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The CU2.0 Podcast
This podcast explores contemporary, critical thinking and issues impacting the nation's credit unions. What do they need to be doing to not just survive but prosper?
The CU2.0 Podcast
CU 2.0 Podcast Episode 374 Room 39a's Blake Woods on Research That Matters, Really
Exactly what is Room (39)a?
There’s one at NASA’s Kennedy Space Center but today we are talking about the Room (39)a at CFCU, Community Financial Credit Union in Michigan, where past CU 2.0 Podcast guest Tansley Stearns serves as CEO and she has launched this Room (39)a as a CUSO that will offer subscriptions to its research.
As for what it does, CFCU’s Room (39)a describes itself this way: “a place where possibility and the unexpected collide. We blend the precision of research with human imagination to unlock new ideas, products, strategies and opportunities for companies and brands.”
Could this be exactly what credit unions need today as they battle with mammoth money center banks and fintechs with massive war chests.
On the show is Blake Woods, a CFCU SVP who also serves as chief ideator at Room (39)a.
The episode explores the Room (39)a approach to research, how it decides what topics to pursue, and why it believes the credit union industry very much needs the kinds of research it is doing.
Don’t think this is a propeller head show. Quite the contrary. We dive deeply into gambling, for instance, and also into questions about credit union sports sponsorship deals.
Listen up.
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Welcome to the CU2.0 podcast.
SPEAKER_00:Hi, and welcome to the CU 2.0 podcast with big new ideas about credit unions and conversations about innovative technology with credit union and fintech leaders. This podcast is brought to you by Quillo, the real-time loan syndication network for credit unions, and by your host, longtime credit union and financial technology journalist Robert McGarvey. And now, the CU 2.0 podcast with Robert McGarvey.
SPEAKER_02:Exactly what is Room 39A? It's one at NASA's Kennedy Space Center. You may have heard of that one, but today we're talking about Room 39A at CFCU Community Financial Credit Union in Michigan. Where past the U2.0 podcast gets Tanley Stern service to CEO. She's launched this Room 39A as a Q Zoe that will offer subscriptions to its research. As for what exactly it does, TFC used Room 39A describes itself this way, a place for possibility and the unexpected collide. We blend the precision of research with human imagination to unlock new ideas, products, strategies, and opportunities for companies and brands. Could this be exactly what Freddians need today is the battle with mammoth money center backs and fintechs with massive war chests? This may be the on the show as Blackwood's stiff to SVP lost the service chief ideator, Room 39A. The episode explores the Room 39A approach to research, how it decides what topics to pursue, and why believes the credit union industry very much needs the kinds of research it is doing. This isn't a propeller headshow, don't think it is quite the contrary. We dive deeply into gambling. Sports betting. And also into questions about credit union sports sponsorship deals. It's cool stuff, it's relevant stuff. It's stuff that can make a difference for credit unions. Listen up. So let's start by what is Room 39A? Let's let's define it.
SPEAKER_01:Yeah, yeah. Room 39A is a QSO that we founded on a community financial credit union and provide research and insights to the credit union industry. And um, our goal is to not just do research, but then spin up pilots where credit unions who subscribe to room 39A can raise their hand and get involved and launch things at their credit union.
SPEAKER_02:So there would be two groups. There would be investor owner credit unions of Room 39A, and then subscribers who are essentially customers.
SPEAKER_01:Yeah, as we're currently structured, it's wholly owned by Community Financial Credit Union. Um, but yeah, we invite subscribers from uh any credit union to come and help us steer the research and then raise their hand for those pilots.
SPEAKER_02:Now, if a credit union vigorously waves his hand and said we want to be an investor, what would be the response?
SPEAKER_01:I think you know we'd be happy to evaluate that. Uh we just launched this year, so um we're still kind of early in the process. But yeah, I think we would, you know, be interested in negotiating that.
SPEAKER_02:I imagine task one for you is to flesh out what you're doing so it becomes clearer if I'm going to invest, what am I investing in?
SPEAKER_01:Yeah, yeah. We want to build um first step before even subscribers is building that body of research in those projects. So that's what we've been working on this year, is is just developing the topics and the uh uh areas of exploration. And we've got about I think 12 white papers in our library at this point. So now we're kind of shifting from building to getting subscribers, and then I think investment is that final step.
SPEAKER_02:Do you have a white paper on mergers?
SPEAKER_01:We're working on one right now.
SPEAKER_02:Oh, all right, all right. Yep. I was doing some research a month or two ago for a client on credit union mergers, and I couldn't find a good current paper on it. I found some papers written by an academic, I think at Texas AM, that were pretty good. I think they were through Filene.
SPEAKER_03:Okay.
SPEAKER_02:Uh, but they were like 15 years old or so, they were old. And the landscape has changed when you have first tech and VCU merging. You go, oh wow, it's a whole new bug in here. And I couldn't find anything that addressed that, nor could I find any paper that addressed the the key question of do you actually increase your business if you merge? I you you might think the obvious answer is yes, but uh from what I could find, it's that's not always the case. So and what are the criteria there? So that that's an obvious research need. What what other kind of research do you see room 3098 doing?
