This week on the Common Cents podcast: How can credit unions and community banks stay competitive and community-centric? How do you listen and respond to consumer demand to build better for members and customers? And finally: Why are fintech partnerships so essential for the future of credit unions and community banks?
Ben Maxim, Chief Operating Officer of Reseda Group, tackles these topics and shares how his team improves tech offerings in the industry both by building their own solutions and through their partner ecosystem.
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Read the full transcript below:
Ben Halbrooks:
I’ve got Ben Maxim here from Reseda Group. He’s Chief Operating Officer. Ben, thanks a ton for joining me.
Ben Maxim:
Yeah, thanks Ben for having me.
Ben Halbrooks:
Sure. Well, we’re going to dive straight into Reseda Group, and we’re going to start with an elevator pitch. And I looked this up and apparently 118 seconds is the length of the average elevator ride in New York City. So that is going to be our time frame as we go. So you’ve got to be under 118 seconds with your pitch, and your time starts… now.
Ben Maxim:
All right. Reseda Group basically in a nutshell is looking to improve the offerings of technology in the credit union space, both through investment in other CUSO fintechs, but also by building our own products and solutions, including ones that help connect fintechs and credit unions together.
Ben Halbrooks:
Whoa, that was less than… 20 seconds.
Ben Maxim:
I’m not used to these New York elevators in Michigan. Our buildings are not that tall.
Ben Halbrooks:
Hey, there we go. I mean, I just figured that’s the first thing that popped up was New York City when I searched it. So, hey, why not? I mean, that’s quite an elevator pitch, and you went straight to the core of what does Reseda Group do for FIs, which is fabulous. So I want to talk about a little bit of how you guys started. How did you start versus where you are today? And then as a tag on question, where are you headed from here?
Ben Maxim:
Yeah, absolutely. So Reseda Group was founded three years ago as a subsidiary of Michigan State University Federal Credit Union. In my previous life, and still doing this job kind of as well, I’ve been overseeing the innovation and technology build out at MSUFCU for the past 17 years and been a part of it as a developer leading dev team and now as chief innovation officer there as well. We formed a unit four years ago to look at fintech more broadly, build prototypes, put them in front of our members, and get real feedback on products before we put full investment into them. So a bunch of piloting, a bunch of testing, experimenting, a lot of R&D work. We had built all our own stuff: online banking, mobile banking, websites – doing it all. So we had built a lot of solutions over time that really lent itself to selling into a credit union marketplace.
And we’ve had credit unions visit us over the years at MSUFCU and ask us to buy, in particular, a solution they really enjoyed was our financial literacy solution, Financial 4.0. So we transferred that solution to Reseda when we formed it. And then we also, because of all the work we were doing in the lab at MSUFCU partner with fintech who were also looking for investment and really what we were saying and what we were seeing is that fintechs were getting bought, acquired, focusing on the top five banks, big regional, super regional players, and kind of forgetting about credit unions, especially after they got their start and got going. They were also some of the ones that wanted to focus on credit unions that didn’t have enough financing, weren’t the cool sexy thing for the VCs. So they weren’t getting financing. They kind of were dying on the vine even though they had a great idea, very beneficial to membership.
And so we wanted to do both. So when we started Reseda Group, one of the first things we did was brought over that financial education solution. It’s now called Evergreen Financial Wellness Center. We spent the past year retooling that, so it’s actually a headless API. So all fun tech stuff. But what you can do basically is embed it anywhere that you’re already using. So we were trying to create as a standalone website, do your branding. Credit unions were telling us, well, I already have a website, I already have digital banking. Can you just put it there? So that’s why we kind of retooled it so it can be plugged into anything. We have partnerships there with some fintechs that want to provide that content to their clients as well and using their products. And we’ve also embedded it into different solutions for digital banking and online banking as well.
So that’s one of our stronger products. We also have ended up, again, when we started, we had everything as our own separate product company, and we were investing in all these other companies, and it grew faster than we ever thought it would. And by the time we hit about this time last year, it was becoming a bit challenging and complex to manage in its current form. And we were in the middle of acquiring our other kind of flagship solution from a company that was known as ChannelNet. Now, the product we’ve rebranded, it was called One Click Financial, it’s now One Click Financial by Reseda Group. It is a personalization solution where basically we ingest 22 pieces of data that the credit union provides or community bank provides to the platform. And then we’re able to provide certain journeys either that we already have pre-baked or ones that we can customize with the financial institution.
And they can be things like, Hey, there’s a propensity that you’re a member that’s based on this data is going to buy their next car. So let’s show them stuff like, here’s their pre-approval for their loan. Here’s some dealer inventory nearby. And they have this kind of auto buying journey that they see on their own personalized web experience. Or there’s another member that is maybe has a lower FICO score and here’s now financial education and different products to help them build that credit back up to be able to be that car buyer of the next round. It really just kind of ebbs and flows, and then the credit union can customize what kind of messaging they want to have as well. And we work with them on that. So when we went to make that acquisition, we didn’t want to create yet another company. So what we ended up doing is we decided to bring everything up to a product level and put it in a product organization within Reseda.
