As more consumers expect their banking services to use technology to make banking quicker and easier to do, credit unions have been increasingly turning to fintechs for help. However, it can be difficult to find the right fintech partner for your credit union, one that will help your organization achieve its goals.

Sarah Snell Cooke, co-founder of The Credit Union Connection, sat down and asked him everything you wanted to know about credit union and fintech partnerships but were afraid to ask. TruStage Ventures Managing Director Sam Das shared what credit unions should be looking for when considering fintech partners and the impact of generative AI on the credit union industry.

Watch the video or read the transcript below!

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Sarah Cooke 00:03

Hello and welcome, everybody to The Credit Union Connection. I'm your host, Sarah Snell Cooke. I'm here today with the fabulous Sam Das, Managing Director of TruStage Ventures. Welcome.

Sam Das 00:20
Thank you so much for having me. And such a such a warm welcome. I need to get my kids to

introduce me like that. We'll see.

Sarah Cooke 00:30

Well, here, here's your chance to introduce yourself. So tell us about how glorious your career has been, as well as you know, your time at TruStage Ventures, just like the elevator pitch, if you will.

Sam Das 00:43

Oh, absolutely. So it's been an interesting journey. So currently, I'm a managing director at TruStage Ventures, have been with TruStage now going on eight years. I can't believe it's, it's always funny when you're pushing a decade at any place. It changes the dynamic. But, you know, I began my career in investment banking. So don't hold that against me. Well, we have to pay our dues someplace. But working within financial services from day one, you know, doing mergers and acquisitions, capital raise, etc. And that took me all the way through the Great Recession, which was a very interesting time to be an investment banker and working on those types of opportunities. It actually led me to work on a lot of the major restructuring that happened during that time, like Lehman Brothers, Bear Stearns, you know, we AIG, we saw a lot of activity during that time. But one thing that it really solidified in me was the fact that there was a clear indication that, you know, the mainstream financial services, companies weren't really serving the needs of consumers the way that they should be. And that was really what precipitated a lot of what happened in the Great Recession. And so I actually left banking at that point to start my own FinTech, really with an aim towards, you know, how do you democratize financial services by using technology? And that was probably circa 2010 or so. And, you know, I was probably part of that initial cohort of entrepreneurs that saw that opportunity, there was this dislocation in the marketplace, and which was rich for innovation. And so, during that time, we saw a bunch of FinTech starting sprang into existence, which was fantastic. Like, you know, it was the right time, consumers were, were open to experimenting and trying new things, especially with their unique financial circumstances. But, like, all fintechs, you always think about how do I reach the most amount of consumers? And where I was broadly into was on, how do you help those who need the most amount of health, those who have very little and savings who are living paycheck to paycheck, really get access to the financial products and services they actually need. And as I started looking at that fundamental mission statement, let me, who else shares that same ethos, and that that's what actually led me to credit unions and ultimately, to TruStage, to Mutual Group at the time, but now TruStage. And so, you know, as I learned more about what TruStage was doing the relationship with credit unions, it kind of dawned on me that, you know, TruStage is the perfect type of organizations to help deliver these types of solutions through their credit union departments. And just coincidentally, that was around the same time that TrueStage Ventures was springing into existence, they'd already been in operation for about a year or so. And it became a very interesting prospect, what I was trying to do with my startup, I could potentially now do with a portfolio of companies and really drive impact and make a real difference in the ecosystem by being part of that. And so I I folded up my company, sold it off, and then joined TruStage Ventures and, you know, at that point in time, there was probably six or so portfolio companies. Today we're over 50. And so, we've been carrying on that, that work over the past eight years, adding to the portfolio driving those types of solutions into the the credit union system and you know, you know, knock on wood it's, it's been going very well. Great reactions from credit unions. It's filling a need, that credit unions see in the marketplace. Because there there are just so many fintechs out there, you know, through TruStage Ventures we help narrow that lens and provide who we at least think are the best in breed those who share the same ethos as credit unions that, you know, we can help bring to, to them in their time with needs and trying to help collectively solve problems.

