Money 20/20 is the largest fintech event in the US, with well more than 10,000 attending. Yet credit union representatives are difficult to spot. According to TruStage SVP of Corporate Development and TruStage Ventures Brian Kaas, he counted fewer than 100 credit unions attending.

Money 20/20 is about the future of money. Credit unions would like to have a future in the money business. It's even in Vegas! Why are so few attending?

Sarah Snell Cooke, Co-Founder/CEO of The Credit Union Connection, sat down with Brian to talk about the event and the first time credit union leaders, including Kaas, will take center stage at the event. The goal: for credit unions to reach 1 billion members worldwide. And do you know who can help credit unions achieve that? Watch the video to find out! ->>>

Read the Transcript of the Video with Trustage’s Brian Kaas and Sarah Snell Cooke!

Disclaimer: Transcript is auto-generated.

Sarah Cooke 00:00

Alright. Hello, and welcome everybody to The Credit Union Connection. I, of course, am your

host. Sarah Snell Cooke. I'm here today with Brian Kaas, who is the TruStage Senior Vice

President of Corporate Development, as well as TruStage Ventures. Welcome.

Brian Kaas 00:16

Sarah, great to be here with you today.

Sarah Cooke 00:19

Yeah, awesome to be here, because I know you always have exciting stuff to say. So we're

really focused on is next week you're going to be going to Money 2020, which starts on the

27th in Vegas. Yay. What stays in, what happens in Vegas does not stay in Vegas in this, in this

context, but explain the event to credit union leaders who may not know about it and why they

should be going there.

Brian Kaas 00:43

Yeah. So I kind of equate Money 2020, to the Super Bowl of banking technology. So this is by

far the largest banking technology in the US and and perhaps globally. And so, you know, what

you see here is you have sort of the latest technologies that are being introduced to the

market. You have a lot of thought leaders that are coming to talk about, you know, sort of the

evolution of of the banking industry. And so I really encourage credit union leaders at some

point to, to go out participate in the event. You know, I think it can be very eye opening to

credit union leaders. I know a lot of credit union folks go to credit union conferences, but you

know, that can create kind of an echo chamber. Those are important. But I think also seeing

what's going on outside of the credit union industry is really important. And I looked a few days

ago just at the attendees at the event, and I mean, they typically draw between anywhere from

10 to 13, 14,000 people. I counted less than 100 credit union industry leaders attending that

event. So, to me, that's a concern, because, again, the world's moving faster than ever on the

technology front. So I think having leaders go out there, and Money 2020 actually is kind of

curating a track for credit union leaders, which kind of led to the panel that, that we're going to

be involved with out at Money 2020 with some of the top credit union executives talking about

our quest to hit 1 billion members globally. Yeah. So I wanted to ask you about that before we

get started on the actual content of the of the panel, I wanted to ask you, what do you feel it

means that credit unions are front and center at an event like 20, Money, 2020, which, like you

said, 10s, more than 10,000 people attending. I mean, the credit union industry is such a huge

segment of the US financial services market, a growing portion of the global banking services

market. And again, that's why I just feel it's so important for credit union leaders to really go

and see how quickly the pace of change is occurring in the market. You know, one of my bigger

concerns for the industry as a whole is that sort of the population of credit union members is

continuing to age each year. So how do we attract the next generation of credit union

members? How do we deliver member experiences in a digital way? And so much of that really

is going to rely, I think, on partnering with FinTech companies that that can offer technology

and experiences that will resonate with a broader segment of the US population. And it's not

just young people, it's people of all ages, now, really, I think are becoming more comfortable

with, you know, kind of that seamless digital transition. I think the other thing that's really

powerful is that technology can enable a credit union to really execute on its mission. There's

so many companies out there now that can help a credit union reach maybe underserved,

overlooked segments of the market that could create, you know, tremendous credit union

members, but the technology combined with the mission of credit unions, I think, is a really

powerful combination.

Sarah Cooke 04:33

No, absolutely, especially with that younger generation, as you said, and that is the one of the

biggest threats to credit unions is the aging of the membership. We need to get the message

out there. Credit unions always talk about that, but actually do it, get the message out there

that they're here to stay and really great institutions to bank with. So as you mentioned, you're

going to be doing this panel: CEOs Take Center Stage, on the quest for 1 billion members. At a

high level, tell me what you and your panel are going to be talking about for the, for the

audience at Money 2020.