SPEAKER_01:Yeah, we're looking, um, we're writing two papers right now. Um, one is on that merger and acquisition and and the impact that has both on the organization and the employees itself, um, not to mention the communities they serve. The other topic we're looking on, we're looking at right now, we just published this last week, was uh grief and money. So exploring uh opportunities for credit unions to stand with members when they have the passing of a loved one. You know, that ranges from uh, you know, compassion and providing solutions of need in that point, all the way up to things like inheritance management.
SPEAKER_02:Um, did you cover that at many institutions it takes months to actually pick up the money that the will says is yours?
SPEAKER_01:Not not just that, but yeah, we even did some member interviews for that um research project and talked to some um members who were recalling, you know, periods of grieving, you know, heard things like it took me a month to even get myself to a place where I could walk into the credit union and start to do that work and then to find out that it's like a 20-step checklist. And every institution has their different list, you know, and then yeah, you're working with lawyers and wills, and it's it's very complex, and you're trying to navigate this in a moment of your life where you're again feeling grief and maybe not, you know, at your best. And um, so yeah, that's that's just an example of uh one of the topics, but I mean, wide range of of topics um and that we've published today or that we have in flight. I'm happy to either give more examples or um yeah, just let me know if it would be helpful to run through. Yeah, yeah, yeah. Give one more example. One more example. Let me think of my favorite one. Um we did we did one this year on um decoupling, and it was around um members who are going through divorce and you know, again, lack of uh compassion solutions, um, process uh for members as they're going through that life event. We did two focus groups um with uh members and non-members that were, you know, had just recently gone through divorce or were in the process of that. So took all the gaps and opportunities that came out of that focus group and published some, published a white paper with, you know, kind of identifying where financial institutions fall short, um, uh potential for solutions in that area and opportunities for partnership.
SPEAKER_02:Well, I think memory's right, divorce and serious illness are the two potentially most financially devastating events in a person's life.
SPEAKER_01:I think uh I think that sounds uh correct. And um, yeah, I mean, just the focus group, just hearing the amount of time and money that was spent, you know, in that process. You had people that maybe had a life plan that got completely up-ended through this this event in their life, right? And trying to, again, have more than a checklist, or I guess you just have to start over type uh solution uh for memories is is what we explored in that paper.
SPEAKER_02:So what what gap are you you trying to fill? You know, and room 39a? Why does room 39a exist? Presumably there's a gap in the landscape. What is it?
SPEAKER_01:Yeah, I think there is a gap in the landscape around research. You mentioned like your difficulty of finding, you know, a white paper or at least one that was published within the last decade. And so what we aim to do at Room 39A is um have our subscribers, you know, steer us and say, these are the topics we want to learn more about. And we have the infrastructure built to quickly, you know, set up those member interviews, those focus groups, and deliver insights. We do that in 90-day cycles. So that divorce or decoupling white paper that I mentioned, from the time we got the idea to the time we delivered the white paper and the solutions, and we did a webinar, was 90 days. Um, so that's what we aim to do is just rapidly identify these trends or these opportunities for credit unions and deliver uh white papers. And we try to do it in a fashion that's easily digestible. These white papers tend to be five to 10 pages long. Um, so you know it's it may not look like some of the academic research that's often cited and out there. It's really meant for any leader in the organization to be able to take and um you know quickly put an eye, you know, put something into action or make a change at their organization to address those needs. Or, like I said, raise their hands for the pilot opportunity that best follows.
SPEAKER_02:Did that white paper explore the um role of the board in a merger?
SPEAKER_01:That so that white paper is still being um written on mergers. So we were just um my call before this was actually we're still doing interviews, but um, yeah, we we do that a hint, a hint, and you can take it or leave it.
SPEAKER_02:Yeah, but my research tells me that the wild card in a lot of mergers is the board, particularly in the acquired institution, not the acquiring institution, because they ain't gonna have board seats. Some of them will do anything they can to block that merger, right? Yeah, yeah, yeah.
SPEAKER_01:I've uh I've been through a a merger, we would call it in the industry, a merger of equals.
SPEAKER_02:Everybody says that. I'm I'm I'm an old guy. I've heard this, I've heard this for 40 years. It's never true. It is never true and never will be true.
SPEAKER_01:Yeah, and uh yeah, just you finished my story. Um, you know, the the board, the that the um institution now, you know, I don't think any of those board members from the slightly smaller credit union, you know, remain through the merger. And so yeah, even even these things that are framed as like A plus B equals C tend to often um not take that shape. And that's what drives the fear and I think the resistance, you know, sometimes even when a merger might might be the best step for those two organizations.
SPEAKER_02:Yeah, I'm not actually throwing rocks at the board members. It's just my research telling me that wow, sometimes these people do everything to undermine it. And is that is that executing the fiduciary responsibility of a board member? I'd argue it doesn't it is not, right? But that doesn't mean I'm saying let's get get the handcuffs and throw them to jail.
