In a recent insightful discussion on the Credit Union Connection, host Sarah Snell Cooke sat down with two “repeat offenders”—Brian Kaas, president and managing director of TruStage Ventures, and Matt Potere, CEO of Happy Money—to delve into the evolving landscape of credit unions and their increasing embrace of fintech partnerships. The conversation explored how these collaborations are addressing critical challenges, fostering growth, and shaping the future of financial services.
A key theme of the discussion was the imperative for credit unions to attract younger generations. Matt Potere highlighted how Happy Money partners with credit unions to bring in new members and originate high-quality personal loans, helping consumers consolidate debt and save money. This approach addresses the challenge of declining in-branch visits and the need for access to quality assets. Happy Money has already assisted over 300,000 members and deployed over $6 billion in loans.
Brian Kaas from TruStage Ventures, which has invested over $400 million in fintech companies and facilitated more than 3,000 partnerships between fintechs and credit unions, emphasized the industry’s need to accelerate its digital journey. He noted that while many credit unions are embracing digital tools and FinTech partnerships, some are falling behind. Kaas stressed that the rapid pace of technological change, driven significantly by AI, means that digital solutions need continuous evolution, not just a one-time implementation.
The discussion also tackled the crucial element of trust in these partnerships. Potere explained that credit unions are entrusting fintechs with originating high-quality assets that will be on their balance sheets, making
risk management and strong credit quality paramount. Kaas advised credit unions to speak with other credit union customers of potential fintech partners to gauge their experiences and ensure the fintech has the credit union’s best interests at heart.
A significant hurdle in the past has been the integration of fintech solutions with legacy core systems. Kaas shared his “cautious optimism” about recent advancements, particularly the use of AI to accelerate integrations into older technologies at a lower cost, which could level the playing field for credit unions that lack the resources of larger banks. Potere echoed this, emphasizing the need for seamless, fully digital consumer experiences and turnkey integration processes for credit unions.
The conversation also touched on how fintech partnerships are helping credit unions diversify their asset bases beyond traditional avenues like indirect auto loans, with increasing interest in personal loans and HELOCs. Technology is also enabling credit unions to reach a broader potential membership base, leveraging fintech platforms for greater visibility and access to marketplaces like Credit Karma.
Disclosure: Transcript below is automatically generated
Sarah Cooke
Exactly what language would you like on your tombstone? Something weird. Alright, I hit record. You guys gotta accept it, and then we will be off and running. Hello and welcome everybody. My name is Sarah Snell Cooke. I am your host of the credit union connection. I’m here today with two repeat offenders. We’ve got Brian Kaas, he’s below me, president and Managing Director of TrueStage Ventures. Welcome, good to see you. Sarah, yes, good, great to see you again. And to my left, Matt Potere, who is the CEO at Happy Money, welcome,
Matt Potere
thanks, Sarah, good to be on again.
Sarah Cooke
And why don’t you two, just take a quick minute to introduce yourselves and your companies. Brian, you, why don’t you start?
Brian Kaas
Sure? Yeah. So Brian Kaas, I’m the President and Managing Director of TrueStage ventures. And TrueStage Ventures is the corporate venture capital fund that is operated by TrueStage so I think many of the audience members will be familiar with TrueStage, but we’re a large insurance and financial services company that’s been serving the credit union industry for now just over 90 years. So very proud of the work that we’ve done that kind of helped the industry, and we’ve been now investing in FinTech companies for almost a decade now. So have seen a lot of companies. Have seen a lot of trends, and definitely excited to kind of talk about where we stay, see things heading over the next 10 years? Yeah,
Sarah Cooke
I want to see that crystal ball. Give me some ideas of where to
Matt Potere
invest. Well, I’m Matt Potere. I’m the CEO of Happy Money, and Happy Money is a consumer finance platform. We partner with credit unions to help fund personal loans, to help consumers consolidate debt, to save time and money. To date, we’ve helped over 300,000 members and deployed over $6 billion in loans to help to help consumers across the country,
Sarah Cooke
and a big number. Yes, we’ve,
Matt Potere
we’ve got, we’ve got a lot, a long way to go, but we’re pretty excited about what we’ve accomplished so far. Yeah,
Sarah Cooke
that’s awesome. So Matt, credit unions are increasingly embracing fintechs, particularly, of course, credit unions trying to reach the younger generations, which they desperately need to so they have certain expectations of digital tools and the ease of engagement frictionless. How’s that going for you? All, yeah,
Matt Potere
so when we talk to our credit union partners, there are a couple of big trends that we’re helping address for them, and a couple of big, big challenges. One is, as you said, the member base at credit unions is getting older, and so they’re looking to bring in new members and ensure that they can grow their member base. And so through by partnering with companies like Happy Money, that’s exactly what we do. We help bring them we help bring them new members. The other thing though, we do is we originate high quality loans with good risk adjusted returns. And many of our credit union partners, and many credit unions across the country are are challenged to originate assets. You know, consumers don’t walk into a branch like they used to 10, 15, 20 years ago, and increasingly, they need access to high quality assets. And again, that’s what we do. We do all that, we do all the marketing, we take all the marketing risk, and we’ve and we built our platform to help our partners leverage that and get assets at at scale. Yeah. How many, how many how many partners do you have right now? Yeah, so we’ve got about a dozen partners, which includes some of the largest credit unions in the country.
