Possibly the defining factor of our current moment in business, technology, and innovation is the culture driving the creation and growth of start-ups. We’ve seen how rapidly the business landscape has changed, for better or worse, because of the startup ethos.
While credit unions have undoubtedly been affected by the rise of fintech startups, the concept of a “credit union startup” in this day and age is almost unheard of. If anything, the industry is trending in the opposite direction—toward the consolidation of existing credit unions rather than the creation of new ones.
But Civic FCU, a startup credit union that launched in 2019, is bucking the trend. Bijal Gami, VP of Operations; Lamar Heyward, SVP of Marketing; and Michael Spink, SVP of R&D join us for an animated discussion of how they are executing on Civic FCU’s core strategy, why they started a credit union instead of a fintech company, and what we can learn by marrying a startup culture with the cooperative principles.
Key Insights and Takeaways
- Diversity drives more adaptable, innovative, healthy organizations. Civic FCU is fortunate to have a lot of people with diverse backgrounds to begin with, but they also encourage diversity of thought, continuing education, and community engagement. Bringing together lots of very different people, who are driven by a shared passion, leads to more avenues for success.
- You need to learn from the real world. By conducting ethnographic research, visits to vendors, or strategic planning in the field, and by selecting the right people from your team to work in startup incubators, you can ensure that your credit union’s abilities and culture are developed in a real-world environment, not just on paper.
- In order to reignite the credit union movement, which many believe has died as a concept, we need to create, innovate, and iterate. Integrating the industry with the attitudes and models of the high-tech sector benefits both credit unions and their members.
Read the full transcript here:
Cameron: Hello and welcome to another episode of the Remarkable Credit Union podcast. We created our podcast to help credit union leaders and marketers think outside of the box about marketing, technology, and community impact. Each episode we bring on expert guests from inside and outside of the industry for conversations about innovation. Our goal, as always, is to challenge your preconceptions about business as usual and provide you all with actionable takeaways.
Cameron: Today’s big question, what lessons can we learn from a startup credit union around innovation, staying true to the cooperative values, and creating a great culture. I’m very excited today to welcome three fine gentlemen from Civic FCU, one of the very few startup credit unions that we have in the United States today. In order, the first one is Bijal Gami who is the VP of Operations at Civic Federal Credit Union. I actually met Bijal. He’s a current, Filene I3 Member and he’s done a lot of great work with the groups there, and his personal passions are golf, playing with the kids, and, he paused for a moment, making a lot of money. He wasn’t sure that was credit union friendly, but hey, it’s honest and we appreciate that and that’s why we love him.
Cameron: Our next guest is Lamar Heyward. Lamar is the SVP of Marketing at Civic FCU. One of the first things you’ll notice about Lamar, and I’m sad, his is just audio. He’s exceedingly well-dressed. He’s definitely a gentleman former Filene I3 and I4 member, and he’s very, very passionate about spending time with his kids.
Cameron: Then last but certainly not least, we have Michael Spink was the SVP of Research and Development at both Civic FCU and Local Government FCU, and we’ll hear about the relationship between those two credit unions. Michael has a really interesting career. He actually has a degree in strategic foresight, he’s the vice chair of the Cooperative Council of North Carolina. He was a trail steward for the Eno River Trail System. When I asked him about his personal passion, he said in one word, community. He’s a big advocate of the city, Durham, North Carolina, where they’re located, and he’s really actively engaged in that. He wanted to challenge anyone in our audience who might disagree with this, to come on the podcast, that it is far and away the best city in the entire south. Lamar, Bijal, and Michael, thank you for joining today.
Michael Spink: Hey, man.
Bijal Gami: Thank you to be here.
Lamar Heyward: Thanks for having us.
Cameron: All right. That’s my first triple introduction ever. So hopefully we got through it just fine. I’d love to tee us up with just a high level question. From what I know, Local Government has a great reputation. It’s a successful credit union, so why start a new credit union and what need does that address that’s not being filled by Local Government FCU.
Lamar Heyward: Well, you talked about that reputation and I think one big part of that is our desire as most credit unions to continue to serve our membership and serve them well. Starting Civic is really about creating more options. Civic, just like Local Government Federal Credit Union still serves Local Government in North Carolina. I think one of the big questions we have to ask ourselves when we got started was, “Hey, what do we do? Do we go across the country? Do we open up the field of membership?” But we made the decision to stay dedicated and stay focused because we still feel like there’s a lot to do to be able to reach our members and offering them different alternatives. One of those key alternatives tied to the offering of business services to our members and prospective members in North Carolina. Want to add anything to that?
Michael Spink: Reach, a big piece of what we were looking at, and we’re very fortunate. I’ll give a shout out to North Carolina State Employees Credit Union, Local Government since 1983, has served our members through what they now have just heard today, let’s say 269 branches and over 1108, ATMs which is tremendous coverage. North Carolina is a big state and we built a Civic Federal Credit Union to be 100% digital to really build a much, much stronger, experience, and reach.
Michael Spink: North Carolina is blessed with 93% of the population has access to broadband, and they’re working hard to cover that other 7%. We wanted to make sure we get members what they want, because they said they wanted a stronger digital experience. So that was another big piece of it, to get to those folks that even though there’s at least one branch in every county, some folks are still 50, 60 miles from a branch, so we wanted to build a really solid, electronic digital platform for them to get their fair share of the good stuff we have to offer.
Cameron: Is there a reason why, or actually I’d love to just understand how is that structured legally? I know that there’s a lot of restrictions on credit unions on how they can do things compared to certain for profit businesses and raising money and all of that. So why do this as a separate entity rather than maybe as something just like a division of a Local Government?