SPEAKER_01:No, no, I didn't hear I didn't hear that from you. Yeah.
SPEAKER_02:So we can talk about this with other credit unions. What's the reaction? This is something we need. Tell us more. What you know, what's what what's happening?
SPEAKER_01:Yeah, right now um it's been very exciting being at events like C2.0. Um, a lot of feedback we got coming out of that event was like, yeah, this is just what we need. You know, um, we're looking for insights that are digestible and actionable, I think are the two words that I I hear most often. So um we're excited about the early market feedback to room 39A. And um I think as we continue to build out not just our research library, but some of those pilot opportunities, um, yeah, we're we're uh bullish on the opportunity to grow it in this industry.
SPEAKER_02:I'm thinking, and I might be wrong. If you think about it, there are quite a few consulting firms that spend a lot of time looking at um basically big banks. I'm not aware of any consulting firm that spends a lot of time studying credit unions. I guess Callahan, but they're they're they're more data-driven, it's more narrow focus.
SPEAKER_01:Yeah, yeah, and uh Callahan uh our first subscribers, so um it's it's kind of interesting to um think about that. But one of the things that their leader, John Jeffries and I talked about was you know the ability to pair qualitative and quantitative data. I think Callahan does a great job of you know visualizing the call report and helping credit unions better understand, you know, um how to leverage that data and make peer comparisons. And um I think John's done a great job of elevating that organization to do more um on-site consultation like you referenced. But typically we see in our industry a lot less of that than we do um, you know, in some of our banking counterparts where you know they're bringing in Deloitte or some of these kind of household names to provide that level of strategy. So what we aim to do is again, just um that that type of research takes a ton of work and infrastructure. We've got that built. And rather than have 4,500 credit unions all try to do that, you know, can we come together collaboratively and um do some of that research together?
SPEAKER_02:Bring 4,500 credit unions together, and I don't think too much is gonna result, to be honest. It's uh argument, yes. You need someone to lead the way here.
SPEAKER_01:Fair point. You know, I think um uh not all 4,500 will will be in the place to um receive value from 39A, but I'd like to think whether it's you know BECU or Father Kramer credit union with three employees, you know, that um, you know, those that would be interested in identifying these topics and exploring them alongside of us, you know, we'd we'd love to return value to them.
SPEAKER_02:And what kind of payment structure is there for credit unions that want to actually research?
SPEAKER_01:We offer monthly subscription and we uh we have a tiered by assets. Um so for our smallest credit unions, those that are under$399 million in assets, um, it's$399 a month. Um, all the way up to, you know, our largest credit unions would pay$1,500 a month. Um but yeah, we don't lock people into multi-year um agreements, and and we really try to um position this as something like, you know, give us a shot and let us be your insights department, let us help you drive your strategic planning, your board offsites with content.
SPEAKER_02:And that fee is gets what? Access to all of the published research?
SPEAKER_01:Yep, all my research are recorded focus groups. Um, and then they can um raise their hand and take part in the pilots that we launch.
SPEAKER_02:And I suppose you would welcome suggestions from them about topics, not necessarily that you would do them, but you would be interested in hearing the suggestion.
SPEAKER_01:Yeah, our our plan is to you know identify topics of exploration and allow the community to to steer those through voting. So, you know, here's here's six topics uh for Q1 of 2026 and let us know um where you'd like us to focus our research efforts. And um, you know, that way we've got some ability to make sure it's important for us that we're not exploring things that are easy to find on Google. We really want to push the boundaries of ways that credit unions are helping their members and and push credit unions to think outside the box a little bit.
SPEAKER_02:I would I would assume that you're also gonna focus on topics that enough credit unions are interested in. You know, for instance, are enough credit unions interested in uh cannabis banking? Oh, if I were making decisions right now, I'd say no. Uh, there's a handful that are, but they're very interested in it. But 4,000 credit unions are running in the other direction as fast as they can. Uh so and and the same thing with crypto, which some people say we should be a heck of a lot more interested than stablecoin. I maybe we should, but it's gonna be hard to convince credit unions to be interested.
SPEAKER_01:Yeah, I think it's a fair point. Um, and what we do and we identify topics, you know, we really lean on, you know, our team, uh, having Tansley Stearns, our CEO, attached to the um project, having George Hoffheimer, you know, previously a Philine Research. I feel like we have a good pulse on you know what those issues are for credit unions. Um but yeah, the two you referenced, like both both super interesting research projects, but probably um too niche for us right now to focus on. So we haven't, you know, um done research to date on crypto or cannabis banking, those two examples you gave us. Um we're really, you know, right now thinking about topics around standing with members in dark moments in life, um, and also trying to think about credit union interventions to help with cash flow, just given some of the economic um uh constraints or um factors that we we see in the data right now. Elaborate on that. Um, yeah, uh on the founder part.
SPEAKER_02:Um, yeah, on the cash flow issue.