Sarah Cooke
Awesome, awesome. And so Brian, same question to you, how is it going with credit unions, adapting the digital tools and partnering with fintechs to make what needs to happen happen?
Brian Kaas
Yeah, I certainly am encouraged by what I see from a lot of credit unions, really, I think, kind of embracing all things digital, you know, really, kind of leveraging partnerships with FinTech companies to assist on that journey. But I also see a lot of credit unions that are falling behind. And, you know, I think as I kind of look at the industry as a whole, you know, we really need, you know, as many credit unions as possible to kind of really kind of accelerate their their digital journeys. Because I think the industry as a whole does better if we all kind of make this leap into the kind of modern financial services world. You know, with that said, I think what we’re seeing is just the pace of change, and technology is evolving so rapidly that it’s not like you can kind of say, well, we we put in a new digital banking platform, so we’re good for the next decade. I mean. This is crazy. What we’re seeing in terms of even FinTech companies that are six or seven years old being disrupted by new FinTech companies and having business models turned on their heads. So, I mean, it just, it’s really wild, and AI is really driving a lot of that, and it’s only going to accelerate. And
Sarah Cooke
I think for a while there, that was kind of holding people up, trying to understand, get their under, get their bearings around AI. And so hopefully, from what I’ve heard, it seems like we are moving forward, which is, which is great news for all of us. And in doing this, and credit unions partnering with so many different third parties nowadays, they’re really shaping the credit union. Obviously, the leaders of the credit union are, you know, selecting those partners. But what do you think, as far as like, how credit unions are able to trust these third parties to basically serve their members. And credit unions are so, you know, I don’t want to say uptight about it, but they rightfully uptight on how their members are served. Matt, you look like you want to take a stab at that. Yeah.
Matt Potere
I mean the right word. You said there is trust. And so when a credit union partners with a company like Happy Money, they’re, they’re trusting us to help originate high quality assets, because they’re putting those loans on their balance sheet, and so building that trust and making sure that they’re partnering with the right partner that really thinks about risk management, not just doing things compliantly, but with, you know, with strong credit quality, and who have been through some cycles, and understand that the economy, the economy changes, credit performance, can change, and to see around those corners. You know, I always describe us as a consumer finance platform for that reason, because whether we’re holding those assets on our own balance sheet or our partners are holding it on theirs, it’s really important that we think about credit risk and ensure that they’re getting fair returns, and we’re doing things in the right ways. Brian,
Sarah Cooke
anything to add to that.
Brian Kaas
I mean, I completely agree sort of trust is so critical in the success of these partnerships. And one piece of advice I give to credit unions when they’re evaluating different potential partners, is talk to some of their other credit union customers and learn about their experiences. You know, do they have the credit unions best interests at heart, or are they really looking to grow as fast as possible at all expense? Because, you know, they’re looking to be out to their next company and in two or three years. And so that’s that’s really critical. Obviously, with TruStage Ventures, we spend a lot of time really vetting the founders of these companies, trying to find companies that are going to be a good cultural fit with credit unions that in many cases are, are also mission driven. I think, you know, Happy Money is a great example of, you know, kind of the mission of of the company is like, how do we kind of get people on better financial footing by allowing them to consolidate, you know, higher interest credit card debt into a consumer loan to kind of achieve greater financial security. And so that’s something we spend a lot of time when we’re getting to meet these companies that could become investments that we then put in front of credit unions. And
Sarah Cooke
one of the things, Brian, I’m going to follow up with you on this, and Matt, you’re welcome to chime in, but one of the things that previously held credit unions up from partnering was being able to integrate the core. How have we made progress in that area?
Brian Kaas
We’re starting to make progress. Um, it’s been a huge, huge pain point for so many credit unions and for the fintechs, you there are so many legacy technology platforms that that credit unions use that you know, it can be very timely, very expensive for companies to be able to to integrate and partner with credit unions. You know, interestingly, over the last few months, I’ve met with a couple of companies, again, utilizing AI to greatly accelerate the pace of integrations into legacy technologies at a significantly lower cost. And so, you know, I’m cautiously optimistic that sort of the integration challenges of the past decade will be less than than what you know, we’ve kind of suffered through, and that’s going to help really, I think, level the playing field for credit unions. Because that has been a barrier. A big bank, they can throw an army of people, you know, into these integrations, whereas credit unions just don’t have that luxury. So I’m again, cautiously optimistic that that we’re going to going to see some real progress on that front over the next 18 to 24 months.