Lamar Heyward: Well, I think one of the things we noticed that we went through the chartering process is the charter that we have for Local Government Federal Credit Union was established back in ’83, and we couldn’t even do that same type of charter. So for us to be able to offer some of the services that we wanted to offer, the only option was to create a completely different organization, with a completely new charter. Trust me, if we had it our way, we probably would have preferred the other, because if there was one thing that took a whole lot of time, it was the chartering process and that’s being able to give Civic off of the ground.
Cameron: Very interesting. Your charter actually forbade you guys to do what you thought it was in the best interest of your members, what they were asking for?
Lamar Heyward: Exactly. Exactly.
Cameron: All right, very interesting. I’m curious when people think of startup in the financial industry, part of why I was so delighted to have you guys on the podcast, they tend to think of FinTechs. I think the statistics are pretty anemic, two to three, I think two credit unions a decade or something like that. So I’m curious, did you guys ever think about alternative structures? Did you think about starting a for-profit bank, a cooperative bank, some other structure, even something more FinTech like where you can skirt some of the regulatory agencies?
Lamar Heyward: Well, the part of the due diligence, we definitely explored a lot of those different options. But I can remember some of those early conversations, the board and even the executive leadership here at the credit union was very intent on, as much as possible staying true to credit unions. Even the labeling of Civic was something that we explored like, do we call it a credit union? There was this desire to make sure that we stay true to those roots.
Michael Spink: Yeah, I think, too, as far as the term FinTech and what FinTechs essentially are designed to do, and I think it’s apparent when you look at pretty much of the hundreds if not thousands of them that are out there, they tend to take a piece of the financial services ecosystem, you might say, whether it’s a payment, a customer interface, back-end operations kind of things, whatever it is that they’re after, they tend to take one chunk, and we knew that we needed to really build something.
Michael Spink: Again, going back to what Lamar mentioned about, it would’ve been easier if to take a different path, but because it needed to be another whole service institution, and we were very fortunate in the LUA, the letter of understanding and agreement that this work through with NCUA way gave us, and I think a lot of this has to do with the credibility of Local Government being behind this. A lot of the same management getting it started allowed us to come out of the ground with a pretty full service financial institution and a FinTech type of structure would not allow for something like that to have happened.
Michael Spink: So it was a pretty complex and very in-depth understanding of the lay of the land and all of the various options that were involved. Everybody was at the table, which was really an interesting thing because this all could have been decided in a board room, but there was a lot of management, employee staff that were very involved and were offered a voice. Not that we always did what everybody wanted or what they said, but everybody was heard and all those options were brought to the table so that wherever it was that we got into, we got into what would work best for the people that we serve.
Lamar Heyward: I think just to piggy back on that shortly, capitalizing on that experience that Michael just spoke to was another key part. Like, I mean, we know how to run a credit union. We don’t know how to run a lot of those other types of businesses. So being able to use that both to get the necessary approvals to do the work as well as to kind of have a headstart as we worked to launch a full service organization was a key part.
Bijal Gami: I’ll piggy back off that, too. Michael mentioned a lot of FinTechs geared towards that one piece of solving one piece of the problem, we had the opportunity of really launching a true de novo, and we really did take multiple pieces from the ground up and actually build it. So in a sense, we’re multiple FinTechs in one. I mean, I think through implementation and probably for the foreseeable future, we really do act like FinTechs, because everything that we do now has to deal with the platform and how it talks to another platform. We’re running into, I don’t want to say problems or hiccups, because of the partnerships that we’ve chosen, because some partners don’t talk well with others and you start to learn those things after you start business. So it’s been a great learning experience that I would imagine any FinTech has to go through when they start their own.
Cameron: Great. One of the things that I was really excited about, we got one other startup credit union on the podcast, and that was Clean Energy Credit Union, and they brought in a lot of experts, but they weren’t, I think truly from scratch, they weren’t connected to another credit union and shared all the challenges, the good things, and everything along that journey. I had originally met Lamar, actually when we were able to bring Lamar into one of the Filene I4 projects, and I’d just barely seen him sort of on a presentation, I said, “That guy is really smart.”
Cameron: Then I met Bijal, at a different event. I didn’t even realize you guys were at the same credit union. I said, “That guy’s really smart.” When I heard you guys were doing a startup, I thought, “Wow, if anyone can really just do this the right way, it’s going to be you all.” So I’d love for you all to maybe share the lessons you’ve learned along the way. What are the good, bad, and ugly of starting a credit Union for other folks out there thinking about it?
Michael Spink: Bijal’s not as smart as you thought he was. No, he’s smarter. We are very fortunate that we have a lot of great people with a lot of diverse background. We’re very much a learning institution. We’re constantly learning. Actually, I was an I3er as well. We always encourage to get to into this kind of spaces. Some people can bring it back and incorporate some of that thinking and methodology more than others, but it gets everyone exposure to that. A lot of our people are even currently involved in advancing their educations or their occupational interests. We encourage folks to be on boards outside of the credit union industry, a lot of heavy duty community service.
Michael Spink: We just have a lot of real … We embrace the diversity of thought, which is something that isn’t always easy to do. I think that’s really helped us get through a lot of this and beginning to embrace the fact that we are all very different people and we’re all driven by a similar passion and harnessing that energy and enthusiasm sometimes can be a challenge because it can get heated up sometimes. But we all know that we’re running after the same mission and I think that is what keeps up united.
Bijal Gami: I’ll piggy back off that. I don’t know if this really a problem, but going through the RFP process, as Michael alluded to, there was a bunch of people at the table and everybody had their own opinions and it was great, because the opinions came from different view points and we really used that. When we rolled into implementation, I think it was hard for us to step back and realize, as individuals, what our roles were, because we were involved in everything at the RFP process. Through implementation I think we started to understand what individual roles were and then as we actually launched I think it was defined.
