Austin Wenzlaff, CEO and Co-Founder of Nook, visited with Glenn Sarvady of the Best Innovation Group for their BIGcast podcast to talk about Nook’s innovative approach to bringing relationship banking back to credit unions via personalization.
Glenn started the conversation by asking Austin about Nook’s mission. Austin replied that the mission statement is to bring back relationship-based banking back to credit unions. “Credit unions had an incredibly strong core differentiator in the past. They knew their members inside and out, and that's because they were built very specifically for a core group of members.’ Because of that, they had this trust and relationship, and people did a lot of business with the credit unions as a result of that.”
Austin noted that as credit unions have grown in size, they’ve evolved the field of membership, expanded digital into digital channels, and cover larger swaths of geography. As a result, they’ve lost closeness with members. “It's been very difficult [for them] to say, ‘Hey, we are an institution that's specifically focused around you and your life goals.”
He said Nook aims to rekindle relationship banking by focusing on sub-segments of the membership. “We go after a core group of people and focus on them deeply like credit unions did 50 years ago, but we don't have to invent a new credit union from scratch or do anything like that. We can simply do that within the parent brands. Many of these credit unions already have very well-established, trusted brands, but within that, we can take extra specialization and personalization to really dig deeper with the core group. so that they feel again like we are really hyper-focused on them and they're going to build a relationship with us and then hopefully do more business with us as well.”
Glenn asked for more details on Nook’s strategy of targeting sub-segments or niches of a credit union’s membership. Austin replied, “There are a lot of different niche opportunities with individual credit unions that might be even more hyper-focused and specialized than what we're doing today. But one of the things that we decided to do when we built Nook was there's got to be a bunch of common niche strategies that can be shared across the entire industry.” He added that Nook is researching “common larger groups and larger strategies that we can go after so that they can be repeatable and scalable across the industry versus doing like a custom one-off for an individual credit union.”
Glenn observed that Nook’s initial sub-segment is the 50+ age niche. Austin said, “We started there [because] it's the lowest-hanging fruit. Credit unions already have a lot of those members, and I know a lot of [credit unions] are saying that's a bad thing because they're aging out. We actually don't think that's true. Not yet, anyway, we think there's a lot of opportunity to capture.”
Austin commented further on the 50+ niche, saying, “The 50-plus group will continue to outpace Millennials and Gen Z in their consumer spending as they're entering retirement. Some in the industry say those people don't need loans anymore because they're at that stage in their life where they have cash and they're just depositors, but that's not true. They're buying boats. They're buying RVs. They're buying vacation properties. They're doing a lot of very large financial purchases where they would prefer to use a financing mechanism versus using their cash or retirement savings.”
Despite the attractiveness of the 50+ group, Austin said Nook is planning to venture into other niche opportunities. “They are just our starting point. We plan to venture into other niche opportunities. Those could be younger demographics.” He said other attributes can define a niche as well. For example, small business owners. “I think that's a really good group to go after. It’s somebody that credit unions struggle to communicate with because small business owners are focused on having a partner, not having a transaction. If we're really going to build relationships and bring relationship-based banking back. I think small business ownership is a really good place for us to be.”
Glenn asked if Nook required any integration with a credit union’s core processor or other significant technological efforts. Austin observed that many fintechs encounter credit union objections that there aren’t enough resources or time to undertake extensive technical projects. He said that does not apply to Nook. “When we built Nook, we were very intentional about helping credit unions as much as we possibly can, but doing so without the need for tech integration and without the need of a lot of ongoing support and resources.”
He related the example of Dort Financial Credit Union of Flint, MI (assets $2 billion). “Dort is an example [that] we can go live in a matter of two weeks with zero tech integration. Almost no resources are required on their end to get rolling. Then after we go live, basically no resources are required from them other than to meet once a month.”
Glenn supposed that because little integration effort is required, credit unions big and small could benefit. Austin agreed, “Definitely. With Nook, we don't have to worry about that.
Glenn congratulated Nook on being a “newly minted” CUSO. Austin thanked him for the recognition, saying that he called Dort President & CEO Brian Waldron about Nook’s innovative idea and asked if the organization would be interested in piloting the solution. “So we were able to pilot it out and saw immediate success with them right after we went live.” Austin said the results were so positive he asked Dort if they would “be interested in coming on as an investor and an owner in the company and kicking us off in becoming a CUSO.” The answer was yes because, according to Austin, the credit union said, “The main reason we were attracted to Nook and investing in Nook was because it actually worked."