Mergers have been a hot topic in world of credit unions for the past couple of years. Thanks to mergers, the total number of credit unions has gone down significantly. At the same time, many credit unions, including small credit unions have benefitted, but there are still complexities they have to face when it comes to these mergers going through. Adding to the list of challenges are the changing political climate and protecting data while implementing AI solutions.
Chief Client Officer at Member Driven Technologies (MDT) Gary Lee sat down with host Sarah Snell Cooke at GAC 2025 to discuss the current trend of credit union mergers and the continued challenges of implementing AI and meeting compliance standards.
Disclosure: Transcript below video is automatically generated
Sarah Cooke 0:00
Hello and welcome to GAC 2025. I am here with Gary Lee. Welcome.
Gary Lee 0:07
Thank you for having me.
Sarah Cooke 0:08
And Gary is the Chief Client Officer at MDT. Tell us a little bit about yourself, your background in the company.
Gary Lee 0:18
Sure. I myself have been at MDT for 16 years now. I started out in our Client Services Division. I traveled a bit on the relationship side of the house, and then I followed out, our CEO, who’s actually soon to be retiring, around on the sales mission and understanding what credit union executives were looking for in a new core system, as well as service and support. So I’ve been a little bit of everywhere through our organization. My current role and title is to take that relationship from the sales cycle and also bring that over to the service side and the experience of it. So there’s a huge part of integrity in our organization in which same folks and group that are taking you through the sales cycle are those that are supporting you once you actually go live in the credit union space. So that’s that’s pretty much my role in oversight in that arena, with, within our organization.
Sarah Cooke 1:09
Yeah, that’s smart, because it’s like you build the trust and keep the trust, which is why anybody does business with anybody.
Gary Lee 1:15
Yeah, long term relationships and rapport are very critical to our business and making sure our credit unions trust us.
Sarah Cooke 1:21
Yeah. I’m sure, as, as every business partner here has felt, credit unions have emerged, I mean, I’ve been in credit unions for 25 years and 26 years now.
Gary Lee 1:32
You have been always on this side of the house.
Sarah Cooke 1:34
I am. I’ve always been, well, I would spend most of my time at Credit Union Times.
Gary Lee 1:40
Okay.
Sarah Cooke 1:40
And then in 2017 I started my own businesses. Yeah, so, um, but yeah, so I’ve seen credit unions go down from like 14,000 to like 5000 today. So we’re all feeling the mergers, and everybody’s talking about how we can support smaller credit unions and how important they are, but, and you guys do that as well, and you also help with those necessary mergers that have to happen. So where do you, what do you see about that, especially, like, I imagine, with the technology, it’s, it’s all going to change, it’s all going to get linked up properly, like I’m talking about tech, like, I know.
Gary Lee 2:17
Yeah. I mean, it depends on what we’re speaking to with mergers. I mean specifically for MDT and in our community that we serve of credit unions, as well as those potential credit unions coming in to our base. Traditionally, what we’re seeing our teams and our community of credit unions exploring is roughly between three and five mergers per year. So roughly, we’re at 120 credit unions that we’re serving right now. Quite often, more than not, our credit unions are traditionally the beneficiary of those mergers that we’re seeing. So we’re not really seeing a lot of our credit unions merge out of our community, but they’re traditionally merging credit unions in which is great, you know, for our credit unions continued growth, as well as MDT to stay active in that merger space. So yeah, we’re traditionally seeing between three and five a year. And you know, mergers are a very complex game. There’s a lot that comes along with it. You know, the project management piece, when to do your data cuts, when to install X particular like, particular type of software or solution. So they’re very complex. And we’ve gotten it down to a science where we’ll take our credit unions through a merger process, and we’ve done it against, in theory, all of the other competing cores, as well as even the existing core that we support. So we’re very well versed in it, but that’s what we’re traditionally seeing, is that type of tic, again, that three to five that we’re assisting our credit unions with on an annual basis.
And so where do you see that trend going? I mean, I’m kind of thinking, is this going to continue? But…
Yeah. I don’t, it hasn’t slowed down much. We’ve, we’ve been watching that three to five, just in our base, and then also watching the industry for roughly the past probably five to seven years. And it hasn’t essentially slowed down. So I still think the, you know, the credit union, or the fabric of the credit union industry, there are still plenty of credit unions that reside traditionally on that smaller space. And we hear it from some of our elected officials and everyone that these credit unions need a home and they need to stay in place to serve this particular membership, or say, there’s also a component, you know, you start looking at the compliance piece, and you start looking at, do I have the skill set to keep up with security? Do I have the skill set to do X? And that’s where you start to see, does a credit union in their board and their community and their segment have the appetite to continue to invest in something that sometimes is always a challenge and it always feels like they’re potentially behind? So, as of right now, I think unfortunately, if we want to say that, that the merger space will likely continue, yeah, we’ll just have to see, weather the storm as an industry.