Bijal Gami: But that was kind of a hiccup that we went through and then one other learning thing I would like to note is partnerships, which I kind of alluded to before. A lot of people speak about partnerships as in what’s Civic’s mission and then what’s the partnership that we want with the core or processor. I don’t think a lot of people think about what that partner’s relationship is with the rest of the industry, because partners need to work with other partners because the platforms don’t work unless they talk to each other. So that would be something key that I would hindsight liked to have known more of.
Lamar Heyward: I think another thing, as you mentioned this in your talk with Clean Energy, start up credit union in the staff’s idea of starting from scratch versus in our case being started and founded by another credit union. One of the challenges that we have is figuring out the best way to work together to close this. Even the fact that a lot of people working on Civic were expats, if you will, from LGFCU and for us, what that means is the two cultures kind of co-mingling. To Bijal’s point about our very collaborative approach and process to work. Even this start-up mentality coming from LGFCU, obviously was this established business. We had a lot of processes in place and you just knew how to operate it and now you’re asking people to come over to a new thing and just embrace it a completely different way of working with a ton of unknowns.
Lamar Heyward: For some people that was exciting and encouraging, for others it was more of a like, “What have I got myself into?” I think that impacted, and still today, continues to impact the work and the approach to the work if you contrast that with a FinTech where you typically have a bunch of people who believe in something they’re passionate about and they have some skills and they’re working together to build it and a lot of the carry over from an older way of working or thinking just isn’t there to get in the way or hinder them.
Michael Spink: I think it goes back to comfort zones, right? What the first [inaudible 00:14:33], it’s another way of putting it, but the people that did come over you even know you are going into something new and you might have the opportunity with some levels of autonomy and approach things different. It’s sometimes very easy, especially as you’re facing challenges to fall back on the things that you know and to fall back on the tried and true processes that you and a lot of people, which is also a challenge have had great success in their careers, whether it was here or at another financial institution or whatever organization they might have been that it doesn’t mean that’s going to the best thing for this.
Michael Spink: I know that even for myself, I always kind of try to think that I’m the rebel and want to go against things, but you find it easier to function. You fall into these automatic ways of doing things, “Well, that will work.” It’s kind of a challenge to yourself and people around you to no, it doesn’t mean we have to do it that way. There could be new and different methodology to figure out what we are trying to do. Not only just in the name of efficiency, or saving a dollar, but to provide the optimal experience for the member and in turn providing the optimal experience for us.
Michael Spink: We have a great breath of age and I always like to think that the things that we are building now, people are going to have to be dealing with in 10 years. What are they going to be saying about us, the people that are building this, are they going to be like, “Wow, it’s really cool, I’m so glad they set it up this way,” or, “What were those guys thinking?” That is definitely one of the challenges and problems in building this out and figure we will doing that for good.
Lamar Heyward: Yeah, and it’s important to note that that’s not specific to any part of the organization. Everybody from the president all the way down struggles with this idea of not falling back on what we know, because of the experience, because of the success, because a lot of the victories that we won, trying to do something completely different. To have this new result is hard to do when you know I can just to do this thing that I know how to do. Here in the office, it comes up a lot, “Well, in my last credit union we did it this way, so why not try that?”
Cameron: I think that, if any of you all have read that book, The Power of Habits, or any of the … There is so much interesting research on how strong habits are. I remember one of the most interesting anecdotes in there was how people have a complete loss of short-term and long-term memory capabilities. Like they can’t remember something that happened three minutes ago, can still form new habits. They can actually learn how to go get the mail or walk to the coffee shop.
Cameron: I think they said something like 40% of our days are ran on complete autopilot, which makes sense, right because we couldn’t get anything done if we had to consciously think through everything, but it’s the real interesting tension you’ve highlighted in a start-up. It seems to be both a strength and a weakness where you got all these assets, culturally, systems processes and so on from the Local Government connection, but also that risk of sliding back into them automatically. This is one of my favorite questions to ask people, how would you describe your organizational strategy in one sentence?
Lamar Heyward: One sentence? There’s a challenge.
Michael Spink: Lamar’s in marketing, he’s got it.
Cameron: I’ll give you two if you need it, maybe even three.
Lamar Heyward: Well, I’m also thinking about setting it up, especially where we are as an organization now, because the strategy for us really does deal with this transition. We are focused on a very specific market, you know, to start, which is the folks that we’re doing business in business accounts with the Local Government Federal Credit Union, and getting them transition over to Civic, because it’s not a merger, we can’t automatically assume that business, we have to win it. That is is really, at the outset, what we’re truly focused on. Even more than general awareness here in the state for consumers and businesses is winning this existing business that is over at LGFCU.
Cameron: All right, I like it, I will take that. So, basically winning that existing business from Local Government is the first mountain to climb. I’d love to know, let’s say once you get through that, I assume that will be, I don’t know, maybe a 18 to 36 month process. What’s the next mountain you guys want to climb after that?
Lamar Heyward: Ben, it is the very general stereotypical building awareness, because for all that we’ve done in building Civic, one thing that was very unique about our approach to a lot of start ups, especially with the admin of things like Kickstart and what not, is we were supper low key and very undercover with what we built. Meaning a lot of the work that you do, typically to build, launch, announce and bring up business to market, we did the exact opposite with hopes of crossing that bridge, if you will, when we get to it, and that was an important business decision for us to make. What that means is, as we focus on winning these business accounts that I just referred to, as we get done with that the emphasis will then shift to announce Civic to the state.
Cameron: All right. That’s a perfect segue into my next topic, probably especially for you, Lamar. I would love to hear, sort of on the marketing front and let’s talk about what you’re focused right now, let’s talk about the interesting idea of converting these existing accounts from Local Government. How are you marketing yourself to them, what’s worked and where have you kind of failed and what have you learned from that?