Sarah Cooke 05:25

Yeah, and that's so important is that culture match because a lot of times there is I hear from Credit Union executives all the time or boards, about the mismatch between you know, the FinTech goals versus the credit union's goals. And it's, you know, getting right and diving right into that FinTech space, you know, in the last year or so, you know, with signature and the other problems in, you know, fintechs and banking, as credit unions are evaluating which fintechs to use, what should they be looking at?

Sam Das 05:58

That's a great question. And, you know, every credit union needs to have their own process in place to adapt this. And, you know, we talked to credit unions and credit union boards all the time about this, having first and foremost having that internal discipline of how do get these types of companies going through that procurement process, looking at the product itself, the financial health of the companies, you know, the how well it fits within the the regulatory and compliance framework that, you know, all credit unions, you know, hold very paramount to their existence, and ultimately how they're going to serve, potentially serve that end member. It within the the infrastructure that credit union is putting into place, but, and you touched on it earlier, part of that part of that intangible piece, is how well do the FinTech founders really understand what pregnenolone you're trying to do, how good of a partner are they going to be both in the short term solving for what they need, but also long term, because the partnerships will one of the things that, you know, we always tell creating this, these partnerships with the fintechs in our portfolio, and outside of the portfolio, they're not the traditional trading vendor relationships that they may be used to in the past, we're trying to look at them much more broadly, their partner, they're truly partners in a very similar way that TruStage, our partners credit unions, right? You know, we obviously deliver solutions to credit beings, you know, buyers, financial products that we provide both to the credit unions and to the consumer, to our members. But we also want to be good partners, and really help ideate and problem solve alongside the credit unions. And that's what we also look for in the fintechs that we invest in, and we help recommend to credit unions, they have to share that same mission and commitment, and are going to be in it for the long haul. And so, you know, there's obviously be the qualitative, the quantitative checklist of items that you need to go through, but really assessing those qualitative factors is paramount in really finding the right partners who are going to grow with your institution long term.

Sarah Cooke 08:24

Yeah, and that actually drives into my next question, if they're looking to invest in a FinTech, you know, maybe create a CUSO out of one, what should credit unions, or there's a difference what pretty much should be looking for there?

Sam Das 08:38

I think it shares a lot of the same DNA as going through that process. Right, you still have to vet those companies, you know, TruStage Ventures, is a corporate venture capital firm, right? We have one, for lack of a better word, one LP, you know, we're funded by our parent company, as credit unions look to make investments, you know, they're doing the same thing, whether they have a dedicated resource, like you said, forming a CUSO, or just making kind of one-off investments. Fundamentally, you need to have a strategy, what is that strategy that you're investing into? Is it purely financial? Is it purely strategic? Or that somewhere in between that spectrum, the establishing those guidelines internally helps provide at least a framework for vetting what types of opportunities are going to make sense for you to invest in or if investing is something that is of interest? I would say first and foremost, so, if it's not going to be a solution that you're credit union itself is not going to be utilizing. I would, I don't know if just investing for the financial sake of it is necessarily in the best interest. But again, every credit union is going to be different. They're going to approch that process differently, and you just have to prioritize, what is what is it you're trying to solve for with the investment?

Sarah Cooke 10:07

Yeah, yeah, makes sense. So now you've had a long tenure in FinTech and investing. And you've had several years and credit unions now, as you mentioned. What's been most fascinating to you about how credit unions are leveraging fintechs or not?

Sam Das 10:24

Well, you know, what's really been eye opening for me. As I gotten to know, more and more credit unions, credit unions do so many things very well, right. It's the table stakes, trading with offer better rates, they offer personalized service, they have these deep, deep relationships with their members. That's the foundation of the entire ecosystem, which is fantastic, and was one of the reasons why fintechs want to work with credit unions, because there there is this huge advantage of what credit unions bring to the marketplace that's differentiated from the competition out there. But what I've really come to realize, and what's fascinating me the most is the level of collaboration that credit unions have amongst their own peers. That is unique, across any industry I've ever seen, to be honest, particularly against banks. You will never see a bank really talk about what's well, they may tout their successes, but they'll never talk about their failures to a a neighboring bank, whereas credit unions, they are very much open books, and they want to collectively share those insights, so that it helps move the credit union mission forward and help provide the entire ecosystem to recognize the progress that we're all trying to, to solve for, because I mean, everyone is unified by that same fundamental mission. How can we enrich the lives of our members? How can we, you know, pull them up from, you know, potentially, financial situations that are not ideal? Yeah, how do we help empower them to take control of their financial lives? That's all fundamental in the credit union mission, and everyone working together along those lines, helps do that. And, you know, that's something that even within the portfolio companies, or fintechs, that we invest in, we help reinforce, we want the portfolio companies to work with each other to help provide solutions and provide better leverage, technology leverage to the credit union that they're serving, so that the credit cards themselves are getting much more value from the collaboration of technology partnerships that are, that they're forming. And hopefully, that one plus one equals more than, than three, ideally, in the long term. So that's, that's what I've been fascinated by. It's constantly evolving. And, you know, through conversations like this, through the confidence that we go to, you know, there's always more opportunities to foster that collaboration in the ecosystem.

