By John San Filippo
For Ribbon Co-Founder and CEO Saeid Kian, the experience of dealing with the financial side of his father’s passing led to the creation of what Kian calls an “inheritance platform,” a way to simplify the lives of deceased members’ families, while retaining generational wealth transfer at the credit union.
Kian was working for Stripe in Singapore in early 2020 when he got a call from his father. “My dad calls me and tells me he has stage four pancreatic cancer,” recounted Kian. “You can imagine it was pretty shocking.”
After much soul searching, Kian and his wife decided to move back to the U.S. to be closer to his father and help in any way they could. “We were taking him to radiation and chemotherapy appointments and things like that,” he told Finopotamus, “and then also doing all the stuff that you're supposed to do like last trips together, adding myself to the accounts, et cetera.”
Lots of Red Tape
When his father passed a few months later, Kian was “overwhelmed with grief trying to figure out what all this means,” he said. “But I was hit with not just the grief, which I was expecting, but also with the logistical nightmare of inheritance.” He said he was besieged by “endless paperwork and unnecessarily offline processes” for resolving even the simplest accounts.
“My father loved his credit union,” noted Kian, “but I never really understood [credit unions] growing up. I didn't really care. So, this was my first real experience with the credit union – [them] asking [me] to go into branch when I wasn't nearby. My first experience was just a nightmare.”
He said that having to shuttle paperwork back and forth eventually dragged the process out into several frustrating months.
“My co-founder and I call this the lose-lose,” Kian told Finopotamus. “The person who's grieving is losing out because they're spending a ton of time going through and just dealing with this when they should be grieving and they have other things to deal with. And then the credit union is losing out because – guess what I did when I got that check. I walked out the door and that deposit left forever.”
An Idea Is Born
“When you're talking about the great wealth transfer, you're really talking about deposit retention,” explained Kian. “These are chances and opportunities to be able to convince that next generation to stay.” It’s on this premise that he and his co-founder created Ribbon.
“Credit unions need an inheritance platform that makes it easy for that next generation to submit all the paperwork,” said Kian. “Then they can replace the conversation about paperwork with conversations about things that are relevant for the heir – relevant products, relevant services. By making it easier for the heir, you're able to run these campaigns to hopefully convince a larger percentage to stay with your credit union.”
This can represent either a significant threat or a significant opportunity depending on whether a credit union chooses to address the situation. Kian estimated that, based on his research, about one third of all credit union deposits belong to members aged 65 or older. He added he’s talked to some credit unions where that number is as high as half.
He also estimated that 1-2% of credit union members pass away each year. For a 100,000-member credit union, that represents 1,000 to 2,000 potential lost deposit relationships each year.
Under the Hood
Finopotamus asked Kian to describe what a credit union gets from Ribbon for its money.
“You buy a software-as-a-service application and a widget that we can put in, as well as an admin portal that your operations team can use,” explained Kian. He added that the software is typically managed by someone on the deposit operations team, noting that it’s not unusual to see that person spending 20-30 hours per month dealing with deceased accounts.”
Kian also pointed out that since most heirs are not credit union members, the Ribbon widget sits outside of the credit union’s digital banking platform, making it easily accessible by anyone who needs it. He added that Ribbon can also be used by branch staff for those heirs who prefer an in-person visit. “We don’t force anyone to go online,” he said.
The primary purpose of the platform is to automate and digitize the submission and processing of all required documents, he said. By minimizing the paperwork hassle at both ends, the credit union can focus more on retaining those deposits.
“When you're talking about tens of millions of dollars being inherited every year, if you go from $9 million walking out the door to $7 million walking out of the door, for example, that's $2 million extra in deposit retention,” concluded Kian.