Just six months ago, BNPL (Buy Now Pay Later) seemed to be on every lip in credit union c-suites as executives eyed the rosy reports of robust lending at fintechs such as Klarna and Affirm but then came May and Klarna laid off 10% of its workforce amid a souring of the global economy and soaring worries about inflation, certainly in the U.S. where a gallon of gasoline now is around $5, up from about $4.35 just a month ago.
Add in the fact that the CFPB has opened an inquiry into BNPL and formally requested buckets of information from leading BNPL players and, suddenly, that screech you hear are the brakes being applied to BNPL at many, many financial institutions, credit unions definitely among them.
If you are a credit union executive you should be staying up at night chewing on this question: how do we survive in an age of relentless technology innovation and an increasing consumer acceptance of trusting their financial services to a fintech.
Tossin’ and turnin’.
Guy Messick, a retired lawyer who now serves as CEO of NACUSO Business Services, is a man you want to hear.
NACUSO Business Services is a recent offshoot from NACUSO, the trade group for CUSOs and the credit unions that own and use them, and this offshoot has a specific focus which is to help credit unions and CUSOs hook up, especially CUSOs with a fintech focus.
Messick believes that CUSOs are a tool that potentially give credit unions an enormous marketplace advantage.
But he also knows that the two need a place to meet and mingle and get to know each other and each other’s needs and wants. Thus the rise of NACUSO Business Services.
Its offering include a listing marketplace where many fintechs just might want to be featured.
This just might be a way to get better sleep at night.
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Per the story, Delta, American and United are all shoveling gruel at their front of the plane passengers and, increasingly, in the back of the bus food manque is for sale
Put down that fork. And vow with me: I will not eat airline food.
It doesn’t matter what class of carriage. The stuff is not something one should eat.
Say it loud, say it proud, say it until you mean it.
Not even stroopwafel, which can’t possibly be good for you.
I stand with Gordon Ramsey with this (and I never thought I’d write that). Here’s what he told Refinery 29: “There’s no f–king way I eat on planes. I worked for airlines for 10 years, so I know where this food’s been and where it goes, and how long it took before it got on board.”
There’s even a website Airline Meals where passengers document, typically in words and pix, how appalling their food has been.
When Time Magazine ate some airline food, it offered this comment: “Low air pressure and background noises further impact the way we taste, by repressing the ability to taste sweet and salty foods…. For food to taste the same before it is in the air, airline caterers have to add up to 30% more of sugar or salt to a meal.”
I don’t want to put that stuff in my mouth.
Yet a fact is that. just maybe, airline food isn’t as bad as we think – but the environment (low air pressure, often very low humidity, noise) affects our taste buds and, very probably, it would require an explosion of flavors to make any kind of impression.
That’s also why buying take-away food at airport concessions – and there are increasing numbers of good options (at Phoenix Sky Harbor there’s an emphasis on local favorites such as Zinc Brasserie, La Grande Orange, and Matt’s Big Breakfast) – is not such a smart move. It generally won’t taste like much at altitude. Eat it in the airport and enjoy it more. At 30,000 ft. not much will taste good.
That’s why when I believe I will be hungry on a flight I usually buy a bag of nuts and maybe a Starbucks coffee. A 4 oz bag of cashews packs 650 calories and that’s around 100 more than a Big Mac. The nuts will tide you over on a x-country flight. And they also are modestly good for us.
That last bit matters because the research says that frequent flying is bad for our health – and so the smarter we eat at 30,000 feet the better for our health.
As for the research, it’s in a Harvard Business Review article by Columbia University professor Andrew Rundle. The professor had access to mounds of deidentified data from EHE which has data from tens of thousands of US employees including both health and travel info.
Rundle wanted to know if a diet of steady travel – which he sets at 14 or more nights way from home monthly – impacts health.
Wrote Rundle: “We found a strong correlation between the frequency of business travel and a wide range of physical and behavioral health risks.”
What risks? The heavy travelers self-reported “clinical symptoms of anxiety, depression and alcohol dependence; no physical activity or exercise; smoking; and trouble sleeping.”
