By John San Filippo
PSCU held its 2022 Member Forum April 26-28 at the Bellagio in Las Vegas. It was the CUSO’s first live, in-person event since 2019. Surprisingly, more than 1,200 attendees showed up, making it PSCU’s largest in-person event ever.
The conference was kicked off by a keynote address from CEO Chuck Fagan. Finopotamus sat down with Fagan later in the week to further explore several of the topics covered in his presentation. Here are highlights from that discussion.
Connected Experiences
Over the course of the conference, several presenters, Fagan included, mentioned the idea of “connected experiences.” Finopotamus began the conversation by asking Fagan what PSCU means by connected experiences.
“Connected experiences have taken on an entirely new focus post COVID,” said Fagan. “Headed into COVID, consumers could go to their branch, they could call the contact center, but still at that point in time, there was a bit of adoption going on in the digital channels. Then everybody was forced into working online, grocery shopping online, ordering food online, whatever. We were all immediately pushed into that world.”
Fagan said the challenge for credit unions was to replicate the effectiveness of these in-person member interactions using purely digital tools. He added the credit unions were so successful at this, now there’s no turning back.
“It takes 21 days to form a habit, 66 days to form a behavior, and that behavior is now set in consumers,” said Fagan. “We’re never going back to what it was before. Even as consumers get access to go back to restaurants, malls, and all that, the world of financial services has to enable that continued behavior because, number one, it’s the way that financial institutions can be more efficient, but number two, the consumer is way more efficient in their lives, too.”
According to Fagan, a truly connected experience is one that transcends individual channels and moves from digital to in-person and back again as circumstances dictate. “If [the interaction] needs to shift to an in-person branch discussion, the member shouldn't have to start all over,” he noted. “It should build, and they should be able to have that personalization, that familiarity, in every interaction.”
Keeping Pace with the Apples of the World
Applying for an Apple credit card is a simple matter of a few mouse clicks or taps on your cell phone’s screen. Once approved, a digital version is immediately available. In contrast, many credit unions still require a long, frustrating application, even for members, followed by a request for paystubs. Finopotamus asked Fagan whether most credit unions realize there’s such a large gap in the user experience.
“I think they may be aware of it, but the challenge is what to do about it,” said Fagan. “It's against the grain for the way they've traditionally thought. I don't think the ‘because we've always done it that way’ mentality exists. I think there's an openness to looking at it differently. It's moving across and being able to build the experience to enable it to happen. And I don't think there's an easy path to get there.”
Fagan added that this is where organizations like PSCU need to take the lead. “That's a role that we have to play. PSCU’s partnership with Amount gives them a vehicle down that road. So I think the awareness may be there, but the execution, the ability to get it done, is kind of the next hurdle.”
PSCU’s Evolution from Reseller to Fintech
PSCU was borne out of a desire to provide better member service. “We started out in 1977 with five credit unions that wanted to get into credit cards, but couldn't do it because they didn't have scale,” recounted Fagan. “They collectively said, ‘Let's put our projections on a single sheet of paper, make ourselves look like one client, and then we'll grab the attention of the processors.’ That was basically our model for the first 12 years of PSCU.” The CUSO established itself reselling products and services from other companies like CheckFree, MasterCard and various plastics providers, among others.
“Then we built a call center and a fraud group,” said Fagan. “That was the only real thing we owned was fraud and a call center.”
Fast-forward to 2015. “We made a decision that our partner First Data, now part of Fiserv, was the best at routing transactions from the merchant to their platform for approval/denial and back. So we decided we needed to build the experience around that for the cardholder and the credit union,” said Fagan.
That’s when PSCU became committed to building some of its own solutions. “Our first major milestone was putting a discipline in place of a minimum of 5% of our revenue invested in capital spend,” he explained. “That in itself says, as you grow, you have to spend more. We're spending well over the 5% annually now.”
Fagan said that getting credit unions to buy into this new direction was a challenge. “There had to be a trust factor in doing it,” he said. “Our credo was: If you build it, they might come, but if you build it with them, they're already there. So we collaborate with our credit unions and they have input into what we build and how we build it. They like that.”
The CUSO Model
Fagan made it clear that the trust and collaboration of its credit union owners is key to PSCU’s success. Finopotamus asked whether a non-CUSO entity could achieve that same level of trust.
“I think it would be very difficult,” said Fagan. “When a credit union looks at PSCU, whether it’s for the call center, fraud or our other products and services, they’re trusting their member with somebody else. And would you do that with a company that you don't own and don’t have a say in?”
He added that while no credit union will choose PSCU solely because it’s a CUSO, “it is a clear tiebreaker for us that a credit union would trust us with their members, because we have a philosophy built around people helping people. We have a philosophy around understanding their business and that's something pretty sacred.”
Cryptocurrency
During the conference, PSCU announced that it had created a microsite as a resource center for cryptocurrency information. Noting that PSCU may not be top of mind in current credit union discussions of cryptocurrency, Finopotamus asked what drove this initiative.
“Our initial play is having a couple team of members that as part of their responsibility is to learn more about it, to understand what it might mean for credit unions, understand what it might mean for us and educate internally, but also educate externally,” said Fagan. “Our resources are being invited to participate in board meetings. They're invited to speak to credit union league meetings and different events around the country.”
Fagan said that while the precise impact of cryptocurrency on credit unions is uncertain – in no small part due to regulatory issues – the fact this it will impact credit unions in some significant way is inevitable. He added that PSCU’s current goal is to be a trusted source of cryptocurrency information.
“There is a bit of a trust factor that we've earned with our member owners,” said Fagan. “Think of Warren Buffet's advice to never invest in something if you don't understand it. There needs to be a better understanding across the industry.”
Where can credit unions start? “One of the recommendations I've made to credit unions is take one or two of your younger employees that have an aptitude for technology and say, okay, you are my crypto folks, learn everything about it. You still have to do your day job, but learn everything about it. Educate the executive team.”
Whether it’s cryptocurrency or call centers, Fagan drove home the point that credit union trust is key to PSCU’s future growth and success. “We’ve created a very significant benefit to working with PSCU because we have that understanding of what credit unions are trying to accomplish. I think that sets us apart and establishes that partnership spirit,” concluded Fagan.