SPEAKER_01:Gotcha. Yeah. So when we're thinking about different research topics, you know, one of the questions we ask ourselves is is what's keeping credit union members at up at night or what's keeping credit union executives up at night? And I think a lot of credit unions right now, you know, we've gone through a few years of balance sheet um constraints and trying to um help our members through times of inflation. And so as we think about, you know, research topics, how can we help credit unions make a difference um in areas of life that really matter to their members? Um again, cannabis banking, it's super interesting research, but I don't think that's keeping the average American up at night. It's definitely keeping some Americans up at night, particularly those who work in that industry. But I think there's some more macro type issues that you know are worth uh exploring. Uh the example I gave about divorce, you know, there's millions of Americans that are going through that any given day. And so if we can provide a solution and some research there that can help the credit union movement better stand with members in that dark moment in life, I think that's more impactful. And that's why we've chosen to steer the research in that direction.
SPEAKER_02:Now, why isn't this work being done or is it being done by America's credit union on one hand, uh NCUA on another hand, uh Phileen for a third example.
SPEAKER_01:Yeah, I I think some of this work is being done, and um, I just think more of it needs to be done, you know. So um on any of those specific topics, I'm I I'd have to do some research myself to see what has been um published to date. But I think oftentimes, you know, credit unions are are credit union rate associations are um narrowly focused on um some of the issues on Capitol Hill or um you know credit unions themselves maybe focus their research into balance sheet initiatives and and their own product promotions. There's so much um on the plate of any credit union executive team. And so we're blessed to have an insights department here at CFCU. And, you know, it's my honor to lead that, one of the teams I lead here. And not every credit union is fortunate enough to have um that type of in-house research going on. And so that's our goal of Room 39A is to provide that um for any credit union that's willing to raise their hand and join us um because we we think it's table stakes. And if we're gonna continue to evolve and meet the needs of the consumer, we need to be doing that type of first-person research uh with those consumers and developing solutions on the backside of it.
SPEAKER_02:What's the uh FTE count in the insight group at CFCU?
SPEAKER_01:I think that team has five employees today, and that includes both the qualitative and quantitative stuff. That being said, there's other individuals that don't work directly in insights that um provide value to room 39A, whether it's you know, the event planning and logistics, whether it's the marketing of it, right? So there's there's additional resources, but yeah, we're um we're we're hoping to continue to grow that that group to be more robust. And I do think that's unique. You know, we're about$1.5 billion in assets, 18th largest credit union in Michigan. So we're not the largest credit union by any stretch of the imagination. So hopefully that can help frame the importance of insights. We we think at CFCU, listening is our superpower, and it's what it's why we can be first to market in so many ways. We believe it's what gives us the edge um when it comes to spinning up new solutions. And I shared some of those, I think, at the event you attended, where we've been, you know, first to market and able to diagnose these these issues and get a solution out there quickly. For instance, you gave the example at the CE 2.0 event around going through our transaction data and seeing the outflows that were going to gambling and sports.
SPEAKER_02:Oh, yeah. No, that was that was that was that blew my mind.
SPEAKER_01:Yeah, yeah.
SPEAKER_02:And all I can say is that the the your your your members must be terrible, terrible, terrible gamblers because they seem to lose more than they win. Yeah, yeah. I mean, you're you're supposed to the the book lives on the middle. It's you're you're supposed to balance dollars on saying win, dollars saying lose. And in there, if you set the right line, there's gonna be money for you. Uh whereas you seem to have a lot of people just playing lose.
SPEAKER_01:Yeah, yeah. And um maybe maybe that's the performance of some of the local teams. But I I think the bigger thing that plays into that, Robert, and I've done a a bunch of research on this, is that a lot of the sports books don't incentivize the type of bet you're talking about, which is a straight bet. And it's so, you know, there's minus 110 odds for for this team.
SPEAKER_02:And you know, the New York Times or Washington Post yesterday or today has a story about how so much of this stuff they they you win there, it's an easy, easy bet. You win. Then they say, okay, why don't you parlay this into something because it's an impossible bet. It's absolutely impossible to win on the parlay. You have to pick like five things right.
SPEAKER_01:It's it's really interesting social science. So what they're playing into is the same thing that drives people to buy a lotto ticket. And it's yeah, winning winning five bucks because you pick the Mets versus the Yankees is only so exciting. And through boost and promotions and um other types of campaigns, they really incentivize their players to, yeah, string together three legs of a same game parlay, or string together five legs of and now when you look at the statistics of that, you're yes, of course, the pot and the the chance to win bigger is there, but the likelihood of all those events and outcomes happening is dramatically less.
SPEAKER_02:And so that's why you'll buy lottery tickets, exactly. Yep, and so someone wins that lottery sometimes. Someone does, but those stories come on astronomical.
SPEAKER_01:Yeah, and if you if you were to go on the fan duel or DraftKings social media, you know, they share the the big stories of the big winners. Look at this guy, he picked these 10 games all on a Sunday from his couch, and now he's got a hundred thousand dollars. But we're not here. Yeah, but obviously the overwhelming majority of folks. They're still in the Nissan, though.