Really frequent travelers – those away from home 21 or more nights monthly – fared even worse. Wrote Rundle: “The odds of being obese were 92% higher for those who traveled 21 or more nights per month compared to those who traveled only one to six nights per month, and this ultra-traveling group also had higher diastolic blood pressure and lower high density lipoprotein (the good cholesterol).”
Ouch.
Of course, in the last two pandemic years, there have been few of us logging 21 nights away monthly or even 14.
But the growing crowds at airports augur a return of business travel. I remain convinced that business travel will never again reach the levels of 2019 – but I also believe that the heaviest travelers in 2019 will again soon be traveling heavily and maybe already are. Their travel rings the corporate cash register, it brings in new customers and keeps existing customers happy.
For those heavy travelers in particular but for all of us too, a simple step towards slightly better road health is to skip the airline inflight meals, reduce or eliminate inflight alcohol consumption, and be mindful of what we eat and drink in airports and hotels.
That regimen is no cure. But it’s a step. And that’s smarter than falling back into bad old habits like eating inflight food just because it kills time.
Three recent trade industry headlines have made clear to me that, suddenly, in addition to weighing issues such as Covid and environmental impacts of travel I must also factor in ethics. Why? Read the headlines:
The Saudi goal is bold: to attract 100 million tourists yearly by 2030.
The Saudis know which way the wind is blowing. Between a global shift away from fossil fuels and the inevitable depletion of the country’s oil reserves, the petroleum cash gusher that has propped up this country won’t last forever.
So why not pour cash into buying a stake in the global tourist economy? Especially now when assets are cheap (vide Seabourn).
Know this: Saudi Arabia is by no means the only nation that wants tourist dollars but which would be viewed as ethically repugnant by many. Think Myanmar, Russia, Yemen, and Iran for a start on a global human rights violators list.
But, honestly, most of those nations take half hearted approaches to tourism.
And US companies are skittish about doing business in them – even with Russia, now, post the Ukraine invasion.
Saudi Arabia is different. It is actively wooing US businesses and it is waving wads of riyals to get their attention. It is working.
Marriot, Hilton and Hyatt all have signaled intent to develop properties on Saudi sand – Hyatt is saying it will open a Miraval at a Red Sea resort and Marriott is blabbering about a Ritz-Carlton.
Will they actually attract US tourists?
Fact is, Saudi Arabia already has a thriving tourism industry that is centered on religious tourism.
But now the Saudi eyes have shifted to winning tourists from western Europe and the US and, it believes, it has the goods to sell them, notably the Red Sea – sometimes islands in it are referred to as the Saudi Maldives – but there also are ruins, stunning (if sandy) landscapes, and coast lines and mountains.
It’s not just the monotone sandbox many Americans believe it to be.
So why not go there?
This is where ethics and personal choices enter the equation.
Of course there have long been suggestions of significant involvement by powerful Saudi officials in 9/11, a claim many take as fact although there is little hard evidence. It is undeniable however that 15 of the hijackers were Saudi citizens. That’s out of a total of 19.
Then there is the murder of Wapo columnist Jamal Khashoggi at a Saudi consulate in Istanbul – a sadistic killing that many say was authorized at the highest level of the Saudi government. But the official Saudi position is this was a rogue killing.
The Saudis also have a medley of oppressive laws, from a ban on alcohol and pork products (don’t even joke about a breakfast of a Bloody Mary and a Bacon Butty) and modest dress is mandatory. It is illegal to carry binoculars in Saudi Arabia.
It is also illegal to carry two passports in the country (something I have always done for 30+ years).
It is illegal to possess photos of scantily glad women. Don’t try to bring in a Playboy or even the Sports Illustrated swimsuit issue.
It gets worse. The Saudis are serious violators of human rights.