Sarah Cooke 13:25
Yeah, no, I think one of the things you said is really interesting to me, is that you're fostering that same collaboration among your portfolio companies as well. Can you give an example?

Sam Das 13:39

Absolutely, I mean, so, you know, we have companies in portfolio that, you know, are lending focus, right? And so they're working with the Chief Lending Officer of a credit union, and are helping devise solutions that are targeted at their existing members. Down the hall, the CMO of the credit union is working with another portfolio company that is trying to drive messaging and drive solutions to their member bays, based on you know, kind of their product suite. Now, they're all kind of working somewhat siloed and don't necessarily know. So, they might be working with a, with Clutch on the lending side, driving, you know, a, an auto solution that's kind of recapture auto loans from existing members. But, you know, the CMO might be working with Pulsate, who is able to drive push notification through digital banking on what's relevant to that credit union member. Well, you know, if Pulsate can work with with Clutch directly and have that integrated, well, you're killing two birds with one stone and actually solving for the needs of your credit union members by giving them relevant information as to what they need when they need it. But then also streamlining of frictionless experience for the credit union member to ensure that you're lessening the workload on the member so that they get what they need sooner, and, at the same time, relieve some stress in that experience. So the more that our portfolio companies can kind of devise strategies have those integrations already in place, it just helps enable the internal, both the internal communications and also lessen the workload that the credit unions need to do to actually implement the overall strategy that they're looking to deploy. Yeah,

Sarah Cooke 15:52

that sounds like a total winning strategy itself right there. For everybody. So you know, one of the things is we're talking about technology, of course, that has stolen the stage and headlines everywhere is generative AI. And you hear, what is that again? Yeah, so like every conference I've been to so far, in the last eight, nine months of, had, like at least a couple sessions on it. My board of the credit union that I've served on has talked about it many, many times. I think there's a lot of confusion out there as to what it actually is and can do and stuff. But no, I was going to ask you as far as like, what do you see as the short and long term impact of generative AI on the way banking is performed, the way credit unions are going to be doing business in the future, short term and long term?