Matt Potere
Yeah, it’s a really, I mean, it’s a really important point. And one of the things we focus we spend a lot of time on is we need to give consumers a seamless, fully digital experience. And so for consumers on our platform, they can go beginning to end in a matter of minutes with high quality, diligent underwriting. You know, it’s easy to go fast, it’s easy to be diligent. We have to do both, and so, and we do both, but we have to do all of that and integrate with our credit union partners and make it easy for them. You know, they don’t want to spend months and spend significant dollars doing integrations. And so one of the things we’ve really focused on is making that integration really turnkey, so that they can get access to members who have gone through that great experience, to get access to that asset. But they don’t have to make the big investment, because that’s what we do for them. We give them the scale and we make the investment, we make it easy to plug in. It’s really important.
Sarah Cooke
Yeah, yeah. And that’s also helping credit unions to expand and diversify their membership base, I imagine, especially with a marketplace like yours. I guess I’ll stop there and ask that question, how are credit unions expanding?
Matt Potere
Yeah, I mean, increasingly, they’re looking for other assets. I mentioned. Indirect Auto is an asset that, historically, it was relatively easy for credit unions to plug into, but they were very concentrated. They’ve been very concentrated in indirect auto and so they increasingly want to diversify assets. You know, personal loans are certainly something they’re interested in. And even assets that you know, today Happy Money doesn’t offer like HELOCs have become increasingly more more popular as well, for all of those same reasons, because credit unions to be healthy and long term sustainable, they have to have diversification of their asset base.
Brian Kaas
Yeah, I think technology really is enabling credit unions to reach, or at least have access to, a much larger potential membership base. We see a lot of credit unions now really kind of through these FinTech partnerships, reaching consumers across the country, obviously their Field of Membership issues that need to be addressed, but I just see more credit unions embracing those types of relationships, really leveraging the technology again, to go after younger members, to have access to some of the platforms that you know, a single credit union isn’t going to be able to, to get any type of placement on Credit Karma, to have access to something like that. So partnering creatively with with companies you know, again, like Happy Money or others, to have opportunities to to your get in front of more members union credits, another company that that really works with credit unions to get them placed on some of these marketplaces that are out there. So, yeah, I think there’s a lot of opportunity. I would like to see more credit unions doing it a lot of times when I see, you know, it’s a list of, you know, 50 to 70 credit unions, I feel that like are very involved on many, many things. And there’s, you know, 4000 credit unions that we need to kind of bring them along to kind of follow suit here, because, you know, there are also a lot of fintechs out there that are competing for that member, or banks obviously going aggressively after the the credit union member for their next loan or their next deposit account. So we can’t, can’t ease up on the gas here, just yet.
Sarah Cooke
Now, how much of a obstacle is Field of Membership? Brian,
Brian Kaas
well, I’m not an expert on it, but I feel like you know, a lot of credit unions are are able to, you know kind of address field of membership requirements through, you know, Matt, you might have addressed this issue or national nonprofits, yeah, yes, exactly through, through some of those types of structures. But I think for a lot of credit unions, it does, again, kind of create limits on what they’re able to do. But Matt, I’m curious, you probably have this address this question all the time.
Matt Potere
Yeah, we do when we definitely see this where, you know, a credit union wants to get access to assets and even diversify geographically, but the Field of Membership doesn’t allow them. To do that, one of the things we’ve done to address that is we have a platform that we call hive that allows the credit union to take an economic interest in participations, and so it’s a way for them to get access to the asset, participate in the loan, without having to deal with the Field of Membership issues, because we have a sponsoring credit union who takes care of that. And we’ve increasingly seen, and it’s often a way that, as credit unions work their way on this journey, sometimes they’ll start there, because that’s a very easy way for them to start. They get the economic benefits. And then over time, look at their Field of Membership, try to expand their Field of Membership, and then go direct and bring the member on directly as well from partnerships. Nice,
Sarah Cooke
yeah, because then after they do have that loan, they can count that person as a member, correct? I mean, I think, yeah,
Matt Potere
the usually, if it’s direct with the participation, they don’t, they often don’t count that as as their member, but they do get access to the to the asset that they otherwise, right,
Sarah Cooke
yes. So now, Brian, I know you guys have invested more than $400 million almost half a billion dollars, in in these partnerships with or in the fintechs, and facilitated more than 3000 partnerships between the fintechs and the credit unions. When you started, was this what you expected? What are you seeing in growth? What would you like to see in growth? Go for it.
