‍

Cotribute is the award-winning fintech platform that enables membership and margin growth through delightful digital acquisition and onboarding experiences. Cotribute seamlessly integrates with Core, LOS and online banking systems and is on a mission to deliver compelling digital experiences to every credit union member.

Learn more about how Pat and other credit union leaders leverage Cotribute to deliver compelling digital experiences that grow deposits and loans.

Transcript

Samantha

So Pat, thank you so much for taking the time to be herewith us today. We're so excited to just hear some of your perspective and yourjourney in the credit union space [and] some of the advice that you might havefor credit unions. I'd love to start off just hearing a little bit about yourbackground. Maybe [share] how you got started working with credit unions, and howyour journey has progressed to where you are today and what you're doing now.

Pat

Well, thanks, Sam. It's great being here as well. So mycareer in credit unions actually started with banks a little over 40 years ago.I started, actually, as a part-time teller and then worked my way up. I endedup in the commercial teller ranks. The vault teller, in this case. One of theaccounts that I actually handled as a commercial teller was a credit union. AndI didn't know anything about it. And I remember talking with my parents andsaying, what do you know about credit unions? And of course, they had a carloan, like a lot of people. They didn't know a lot, and over time as I workedthere, and got to know some of the folks from the credit union - literally oneday the manager at that time (many years ago) walked in and said, “Hey, how wouldyou like a job? I'll pay you $1,000 more a year than what you're paid now.” SoI went, made the decision to go over and start with the credit union and to behonest about it, I happened to go into a place at the time that was havinga lot of problems. Eventually, the regulators got involved and removed theboard and some of the management. I was one of the few left standing in thiscase and the board put some money into developing me and as that happened and Ihad more of a voice, we turned that credit union around and it's still aroundtoday. In this case, I just fell in love with the cause and the purpose, and asa result of that experience I gained a reputation with the regulators as a turnaroundspecialist [with] both the federal regulators and the state regulator. EventuallyI even became a trainer at different times for the regulators as well. Sothat's how I I got started. And then over time, as I progressed and because of myreputation as a turnaround specialist, quite frankly that was the next job thatI took for another credit union who needed to turn around, and I figured outpretty quickly that I wanted to become a CEO at some point. I started lookingat what it is that I needed to be able to do and I figured out pretty quicklythat I was pigeonholed as a turnaround. So I found a credit union that is verywell run that was looking for a #2. They hired me and it kind of broke thatcycle just a little bit and expanded my experience and it allowed me to be ableto obtain a lot of new skills, get a broader vision of the operation and when Icompleted my time there, there was not an area of the credit union that Ihadn't either overseen or for that matter, run in one form or another. Then Iwas eventually recruited from there, to become a CEO in Colorado and I was theCEO at a credit union here for just under 30 years at the time. And again itturned out to be a turnaround situation. And its preceding credit union thatserves the same sponsor group, actually, went under and was taken over by theregulator so we had a pretty big uphill battle and reinvented ourselves anumber of times and became very successful. Very well known, not just locallyand statewide, but also nationally and then my time came to an end not quitetwo years ago. I'm going to say probably about a year and a half ago or so andthen I was just trying to decide what it is that I wanted to do.

Samantha

OK.

Pat

From there, some of my colleagues in the credit unionmovement, and I kept in touch and one of them called and said, “Hey, we needsome help. Can you help us out?” So I got involved with nutmeg State Financial CreditUnion in Connecticut and I started as a consultant. And I've just recentlydecided to come on board and help them out as their President and CEO for theforeseeable future. So how's that for my background?

Samantha

Perfect. Very cool to hear about how you got started andall the different things that you've done in the space. What I wanted to ask asI was kind of listening to all your different experiences is - Is thereanything that stands out to you as something that the most successful growingcredit unions have as part of their culture, their DNA? Because you've workedwith some that, you know, were struggling. You helped turn them around. Andthen maybe some that were doing better. It seems like you've kind of seen justa wide range of credit unions and how they work. So what are some of thosefactors that you think contribute to success and growth and just overall healthof an organization like that?