Lamar Heyward: So, the bulk of that business is in the fire industry in North Carolina and one of the reasons that we have such a strong hook into that market is Local Government Federal Credit Union, now over a decade, developed a book of business that’s been around serving a group of people in North Carolina that just wasn’t being served, much like credit unions in general. With the fire industry in general. With the fire industry, particularly in our state a big brand is not as interested in financing something like a fire truck or the gear that firefighters wear. They are much more interested in the big dollar things like the fire station or some huge multimillion dollar investment.
Lamar Heyward: What that meant was there was this huge gap in what’s available, particularly in small town North Carolina for them to be able to do things like fight fires and serve the needs in those communities. Local Government Federal Credit Union developed a strong program servicing those accounts. However, because of the partnership with state employees those are business and organization accounts of State Employees Credit Union made the decision to no longer service those type of accounts, which put us in a position for having to still service that business.
Lamar Heyward: Civic’s birth really was centered around solving that particular problem. So, that reference I just made to focusing on that business, the reason that they are our top priority and number one right now, is primarily because if we do not successfully get them convinced to join Civic then that business will be leaving the credit union industry all together and going to a local or regional bank.
Lamar Heyward: So, after we get that box checked, if you will, because people will be available and able to join and become members of the credit union, but after we’ve solved that then the focus is to shift to consumers and to small business and the goal there really is going to be making sure that A, people know Civic is a thing and that it exists in North Carolina, and then B, see some of the conversations we’ve had around our community and the offset of the podcast work on making sure that we have the physical footprint representation.
Lamar Heyward: Because being digital only puts us in this unique position where we’re extremely accessible, but you don’t really have a presence in the markets. So we need to the types of work, if you will, from a marketing standpoint to be able to showcase our presence and placing our faith in the communities, which really, for us, will have a lot to do with getting in ingrained in what they’re doing, telling the member’s stories through their perspective, and being able to sort of have Civic as the secondary support of what our members and perspective members are doing to serve North Carolina. We both have this vested interest in a strong state of community that we serve, as well, as you know the credit union. So, how do we tell the type of stories that allows us to both showcase what our members are doing, as well as this underlying support that is coming us.
Cameron: Is your charter all of North Carolina or is it national?
Lamar Heyward: That’s a good question. It is specific to North Carolina. Technically speaking, the charter allows us to serve anywhere in the country, but we’ve made the decision, the business decision to stay focused on North Carolina. So it’s local government, city, and county employees, firefighters, police officers, municipal officials in the state of North Carolina.
Michael Spink: And volunteers. I want to add into that, because Lamar has used the word ingrained and all three of us have been here for a while and watching when we first made the moves to get in to begin to help the fire rescue, EMS, the first responders however you want to term that you didn’t just walk in there and get their business. It’s a very close fraternity of people and we spent a good number of year just really, hundreds of thousands of miles, literally being driven around the state, visiting bigger departments, to small rural departments. To really get a good understanding of what they needed and what problems weren’t being solved for them. So, we spent a lot of time just really learning and integrating and ingraining ourselves in what they were doing.
Michael Spink: A reminder, I’ve been with this credit union for over 15 years and when I had my initial interview with Maurice Smith credit union’s CEO, both credit unions he said, “We are not here to be a vendor to local government, we are here to be a part of local government.” We’ve done a fabulous job in doing that. So, going to that fire community and really beginning to understand them to earn their business. I’m looking that name of your podcast, Remarkable Credit Union Podcast, can either be read as you know, you put together a remarkable productions, or you’re speaking to remarkable credit unions.
Michael Spink: I see us as a remarkable credit union and that’s how we function and it really sticks to what credit union’s role about, a representative of their communities and there to support their communities, to fill the holes that other people aren’t filling. So, when we get to where, you know, we work to get that business within the communities that we’ve been serving and as we extend into the consumer side of things, this is just not the matter just finding them, you know, a more equitable credit card, we won’t do that. To get them that more solid auto loan that they can feel safer getting in to, we will do that, but that we will get actively engaged in these communities, and Lamar using the word, stories and understanding those stories and helping to create those stories for success for people. To really lift communities as a whole, because it goes beyond financial services.
Michael Spink: We believe in hope and offering things that we’ve gotten involved with UNC system, and we’re active in other with NC State. There’s different places that are doing a lot of things for North Carolina, especially rural North Carolina. So we can get in and work with them to help lift the whole and in turn doing that will do betterment for everybody, and thus then the credit union will prosper and we’ll be able to reach more people with outreach and access piece. We can reach more people with what we claim to be a good product founded in really good solid principles. That’s very important for us.
Lamar Heyward: We’re here in Raleigh, North Carolina, which you know is the New York City, if you will of our state. We have that, Michael is laughing, for you know, the real [inaudible 00:26:35]. But Raleigh and Charlotte are the big metro, but to Michael’s point, just like credit union all along, from the start, we really do want to focus on the less, or underserved areas and populations of the state, because you know, our big metros have plenty of banks and credit unions to choose from, but who’s not getting a lot of the same attention are some of the smaller areas. It really is important to us to make sure that we’re doing this community work in those places throughout the state and being able to help them to succeed.
Lamar Heyward: We’ve seen a lot of, you know, really big brands have a lot of success with that model. One of my favorite stories to tell has to do with Target and what they did was come into a market where you had the K-Marts and the Wal-Marts and feel like, okay we can step this up a level and give people a level of service or quality of product that is not quite Nordstrom’s, but it’s also, you know, significantly better than what they’re getting at the traditional big box store and they really made a name for themselves doing that. I think a lot of what we’ve always had a heart to do was give our members and prospective members access to the types financial services like Goldman Sachs without the Goldman Sachs prices.
