ICYMI (In Case You Missed It)

In Case You Missed It – NACUSO 2023

CUSOs are becoming more and more important to the credit union industry because they focus on solving specific problems. Which is basically what iDiz does. So we headed to Las Vegas for the 2023 NACUSO Network (why does every conference end up in Vegas, anyway?), and here’s what we think you might be interested in, just in case you missed it.

Next Big Ideas you might want to pay attention to

NACUSO runs a competition each year that lets new companies compete against each other for CO-OP Solutions’ prize money. Here are my notes from the 5 ideas that made it to the finals:

  • Goalsetter – a fun saving, investing, financial education, and smart spending platform that makes it easy for the whole family to go cashless while teaching them how to be money smart. It’s focused on nextgen members, and can be white-labeled by CUs. Parents/grandparents can give gift amount$, but can tie the rewards to completed financial education lessons. (CEO formerly worked for Nickelodeon and multiple other kid programs.) (Winner)
  • Mahalo Banking – digital banking CUSO focusing on adaptations for people with neurodiverse conditions, including offering font and color options for dyslexic or visually impaired, disabling animations, even allowing left-handed users to move the buttons to make it easier to use the app. (Second Place)
  • Quilo – real-time digital loan syndication so that multiple CUs can take a fraction of multiple loans. CUs get to set their own parameters/tolerances, and the recipient does not know that other CUs are part of the loan. Loan decisions are all digital in order to provide instant funding.
  • Harness – platform that gives members the flexibility to program their credit/debit swipes to match what they want (rewards, round up savings or donations to charities, 529s, etc.). Allows members to choose, and to change their minds when their lives change. Increases interchange income for CUs when their cards are used more often.
  • BankSocial – cryptocurrency exchange that allows CUs to evolve from analog to DeFi (decentralized finance). No cost implementation, co-branded, built into your core and digital banking systems.

Much Love for Small Credit Unions

There were two fascinating and productive discussion and workshop sessions centered around small credit unions. A few takeaways that are already making waves – you’ll see much more on these later:

  • Small and de novo CUs are in danger; every merger is a loss of important community connections, expertise, diversity, and the hyper-local focus small CUs bring to the table.
  • There are good answers for EVERY issue that makes a small CU vanish in a merger. For example, look around at all the CUSOs that can handle every aspect of doing business.
  • Technology is bringing solutions to every problem of scale.
  • Expensive one-sided contracts with stagnant vendors are still a huge problem
  • Small CUs have tremendous value to the entire CU movement. Think of the value of the biological diversity of a wild forest vs. a field of pine trees planted in rows.
  • Small CUs are incubators for new ideas and fresh talent.
  • We discussed several exciting ideas for tapping into and increasing the value to elevate, stabilize, and revitalize the entire credit union movement, including:
    • a new CUSO (Revolution CUSO) that is getting started for the express purpose of serving and supporting small credit unions.
    • We heard several incredible ideas for solving executive and staffing problems, such as fractional CEOs and execs, and creating more career paths to attract and retain talent.
    • An amazing idea for a “CU Peace Corps” where young execs are trained, supported, mentored, and sent to small CUs to gain experience and a tremendous head start on their CU careers.
    • Forward-thinking CUs are already taking action to cultivate the next generations of CU volunteers, boards and leadership, especially among younger members and staff. Boards must represent all members, not just retirees with nothing better to do, and they need support and nurturing to learn and take on their responsibilities.

Crypto, DeFi, and Credit Unions

The world we live in is changing, your member base is changing, and CUs will need to adapt. Part of that process is understanding what things like crypto, NFTs, and blockchain really are, which I finally grasped after attending one session at NACUSO. Put simply, while Bitcoin is a currency, and NFTs are a token designed to be an asset with a record of ownership, Blockchain is the part that makes it work – providing the digital trail or proof of ownership.

Just as music has evolved from vinyl to cassettes to CDs to MP3 files, money has moved from gold to coins to paper to spreadsheets. Spreadsheets are now a digital record, and so is Blockchain – a distributed ledger/single source of facts that records ownership, and one that everyone can verify and trust – which makes it a better form of record-keeping.

Titles to physical objects (cars, houses) are already being recorded/tested as NFTs. So if a physical object can be recorded, why can’t a loan (a CU asset) be recorded as an NFT? That’s the message from Lamont Black, a professor at DePaul University and financial futurist. He believes that CUs are ideally suited for this type of decentralized finance (DeFi) because of their foundation of collaboration. After all, CUs are already decentralized and serve a group of shared interests – very similar to DeFi – and banks aren’t.

If you haven’t found a lending platform, you haven’t been looking

83% of current lending tools return decisions in over 30+ minutes up to 24 hours. But consumers don’t want to wait that long. They want instant decisions. So no matter what size CU you are, or what what type of lending you want to focus on, you should be talking to at least one of the groups at NACUSO in order to speed up and simplify your decisioning process, to make new kinds of loans (like business or mortgage lending). And you certainly have lots of options. (Seriously, it seemed like every third booth was manned by a lending-focused CUSO.) Zest AI touted how their process gets decisions in seconds, 24/7, reaches overlooked borrowers, and allows better decisions on unsecured, indirect, auto, RV, personal loans and credit cards. Quilo allows you to own a fraction of many loans through loan syndication, rather than just financing a few. Then there are Syfrr, Acusi, LoanStreet, Origence, Sync1 Systems, and a several others we never really got the chance to talk to.

How do you start a CUSO, anyway?

Brian Lauer, NACUSO General Counsel & Attorney from Messick Lauer & Smith P.C. provided a fascinating overview of the legal nuts-and-bolts of what it takes to start an run a CUSO. For example, the requirement that CUSOs primarily service credit unions and/or credit union members. Judging from the attentive crowd and the many perceptive questions, interest in CUSOs is intense!

CUSOs, let’s talk!

At iDiz, we share your deep belief in the power of cooperative finance and cooperation. We’ve worked with credit unions and CUSOs for a long time, and we’d love to develop more CUSO partnerships. If you need help with growth strategy, marketing, branding or your CU or CUSO website, please get in touch!

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