Pat

As we go through it, well, here's my experience. The largemajority of credit unions number wise are actually small to mid size creditunions. And whereas the larger credit unions have billion dollars or more, havea lot more resources available to them, and my experience is typically below abillion dollars. The credit unions that I've seen that have had the mostsuccess with growth, have a few things in common. One is they have a really solidfoundation from a net worth perspective. They have a really good identity andthey're grounded in their purpose itself and they've carved out some type ofniche. So unfortunately, what's happened a lot in my experience is that over timewe felt like we needed to become all things to all people. And when we do that,we dilute our economic power and therefore our IMP. When we do that, we don'thave the opportunity to be able to grow the way we might if we were just tofocus some of our resources. And I have a real life experience of that goingback to the Great Recession itself, we made some very difficult decisionscoming into the recession that we needed to change our business model andimprove the economic payback to the Member and as a result we looked at all ofour products / services and we eliminated 70% and we focused our economic poweron the products and services that were most meaningful and quite frankly alsoprovided the greatest margin for us as well. In addition to that, that allowedus to be able to simplify a lot of our delivery systems, our training systems.We became much more efficient overall and I can give you a lot more detail. Butduring the Great Recession, when there was a contraction strategy that wasemployed by the regulators, our credit union, in a period of three years,doubled its size and we did it profitably. So timing is everything. Buthopefully that helps answer your question.

Samantha

Yes, absolutely. I think that point about finding yourniche and you know, not trying to serve everyone makes a lot of sense. What aresome of the ways that you've seen the industry change particularly, I meanyou've seen a lot of change, but particularly in the last you know, three yearswith the pandemic. What are some of the biggest things that you've seen happen- the biggest shifts?

Pat

Well, you know, biggest shifts - through credit unions, ourbusiness model is very static. I mean, regardless of economic times andsometimes that service serves us well and other times quite frankly, itdoesn't. So you know our business model in this case, which is highly reliantright on being able to make loans to members and attract deposits. - we liveoff of margin. In this case, that has not changed. Early on in the pandemic,there was a lot of concern by everyone, and rightly so, about potentialeconomic losses, loan losses, things along those lines that may actually impactall of us. We did not see that and I'm sure some of that had to do with thegovernment intervention that happened as well. But just as an industry as awhole, we did not see that - what we did see as a result of the pandemic, ofcourse, is as a result of government interaction with the feds specifically, theywere looking to stimulate the economy. A lot of us actually saw a lot of loans.So new purchasing that was happening, refinancing that was happening, a lotoverall and as that has happened in a lower rate environment and while it washelpful during that period of time, of course, the big concern is what happensnow - is rates have increased. And if they continue to, and the economic impacton us as a result of that [continues], the other thing that we've seen, primarilyas a result of the economic factors that are driving rates up, is of course thehousing market and specifically refinance has started to slow down. So that'son the consumer side, commercials faces a few different challenges as we gothrough it, primarily with some of the changes as a result of the pandemicvacancies and leases and things along those lines have impacted, but maybe notquite as much as we had initially seen. So the same problems pre pandemic arethe same problems we had post pandemic in this case - because of the businessmodel we just feel it a little bit differently.

Samantha

Sure, sure. That makes a lot of sense. And what would yousay to a credit union that might be struggling in the area of growth? So youmentioned kind of finding your organization’s niche and then you know what ifwe take it a step further, you know when you're actually trying to, you foundyour niche? OK, these are the Members that we want to serve, the potentialcustomers that we want, but we're struggling to get them. What are some of thebest strategies that you've seen?