SPEAKER_02:Maybe that's been repossessed too.
SPEAKER_01:Maybe, yeah. So that's that's just one example again of of where I'm gonna do it.
SPEAKER_02:What was the point of that research? What what were you aiming to to do?
SPEAKER_01:Oh, it yeah, and that's the beauty of research too, is sometimes you can get started on one thing and end up in a completely different space. I was actually trying to look to see if there was a rewards partner that we could identify. I thought if we could like find a local retailer that our members seem to spend their debit card at that we could offer some sort of promotion or incentive, cash back, you know, with with that retailer. But again, I was just shocked to see the the um the sportsbooks and the gambling website so high up the list on those debit and credit spends. And so that's that's just a great example of you're looking for one thing and the research takes you in a whole completely different uh angle. So yeah, we had no um plans to launch a gambling alternative product or some sort of um, you know, promotion tied to a sports team. It just kind of fell in my lap as I was I was researching something else. But again, having an insights and innovation department, you know, we were able to kind of quickly um spin up an idea, forge a partnership, get all the approvals that were needed, and launch something like truly unique in the market.
SPEAKER_02:What was that?
SPEAKER_01:That was called our One Pride CD. And so that was uh the opportunity for members to back the Lions in a no-risk way. And so the rate started at 2%. Uh folks could invest um as much or as little as they'd want. I think we had a$100 minimum on the account if memory serves, and we had someone invest a couple hundred thousand dollars in it. Um, and every time the Lions scored the first touchdown of the game, um, that product's rate would go up 25 basis points. And so I believe both seasons we ended at 5.25%. Um, but obviously a lot of fun along the way. And, you know, got to celebrate with our members, our local team here, the Detroit Lions, when they would score that first touchdown, they knew their rate was going up. And the beauty of the product was again, even if the Lions never scored all season, um, they were still gonna make that 2%. And so, unlike the sports books that kind of incentivize behaviors that are detrimental to your finances, we knew that everyone that placed a bet with us was going to come out a winner.
SPEAKER_02:Yeah, I'm glad you elaborated on that. Because as I said, I just read this article about the parlay bets that are unwinnable as far as I can tell. I mean, uh technically you there is a way to win, but the odds are stacked against you. Yeah, I'm sure that it doesn't explain. So you your betters are not necessarily worse and stupider than other betters. They're just betting on things that can't be won.
SPEAKER_01:So there's there's a lot of behavioral science that go into why the sports books do what they do. And um, I can tell you, even from when we started on this research, the incentives and the promotions that are tied to these parlays and same-game parlays with again a bunch of different outcomes that need to go right. It's it's night and day from where it was even two, three years ago. It's it's honestly all you see when you open one of these apps now. And it's because they they know that's the best business for them. There's only so much money to be made.
SPEAKER_02:I listen to that. I listened to some college uh football games on the radio, and I hear these Ask for sports books that basically says, hey, you know, come on down to blah blah blah. You can have a hundred dollars free to gamble here. And I'm I'm thinking now, okay, there has to be a real upside here for them. They figure I'm gonna be such a fool that I'll just wind up spending a thousand dollars losing most of it. I mean, it you're not gonna give me a hundred unless you're gonna make some money on the back.
SPEAKER_01:Yeah, and those types of behaviors are like really where I want credit units to be thinking more about like what excites your membership today and you know what what brings them joy, what gets them um checking those apps night and day, and you know, try to try to redevelop your deposit product line to match that. And I think I gave this example at the event you and I were both at, but doesn't that's not exclusive to sports. You know, you can you could think about um things tied to the weather or just you know the flip of a coin. Um that type of of chance and excitement is engaging and more engaging, I think, than some of the legacy products and services that banks and credit unions have offered that that feel pretty stale to the to a large segment of consumers. So um I'm not suggesting that we have our members put all their money into those types of accounts, but when you have those opportunities, specifically with like those local ties or partnerships, really think deeply about like what you can do to make that more than uh just a one-time transaction where they open up the account and never hear from you again. Like, what can you do to keep the member uh excited and checking back constantly and engaged throughout your entire relationship with them?
SPEAKER_02:Well, you're definitely onto something where there is all kinds of meaning in the data if you look in the right places for the right things. And I remember this was some years ago. I was having a conversation with a guy from a very big bank credit card issuer, and he told me that they were exploring in data to see if there were predictive factors that could tell them this couple and couple is heading towards a divorce. And I said, Why? And he said, Well, divorce is highly correlated with credit card default. So maybe we would reduce the the balance available to them. Maybe and he said this was all it wasn't fully baked, but they were collecting the data to see uh if there were so are you sending a lot of flowers to an address that's not your home address and not where your wife works? Okay, that might be a clue. Uh, you're spending a lot of money in motel rooms in the same city where you live. Now that might be a clue. That's the kind of stuff they were looking for. And I don't know where it came out. He did say a concern they had was that their credit card holders would go ballistic at this perceived invasion into privacy.
unknown:Yeah.