A 2020 US State Department report on Saudi Arabia noted: “Significant human rights issues included: unlawful killings; executions for nonviolent offenses; forced disappearances; torture and cases of cruel, inhuman, or degrading treatment of prisoners and detainees by government agents; harsh and life-threatening prison conditions; arbitrary arrest and detention; political prisoners or detainees; serious restrictions on free expression, the press, and the internet, including threats of violence or unjustified arrests or prosecutions against journalists, censorship, site blocking, and engaging in harassment and intimidation against Saudi dissidents living abroad; substantial interference with the freedom of peaceful assembly and freedom of association; severe restrictions of religious freedom; restrictions on freedom of movement; inability of citizens to choose their government peacefully through free and fair elections; violence and discrimination against women, although new women’s rights initiatives were implemented; trafficking in persons; criminalization of consensual same-sex sexual activity; and restrictions on workers’ freedom of association, including prohibition of trade unions and collective bargaining.”
A 2021 Amnesty International report on Saudi Arabia said: “The crackdown continued on the rights to freedom of expression, association and assembly. The Specialized Criminal Court handed down heavy prison terms to individuals for their human rights work and expression of dissenting views. Among those arbitrarily detained, prosecuted or sentenced were human rights defenders, government critics and other political activists. Women human rights defenders were subjected to judicially imposed travel bans following conditional release from prison. Courts resorted extensively to the death penalty and people were executed for a wide range of crimes. Migrant workers continued to be vulnerable to abuse and exploitation under the country’s sponsorship system, and tens of thousands were arbitrarily detained and subsequently deported. Prison authorities violated the right to health of human rights defenders and others imprisoned after grossly unfair trials.”
Nope, that’s not a country where I would plan to spend my volitional leisure travel dollars or time.
Very probably you soon will have to make your own decision on the Saudi question. Their intentions are plain, their money is plentiful, and they are in a hurry to make a mark in global tourism. Will you help them?
Subtitle this podcast: what a fintech needs to know and do to succeed when working with credit unions.
Just maybe knowing how to do that is the special sauce that has powered Digital Onboarding – not that many years out of the DCU Fintech Innovation Center – to having 80+ customers in financial services, mainly credit unions.
And in this podcast Ted Brown, CEO of Digital Onboarding, tells where he got the idea for a company that provides tools that help credit unions turn members into raving fans who use many of the institution’s tools, from direct deposit to automatic card payments.
By the way, the more such tools a member uses the stickier the relationship.
Oh…the idea that led to Digital Onboarding’s core business mission came out of talks with DCU execs who shared pain points and wishes and, click, the light bulb went off in Brown’s head and the company’s business plan took shape.
Brown is candid in this podcast.
But so also is Deborah Colby, chief marketing officer at One Nevada Credit Union who is in the show as a one person truth squad. Spoiler alert: she is a raving fan of Brown and Digital Onboarding. If you are hoping for Shark Tank snark, you won’t find it here.
What you will find is Colby’s perceptive take on what a fintech needs to know to really click with a credit union. Heads up, fintech execs, if you don’t catch that bit you have missed gold.
Credit union execs, listen and you will hear good ways to assess if you are in fact getting what you need from your fintechs.
The format of this show departs from our pattern. Here you will hear an intro, then we cut to a one on one with Ted Brown where Colby puts in a cameo at the end, then we go to Colby on her own telling how One Nevada works with Digital Onboarding.
Listen up.
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You’ve heard about the Great Resignation, and the Bureau of Labor Statistics reported the quit rate exploded from 1.6% of jobholders in April 2020 to 6.4% in August 2021. Why are they quitting? Many of them are employees who finally decided to take a big breath in and make the jump into the full-time pursuit of their own side hustle.
Another shoe just fell and unless you closely follow Iberian news you probably didn’t hear it. Spain has suddenly eased its requirements for unvaccinated Americans to enter the country, now demanding simply a negative result on a Covid test. Previously Spain had required the unvaccinated to provide proof of recovery from a recent case of coronavirus, meaning the person had antibodies and thus a natural immunity.
What prompted this? Reported the Washington Post, “The Spanish minister of industry, trade and tourism, María Reyes Maroto, said in an announcement that the ‘new phase of the pandemic’ allowed the country to relax the entry rules. The country saw a 9 percent drop in daily cases over the past week, with 229 new cases per 100,000 people in the past seven days as of Monday, according to tracking data compiled by The Washington Post.”