Michael Spink: Which taps into empowerment. I mentioned the word hope, because a lot of rural America has been beaten up. North Carolina took big hits when textiles started moving out and different kinds of manufacturing and logistics distribution kind of stuff. You go into some of the Midwestern states agriculture is getting hit in big ways. Things are changing a lot. There’s a lot of despair and despondence. You go up through the rust belt and these communities are hurting. They’re hurting bad and they’re trying to figure out what are we going to do now. Their younger people are leaving, maybe to go to school, they don’t come back.
Michael Spink: What we have seen, in Kingston, North Carolina is a good example of that is empowering the community. Often times there’s different community leaders, or you know someone that happens to own several big chunks of real estate, maybe a car dealership, has a couple of businesses going and getting them a little more in tuned with the people within their communities and how they, just by exercising the influence and economic powers that they have can be able to begin to plant seeds of hope. Whether it be an artist community or a mill getting repurposed through development, of them beginning to see, like hey, there is a little bit of hope.
Michael Spink: When they see that spring out then it becomes a bit of a pride and then they become more actively engaged in their own community and we really believe in the empowerment of that so we can give individuals and businesses the opportunities to be able to start making it on their own. They’re going to begin to help one another, which in turn will lift the entire community and then they win. Not necessarily just a win for us for gaining some market share and building our asset size, which you know, that matters. You can hear all the people saying, “We need to have that first,” and I get that, but we really truly believe that when we’re doing these things and giving that hope and getting some things underway for people and their communities, the spirit builds just a better quality of life across the board.
Lamar Heyward: Yeah, and something else that we really believe strongly at Civic that we did some of with the build and we definitely want to do much more of in the future and is probably in Michael’s wheelhouse, but is this idea of co-creation and partnering with the members and the prospects to determine what the future of the credit union becomes and as Michael was talking about that, one of things I remembered when were doing some of the early work, before we had a name, before we had a brand, and identity or anything, we did some work you know, ethnographic research going into people’s homes, and really just talking to them about their relationship with money, because we wanted help to understand what we really need to be to really reach our members.
Lamar Heyward: I can recall a part of that process involving a young lady who was just so excited around the fact that we were doing this. I mean, here’s this financial institution from Raleigh coming to her area of small town North Carolina and engaging her and asking questions for no other reason, but to learn what it is that she wants and what would be great for her family and her community and that meant a significant amount to her. So when you think about just the impact we can have on the lives of people, just by being invested in their future ahead of our ours, that really, really, really sends a message in terms of, not only what type of organization that we want to be, but the type or organizations that we need to see not only in our state, but throughout the country.
Cameron: Very well said. I appreciate a lot of the different threads you had their. Our listeners know that I’m a Pixel Spoke is a passionate certified B corporation, and I’m the chair of the Portland community and do a lot of work nationally with this whole movement of businesses that want to use business as a force of good. I’ve talked about this several times to credit union audiences about what it means to be a social enterprise. I’ve had people say, “Well, aren’t we a social enterprise? Isn’t a credit union a social enterprise?”
Cameron: In my perspective, it can be, but a social enterprise is a business model that through the business model itself creates positive impact and good in the world, which is really the heart of what you guys are talking about versus some credit unions really end up being focused on, I think, perhaps even too much benchmarking against banks and the auto loan or the credit card, and they actually let that become the primary driver versus that really deep connection with those holes in the market that are not being served by the broader set of competition, which is, of course, quite significant.
Cameron: I love what you guys said there. One of the phrases that I hear a lot is just this idea of how to create a shared and durable prosperity for all. I think credit union and cooperative models are such a key piece of that, because they have the opportunity to look because of their charter, because of their ownership structure to look at things in a way that for-profit businesses quite honestly usually can’t.
Cameron: So, anyway, I just love what you guys said. I would like to do a slight pivot and then talk a little bit about technology, because obviously, you’re digital only and you guys, I’m sure have gone through quite an amazing selection process. I would love to hear, maybe real quickly, what are you doing with technology that you’re really proud of? Also maybe are there some places where you failed or let’s say you stumbled and you’ve learned something from that that would be a value to our audience?
Michael Spink: I guess [inaudible 00:33:06] and we talked about this a little bit earlier. We launched a true Genova credit union. What that really means is we launched probably over a dozen, if not two dozen simultaneous platforms all in one day, which is quite remarkable just to say. To further elaborate, LOS, core, credit processor, debit processor, online or mobile provider, we didn’t have any of that before. We literally did our core key process for every platform what we currently use today. Can I say that everything is working perfectly? No, that would be a lie, but that would be a lie for any organization that’s doing banking with credit unions today. There’s hiccups every single day, but to launch all of them at the same time was quite remarkable. All of them are working for the most part the way they should be working and we’ve only been open for a couple of months now.
Cameron: Any key learning from that process, I agree that that it’s incredibly rare and I think it’s the version of the clichéd version, a cliché that I love, the digital branch concept, but the funny thing for me is that you don’t launch a physical branch and then say, “Hey, come back in three months, we’ll have loan officers here then,” and then let’s say, six months later, we’ll have the windows in. You know, you coordinate the whole thing and it launches as a cohesive whole and for most credit unions, obviously they are launching piece meal all these different things. So, what did you learn from all that? What lessons can you share with everyone else?
Lamar Heyward: That’s a good point, so Bijal has the opportunity, I guess we’ll call it to be at the table at the very, very, very, very beginning as far as that planning process you know, around the selection of the technology and I do think that one of the lessons that comes to mind, even though we had this very harried, do it fast, do it quick focus was giving yourself a significant runway to be able to do this, especially with the added complexity, so the more you have involved, I mean really make sure that there’s adequate space and the appropriate partners in place, to help you get the work done.
Lamar Heyward: Early on, we had a partner that helped us, not just do the RFP process, but do the selections process. Someone who had experience doing a lot of that shopping, if you will, which did prove to be valuable. Especially as most of us were bringing to the table credit union business experience, but not this experience of having to buy a bunch of different systems.
