Reseda Group’s Ben Maxim was recently featured on the CUNA News Podcast, to discuss how credit unions can benefit from the right FinTech partnerships as well as the three most important trends credit unions need to watch and how to keep up on these trends. You can listen to the listen to the podcast here or read an abbreviated version of the Q&A below.
Q: Why don’t we just start with letting the audience know who you are, introducing yourself and letting them know what you do at Reseda Group?
Thank you. I’m Ben Maxim, chief technology officer at Reseda Group and chief digital strategy and innovation officer at MSU Federal Credit Union, where I run our innovation lab. Between Reseda and MSUFCU, we’ve created what we call an innovation ecosystem where companies can either start in Reseda Group with investment and then go to the lab for experimentation and piloting, or they start with the lab and then eventually move over to Reseda Group.
Q: Why is it important for credit unions of all sizes to be aware of FinTech trends and new technology?
I think we use this FinTech term pretty liberally nowadays. A few years ago, it was thought that FinTechs were coming to eat our lunch, but we’ve realized as an industry that there’s a lot of power in partnership. There’s a lot of mission alignment in what FinTechs are trying to accomplish and, really, credit unions — to think about our history. We were formed as a way to deliver financial services in a new and innovative way, different from the traditional banking model.
Together, a lot of these FinTechs are providing us things that we might not be able to build ourselves. We don’t have to spend the time to build it ourselves. If we keep an eye on what they’re building, we can know where we should be dabbling and let them maybe experiment with a direct-to-consumer model, then bring it in and offer it to our members. It really is a great way for us, as an industry, to experiment with things — and you don’t have to be a large credit union to do this. A lot of the pricing is based on your asset size. A lot of companies, if you are going to offer them access to your members and data, they will quite often potentially let you do a free proof of concept to see if it’s valuable before signing that longer contract.
Q: How do you differentiate from which technology is truly just a short-term trend or versus what to invest in at MSUFCU?
That’s a hard question because sometimes we want to be early and be the first ones to do something — and we may get it wrong, and that’s OK. Some of what we’ve done is framed as “fail fast.” I try to reframe it as “learn fast.” We’ll do a pilot with companies and then we set some metrics, and we make a lot of assumptions up front with what success should look like. Then, we use a pilot of three months, six months, 12 months, depending on how much time it would take to actually get a reasonable amount of data to make a decision. Then, if something’s good, we move it forward at the credit union and roll it out to the larger audience.
We’ve created this gate-style funding model where if something isn’t going well, we’ll cut it off early or make some changes, then keep going and cut it off or move it forward so we’re not six months into something that then isn’t panning out. We’re trying to get early-and-often feedback from our members and employees as well. We try to frame questions as we’re evaluating what FinTechs to bring on in three categories: feasibility, viability and desirability. Does it work? Can we support it and do our members actually want it? Are there other ways to think of those?
A lot of times, we can find technologies that these FinTechs have. We may be their first client, or you may be their first client, and they don’t really have a big story to tell other than, “Here’s what the industry and opportunity looks like.”
Q: What are the three most important FinTech trends credit union should be paying attention to and why?
I think the biggest one right now is the “future of money” and what’s happening with blockchain technology and decentralized finance where you can then start transferring money, whether it’s peer-to-peer or across borders.
I think another one is financial wellness. There are a lot of FinTechs that set out to carve out a piece of the financial wellness space, whether it’s rounding up to save money, pay down debt, give to charity or through financial literacy education to help people take control of their personal finances. More and more states are requiring financial literacy courses at the high school level, and I think we’re going to see a huge trend for credit unions to take the lead in being a solution for school districts to prepare students for success.
A third trend is increasing FinTech partnership with credit unions to fill gaps in service offerings. There are a lot of people trying to figure out lending because that was what we all needed. We were trying to get loans out the door. Many of us today are feeling a liquidity crunch. We’re having trouble getting deposits on hand to do the lending that we want to do and what FinTechs out there are going to help us attract more deposits. I think we might start looking at deposit-attracting FinTechs for maybe at least the short to medium term here.
Q: If you had to pick one innovation area or type of technology for a credit union to focus on in 2023, what would it be and why?
Really, I think the power of FinTech right now is to drive engagement and help build digital relationships. There’s a lot that fits into that. … Coming out of the pandemic, everyone learned about these experiences that they had going digital, like with food ordering and grocery shopping and all different ways that they could then get whatever they wanted from the comfort of their couch. It shows up on their doorstep, and they didn’t have to leave the house. That was a great experience for many of them. These services have continued on — food delivery, grocery shopping. There seems to be new things every day that you can just get brought to your house. It’s the blend of humans and digital working together, and I think that’s a power offering that credit unions have as well.
Q: If I’m a credit union leader looking to be more innovative in 2023, what advice do you have for me?
First and foremost, learn fast, try new things. Don’t be afraid to give something a try. Companies are looking for people to partner with them, and they’re struggling to find credit unions to do it. There are a lot of FinTechs that come to us, and then we don’t know what other credit unions we can pass them off to. Know that FinTechs are looking for you and are willing to work with you and want to work with you. If you don’t know where to get started, think about your existing partners. We all have vendors that are likely looking to improve their products, so consider offering to be a pilot partner with them. They might have a third-party FinTech startup solution and need the help of a credit union to test it, so put yourself out there and see what you can find and learn.