I am following Spain’s behavior because I vacationed there last fall, in part because I liked their requirement that all Americans who entered had to be vaccinated. I have another trip there planned for this fall. I am not thrilled by this easing of entry requirements so I will monitor what happens to the Iberian infection rate.
But Spain is just the start. The more I think on it the more I see a troubling stampede to eliminate Covid related protections – even though the disease is still out there and it is still killing.
Where? Try here, in the US of A. Unlike Spain, the US in fact now is seeing rise case numbers, indeed double digit increases. The New York Times reports a staggering 53% jump in the number of cases in the past 14 days…and the real number is doubtless higher because the proliferation of at home test kits means innumerable positives are noted but not recorded (and, we hope, the affected individuals choose to self isolate but who knows?).
Worse probably is coming. This is a Walt Kelly moment and we have met the enemy and he is us.
We are suddenly behaving as though Covid had been defeated. Even when – quite obviously – it remains very much on the prowl for victims among us.
I definitely am not preaching do as I do. My own recent behavior, looked at through this Covid lens, embarrasses me.
My guard isn’t down, it has fled. On Friday night I went to a buzzy, busy, crowded restaurant in Phoenix – Scott Conant’s Mora Italian, don’t miss the polenta or the pasta pomodoro. The food was great. But, although the servers were masked, I wasn’t and neither were many others. It was only when I was back home and reviewing a very pleasant meal in my head that the thought suddenly occurred: what the hell was I thinking (or not thinking).
But my behavior gets weirder. On Saturday I went with my wife to a matinee of the new Downton movie (no sniggers, sometimes one does what one needs to do) and again did not even think of a mask. Honestly it did not matter. There was one other person in the theater – which seats probably 150 – so we were fine. But what if 50 had tumbled in? What if?
On Sunday I went to a church service, again without a mask. Probably 250 were at the service, a crowd but not jammed. (Capacity is said to be around 500.) I noted maybe a half dozen people wearing masks. The rest were maskless. Including me.
How dumb are we?
The NYTimes Covid tracker shows an 84% jump in Covid cases in metro Phoenix in the past two weeks. That’s a huge leap.
America also remains vaccine stupid, where a full one third of us are not fully vaccinated. In Arizona, where I live, 38% aren’t (a lot of Stop the Steal cretins here).
Yeah, I am vaccinated and doubly boosted – but I also know that many fully vaccinated have come down with cases of Covid as new variants emerge. That’s not unexpected.
Here’s my vow: the mask goes back on my face in public settings because Arizona remains a dangerous place.
It ain’t back to normal yet.
No matter how much I wish it were.
It won’t be normal until we defeat this virus. That means acting smart. And safe.
A question for credit union boards: Are you paying your staff, especially c-suiters, enough to stay competitive in your marketplace?
We are in an era of intense competition for talent. You know how hard it has become to recruit to fill teller openings.
But do you know that a talent war is upending olden credit union beliefs about senior talent and compensation?
It is. And this will help decide what credit unions are left standing 10 years from now.
Telling us what is really going on in credit union executive compensation is Kirk Kordeleski, a onetime Bethpage CU CEO who now consults with credit unions about compensation especially SERP.
If you think that has to do with search exchange results pages you definitely need to hear this show.
That’s Supplemental Executive Retirement Plans and they are emerging as a key tool in senior executive recruitment and retention at credit unions.
Kordeleski, by the way, is a past CU 2.0 Podcast guest – episode 46 in Season 1.
Kordeleski did this show from a quarantine hotel in Amsterdam after failing the Covid test required for passengers entering the US. He is in a remarkably good mood and that may be a clue that this is indeed a guy who can help you untangle your institution’s antiquated comp practices.
Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com
And like this podcast on whatever service you use to stream it. That matters.