Sam Das 16:49

Yeah, I mean, it's a great question. Kind of jumping to the end of that. The long term, I think, is still very much unwritten. Right, we're still learning into a lot of the use cases and opportunities. But with that said, the use case and opportunities are virtually limitless at this stage, because it is so new. It's, you know, I, you mentioned, I go to a lot of conferences and give different talks and 10 different panels, I always do a poll of, especially when I'm talking about generative AI, who in the audience have had experience with generative AI, or who have used Chat GPT, whether personally or professionally. And I don't think I've been in a room where there hasn't been a hand up. It's one of those technologies that has captured the attention of board rooms, conferences, dinner tables, more so than anything in recent history. And you look at the adoption of Chat GPT, you know, they hit a million users in, I think it was like, within five days. It's just mind boggling. So, but that just tells you that there is a level of familiarity with the technology, which is very complex technology, because there are just so many ways that people are utilizing today. For credit unions, you know, it's, it's a technology that can be transformative. But, you know, we highly recommend dipping your toe in those waters, right? Because while the technology has many uses, the regulatory landscape behind it, it's still being written and how our, what are the safeguards that credit unions should be thinking about and will need to comply with longer term, that's still unknown. You know, we have several companies in portfolio that you know, are utilizing Gen AI and are providing Gen AI solutions to credit unions like Posh for instance. And you know, Posh is taking a great perspective on it. They have a solution called Knowledge Assistant that has the necessary guardrails around Gen AI, right? it's not just using Gen AI for Gen Ai's sake. It's utilizing the credit union's own knowledge bases, its own internal paperwork, helping to streamline the communication that internal staff need to answer the questions of members, right? And the one great thing about it is, you know it, it helps reduce a lot of that search time and finding the answers but also providing those answers in ways that are going to resonate back to the member the way that you want it to. And because it's kind of a self-containing data set, it's not, you run, you eliminate the risk of having kind of false negative information, things that you don't want to potentially seep through with that AI. That's really the danger, right? Yeah, and there's been numerous cases where that type of AI has done some companies in trouble, like, in the air, I forget which airline it was, but they had an AI solution, basically, you know, issue a ticket to an individual that, you know, was, was free essentially, and but the, the airline had to honor it because it was under their policies. And so, you know, these are all great technologies, but we have to understand how to use them, how to deploy them safely. And so finding the right partners who can help provide that guidance is going to be critical to the evolution of where it's going. With that said, it's great that both management teams as well as printing boards are having the discussion. They need to have a discussion, because if they don't have an AI strategy, they're going to be left in the dust, because their competition is going to develop those strategies. You know, it's, unfortunately, there is a bit of an arms race, you need to have the technologies to stay relevant, to deliver the solution that remember you're looking for, to help reduce your own costs and maintain the efficiency so you can still be able to compete on a financial basis. So there's a lot of benefits for the utilization of it out of the gate.

Sarah Cooke 21:50

Yeah. Yeah, for sure. And there's, there's the whole spectrum among credit unions to they're the ones that are no, no way. I'll never touch it. We're never going to use it. And others are like, well, let's see. And then there's the Yeah, let's figure this out now. Yeah. Yeah. So what has you most excited about the future of credit unions and fintechs working together?

Sam Das 22:10

Yeah, I will say, over the last couple of years, and our, with a...accelerant through COVID and a pandemic, we've seen the adoption of FinTech partnership just, just escalate, which has been fantastic. You know, it's become almost commonplace now for credit unions to seek out fintechs to really partner with and, you know, provide the best in class solutions, both internally within their operation, but also delivering those out to their members. And what gets me most excited, is the fact that we are tying those best in class technologies with a mission that is ultimately made to serve the needs of those members in the best way possible, which is the recipe to win in this marketplace. My hope, my aspiration here, and we've seen credit union membership growth, since the Great Recession, you know, ticked up year in year out. I predict that, you know, through these partnerships, we're gonna see that credit, the credit union membership ranks, accelerate even further over the next 10 years, and hopefully, potentially double, maybe even triple, you know, as you tie those two pieces together, you know, credit unions, fintechs become unstoppable. And, you know, that's, that's what we're trying to aspire to, to make credit unions the winning option for any member to seek out, to find their financial services needs.

Sarah Cooke 24:10
Yep, 100% love it. I, what I'm hearing, too, among the different business partners is a lot of the times that credit unions are actually more willing to try things out versus community banks. And I think it has a lot to do with like you said that, that member experience that they're so, that is so important for credit unions. Yeah. So as we wrap this up, I'm gonna give you the chance to provide your final thoughts. Last word. What would you, what do you want to leave our audience with?

Sam Das 24:45

I would say, you know, for those credit unions that have already dipped their toe in FinTech partnerships, keep on doing what you're doing. You're on the right path. To your point, test and learn into those models, you know, it's with every new learning, you gain more experience, you gain more data points that will help further propel your strategies forward, and talk to your fellow credit unions. A lot of you are already doing it. If you have questions, there are people out there who have answers, whether it's your fellow credit unions or you know, talk to TruStage, talk to us. We talk to credit unions all the time about how they should approach their their strategies, you know, what they should be thinking about, and how can they, how can we help accentuate some of the strategies that we already have in place. The help is out there. seek it out. Yeah,

Sarah Cooke 25:40
absolutely. Thank you so much for your time. Appreciate it, Sam.

Sam Das 25:43
Oh, thank you. It's been great.