SPEAKER_02:Whether you were spending nights in motels locally or not, you would just say you shouldn't be doing that. This is like Orwell, it's 1984. Yeah.
SPEAKER_01:Yeah, I I understand that concern. And you know, I think there's a middle ground. But what I do know to be true is credit unions are not leveraging the data they have and specifically the transaction data they have. I think it's a really um telling um data point that we all need to be considering in product development and campaign development. And yeah, you need to make sure you're good stewards of that. And, you know, I like to say that let the data inform your hypotheses or your experiments versus reaching out to member A and saying, hey, I saw these six transactions and I'm making this assumption about your life. You know, maybe it can help you with targeting, maybe it can make you feel more confident about bringing a solution to market like ours, you know, something that's never been tried before. I think that's that's the way credit unions can better use that data and steer clear of some of those 1984 type concerns. You know, we didn't um we didn't single anyone out and say, hey, we know you're sports gambling, so try this thing. But we did target that message to people that we knew had those transactions because we knew they were the types of members that would be excited by chance and excited by you know a partnership with the local sports team and uh you know, maybe eager to try this new thing out with us.
SPEAKER_02:What's the um biggest credit union that you're participating with or to participating in room 39A?
SPEAKER_01:Our our the biggest uh subscriber we have right now is Galleon and Associate. So yeah, we're we're still looking for uh new credit unions to join Ring 39A and uh really hitting uh this budget season hard to start to build up that subscriber list.
SPEAKER_02:Well, for a big credit union, the the amount you're talking about is not a big deal.
SPEAKER_01:Yeah, I I think um for us right now it's all about brand recognition, just getting our name out there, making sure people know who we are, uh differentiating ourselves from some of the other um research CUSOs or entities that exist in the market, trying to even ourselves try to think through our evolution of you know where we can be most useful to the industry. So I I do agree. Like I think our pricing is is fair. And uh we were just talking about betting. I think we're asking credit unions to place a small bet on us and again, not locking them into any sort of five-year deals to do so. Um, and so I I feel confident that we'll um pick up market share and uh really start um making a big impact here in the industry yet this year.
SPEAKER_02:Well, this is probably budget season and many credit units, right?
SPEAKER_01:I know it's it's in mind. That's what I was doing uh earlier this morning. So yeah, I know um this is uh prime time for us, and that's why you and I cross paths. We're definitely hitting the event circuit hard right now and uh just um introducing ourselves to the industry because you're right. This is the this is the time to get into that 2026 budget.
SPEAKER_02:So when you go to other what other kinds of events are you going to?
SPEAKER_01:Yeah, we've got a few coming up. We're gonna be um with a group called BD Now uh in Portland, May, uh October 28th to the 30th. Um, and this is an event put on by Julie Ferguson. And we're gonna be talking about um forging partnerships. So getting out of the typical setting up a table and handing out tchotch keys, but really how do you drive um member activation through partnerships? So that same example I was just talking about earlier is a is a great example of a partnership we forged with uh our local Detroit Lions, and we'll be talking about that there. And then we've got Venture Tech coming up uh the first week of November, I believe November 4th to the 6th, we'll be down in Frisco, Texas. Um, a lot of the circle credit unions attend that event, and we'll be looking to um share our story at that event and hopefully um uh have a few new credit union subscribers coming out of our time in Texas.
SPEAKER_02:So if I'm a credit union who's a subscriber and I say your sports betting thing intrigues me, would you share the how-to of doing the data search?
SPEAKER_01:Definitely, yeah. I I've um been talking about that product on stages for uh probably a year and a half now, and I really invite the industry to um try things like that. At Room 39A, we're all about helping credit unions evolve and elevate their game. And so, yeah, there's no um concern from me in terms of um sharing the the T's and C's, those are out and available on our website, or even going through my process of um, you know, how I uncovered that. I mean, I'll just share it with you here today. You know, I just asked for a list of our top 20 or our top 100 um retailers by spend for debit and credit cards. And I think if you're not doing that at a credit union today, like that's a great thing to do, whether it's relative to this project that we were talking about or just better understanding your membership. That's a really key data point and something I think most credit unions could pretty easily get to. But yeah, I think those are interesting moments specifically for you know, credit unions that operate within a single community or a single state, you know, like how can you um provide rewards that are relevant to your members?
SPEAKER_02:You know, um it's so hard to and this is where research comes in. I I did a podcast a month or two ago with a company called Prize Out that has a cash cash back feature. And I asked them to get put a customer on the show, you know, a user of the card. And they put a woman, single mom, factory worker in, I believe, Indiana, and uh uh and she was talking about the joys of like having an extra 25 bucks to spend uh at Walmart. And many people might say, who cares about that? This to her was massively important. It was mass. This is the difference between buying herself a little treat and just spending all the money on her kids, which she was mainly doing. Yeah, it was like and you hear that and you almost want to cry. You say, This is I wouldn't have thought wouldn't have thought of that a million years. But yeah, and that's where research and focus groups come into my mind. You hear opinions that aren't in your own social circle, aren't in your own mind.
