, here's a 5 percent CD, you should come in, right? We get a very targeted group that we can go for.

So that, that ultimately is what we're looking at for consumer perception. What's a bit unique for us is... Not only are we fragmenting what we do then for what deposit products, we're very much getting away from trying to target in the market for being a loan first organization. And, and I think that's one of the things that credit unions, you know, over the last two decades have become probably a little bit driven in is we are the, We are the low rate lender of choice, and we've won because we can give you a better rate, which although yes, that's a great value proposition back to our member owners, if you're always competing on the low rate side, it becomes really challenging to stay sustainable in that model, especially when Thank you.

You're not competing against just the person down the street, you're competing against the person across the country. And so we've really moved away where we don't have any mindset of targeting directly in our market for loan products. We want to become the depositor of choice and then we can always figure out how to leverage those loans in, you know, in, in other ways that, that aren't going to just be the low rate lender.

Mm hmm. 

Brock: Anything else to add, or? 

Matt: The last thing I'd kind of tell you is, you know, ironic enough being here.

So this is my 12th anniversary today at the credit union. And the, the part that I think has been really unique and, and my chief revenue officer will talk about this. She's been along for the journey now for over seven years. When you as a, as a leadership team and as an organization kind of pour yourself into the company, and I think that's what we are, we very much treat this as a part of our life, and that work life blend really shows.

The, the ironic part of it is, you know, I took over as, as the CEO at 30 years old or 31, and I never, never intended that, you know, I had to have that in, in life and just, you know, just do the next best thing and you keep trying to make things better. And the, the ironic part about that is a lot of our journey in the last 11, 12 years has probably been a reflection of the journey that I've had to go through in leadership.

You, if, if, you know, I think a lot of individuals jump into leadership. They then forget or they're scared to make a decision because they don't want to fail. And if you look at the last 12 years, the amount of things we've done that have been just absolutely stupid and we've failed on is, is off the chart side.

Right? But we've also been able to create and do some things that are pretty unique because we've always been willing to do that. And, and so the journey of us over the last 12 years is a little bit like the journey of growing up. And, and I joke that, you know, 10 years ago. We were a lot like an awkward teenager, you know, we, we wanted to run really fast and do a lot of things and we created a lot of excitement and people would take notice of it, but we tripped on ourselves all the time, right?

We just hadn't quite grown into our feet yet. And, and I think that's part of the journey that people go through. And, and I think when you lead a company, you have to recognize that, you know, the things you do and, and, and where you go, people get more excited about the vision of what you're doing and actually taking action on it than just.

You know, sitting back and playing it safe all the time, and, and, hey, you got to be willing, and I think this is the hard part, you got to be willing to throw yourself out there that it might cost you your job, it might cost you things from there, but you're willing to take those things on, and you keep a safety net underneath it, you don't put the organization at risk but you can, you can do things that are still outside the norm, and I think that's the part that I've been probably the most excited about our company here is we've been able to bring a group of people together that are willing to take risks and try to do things different for the benefit of the organization in the end.

And, and I think that's, that's the part I challenge the industry on more than anything else is, are you really finding ways to build sustainability in the company or are you just trying to survive the next few years?

Thanks for listening to the CUNA News Podcast. Subscribe to the show on Apple Podcasts, Google Podcasts, Spotify, and YouTube.