SAN DIEGO–A new company founded by students at Duke University that is introducing an app to help credit unions with students even younger than themselves has won The Next Big Idea competition here staged by the National Association of CUSOs.
The company, Zogo Financial, beat out four other companies after pitching its new offering in a Shark Tank style presentation.
A panel asked each of the competing companies questions following their presentations. The panelists included Nick Evans, Keith Kelly, Kris Kovacs, and Sarah Canepa Bang.
Below is a look at the winner, Zogo Financial, along with the other companies that pitched their business proposals, as well.
Zogo Finance has been founded by students at Duke University, all of whom were teenagers at the time of the company’s creation. It has rolled out an app aimed at high school students that seeks to also engage their parents while creating a bond with the credit union (and providing the CU with actionable data). It won the NACUSO award on the same day it turned one-year old.
According to Bolin Li, who just turned 20 and is a cofounder of Zogo Finance, there are 86-million people between the ages of 13-19 in the United States, 76% of whom don’t know what a credit union is.
“These teens are credit unions’ future,” said Li. According to Li, there is no shortage of financial education sponsored by credit unions in the U.S., but he said it is poorly executed by schools and that more than 80% of students don’t find it useful. Another problem, he said, is when the financial education exercise is over, there is no more follow-up and students forget what they have learned.
“All teenagers use digital engagements. So, how to engage them?” asked Li. “I believe the next generation deserves credit unions, and deserves to know what a credit union has to offer.”
Zogo is a financial wellness mobile app developed in conjunction with Duke University’s Behavioral Science Lab that can be white labeled to the credit union.
How Do You Feel Now?
The app allows teens to learn from their own spending habits, according to Li. For instance, it will tell the teenager, “Two days ago you spent X number of dollars” on a certain item, and then ask, “How do you feel about that expense now?
“We’re really trying to get teenagers to understand opportunity costs,” said Li.
Li acknowledged teens have “no attention span,” which is why all the messaging and education is “Twitter length” and “digestible.”
The app asks teens for their plans and in the process captures certain life events, such as saving to buy a car, get a student loan or qualify for a credit card. It shares that information with both parents and the credit union, allowing the latter to target the teen with certain offers.
“Parents become engaged by knowing where teens have spent money and why,” explained Li. “Parents can reward teenagers with a bonus when they reach certain savings goals. Teens can even borrow money from parents and set up a repayment plan from future allowances.”
According to Li, the Zogo app decreases user acquisition costs by up to 85%, and increases user lifetime value by up to 4x. He said there is minimal integration required. Zogo Financial has also partnered with the CUSO Constellation Digital Partners in Raleigh, N.C., which is building out its own offerings.
“We are giving you a tool that not only engages teenagers, but also engages their parents,” said Li. “It’s a tool I guarantee they will engage with on a daily basis, because they are going to get money."
Other companies that were finalists in the NACUSO competition included:
Loan Street, which won the “play in round” held one day earlier among five companies that allowed it to compete in the Next Big idea, is a New York-based commercial lending CUSO offering a LOS and loan participation platform.
Co-founder and CEO Ian Lampl said his company was created in part in response to the 300% growth in member business loans that has taken place at the same time share growth has “been nowhere near that. So, something has to change.”
Lampl said he doesn’t believe new competition will come from commercial banks or even fintechs, but instead from non-bank lenders, which are the fastest growing segment of the lending market. “They have dominated this space,” he said of loans between $20 million and $100 million. “They are not competing on speed or price; they are competing on flexibility. They are very flexible in negotiating loan terms.”
Solving 2 Problems
As a result, Lampl said the company set out to solve two problems: the funding problem and the flexibility problem.
To solve that, LoanStreet has built what it said is the largest online participation platform that seamlessly connects credit unions together. That capacity, in turn, is combined with what he called a flexible origination platform.
“This allows you to go from member to CUSO to a broader network all on a single platform, and it’s all automated from soup to nuts,” Lampl said.
A credit union can be onboarded in approximately five business days, he added.
BankSight offers a solution it describes as “getting member engagement right in a digital world.” As a result, the company says it helps to “solve problems before they are problems.”