SPEAKER_01:Yeah, I I think that's a hugely important point. And um, you know, I think for too long um the banking industry has been shaped by the executives, right? And like their needs and wants. And I think there can be a real disconnect with uh the consumer. And that's why that type of first-person research is so important to what we do. Um, yeah, uh at CFCU, for instance, we we focus on moms, teachers, and students. That's our um target market. And I was a student half a life ago. I've not yet been a mom or a teacher, you know, and so the idea that I'm gonna design a product that's gonna meet their needs is pretty far-fetched. But that's why we regularly, you know, get focus groups of moms together and we put product concepts or potential partner ideas in front of them to get that feedback. Would this be useful? Because again, just to your point, the things that you and I might find beneficial or valuable um don't always match what the consumer is looking for. And so we really try to help credit unions have a framework of like how to facilitate sessions like that. You know, we create kind of focus group in a box or kits and things that they can go and talk to their members with. Um, or like I said, if if they don't even have the capacity to do that, we we record our sessions and they're welcome to watch those and glean insights from them or take the insights that we um elevate out of them.
SPEAKER_02:How hard is it for you to do a focus group that produces relevant information?
SPEAKER_01:Um, I would say it was hard in the beginning. Um, but like anything, you just get better, you hone your craft. One thing we've been blessed with is the ability to bring in outside experts, specifically early on, to facilitate that. Um, I've actually participated in focus groups. I've been on the other side of the table, set of research facilities and observed the way that they were facilitated. And uh again, having the opportunity to work alongside some of those experts. Um, what was once a challenge is now kind of just second nature. And uh yeah, I always feel excited in the days leading up to a focus group because I know not only are we going to get the three questions answered that are really keeping us up at night, but we're also gonna uncover three things that we never would have thought of. And sometimes the focus group about decoupling and divorce will actually yield an idea about cash flow or better financial education in the schools or you know, things that weren't even on topic. Because the beauty of it compared to a survey is I can ask those three, four follow-up questions that are gonna really get us to an opportunity.
SPEAKER_02:Yeah, I've I've watched a few focus groups that I still remember one I watched. This was a video of a meeting. Uh watch this at the California Nevada League meeting, and uh guy was asking, it was just young people, early 20s. So you're interested in joining a credit union? Nah, can't I don't belong to a union? Nah, I don't like credit. And it was just down the line, it was like so negative. I said, I said, man, you guys got a marketing problem here. You gotta recognize that this marketing problem is immense.
SPEAKER_01:Yeah, that's that's a real problem in our industry. And I know folks have even toyed around with, you know, is the name credit union more harmful than beneficial.
SPEAKER_02:That's why a lot of credit unions are taking the name credit union out of their name.
SPEAKER_01:Yeah. You know, the if you really want to get brutally honest, answers in a focus group, which is what I'm always looking for. I don't need, you know, people to pat me on the back or say we're doing great if there's opportunity to improve. But um, we've done focus group with students, particularly like middle and high school students, will give you the straight truth. They won't pull any punches. And if something, I'll put it in their words, is stupid or makes no sense or is a horrible idea, you know, they'll they'll tell you that. And they won't, you know, um feel any embarrassment or shame about being honest. Um, so it's interesting to see, having done a lot of these now, how different groups sometimes you have to really dig in to get to what's helpful and truthful. Um, whereas others, like that example I mentioned with students, they'll they'll just tell you right off the cuff.
SPEAKER_02:Are you aware of any credit union that's taken your idea for that Detroit Lions C D and implemented it themselves locally? Not necessarily, hopefully not in Michigan.
SPEAKER_01:But uh No, not not in Michigan, not nationwide. And I don't understand that because it's a good idea. Yeah, I think so too. I I think you know, we've discussed how we how we could maybe put that in a box and and try to socialize it. I have a lot of credit unions reach out to me and do, you know, a 30-minute call explaining it. And I've spoken on, you know, different stages talking about it too. But I just I don't know if it's uh taboo or if it's like fear of being associated with something that's quote unquote negative, but I've yet to see someone uh leverage that yet. But I I do think eventually you're gonna see a lot more of that. You know, the industry's been talking about gamification and how do we reach the younger generation. And I think we're really on to something with with that offering. So um, you know, sometimes it just it just takes time for those things to develop or confidence.
SPEAKER_02:Yeah, I did a show three or four months ago with a mid-sized or small credit union in uh Ohio that actually has a deal with the the Cleveland Browns. And they have a branded card that's aimed primarily at kids. It's uh it's a little brownie card, I think they call it. It's uh and very popular, apparently. So credit unions like deals with with sports teams, things, things that revolve around sports. Some people think it's an excessive think about thinking about that, but given the popularity of sports, I'm not sure it's excessive.