Brian Kaas 05:13

Yeah. So there was a recent study that was released, a report from the World Council of Credit

Unions, looking at kind of where the credit union industry sits today. We've, we've passed the

400 million member mark globally. You know, in the US, I think the latest stats I've seen is

we're over 140 million members. So I think we're well on our way to hitting that billion dollar,

billion member mark. I think with the panel here, we want to focus on, how do we then continue

that growth trajectory? The CEOs with Dietrich Kuhlmann, who's the, Dietrich Kuhlmann from,

CEO of Navy Federal, Bill Cheney from SchoolsFirst, Jennifer Oliver at Rise Credit Union. So

some very influential leaders, I think, that have been very successful in finding that winning

combination for growth in, with their credit unions. But, you know, I would say there's kind of

the flip side of that coin. A lot of credit unions are not growing. They're shrinking in size,

struggling to continue their operations. And so let's look at the lessons in playbooks that some

of the very successful credit unions have been able to follow. Let's talk about ways that

technology can help smaller to mid sized credit unions reverse, maybe a downward trajectory

and growth, to reach new members, to be more cost efficient, to deliver the better digital

experiences. And so we'll be kind of talking a lot about that, I think when you look at the

opportunity of technology to enable credit unions to grow globally, I think that the, there are

over 7 billion smartphones in the world today in a population of 8 billion. I think close to 70% of,

of people on this planet have a smartphone in their pocket. That means every credit union, you

know, 70% of the the population could have access to a credit union through that smartphone.

So I think that technology is really going to be the key of, how do we reach the next 500 million

people around the globe. How do we grow credit union membership in the US to 200 million? I

think the other thing that's again, an exciting opportunity is that, you know, credit unions don't

have shareholders that they need to answer to. You know, credit unions can invest to the future

in a way that that maybe a lot of the competitors in this space are unable to do, but, you know,

it's going to require, certainly, a lot of ingenuity, and it's going to require, you know, for some

folks, getting out of their comfort zone, maybe reevaluating the way that that credit unions

have, have, you know, kind of operated, relying very heavily on the rank of the branch and in

people coming in to kind of experience that great member service. There's ways you can still

offer great member service digitally to build on kind of the values of credit unions, yeah,

Sarah Cooke 08:41

yeah, absolutely. I know, as a an old Gen Xer, as well as the ignored generation, but I, my, I'm

on the board of my credit union, and the people on the front line didn't even know who I was,

because I never went in the branch. Yes,

Brian Kaas 09:01

yes, yeah.

Sarah Cooke 09:03

So, so, from your perspective as a, as a senior vice president of TruStage and the Ventures,

what is your vision for the future of these ventures within TruStage that you're looking at? But

also, how will they help propel credit unions forward?

Brian Kaas 09:19

Yeah, so really at TruStage Ventures, we've been actively investing in FinTech companies now

for eight years, and really focused on companies that we see can address technology needs of

credit unions or that have services or solutions that a credit union can offer to their

membership. And really, I think the key kind of North Star of the venture fund that we have is

really looking at, how do we ensure credit unions stay relevant and competitive in this rapidly

changing world. I talk about, JP Morgan Chase, having a technology budget that's nearly double

the entire credit union industry combined. So, you know, the days of being able to kind of build,

maybe some of your own solutions and have kind of the, you know, the core technology needed

to just keep the lights on doesn't work in today's world. And really, I think the only way that

credit unions are going to be able to to kind of stay competitive on that front is through these

partnerships. And so we've invested now in over 60 companies, and really are focusing on, how

do we kind of create this ecosystem to connect credit unions with fintechs? So investing only

tells part of the story. We want to now kind of help credit unions dip their toe in the water, help

them navigate a market in which we have over 10,000 FinTech companies in North America

alone. So a lot of credit unions, like I don't even know where to start exactly. Can you help me?