Pat

Well, I think some of us are still trying to figure it out.We're still relatively new post pandemic, but one of the things that thepandemic did do is that right it reasserted the importance of digital platformsand digital growth, the ability to be able to serve members and new members remotelyand through digital platforms. So I think there's still some experimentationand some testing that needs to happen with regard to that. But again, what I'mgoing to do is I'm going to come back and I'm going to point to our our niche,our purpose, our why and being able to actually create an emotional attachmentto what we're doing combined with a vibrant digital platform that will actuallybe able to service people without having to rely on branches. So what we'vealso seen within branches and it's not new but branches, while there are stilltransactions that transpire, what we actually see is we see them becoming moreand more problem resolution centers and I think the pandemic has justaccelerated that a little bit it. I think again, digital platforms, remoteofferings, the ability to be able to provide full service where you can and anexperience that is delightful that competes with non financial institutions isbecoming more and more important.

Samantha

Right, right. And what would you say some of the challengesare that credit unions face when they're trying to increase those digitalcapabilities? But you know, maybe they're getting stuck in some way and they'rehaving trouble kind of moving to that next level of going beyond the in personexperience. Maybe they're really, really good with the in person experience.What are some of the challenges that you know, they might need help with to gointo that next level with digital capabilities.

Pat

Well, I've been on a lot of core systems and I've talkedwith a lot of people over the years and that is typically core system limits.You know, I don't think there's a core provider out there that doesn't believethat they provide the best of breed of everything and maybe not as much todayas it used to be. So you know, for the longest time in our industry anythingand everything that we've had to do, we've had to actually look to our coresystem providers and to be quite frank about it, some of them in this case maybe proprietary, may be locked down and in most cases they're all veryexpensive.

Samantha

OK.

Pat

They don't, particularly in this case, lead to a very agileexperience and delightful experience overall. So what I would say overall istrying to address some of the system limitations through core providers throughsecondary providers like the Cotribute or others that have the ability to beable to connect to the core but actually have the technology to be able toprovide a tremendous and seamless experience. So that's that's what I wouldsay. I also believe too there are different strategies to employ that we'veseen you know some of the larger credit unions can put a lot more resources toit in the mid size to smaller credit unions. In this case. I think in somecases we've become complacent because we don't believe that we can afford it.

Samantha

Right.

Pat

Right, so finding an affordable and agile solution againlike a Cotribute in this case that can work with the core providers and providethe experience I think just becomes increasingly important.

Samantha

And are there other pieces in that part of the technologythat you think are really important aside from the core integration which youmentioned, other things that you would look for specifically in a technologypartner?

Pat

Well, again, I  wouldlook depending on what we're doing here, I would look for the technologypartner to be able to interface across multiple platforms, not just core systemproviders as well. There's a lot of third parties out there that are leveragedwithin our industry and we need to have the ability to be able to havebidirectional communication to be able to collect data, to be able to workbetween systems. So again I would look at that, I would look for modernlanguage. I would look for the ability to be able to test and make adjustmentsand be very agile is what I would do and have done in the past . I would lookfor really good, you know, service level agreements as well.

Samantha

Right.

Pat

You know, I don't know if that's helpful. But that's OK.

Samantha

That's great.

Samantha

Well, Pat, this has all been super helpful and veryinsightful to hear your thoughts. We really appreciate it. Just to wrap up, Iwanted to ask you what do you enjoy most about working in this space? You know,you said you know it's been about 40 years and you know you've stayed here andthis is something it seems like you're passionate about and love to do. I'dlove to hear what it is you enjoy most about it.

Pat

You know, I'm still grounded in the old movement as opposedto the new industry it itself. And what we've seen over time is that we becomemore of an industry than we have a movement. And I would love to see us getback to our roots. I think that competitively we can win in that space. And Ithink we have the ability to be able to connect with people and meet real needsbasic needs. For people of all kinds. And I just love the purpose. I love thepassion of the people around it. So that's what keeps me coming back.

Samantha

I love that. Thanks so much. Well, we really appreciateyour time. Talk to you again soon and thanks again so much for meeting with us.

Pat

All right. Thanks Sam.