Lamar Heyward: Because something that we haven’t talked a lot about in this podcast, but with LGFCU view and their relationship with Civic view, put us in a position where most of the service model that we used was based off the LGFCU system and so this worth of starting a credit union and using a lot of those systems that Bijal talked about, which will work for a great many of us to have, to having help form the outside, whether that was on industry side, on the technology side proved to be incredibly useful.
Lamar Heyward: Something that we do a lot of, to that help point was connecting with a lot of credit unions, which you know we love to do, to be able to get the learnings from other shops and how they approach different things. You know, what systems they liked and disliked. What vendors that they felt like they could recommend or who we should stay away from and that helped us sort of narrow down our process even before we started to make the selection.
Bijal Gami: Those field trips were a good investment.
Lamar Heyward: Yeah. Lots of field trips.
Bijal Gami: One other thing I would say and I don’t know it’s the right thing to say is document everything, but what occurs during the sales cycle doesn’t always turn out to be what happens at the implementation and getting things underway, because obviously there’s a lot of competition out there with all these different providers. As much due diligence as you might do to make sure you’re getting what it is you think you’re getting. There are some thing that when you’re going through a sales cycle and people are getting involved and things are mentioned and questions are asked, and some will say, yeah, we can do that.
Bijal Gami: For that individual that asked the question, that is a huge piece. But then as you get down the road and things are really happening, contracts start getting drawn up and all, that particular question that the person might have had, might not be in that contract but it’s critical to them. So really making sure that all of those components really become part of what it is you’re signing on. Because some of these are big money as most listeners would know.
Bijal Gami: There were a few things that I think that we could say, “That’s what we understood this,” but then along the path because they did it somewhat long and dare I say, arduous at times that some of those things kind of slipped through. So just making sure all that those little bits and pieces that, like I said, for some people they are looking at 30,000 feet. They are not down at like zero, and really working on the ground so making sure that all the tiny bits and pieces get covered and avoid some of the heartache.
Cameron: That’s a great point. I’ve definitely seen that having to participate on the other side of the RFP process and obviously sales people they have their own natural incentive to close the deal, but additionally the people asking some of those questions are often the people reading the contracts and other trade outs that were made. So, I think the clearer that is documented the more that everybody can win together.
Cameron: I would love to talk a little bit about positive impact, we already touched on it quite a bit, and I think it was you, Michael talking when you were talking about empowerment and the idea of just continuing to stay really engaged and maybe as Lamar mentioned doing more co-creation. I’m curious, one of our previous guests Jim Moral, the CEO of Peninsula Credit Union, which is another really, really just sharp, forward thinking credit union that does amazing impact work. He said that sometimes one of the risks of comparison of benchmarking, which is just like an inevitable natural thing in the financial sector is that comparisons can lead us to stray away from mission.
Cameron: So you start saying let’s optimize or prioritize this particular product because it returns a higher margin and some of that is necessary because you need both mission and margin, but at some point you can just totally lose sight. So I’m curious as you guys look towards the future, you’re in those heady start up days, how do you think about institutionalizing some of that mission and purpose, and impact focus when you look out 10 years?
Lamar Heyward: I think one of the things that comes up is the work we try to do, and we talked about story time earlier, to not only use that for our external branding but to get people excited and invigorated within our four walls, as we do the work for Civic and helping to identify with, you know, what I’m doing today and the purpose and impact that it’s having to the members and the perspective members that we serve. Because that goes a really long way to helping us all remember why we’re doing what we’re doing.
Lamar Heyward: Specifically as we all sit around the table to make decisions and I will say that is something that we do have to our advantage, and this kind of just goes to having the right people in the organization is that really being something that is top of mind. So, yes, we’re doing what we need to do to make sure that the balance sheet is healthy, but the constant theme is that very common almost stereotypical, you know, what impact does this have on the members that we’re serving. Having that as a reminder forces us to make sure that, to your point, we don’t stray too far away in an effort to beat out the competition.
Lamar Heyward: We also, in our market have the very good fortune of a lot of that competition being great credit unions like Coastal, FSCU, and the market that we’re in putting us into positions, where even if it was competition it’s not friendly competition and we all have the similar mindset. Whether it’s Duke, FCU, whether it’s Latino we really believe wholeheartedly in serving the members. So it may be a little more challenging if that wasn’t our story, but in our case, those similar values, even outside of our four walls of another credit union helps us to stay grounded and doing what we do.
Michael Spink: [00:41:15]I think to add, too that I mentioned the town of Kingston, which is Southeast of Raleigh. They are a community that got hit with Hurricane Michael and within almost maybe a year and a half or something if that, between these two hurricanes that devastated this town. A lot of the homes were totally destroyed, FEMA did payouts, they lost 26% of their population left, and it was really a town in shambles. I go back to there was a guy, I can’t remember what his actual name, so I’m not going to say a name [inaudible 00:41:59], but he had a brewery and was interested in kind of helping out in town. He was going to buy a couple houses and fix them up and resale them.
Michael Spink: As I mentioned, we work with UMC school government. They put their development in finance initiatives, and they went in and really helped this guy see what he could do to help that community out and their had rehab 20-some homes, I think, developed an artist community, brought in some other businesses. They’re now working on a vocational rehab business to bring back some of the pottery and ceramic kind of stuff that’s real big down there to help people to learn trade and people saw this hope.
Michael Spink: So what we did, that’s where our team had our planning session. We went down there, and walked around the town with the people that were involved in rebuilding this town to really see on the ground, in the heat, what we’re doing, the impact that it makes on individual lives, and the people and the people that are living there. When you’re sitting there, it’s one thing [inaudible 00:43:05] and run you through a slide show and tell you about all the great impact that’s happened. It’s very different when you’re down walking around the town, seeing the buildings that have been rebuilt, seeing the businesses that are starting, talking to the people that did all the leg work, had dinner with some town officials that really engaged on bringing this back.