Find out more about CU2.0 and the digital transformation of credit unions here. It’s a journey every credit union needs to take. Pronto
The American Express offer jumped out at me and how could I miss it because it was at the very top of the list of 100 offers available to me: Get 20,000 Amex Miles just by signing up for Pay Over Time, an Amex response to the rapid rise of BNPL (Buy Now Pay later) options for consumers who are buying everything from Goldbelly lobster rolls to Peloton exercise machines via BNPL.
20,000 miles is nothing to sniff at and, by the accounting of ThePointsGuy, that cache is worth $400 (at two cents a mile). My accounting is more conservative but I would still say it is worth $200. Just for signing up.
Different cardholders are offered different mileage amounts to sign up. Some are offered zilch. Others may be offered more than 20,000. Some may be tempted with 30,000.
Sign up and what happens is that eligible purchases are shuffled into Pay Over Time – where interest charges and fees apply – and that happens at 8pm ET if your Pay Over Time setting is set to active. If not set to active the charges of course do not tumble into that bucket.
What is especially intriguing about the Amex 20,000 mile offer is that there appears to be no obligation to actually use the Pay Over Time feature. Ever. It seems one can sign up, wait for the miles to deposit, then rush over and deactivate Pay Over Time.
With a Platinum Card, eligible purchases are $100 and over. I understand that lower thresholds apply to Green Card purchases but have not confirmed that.
Experts report that interest rates in Pay Over Time may reach up to 23.24% and fees may also be applied, up to 1.33%.
I have not signed up for that offer.
Understand, I have very occasionally used versions of BNPL in recent years – notably to buy an iPad Air a few years ago and, last week, when I was about to purchase an iPhone 12 (for the 5G speeds – I live in a T-Mo neighborhood with lots of good 5G) Apple offered me two year financing at 0 percent interest with no application because I had an existing account.
But I also have turned down -indeed mocked – BNPL offers from other vendors such as Goldbelly which offered to finance a Jacques Torres box of chocolates (probably the best in America) over three payments which seemed a laughable idea for something that would be eaten in three days.
BNPL really is not aimed at me. Its core target are consumers with thin credit histories – not bad, just not much.
So why is Amex offering me a BNPL service?
Beats me.
Why won’t I sign up for the Amex BNPL?
Yes, I know that if I take all the precautionary steps – and remember to read Amex emails about Pay Over Time – I won’t ever have to pay a penny in interest. But I also know the probability is high I won’t read the emails because, well, I read very few emails that land in my inbox because way too many do.
I also have more Amex Miles than I presently have a use for. Another 20,000 would just gather some kind of metaphorical dust.
And, lastly. nowadays I am slowly easing the Amex Plat card back into its original role which is as a travel and entertainment card and, constitutionally, I just am opposed to paying interest on travel and restaurant bills. Those are charges that – in my mind – should be paid off as they arrive.
You think differently? That is your right. And know that many travel vendors see their sector as a BNPL hot zone.
But to me leisure travel, restaurant meals, etc. are non essentials and ought to be paid for with surplus money.
Have I always thought that way? Nope and I got the credit bruises to focus my mind on a more targeted deployment of credit tools. Basically I like credit for a home mortgage, for a car loan, and probably not much else. That’s a conservative approach, I know it’s not for everyone, but it works for me.
And I’ll even skip the 20,000 Amex Mile gift – just call me Odysseus.
What happens when you throw a bunch of ex-Googlers into an office in San Mateo California?
Enter Upstart, a new breed lending company that helps financial institutions – credit unions very much included – make more, better unsecured loans and also do auto refinancing.
Upstart comes at lending with a focus on artificial intelligence, machine learning, and doing a lot of data crunching. Using Upstart’s analytics an institution approves a higher percentage of loans – but also enjoys a lower default rate.
How can that be? According to Jeff Keltner, who heads business development at Upstart and is himself an ex Googler, lots of models plain look at the wrong data when making credit decisions.
Upstart has a page full of dazzling stats about how its models perform versus traditional lending models. Check it out.
20+ years ago I interviewed the Google founders for MIT’s Technology Review magazine. Here’s that story.
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Find out more about CU2.0 and the digital transformation of credit unions here. It’s a journey every credit union needs to take. Pronto