Brian Kaas
Yeah. I you know, I guess when we started, and I can remember when we had our first three or four investments, and I guess I never envisioned that, you know, the fund would grow to the size that it has and and I think, you know, more importantly, you know, the fact that we’ve been able to help facilitate these relationships is really what, you know, excites me and what I’m proud of, because you go back to, you Know, 2017 and 18, there’s a lot of skepticism and distrust around fintechs and, you know, the team, and I’ve spent a lot of time talking at Credit Union conferences over, you know, the last six, seven years, you know, really trying to emphasize the value these partnerships. You know the necessity of these partnerships. You know the technology now it’s it’s becoming so advanced, so complex, very expensive to build, very expensive to maintain. That sort of the days of a credit union trying to build homegrown technology that that competes with best in class platforms out there is just really challenging. And so, you know, again, I think the way for credit unions to keep pace with with change is going to be through these partnerships. And you know, I hope when we’re talking five years from now, we’ve got 10,000 partnerships that we’ve helped facilitate, and that’s really a big area where we’re spending as much time on creating partnerships in this ecosystem to bring fintechs and credit unions together as we are on the investing front, it’s still going to be important to what we do, But we invest in a bunch of companies and credit unions are partnering with, with fintechs, then, you know, our mission has not been achieved.
Matt Potere
Yeah, as one of those portfolio companies, I can, I can say it’s, it’s a real benefit as a as a portfolio company, as a company that that Brian and team have invested in it opens up relationships with credit unions we otherwise couldn’t have gotten. And I think it, it goes the other way as well. We he has a tool in his toolbox when he’s talking to a credit union about being able to diversify assets and can point them in our in our direction. And so it’s a really, it’s a special ecosystem, and definitely fortunate to be a part of it,
Sarah Cooke
yeah, for sure, credit unions are special, and people get a taste of it and want more. So, you know. And it’s interesting, too, because TruStage previously, like you were saying, Brian, before you started TruStage Ventures, and when it was Keener, mutual wasn’t even it was a trusted company, but it wasn’t particularly considered, I think, an innovative company. So this has been a real change for you all in the rebrand, I think, totally appropriate to what you’re doing today. Obviously,
Brian Kaas
yeah, you know, kind of when I started it, about two or three years before we launched a venture fund. And, you know, again, I think very different company from when I started, versus where we’re at today and and, you know, but the world has changed quite a bit. And, you know, fortunately, sort of, you know, our board realized that credit unions were going to face a lot of headwinds with all the changes. And. And technology, and, you know, the digitization of financial services, and, you know, we needed to do what we could to kind of help the system again, kind of navigate that change. And it’s, it’s, like I said, something that that will continue to evolve. And so, you know, the work is by no means complete at this point, and we’re just excited to do what we can to help these credit unions, yeah,
Sarah Cooke
probably accelerate even faster going forward. Yes, so Matt, I want to close up. You’re going to start the close up here. I always allow you guys final thoughts. Why don’t you start to this time? Matt,
Matt Potere
yeah. I mean, I think, you know, we talked a lot about how, you know, credit unions are looking to diversify assets, but we really think this is a, this is a special time with, with AI and other tools, and the digitalization of of lending, relation, building relationships with with companies like Happy Money really help create sustainability for for credit unions. And we feel like we’re at the intersection of that. And so it’s a special time to be a part of it, and it’s an incredibly exciting time. And I can think of no better space, uh, than partnering with, uh, with, with credit unions. So we’re really fortunate.
Sarah Cooke
You were named Best consumer lending company at FinTech breakthrough award. So congratulations
to that. Thank you. Yeah, we’re proud of that, for sure. And Brian,
Sarah Cooke
final thoughts,
Brian Kaas
yeah, maybe I’ll just leave with some tips for you know, credit unions that, again, are in the early stages of their journey and partnering with with credit unions one, you know, I think it’s really important for the senior leadership of those credit unions to have really dedicated discussions of, how are we going to navigate through the change and, you know, where do we need to adjust our strategy to to, you know, find a way To win in the environment. In look at, how can these FinTech partnerships help on that, that execution of the strategy, and I think, you know, kind of build a culture of innovation within your credit union. And you know it, it’s a muscle that you have to build. Mean, you have to exercise that muscle you need to learn how to work with an early stage company, how to test and pilot, and that just doesn’t happen naturally. You know, I look at our organization, we spent a lot of time really kind of changing the culture of the organization to really kind of thrive on innovation. And so the sooner a credit union kind of starts on that journey, the better off you’re going to be. Because, again, like success isn’t necessarily going to happen overnight, but I guarantee if you start on that journey and you put the work in, you will find success. You’ll you’ll successfully. You know, navigate this change your credit union will will be able to grow and thrive with, you know, kind of all the change that lies ahead. Awesome.
Sarah Cooke
Well, thank you, gentlemen, so much for joining us today. Thank you, sir. Cut oop, I’m.