Michael Spink: I really think that helps the people that are setting the future now, really begin to see why it is that we do what we do, to integrate that in into their day-to-day. As Lamar said, bringing their stories back in to the organization so people can see, who don’t have the opportunity to get out there what they’re doing really matters in a way they might not necessarily see when they’re working with their spreadsheets, or designing a newsletter, working on a website, or whatever that might be.
Cameron: Very well put. I think that’s really powerful to … I think one of the biggest opportunities in any business is to get out from behind your desk, I wholeheartily agree, a slide deck does not equal the same as [crosstalk 00:44:06].
Lamar Heyward: Just some feedback on that Cameron, Michael’s reference to us during that meeting something that our leadership has been very insistent about for all the years that I’ve been here is doing our annual planning session in these communities in small town North Carolina. Which means that you know, generally speaking, the executives go away to fancy places, but that’s not our story. We kind of go into the roots of the members that we serve and stay in their towns. Every now and then that turns out to be at Charlotte, but more often than not it’s not Charlotte.
Michael Spink: We’ve had some meetings in some little libraries and little towns, it’s just a great experience.
Lamar Heyward: It is. It is.
Michael Spink: It helps appreciate what we have.
Cameron: Brilliant idea. I think that should be a best practice in the credit union industry. So I always get worried that any industry that lacks startups begins to lose its ability to innovate and stay relevant. I get really concerned when I look at the credit union movement, because I don’t want FinTech startups, I want credit union startups that have the cooperative values built into them, that are close to their members or perspective members in a way you guys are talking about. So I’d love to know what do you think can be done to stimulate more startups in the credit union space?
Lamar Heyward: Well, I mean think about it, we’re sitting at a table with a lot of people who were not only introduced to the concept, but taught about its importance. I think that goes a long way for us to be passionate about it. You know, Dwayne Nailer who’s the President of Civic, is one of the very early I3 online, so if you look at the work that we’re doing to instill the importance that. I mean entrepreneurship that is ingrained as a culture, you know, something that’s taught and ingrained, and people come to believe it not just because they’re born that way, but because, you know, that is introduced to them as an important concept. If we don’t have enough of that in the industry then how would people know that that is even something that we’re supposed to be doing.
Lamar Heyward: I think something that we may take for granted is as passionate as we are about credit unions and the value of them, you know, so a lot of people, just in general America, it’s an old concept that has long since died. So how do we reignite, if you will, the passion and the flame around it as a concept, which would then inspire more people to want to create more of them. Because there was a time in our culture, where you know, ideas were popping up left and right because people believe in it being much a smarter way to pull together the resources of the community to be able to serve that community. That idea which resulted in a lot of those thin startups, you know is just an idea that has long since gone by the waste side.
Michael Spink: I think, too, it’s a matter of taking a little risk or trying things a little bit differently. With [inaudible 00:46:56] a little while ago, are some folks from a credit union in Kentucky and walked them through some different environments that people were working in. Unfortunately for me, doing research and development, I now actually function out of a startup community over in Durham, called the American underground. There is more than 200 start-ups working there. They were very intrigued by the fact we didn’t want to put our logo on a conference room wall and stop by once in a while to partake in a seminar, but that we wanted to me in their community and learning to build things the way they built things.
Michael Spink: We know a lot of stuff, but we don’t know how they do what they do. We got like integrating with that but the consultants from Kentucky were talking about, “Oh, is that the area down town where they’re redoing that warehouse? Don’t they have one of this community …” You can spend $200 a month and get yourself access into one those communities that what they call hot desks and just take one or two good thinking people that you have in your organization that maybe or even sometimes one bucking the system a little bit, and let them do some work out of places like that, and be able to see how different people are functioning in a different mindset and that can be very beneficial.
Michael Spink: There’s an organization out there now for startups had this big thing you know, it’s build, scale, sell. So they’re really driven by bottom line, the lot of them. But there’s more, trying to focus on that social good because they see there’s importance in that. There’s a very small group that’s starting to gain a little bit traction called Zebra’s Unite. Their whole thing is helping startup founders realize the role that they play in the social property. They’re [inaudible 00:48:44] alive and well out there and I think credit unions can benefit greatly by exposing themselves to these different types of communities but in turn these communities can begin to gain by having a credit union presence there and seeing you can build good, strong, viable businesses that focus on a piece of the social good. I think there is both benefits to learn by both there.
Michael Spink: Do you remember back when FinTechs were first starting to pop up? They thought they were going to take over and the banks all thought we got to figure out how to either crush them or get rid of them, because they are going to take our business. As time passed it really became like hey, FinTechs need to scale and the capacity and the experience of the financial institutions. Financial institutions needed to learn some different methodologies and ways of thinking on how to identify the problems and begin to solve those problems. Not all of them are just buying these things, but they’re also integrating and working alongside of them so that everybody is upping their game.
Lamar Heyward: Something else that we just talk a lot about is starting a new credit union or really FI in general is obviously, because of the regulation that it’s easier starting some of the other startups, which is good for us and bad for us in many ways but I would say that some of the hesitancy is likely around that. The work that we did to bring Civic to market took several years and a lot of resources away from work that we would’ve just been devoting to the existing credit union and not everybody has the appetite or the resources to be able to do something like that.
