You Are Who You Eat Lunch With: Fintechs and Credit Unions at Table
By Robert McGarvey
You learned this in high school: You are who you eat lunch with. That is fact. You might have fancied yourself a brainiac…but if you lunched with the sweat hogs, well, the world knew otherwise.
Which brings us to this cautionary wisdom shared recently by Kirk Drake, founder of the CU2.0 consulting firm and CEO of CUSO Ongoing Operations. There are three kinds of fintechs, said Drake. There are those that want to eat your lunch (think Rocket Mortgage). There are those that want to sell you lunch (Zelle). And there are those that want to lunch with you.
Drake offered that observation at a small CU2.0 gathering of credit union executives and fintech entrepreneurs – so that made this especially pointed commentary.
By Drake’s measure, credit union executives want to dodge the first group of fintechs – you are zebra on the savannah and they are hungry hyenas.
As for the second group, there are some that want to sell you lunch who are worth paying. Do you want to develop your own core system, for instance?
But the ones you really, definitely, want to get to know are the fintechs that hope to partner with credit unions in relationships that are intended to benefit both parties.
And the good news on that front is that nowadays there are lots of startup and mid-stage fintechs that are hungry to share a meal – and maybe earn some money – with credit unions.
Case in point of a fintech that wants to lunch with credit unions: Quilo, a quick installment loan company – its AI driven technology offers loan decisions literally in seconds – that is co-founded by Don Shafer, who also co-founded Kasasa, which was formed to offer community financial institutions – credit unions – competitive checking products.
The Quilo game plan is similar. Shafer’s plan is to put Quilo loans into the services of credit unions and community banks who will own the paper and set the loan decisioning terms. Quilo also encourages credit unions to enlist their local merchants in offering Quilo to their customers.
It’s not Buy Now Pay Later, it’s not a conventional credit card – but Quilo is a way for a consumer to set specific terms and payment schedules for the purchases they make.
At Carter Credit Union in Louisiana, CEO Joe Arnold told me he is an early Quilo adopter and that’s because he sees the fintech’s tools helping his members, merchants in his communities and the credit union.
Arnold also indicated he believes Quilo will bring in more members to Carter – very probably younger members.
Want more details on Quilo and how Arnold sees it helping the credit union? Listen to this podcast with Shafer and Arnold.
Know too that there will be many more fintechs such as Quilo. Why? Credit union money is looking to seed them.
An advocate of this trend is Ray Crouse, CEO of Parsons Federal Credit Union and board president at NACUSO. In this podcast Crouse presents the case for credit unions investing in CUSOs that are set up to stimulate fintech innovation. That investment strategy is permitted under NCUA regulation and it is gaining favor, said Crouse. Crouse has skin in this game because, as he discussed, Parsons has made sizable fintech investments and his plan is to make more
More optimism – and money – comes from Martin Walker, a vice president at venture capital firm Next Level Ventures which administers the Curql fund, formed to help fund fintechs with potential to help credit unions grow. Curql has a warchest available for investing of $250 million which makes it a real player. The ambitions are large but, said Walker in this podcast, the interest on the part of fintechs in helping credit unions grow is real and growing.
Add this up and there are fintechs with good ideas and increasingly they are getting investments aimed at involving them in credit unions.
So remember to be picky about who you eat lunch with. You were and always will be who you lunch with. With tech make sure the companies are ones that sincerely want to lunch with the credit union.