Nook Co-founder & CEO Austin Wentzlaff sat down with Jack Smith and Erin Hicks as part of PureIT’s Tech Roundup series to discuss the Nook Niche Experience platform.
Erin kicked off the dialogue by asking Austin to describe Nook’s offering. Austin noted that credit unions traditionally have strong ties with their members, but this has declined over time.
“As credit unions have continued to expand, they've gone way past their initial SEG (Select Employer Group), way past their initial field of memberships, and they've become much larger. And now we're starting to play in a game which is very similar to any other financial institution out there.”
He said credit unions are relying too much on rates to compete. He believes they can still leverage their unique relationship advantage but must think differently.
“I believe strongly that credit unions' core differentiator in the future will continue to be their in-depth relationships with their members. But in today's world and how credit unions are structured and operating, there needs to be more intention and focus on actually establishing what a deep relationship means.”
Erin asked how Nook aims to help credit unions build deeper relationships with members. Austin re-emphasized that it all comes down to strengthening relationships.
“So, what is that differentiator? That's where we looked at this and said credit unions have the strongest value proposition of all financial institutions out there, but they have to work at it now. It’s about bringing the relationship back into the fold.”
Austin summed this point up by saying:
“When you look at the grand scheme of things, people really want to feel like they're going to be taken care of for life versus getting 25 basis points better over here versus over there.”
As for how Nook approaches the problem, Austin said the company’s tagline is “bringing relationship banking back to credit unions”
“And the way we're doing that, the mechanism in which we're approaching that pain point is through what we call the niche experience platform. We built this platform with the idea of focusing very deeply on one core group of members. And if you do that, you can build trust and loyalty because they will understand that their credit union is taking extra special care of them. We want them to feel almost as if they belong to this VIP group that they're getting a specialized service that nobody else in the credit union gets.”
He said that this builds deeper connections with members, leading to greater retention and increased wallet share. An important aspect of the Niche Experience approach is creating sub-segments of members to better craft targeted content. The first niche group Nook highlights is the 50+ age group. As for the subjects covered, financial topics are not emphasized.
“What we want to talk to them is about life, life and things of interest. So, traveling, health and wellness, relationships with your kids and grandkids, food and cooking, those types of topics that make the top 10 list of most interesting things for people, especially then in their in their 50s and 60s. Personal finance as an example is like number 16 on the list of what people are interested in.”
Austin noted that focusing initially on the 50+ age group makes a lot of sense for credit unions.
“The first group we went after was the 50+ age demographic. We went after it for many reasons. Many credit unions are going after Gen Z and Millennials. There are good reasons for that, but we look at the 50+ market and say there’s a ton of opportunity there and will be for years to come.”
He added some further details about the opportunity with 50+ members.
“Among credit unions that I talked to I've never found anybody that has less than 30% of 50+ customers. It's usually in the 40-50% range. The other big reason is not about assets but about consumer spending. The bulk of consumer spending happens in the 50+ market. That trend is supposed to continue for the next two decades. So, while we think Gen Z and Millennials are coming up, they are not going to surpass the 50+ demographic until 20 years from now. We should be thinking about replenishing our membership and getting new blood in here, but are we being too concerned about something that is two decades away?”
Austin explained that 50+ was just the beginning and further subsegments wll be added over time. He used the experience of Dort Financial Credit Union as an example.
“They have DORT Living 50+ and they have about 30,000 members that belong to that group. They understand that DORT is going an extra mile and they're taking extra special care of them. And one of the other kind of unique differentiators about our strategy is that in order to build a brand like that, you have to be highly consistent and frequent. You can't just do this once in a while.”
Austin explained that credit unions sometimes try do-it-yourself content marketing strategies that often fall short.
“A lot of people talk about customer segmentation, and they send an email to their 50+ group once every six months or once a quarter or whatever. And that doesn't work. They don't understand that a connection isn’t being made. So, what we do is we produce content multiple times a week.”
Austin said that despite the focus on non-financial subjects, the bottom line was to drive more business.
“We think you can build super deep engagement by bringing people in on interest. And then the underlying goal is ultimately to convert that into more business. But we're doing it in a very passive, relationship-driven approach versus a ‘Hey, did you know we have a 5% CD?” People don't respond well to that type of communication.”
Austin said members benefit from consuming the tailored lifestyle content yet also see subtle calls to action for financial products and services.
“People can not only come in to educate and learn and be involved in the experience but also transact because that's really what we want to have happen here. You know our ultimate goal is building deep relationships and if nobody were to transact as a result of that, which we think is highly unlikely, but if that didn't happen we're still winning because we’re taking way better care of the members than what was happening in the past. But ultimately, we want to get them exposed to more financial services.”
Erin asked how Nook gets credit unions up and running with the platform. Austin said that from the beginning, his team wanted to minimize the technology integration aspect of implementation.
“When we were building this business model, we were thinking how it can do this in a way where we can eliminate the need for tech integrations and also minimize and eliminate as much as possible the need for credit and resources both during the implementation and from an ongoing perspective. We built the niche experience platform so it lives in parallel to everything else they're doing.”
Austin wrapped up the conversation by saying the Nook team is dedicated to the credit union industry and its members.
“We're super passionate about this industry, and we have been for a long time. It's not just me, but I have a couple other co-founders who have spent nearly a decade, if not more, specifically catering to the credit union industry. We know how credit unions work, we know how the industry operates, so we're definitely here and committed for the long haul. It's all about how we make this industry better.”
Watch the full interview below!