So that’s kind of where we’re at now. So we have a team, we have a full service team, we have client services team, we have a product team, engineering, marketing, sales that report to me in that Reseda role that we have two products in market. And then we have several others that we’re working to bring to market this year that are a mix of things that were, things that were built at MSUFCU, that other credit unions have been interested in over time. And then some stuff that we’ve built ourselves to kind of facilitate the connection of fintech and credit unions and how they can work more strongly together.
Ben Halbrooks:
Yeah. And I know you can only reveal so much, so I’m excited to see what is coming. Clearly you’ve got a lot going on, so pretty exciting. I love to hear how you guys are using technology as an enabler for those community level and credit unions to be able to compete with the big boys. That’s always pretty cool to be a part of. You’ve already talked about obviously some of this, but I’m just curious how the stuff that you guys are working on is driven by consumer expectations and demand. Of course, you’ve talked about how the institution demand has really driven what you’re doing, but then I guess take one more step back for that for me and kind of explain a little bit there.
Ben Maxim:
Yeah, absolutely. So we have the benefit of having MSUFCU as our parent company, and they have 360,000 members, almost 8 billion in assets, 7.8 I think is the current number. So they’re a large institution. They haven’t been a large institution for the entire time I’ve worked for them, when I started they were 1.7 billion. But because they’ve leaned into technology in the way they have, the way that they’ve also listened to their members and not been satisfied with a vendor solution and really looking for partners or to build it themselves that I had a fortunate experience to be a part of over the last 17 years. We have a test bed, we have the access to members who are telling us, yes, I want more of this. So one of the reasons that financial wellness solution has been so strong is because it was geared towards members, and we actually had started it out of this idea that we’re a university based credit union, MSUFCU, they hired students to write about this student experience with money while they’re going through their experience at MSU.
So there’s a team of student interns that were writing about silly things like how to save for spring break or more serious things on buying my first car, I have a job interview, things related to money about the money experience, different tips and tricks on how you do different opportunities to have different savings goals or things that you hear about like, oh, if you save a dollar week one, a dollar week two, different challenges like that. And the membership really responded well to that. So when we told other credit unions that story, they wanted a piece of that and we said, oh, well, we can’t sell it to you. We know how to do that. So that’s why it transferred over to Reseda Group. But we’re seeing the validation, and sometimes what we see is we need that consumer demand to say, hey, I need this education.
And I think the other thing we’re seeing in the space is that–pick your state government. I think at some level there’s 37 different levels of state legislators, legislation looking at requiring some level of financial literacy for high school graduation. It used to be part of a home economics course or it was just part of the experience in school. It kind of fell away. There are generations of parents that didn’t learn this information, so they’re not able to teach their kids. And some of it too is a financial access and inclusion opportunity. If you’ve not had access to the information or the education opportunity, how could you ever have the opportunity to be strong financially? So credit unions have this mission of improving their communities and financial education resonates with the members of their community because they’re getting it, and it helps really build that brand. Personalization is consumer at its core. Netflix, Amazon, pick your top app in the app store top brand that we’re talking about on the news every day. It’s because they figured out the consumer angle. And that’s what OneClick Financial brings as well, is credit unions have that opportunity to do that same kind of targeted messaging to their members that an Amazon or Netflix is able to do.
Ben Halbrooks:
Yeah, wow. What an incredible resource to have that you just have that test, all those test groups and that data to be able to do that so that when you’re building something out, it is something that is definitely needed and in demand. You’re not guessing. You’re not just throwing things against the wall.
Ben Maxim:
Exactly.
Ben Halbrooks:
Well, I know that this is a big beat for you guys. So I kind of want to end with this question, and you’ve touched on it already a little bit. But why are fintech partnerships essential for the future of credit unions and some of those smaller community banks?
Ben Maxim:
Absolutely. So community financial institutions, I think we’ve seen in many of our communities where some of the institutions are merging, smaller credit unions aren’t able to survive. The smaller community banks are getting acquired and now a regional bank has come in or a national bank has come and bought the branches and then closed half of them, and then they kind of pull out of the town. So the town’s kind of left with a lack of support from a financial, from a true local financial institution. So in order for community banks and credit unions to continue to compete, and the reason that’s happening is because people don’t realize that we have the ability to have all this great tech because we can partner with fintechs to provide the things that we can’t build on our own, but Chase will just buy a whole company, or they’ll have 200 data scientists working on an AI solution for them.
We can never compete with that. But there are companies out there focused on helping create these solutions that we can partner with, and we don’t have to do all the work. We can just leverage it and bring where we’re strong, which is knowing our local communities and providing that support and then providing the consumers that we work with, our members and customers, the right tech solutions that allow us to compete on the same level as those large institutions with that community feel that the members resonate, the members and customers really love and know about their community financial institutions.
Ben Halbrooks:
That’s fabulous. That’s a great place to end, and I love that that’s a big mission point for you guys, and more power to you. I know you’ve got lots to come, and I’m excited to see what’s coming.
Ben Maxim:
Absolutely.
Ben Halbrooks:
Thanks so much, Ben. Enjoyed it.
Ben Maxim:
See you. Same.