SPEAKER_01:Yeah, yeah, I think there's definitely some opportunity there. And um, for creditings of all sizes, like, you know, how can you make this fun with the college in your town, right? Yeah, right. Yes. You know, again, if if sports aren't your thing, but you're in a community that gets 80 inches of snow, like some of our northern branches, like how can you play into that, right? Like there's there's a bunch of different ways to engage your members. And I think what it really comes down to is doing that type of listening and understanding, you know, what is what are your members passionate about? Like what are the things and the causes that they are proud of, and then trying to play into that. If you're trying to like force it to a community that's not engaged with that team or that school or that that cause, it you know, it'll only be so successful.
SPEAKER_02:You know, I'm a credit union and I come to you and I say, could you would you do research on the costs and benefits of relationships with with sports teams? And I want to look at stadium sponsorship, stadium naming rights, a co-branded credit card, and a third option that I can't quite think of right now. Yeah, would you do that? Would you be interested in that?
SPEAKER_01:I think I think that's interesting research. Yeah.
SPEAKER_02:I um because a lot of credit unions are exploring this, but they don't have a research basis to say, oh, well, here's the pitfalls, here's the plus side, uh, here's what we need to think about.
SPEAKER_01:Yeah, yeah. And I I think that's interesting research. And what I would hope to do through that research is add in some of that room 39A flavor of um maybe besides just slapping your name on a stadium, like what are other ways that you can embrace the passion and the energy of that fan base, maybe through your products or your event activations? You know, I think a lot of times the only research that's involved in those types of negotiations, Robert, are coming from the uh entity that's going to collect your sponsorship dollars. And they're saying, oh, you'll have this many impressions, or you know, we have this many people that drive by the sign or the the stadium uh every day. So that's why you should invest, you know, this money. I could see a research paper there where you could look at the performance maybe before and after and measure, you know, the impact that it has. The difficult thing in in some of that type of um research is uh many of these credit unions, you know, that's not their only play, right? And there's, you know, they're building new branches, they're they're going through a merger. There's so many other variables. So it's it's tough to sometimes tease out like what is specifically driven by this single campaign. But I don't I don't hate the topic idea because I do think you know there's many credit unions that are signing up for that. And again, I I think you got to take it that next step and find those engagement points or those those ways to align your products to those um partnerships. I think that's like the real sweet spot.
SPEAKER_02:Well, also you could research uh the NFL, MLB, National Hockey League, they all have restrictions on what you can do, which might not be mentioned to you while you're discussing this and dreaming about oh, we can do this and this and this. Well, that might be specifically prohibited. And I'm not saying anybody's conning anybody, it's just no one asked the question before they signed the contract.
SPEAKER_03:Yeah, if you're excited.
SPEAKER_02:And they you would have been told, no, you can't do that. But you don't ask, you're not gonna find out. But if doing research on that could be really useful because there's so much interest in this right now.
SPEAKER_01:Yeah, there is. And um, you know, I think with any partnership, whether it's a naming rights deal or a smaller, you know, type of partnership, you really want to find um organizations that are um kind of on the level playing field. You know, if if a credit union is sponsoring something and they're the 20th largest sponsor for that organization, but for the credit union, it's by far their biggest expenditure. Your priorities or your it might be the most important thing to your strategy, but if you don't have that alignment with the partner, you might not get the service or you might get stuck in the um legality concerns that you mentioned and not being able to live that partnership as fully as you had hoped when you signed the deal. So, you know, I think when we look at partners, you know, we're always trying to find um uh partners that are on the rise, you know, um, because we believe we're growing and on the rise and try to like find someone who's growth-minded and walk that path with them.
SPEAKER_02:You're you're right. And in many of these sports deals, this credit union gets the title the official credit union of the blah blah blah. Now, what if Chase, Manhattan Bank, Chase, JP Morgan Chase, is the official banking partner? Huh. Who do you think has more weight? You everybody's walking around saying, Well, we're the official credit union. That's that's a cool thing, but it might not be quite as important as you think.
SPEAKER_01:Yeah, yeah, that might translate into some smaller uh recognition.
SPEAKER_02:In any event, to wrap this up, I'm a big fan of what you're trying to do. I do think the credit union industry has been hampered by an incredible amount of data, by a lack of an incredible amount of data. If it had an incredible amount, I think that'd be a great thing. Uh, and they're making decisions, flipping coins, which is unfortunate. Because you're and the credit unions are playing against some big wealth research operations like the Money Center Banks and some many of the fintechs. These guys got research to burn. Yeah. Yeah. And research will make a difference. Before we go, think hard about how you can help support this podcast so we can do more interviews with more thoughtful leaders in the credit union world. What we're trying to figure out here in these podcasts is what's next for credit unions. What can they do to really, really, really make a difference in the financial scene? Can't all be mega banks, can it? It's my hope it won't all be mega banks. It'll always be a place for credit unions. That's what we're discussing here. So figure out how you can help. Get in touch with me. This is rjmegarvey at gmail.com. Robert McGarvey again. That's rjmeggarvey at gmail.com. Get in touch, we'll figure out a way that you can help. We need your support, we want your support, we thank you for your support. The C U 2.0 Podcast.