And so we spend a lot of time talking to credit unions, helping them identify maybe some of

their key pain points. Where do they want to grow? And then help match them with companies

that that we've seen that can help achieve those goals.

Sarah Cooke 11:24

Yeah, and especially right now, strategic planning and budgeting time is the time to be really

thinking about what you're going to invest in. And like you said, I think technology is probably

one of the most, I would say the most, but you know, potentially one of the most important

areas where you really need to put the money toward, and not just cybersecurity, which, of

course, is important, but

Brian Kaas 11:46

yeah, that's probably a topic for another discussion. But I think you know when, when you look

at a lot of the unique partnerships that have evolved between the credit unions and fintechs,

yeah, a lot of times it's like, oh, this is just going to be an expense out the door. But you know,

a lot of credit unions have been able to achieve massive ROIs on those investments. There are

FinTech companies out there that you know can enable, that actually can create non interest

income for a credit union. So it's a revenue source versus an expense item. So there's, there's

just so many different flavors out there, so many different ways that credit unions can partner.

And again, I think a common theme of, of those credit unions that have achieved, you know,

significant growth is they have a healthy mix of, you know, again, delivering a great experience

in their branches, but combining it with, you know, good technology, good partnerships, sort of

a team that that has developed a strategy to leverage these FinTech relationships to help

achieve that growth. Yeah,

Sarah Cooke 13:00

and that's you mentioned, something super important for credit is to also kind of change their

feelings and thoughts about is non interest income. Obviously, Washington is coming after it,

but there are services that add value that you can charge fees for, versus being punitive fees

for overdrafts and things like that. Yeah,

Brian Kaas 13:22

they can. I mean, there's so many, you know, really interesting companies out there that

address, you know, financial wealth and can, you know, grow the member experience in a way

that actually generates non interest income for the credit union while delivering a very valuable

service offering to the member. And, yeah, I definitely encourage credit unions to kind of keep

that on on the you know, their horizon. Credit unions have a tremendous amount of trust

between, you know, the credit union and the member. And, you know, are there solutions

where they can deepen that relationship with a member, expand it beyond, you know, maybe

one or two products. You'll hear a lot about that, like, you know, how do we build and deepen

the breadth of the relationship? And again, many of these technologies are really good at that.

That's, you know, kind of they built a whole company around that key objective, right?

Sarah Cooke 14:28

And that's how Dave is stealing their members. So, and then on the flip side, opposite revenue,

you know, some of the time savings that investment is not an expense. I think it's an

investment. You know, if you're saving your staff several hours a day, you know, or whatever it

is, by processing mortgage paperwork and things like that, yes, then you don't have to have

add headcount later down the road, or, if you know the housing market goes down, you don't

have to lay off people, you just turn your bots back. So, yeah, I think that the less sexy part, but

also very important, is the is the efficiencies that these technologies provide also.

Brian Kaas 15:17

Yeah, and that gets really to the cost side of the equation. Is that, again, I think for credit

unions to be able to compete, it's not just kind of the front end member experience, but we

have to be able to operate our credit unions in a cost effective way so that we can remain

competitive with our interest rates. Keep the lights on. And if all of the competition is deploying

artificial intelligence and different sort of robotic process automation, it's going to be very hard

for for credit unions over the next 5, 10, 15 years to to be at the same kind of cost scale as

others. And, yeah, I think a lot of times people think, oh, automation equals job elimination. And

I think it's more of like, well, we can redeploy, you know, employees to different functions that,

that can be performed just as well, but at a fraction of the cost, we can now focus, you know,

efforts on, on member, you know, retention, member engagement. You know, doing some

things differently, and it's going to translate, should translate into a larger credit union that's

going to enable the credit union to bring on more employees, but on a more profitable,

Sarah Cooke 16:41

right, more valuable. Yes, work, more human work. So I'm going to get back to the panel a little

bit. We strayed a bit, but get a little bit closer to the panel. So what is this billion dollar

objective? Or billion, excuse me, I did it too. It's this billion member objective. What is the role

in FinTech there? Because you did touch on it a little bit earlier. How did they help us add

members?

