CU 2.0 Podcast host Robert McGarvey sat down with Nook co-founder and CEO, Austin Wentzlaff, to discuss the innovative Nook content-serving platform.
Robert noted that credit unions traditionally knew much about their members because they were organized around affinity groups, such as companies, unions, religious denominations, or educational institutions. For instance, the Stanford University Federal Credit Union describes itself as a Select Employer Group (SEG).
Many industry observers perceive two major forces as having eroded this intimacy credit unions formerly had with their members: the trend toward fewer but larger institutions and the move from in-person transactions to remote digital interactions. As Robert observed, “A very few credit unions have that kind of tight SEG relationship anymore and they're kind of guessing at what people want, guessing at how to create a relationship with them.”
Austin agreed, saying that in today’s “commoditized financial services world,” credit unions incorrectly assume they can compete on rates by depending on their members' loyalty. “Today's consumer doesn't really care as much about being a member-owner. They care more about speed, convenience, and price, and if speed, convenience, and price are the way you win, we are in a very tough uphill battle.”
Austin said credit unions can differentiate themselves from the competition by recreating the “relationship banking” environment. He added that Nook’s aim is to use digital tools to build the same strong ties credit unions used to have. “The starting point for Nook was figuring out how to bring relationship-based banking back to this market.”
Sometimes, credit unions think adopting an innovation like Nook is risky. Austin countered, “I think credit unions–because they have that legacy of being not-for-profit member-owned institutions–will have the easiest transition into saying, because of that, we care deeply about our members, and we are going to spend extra time and energy on building trust, loyalty, and relationships.”
Robert asked how Nook works to deepen relationships with members in the digital world. Austin said,
Nook’s methodology involves grouping members into subsegments or “niches” based on dimensions such as demographics, location, culture/language, occupation, or hobbies. Each subsegment is then provided with digital content tailored to their interests and life priorities, which is termed a “niche experience.”
Austin said Nook’s first niche focus was on “Fifty Plus,” referring to members 50 years or older. “Our first [niche] is the 50+ demographic. We think it's the low-hanging fruit because that's where most member age skews to in credit unions, and there's a lot of consumer spending happening in that group.”
He says that Nook encountered some skepticism in focusing first on this Baby Boomer generation niche because many credit unions see Millennials and Gen Z as the way to future growth. Austin replied that aside from the Fifty Plus niche's purchasing power, they also significantly influence Millennial and Gen Z children. “A Gen-Zer or Millennial says, ‘I'm thinking about a mortgage, mom or dad. Where should I go?’ The relationship that's been built by the credit union with the 50+ group is going to add value in acquiring the younger customers, and that's a longer-term strategy than sending out emails or putting ad placements on Google or anything like that.”
But how is creating a “niche experience” relevant to credit union growth aspirations? Contrary to conventional consumer financial services marketing, it doesn’t mean providing only content devoted to financial topics. “We are really focused on communicating and talking to people about life and not finance.” “So, how do you build deep trust and relationships with members? You have to talk about life, what's happening in their lives, and what they care about.”
He proposed the scenario of a hypothetical credit union using Nook for a while. “Suppose over the last two years, they’ve been sending content that's helpful, educational, and relevant to niche members. Some members found it really exciting and entertaining, while others thought it was just okay. But the goal is to be in front of them in this kind of implicit way that’s more about helping them, providing guidance, advice, and tips throughout life. It's very specific, intentional, and focused on providing helpful educational content to them, but you're also reinforcing the existence of a credit union. The idea is that they’ll talk to us first the next time they have a financial need rather than doing a Google search about the best rates.”
Robert asked about the specific way that Nook works with the credit union. Austin explained the process using an example of an existing customer, Dort Financial Credit Union.
“We give them the content through a microsite that we've built, which looks and feels a lot like their site, so it's a co-branded experience. They have Dort Living 50+, where this content gets deployed, and we publish two new pieces of content every single week. From there, we also send out an automated weekly email, recapping what happened with our content last week.”
“Dort also has the option to pick that content up and use it. For example, they have a blog called the Shared Interest blog. And again, it's kind of a very similar approach to ours, which is they are not there to talk necessarily just about finance. They want to talk about what their members care about, and that’s why they call it the Shared Interests blog; it's a lot about life and lifestyle.”
Austin said the content can also be used for the credit union’s social media marketing. “If the content is something that they think is going to be relevant to their membership, they can promote it on their social media.”
Robert asked, “Since Nook is relatively new, what have the findings been so far?”
Austin acknowledged that even though Nook launched earlier this year, there have been some promising results. Again, using Dort as an example, he said, “We've seen quite a significant engagement in terms of what we've seen people do on the site. But, even though our model was built to be a longer-term relationship development, within the first two weeks of standing up our solution with Dort, we were actually able to bring in eight qualified business opportunities, and three of those closed.”
In summing it up, Austin said, “People value relationships, and they value trust. Both are important when talking to your banker or your financial advisor. You can get the same products and the same advice elsewhere, but you can't get the same person in the same relationship. That's one of the core differentiators that credit unions had in the past, and now we're not there anymore. We're competing with everybody else, and even though digital has made things a lot easier, it's also made relationships much harder.
He said Nook answers the question, “So, how do we leverage digital tools to build an experience that builds trust?” He added that the process drives a virtuous cycle whereby the data on how members engage with the content is used to improve the overall niche experience, resulting in building deeper trust as the cycle loops indefinitely. “It just keeps building deeper and deeper trust, and that's what we're trying to accomplish.”
Click here to listen to the full podcast! https://cu-2.com/cu-2-0-podcast-episode-292/