Finopotamus Unscripted: The Heavy Hitters

By Finn O'Potamus

In this episode of Finopotamus Unscripted, host John San Filippo met with three credit union technology heavy hitters: John Best (CEO, Best Innovation Group), Kirk Drake (CEO, CU 2.0), and Kris Kovacs (CEO, Constellation Digital Partners) to discuss the state of credit union technology.

Best compared credit union tech to a heavily remodeled old house: functional, but a patchwork lacking sustainability. He predicts AI will expose these weaknesses. Drake acknowledged improvements in cloud adoption and data infrastructure, while highlighting the persistent “core chokehold” and a lack of strategic vision as hindrances. Kovacs added that the proliferation of fintechs has created strategic and integration challenges. He proposed that credit unions evolve from “buyers” or “builders” to “composers,” orchestrating various fintech services.

The discussion turned to strategy. Drake stresses the importance of an overarching strategy, viewing it as a filter for evaluating technology tactics. He cautioned against reactive fintech adoption, arguing for proactive strategies that combine various tactics toward specific business objectives. Best used a “vessel” analogy, urging leaders to define their destination before selecting the appropriate tools and crew. He cautioned against mistaking tactics like “mobile-first” for strategic destinations.

Addressing the challenge of identifying true partners, Drake categorized vendors as those who want to “eat your lunch,” “eat lunch with you,” or “sell you lunch.” True partners are invested in the credit union’s success, exemplified by CUSOs or those deeply embedded in the credit union world.

Kovacs questioned whether credit union strategies are truly informed or merely imitative of competitors, asking how to foster a shift in mindset. Drake responded, elaborating on his idea of strategy as a combination of tactics and offering the example of asset liability management where different approaches come together to achieve a specific financial goal. He criticized credit unions’ tendency to “play whack-a-mole” with fintechs, reacting to trends instead of defining their path. He emphasized choosing partners based on more than just exciting tech; it’s about the team.

The combination of things that make a good thing to bet on ends up actually not being the tech most of the time. It ends up being the team. The ability for them to learn, innovate, adjust, listen, listen, listen. It has very little to do with the best tech at the end of the day. – Kirk Drake

Best emphasized that progressive credit unions operate with a rhythm of continuous improvement, absent in project-driven credit unions. He pointed to personalization, enabled by data and AI, as the future, and used slow mobile app update cycles as an example of how credit unions fall short. Drake underscored the difference in growth metrics between credit unions and SaaS companies, attributing the gap to differing agile management approaches. Best highlighted the lack of effective feedback loops in many credit unions.

A discussion about app store ratings arose. Drake said responsibility for less than favorable ratings lies with the credit unions, especially those trapped in long contracts. Kovacs argued that negative reviews often reflect broader dissatisfaction beyond just the app experience.

San Filippo asked if credit unions are becoming IT departments with financial services attached. Drake said this is happening now, foreseeing AI automating roles and shrinking staff. Kovacs said he envisions credit unions transforming into product design firms powered by AI. Best reiterated that credit unions lack the continuous improvement cycle of true technology firms.

Kovacs emphasized the need for product management – focusing on solving a single problem, learning, iterating, and building on successes, as Chime has done. Drake highlighted the need to define a target market and avoid serving all demographics with the same solutions.

Best presented a hopeful outlook: credit unions leveraging collaboration with each other and blockchain to create a shared service ecosystem. Drake questioned their capacity for such collaborative efforts. Kovacs identified credit unions’ clinging to their unique identities as an obstacle.

The discussion concluded with predictions. Drake predicted future hair loss. Best said he foresees generative AI impacting music and marketing, with a move towards hyper-personalization. Kovacs said he predicts an increase in mergers of equals as a precursor to shared services.