BankSight Systems’ Angie Strunk said it helps a credit union build an internal member engagement strategy that works across all levels and functions of an organization, providing an omni-channel experience that’s consistent across branch, call center, online and mobile channels.
“We understand there are a lot of challenges in trying to meet consumers’ increased expectations,” Strunk said.
So how has it created an omni-channel member journey?
“We have spent the last three years developing an enterprise-wide, intuitive platform,” according to Strunk. “It’s more than just a CRM. Oftentimes CRM tells only part of the story. A lot of legacy systems are not built for the member-facing environment.”
Stunk said the company interviewed hundreds of bank and credit union professionals in building out its solution, which provides a dashboard that shows all member information in one location.
No More Scrambling
“The MSRs don’t have to scramble to find information across multiple systems and multiple screens,” Strunk said.
The company uses data pooling and predictive analytics to create recommendations for MSRs to provide to members. The solution also includes a Relationship Navigator.
The company said it now has approximately 1,000 users on its platform, which charges $65 per user per month. Deployment requires six to eight months. BankSight is integrated with Symitar and some Fiserv cores. It can integrate directly, through open APIs, and through batch CSB, the Strunk said.
The company is not a CUSO.
Posh is a newly formed CUSO founded out of MIT’s AI lab that seeks to help credit unions leverage next generation conversational AI and conversational technologies. The company also helps CUs cut costs and boost engagement using omni-channel, according to cofounder and CEO Karan Kashyap.
The Boston-based CUSO is currently backed by approximately one-dozen credit unions, as well as other organizations. It operates under the umbrella of a separate company, with the CUSO formed specifically to serve credit unions.
The real focus of the company’s work is responding to a shift in member expectations, said Kashyap. It’s similar to what Amazon and Uber provide, 24-hour service without boundaries that is also highly personalized, he told the NACUSO meeting.
“We want to enable members to engage and self-serve via the medium of their choice,” said Kashyap.
He noted the average call costs a credit union approximately $5, with higher costs for after-hours calls.
Kashyap said one reason chatbots have not taken off is conversational AI needs to improve.
“The issue is context understanding. It’s about leveraging the conversation history to make conversations better,” he said. “Many bots continue to fail at conversations by not understanding the history.”
According to Kashyap, the benefits of the Posh solution include:
- 25% to 40% cost efficiency savings in contact center, especially the low hanging fruit in call centers that are pretty simple calls
- Opportunity to boost engagement by 15% and reduce bounce rates
- Opportunity to enhance revenue channels on members’ terms
Kashyap said Posh can be plugged into any system, including legacy systems, as long as they use APIs. It also includes a Bot Analytics Dashboard to show the kinds of questions members are asking. A live chat function also available.
Kashyap said the solution can be deployed within six weeks.
QCash Financial is a CUSO launched by Washington State Employees Credit Union in 2003, and since that time has made more than 300,000 small-dollar loans to people who otherwise would have gone to a predatory lender.
But CEO Ben Morales said the CUSO believes the consumer needs even more help and assistance beyond just loans to become more financial literate and stable, and in May of this year it plans to roll out an app with enhanced offerings. Credit unions that deploy the app will be able to white label it.
“Our vision is about building member financial capability through digital financial therapy,” said Morales. “The app allows users to set savings goals and provides actions to take in real time with a personalized education. The app connects users with a certified financial coach to make more positive changes to behavior, and the changes become consistent habits.”
The Value Proposition
The value proposition for FIs is in building financial capacity, stability, resilience and opportunity for its customers/members, according to Morales, who said QCash has solved the borrow portion of the equation–it’s now about moving people upstream financially.
The problems it is working to solve include short-term savings, debt, financial literacy and long-term savings.
The solution: QCash Financial’s new app.
“What we’ve discovered is in the financial health therapy space is it’s about changing people’s behavior around money,” said Morales. “The content is really key. It’s about targeting content directly to the individual at their stage and scenario in life.”
Morales said financial data is pulled from the core is what informs the content.
“Through financial wellness and health, we can reengage with our SEGs again by offering a product that really supports financial wellness,” said Morales. “These are avenues for getting more information to members.
QCash currently has more than a dozen CUs using its small-dollar loan solution. It offers a site-license model that can be white-labeled by the credit union.