Sarah Cooke 4:46
Yeah. I think a lot will be interesting this year. With all the political stuff going on here in DC, we got to talk about that, all the executive orders that are shaking up, you know, eliminating the CFPB and, you know. How do you deoperationalize all that? And so that it’s like, even though credit unions might be glad to have them off their backs, there’s a lot of technology involved with, you know, undoing what they did to comply. So, one of the things we’re starting to see as AI has come into play: the bad guys have it too. And so it all, not only does it help make security cheaper, faster quicker, it also helps them with the deep fakes and and all the things that you hear about in the news. And so instead of sometimes it was the vendors who were getting hit in the past, and now, individual credits are getting hit because it’s so much easier to just do. Where do you see that heading? What’s the what’s your take on that?
Gary Lee 5:51
With AI, oh gosh, it’s, there, there is a bit of like, how do you control all of it? You know, it’s at the speed in which it’s taking place, at the speed in which AI is hitting our partners, hitting the industry. It, it can certainly be be challenging on, on what to look at, what to, what to monitor, and what to fix. You know, I see a lot of our credit unions wanting to get into AI and to understand how to use it. And some have that sophistication on staff, and they’re looking at the right things, per se. And then we have some credit unions that are just trying to figure out and understand, like, their internal policy of like, how and if we can even use AI. And if we use AI with one of the solutions that are out there, you know, how do we protect our membership? How do we protect our internal data if we’re going to put it in a potentially public or cloud type situation? So do we work in these containers of keeping AI specific to our organization, our membership, or do we go public? So there’s, I think there’s a tremendous amount of challenges that credit unions are facing because they want to leverage AI, and they want to be able to use these solutions, but there is a ton of wraparound securities that need to take place in order to do so. So I don’t know if that essentially answered your question, but I really think like credit unions have to continue to watch and monitor what they are going to allow their teams and their credit unions to use, and their members as well. You know, one example is, we’ve had some credit unions that are using certain products or solutions to aid their membership or aid their internal folks. And new features come out within a certain software set, and there’s a disclaimer or disclosure that you click say, okay, yes, but built in there, did you read everything that was taking place, because now there’s a new AI component that was introduced to that solution.
Sarah Cooke 7:44
Right. You’re probably using AI anyway.
Gary Lee 7:46
You don’t even know if you are, you’re not using it, or where did that data set go that I just fed into our AI system or component, and where does it live now? So I really think there’s, there’s still a window that I think our credit unions have to stay very concentrated on, just like, the beginnings of AI versus going right into using solutions.
Sarah Cooke 8:07
Yeah, and I was on the ISP committee at my credit union, and so we would talk about this every, we did it every quarter. But, yeah, it’s, it’s overwhelming to like, all ,these are all the checks we did. And these are, you know, this is how many attempts we had that kind of stuff. It’s just, it’s overwhelming, I imagine, especially if you’re not one who is familiar…
Gary Lee 8:28
Right.
Sarah Cooke 8:29
…With I mean, I don’t get, I don’t go in and play with AI too much other than chat, play with Chat GPT. But, yeah, I mean, for some of the board members who happen to be older than me, that could be very challenging, I’m sure.
Gary Lee 8:42
It is, and it’s, you know, we see it in our space with credit unions trying to get to potential quicker decisions from an underwriting and our approval process. We’re also seeing it in our organization trying to aid our credit unions with like self help type tools, whether it’s database structure or a particular question that may be routine. If we build a stronger knowledge base with some AI components, then our credit unions have that ability to do some self help type tools. So I think I was, I don’t remember where I was reading it, and I don’t mean to throw out false stats, but it was something of like 80% of end users want to approach a self help type process. And if that’s the case, there’s going to be a large portion of that where AI is probably going to front load those self help type tools. So you know whether that’s going to be us aiding our credit unions or our credit unions aiding their membership, it’s coming.
Sarah Cooke 8:42
Yeah.
Gary Lee 8:43
I mean, it’s here, but I think it’s just only going to expand.
Sarah Cooke 8:54
Yeah. And as a content creator, people keep asking me, Are you nervous? Are you scared about AI? I’m like, I’ll be retired by the time.
Gary Lee 9:39
Yeah.
Sarah Cooke 9:39
I don’t know, though.
Gary Lee 9:40
Well…
Sarah Cooke 9:40
And it’s moving faster.
Gary Lee 9:42
There’s, there’s a lot too, though, in the AI component where you know it’s, it’s almost kind of a garbage in garbage out, kind of type of experience. So if, if whatever you’re doing in your container of AI that’s, that’s private and or in the public space, if that information is not correct, that AI engine still isn’t going to be accurate when it’s playing against it. So not too different.
Sarah Cooke 9:59
Yep. So I always give my guests the final thoughts. Gary, what would you like to leave our audience with, some takeaways?
Gary Lee 10:07
If I was going to leave the industry with with anything after being to, being here at GAC as well, I would just say it’s been a pleasure always attending this event. I appreciate your team, allowing me to come in and attend your particular session. I think the credit union industry remains strong. I think what we are doing as an organization, and you know, the fabric of who we are and wanting to service our credit unions and their membership, and the credit unions wanting to continue that, I think this is still a very strong industry, strong niche type industry in some instances. But yeah, I’m just looking forward to what comes in the following months and following years to see how our credit unions continue to pull through.
Sarah Cooke 10:47
Excellent. Well, thank you for being here.
Gary Lee 10:48
Absolutely. Appreciate you having me.