Brian Kaas 17:05

Yeah, again, I think where technology really comes into play is one, again, I think it is through

the smartphone. I think that will enable credit unions to reach markets that might be more

difficult to do through a traditional creation of branches. I think the other really interesting

thing with technology is that it enables financial institutions to offer certain products that might

not have been, that would have been cost prohibitive to do. So I look at like, micro lending. This

is sort of a, you know, an emerging area. You know, certain, certain markets have been doing

micro lending for a long time. But, you know, how do you provide, you know, a $50 loan to

somebody and do it in a cost effective way and, and to do it in a traditional way, it's really not

possible. But, you know, leveraging technology where there's just a high amount of automation

that, that, again, can reach a person that, that might not otherwise have access to anything,

and do so in a way that, that you know, is cost effective. It is really key, I think, you know,

there's, there's financial education, there's, you know, different savings tools out there that

that, again, can be implemented and distributed through technology to such a large segment of

the population that I think that's got to play a key role in hitting that billion dollar, the billion

member level.

Sarah Cooke 18:59

We've already hit a billion dollars a few times, I think. But, yeah, absolutely. I love the part that

you mentioned micro loans. That is something that you know, obviously can be very cost

prohibitive. What kind of interest can you charge, or what kind of fees can you charge on a $50

loan? But you know, there are technologies out there that can make it happen, not only cost

effective for the credit union, but also for the member who just needs to get groceries that day,

you know.

Brian Kaas 19:28

Absolutely. So many of those, those individuals, have to rely on more predatory options,

because that's the only option that's out there. And and when you look at the growing number

of, you know, underbanked and unbanked consumers in the US market and globally, you know,

they don't have the opportunity to even start to build credit. But a lot of these, these

technologies that I'm talking about, you know, they're tracking payments, they're developing a

credit history, they're helping that person develop a credit report so that they can, you know,

maybe it's micro loans, and then you're able to get your first credit card, which then enables

you to, you know, someday, kind of get a more traditional loan. But it has to start somewhere,

and, and that technology is, is, you know, something that didn't necessarily exist, at least not

at sort of the scale and reach that it does today versus, say, 10, 15, years ago.

Sarah Cooke 20:29

Yeah. And going back to the micro loan example, that's some, I read somewhere. I think it's like

75% of micro loan takers, micro loan borrowers are actually Gen Z and millennials. So you know

that just that one example can help credit unions get younger. Hopefully.

Brian Kaas 20:52

that's, yeah, that's right. What a great opportunity to, you know, provide a lifeline to that, that

younger consumer that can be then translated into a member, and you're kind of with them as

they, you know, kind of enter out into the world and, and you can create a lifelong membership

Sarah Cooke 21:14

Right. Through through a micro loan. Yes, it's not instant gratification necessarily, but if you're

looking at the long game, that is exactly what credit unions are here to do, is to serve those

underserved folks and people with second chances for low, low credit scores or no, no credit

score. So yeah, I think there's a lot of opportunity there for credit unions to really get younger. I

think Denise Wymore, give her a little shout out. Used to use the term youthanize, um, that's

Brian Kaas 21:47

an interesting way to to phrase it, yeah,

Sarah Cooke 21:51

Spelled youth.

Brian Kaas 21:52

Right, with a Y.

Sarah Cooke 21:55

Yeah, not the other way around. So um, Brian, as you know, I typically give my audience, or

excuse me, I always give my guest an opportunity to share their final thoughts at the end here.

So talked about a lot of stuff. What say you? Shat's your final word of wisdom for our credit

union audience?

Brian Kaas 22:16

Yeah. I mean, I think just kind of with the theme of, you know, kind of being on the eve of

Money 2020, you know, I encourage everybody next year to really take a hard look at it. If

you're out there at, it's in Las Vegas, you know, to kind of open, open your eyes to different

ways of of engaging with, with your members. And if you have, you know, you maybe you're a

little on the fence around whether or not to partner with fintechs, you know, I think true states

ventures would be a great opportunity. We're always here to kind of help have conversations

with credit unions. So always want to just kind of, you know, make sure our doors open to those

conversations for those who are interested.

Sarah Cooke 23:04

Yep, awesome. Thank you so much, Brian for joining us today. Appreciate it.

Brian Kaas 23:09

Thank you, Sarah.