Bijal Gami: One comment to add. It’s really driven by baby steps. Innovation, in a lot of credit unions, in a lot of banks as well, is a cultural shift. Michael kind of alluded to it earlier, people want to innovate but the actual company needs to take the innovation and be willing to fail if it does not work. We just took that innovation to an extreme scale and started a brand new credit union, which is innovation at its greatest, which is awesome. But if you look at credit unions, in general people innovate all the time. It’s not that much of a difference, it is a regulatory difference, but people are doing it in our industry. My recommendation will be just start small and do the small changes first to make sure the culture is fit for it, and if it’s not then that’s what you need to fix first.
Lamar Heyward: That’s good, that’s really good. In fact, in a lot of the early work that Michael and I did years and years ago when we started this innovation hub within this organization, that was our initial discovery. Man, that would be great to be able to do some of this great stuff, but how are we going to do it? We’re not there yet. We had to meet a bunch of times just trying to work to get the organization prepared to even to do this before Civic or anything to even innovate. So I would definitely agree that you can the have the loftiest goal in the world, but if it’s not a cultural fit you’re just setting yourself up for failure.
Cameron: Yeah. I think that is well put. Well, I can talk to you guys all day. I want to capture a couple of things real quick that you just said. Jim Collins, the author From Good to Great, Built to Last, a bunch of classics talked about BB’s then cannon balls, which I think touches exactly on what you guys are talking about of if you come out as an organization and you fire a cannon ball, you’re probably going to have the wrong target, so try a lot of little things. Zebras Unite is a really interesting group. They are actually based out of Portland, Oregon here where we are, and it’s worth it. They’ve got a pretty cool manifesto on medium.com if you just Google it.
Cameron: The whole idea is that Zebras are kind of an alternative to unicorns, which are the trendy thing in the investment industry. I think unicorns are these companies that just scale at an exponential level, have huge returns for investors, but often end up doing potentially a lot of social harm. So, I think that’s a great point, I never thought about credit unions engaging with that and started to thinking about what does a zebra look like in the credit union industry.
Cameron: Lastly, Bijal told me before we connected he said, “Hey, just make sure that we don’t bring up that time that we were at a Filine event, backyards, back at the hotel.” I thought, “Man, that just means that I have to bring it up on the podcast.” I wanted to make sure everyone knew that, and then just to close, is there anything you guys … We’ve covered lots of ground, you guys, I can talk to you all day, but anything you’d love to leave our audience with that we didn’t get to or something you want to reiterate?
Michael Spink: Just try, just try. It’s easy to think it and man you can think a lot about this stuff. Like Bijal said, find some smaller stuff and start poking around. Start digging some things up and don’t be afraid of what you might find. Because it’s not all pretty, but you got to put your foot in the water, not a toe, your foot in, and kind of begin to step into new ground and just give it a shot.
Lamar Heyward: I say learn something every day and eventually that learning will come back and benefit you in some way or form.
Bijal Gami: I don’t know, what those guys said.
Cameron: All right, I’m going to give you that one. All right. Hey, thanks.
Lamar Heyward: Thank you.
Cameron: Thanks, love what you guys are doing. Thank you for your time and wish you all the best of luck in the years to come with this great venture you guys are moving forward with.
Bijal Gami: All right. Thanks, man.
Michael Spink: Appreciate it.
Lamar Heyward: Thanks.
Bijal Gami: We appreciate it.
Cameron: All right, that was a great conversation. A little bit longer than usual, but I really enjoyed every minute. I would like to quick share a few of my few key takeaways. I really liked their comments in the beginning about how they’re really lucky to have a lot of people with diverse backgrounds and how they think about this as a philosophy is let’s encourage diversity of thought, continuing education, types of engagement in the community, backgrounds, and let’s throw all that together by having very different people who are driven by a shared passion, and that’s how we think we are going to get the best results.
Cameron: I thought there was a really interesting lesson for the digital branch. Seeing a credit union that really has been able to say, “Let’s just start from scratch and let’s build all these things together at the same time.” Core payment processing, loan applications, member join, mobile app, website, and treat it the way that you actually treat a physical branch. I thought that insight that we really need to go, and we’re looking at the vendors, look at them, talk to them and don’t just look that their values and capabilities, which are obviously important, but how they fit into the entire ecosystem.
Cameron: I think it’s a real powerful analogy that we don’t think through enough of we might actually be better off with a vendor who’s not as good, if they fit into the ecosystem better. Just like with a branch you might have the most amazing who knows, carpeting and window company, but if they don’t fit with the overall branch everyone would think you were crazy for working with them. There’s this real theme of going out into the field. I heard so many instances of it. They talked about ethnographic research of going in and sitting with current potential members to learn about their relationship with money. They talked about making site visits to vendors. They talked about, which I think should be a best practice, that strategic planning is always in small towns in North Carolina.
Cameron: Then I love this idea of finding the right people in your organization even if you’re not doing a startup. Send them off to startup incubators to work one day a week, just see what they can bring back culturally. I think it was really a simple point that Lamar made that to a lot of folks the credit union movement is an old concept that has died, and how do we reignite that. I think his answer to that question was uplifting that the answer is more startups and entrepreneurship is a way of life. So how do we go about introducing that more? I think it’s innovation, programs, and continue education and ideas like sending people to go to work in incubators even though they’re not actually part of a startup per se.
Cameron: Then I also heard this concept that you need to start with culture change before you jump into a startup. That’s actually something they were not ready to do when they first started playing around with this idea of civic and so they really dug into their culture and I always loved that phrase, let’s start with BB’s before we fire the cannon balls. Lastly, I thought it was really interesting, wondering why don’t we have more startups.
Cameron: While obviously the regulatory part is significant it’s not the largest piece. I think that’s actually just a question of maybe we’re just opening our minds to what is possible there. All right, well thank you all for joining us today for another great episode. I hope you will join us next time for a conversation about innovative products with Ryan Foss, the Managing Director of Innovation at Filene. Until then, I wish you the best of luck in making your credit union remarkable.