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Nook co-founder Austin Wentzlaff visited with CUBroadcast host Mike Lawson at the 2024 NACUSO conference to talk about the company and the exciting news that Nook has become a CUSO.
Nook Is Bringing Relationship-based Banking Back
Mike asked Austin to help audience members who haven’t heard of Nook learn a little bit about the company. Austin said, “We like to say we’re bringing back relationship banking. We think that the credit union industry had this as a really strong core differentiator in the past. We were really focused on our members, and we had this tight relationship, but over time, that has become less and less true because credit unions have gotten a lot bigger.”
Fierce Competition
He noted that getting bigger brought its own problems. “We're really trying to compete for the same business that everybody else is, and as a result of that credit unions have kind of stuck with trying to play the same game that SoFi and JP Morgan and everybody else is playing, which is competition on rates. I like to call that the race to the bottom.”
Austin observed that fintechs like Sofi often sacrifice profit for market share, which is not a winning strategy for most credit unions. “Credit unions don't have that luxury,” he said. According to Austin, Nook originated as a counter-strategy. “What we wanted to do was re-emphasize the relationship piece that we think is going to be the credit unions’ strong differentiator again going into the future.”
The Nook Difference: Niche Experiences
Austin explained that Nook builds on the reality that today’s members are comfortable in the digital environment. “Our core idea was creating what we like to call niche experiences.”
The “niche” in niche experiences refers to a subset of members sharing specific characteristics. These could include:
- Demographics
- Location
- Culture or language
- Hobbies
- Occupation or avocation
Once a niche is defined, engaging digital content is provided to members who fit the niche profile to build trust and loyalty.
“So, we take a core group of people that we think is very important to the credit union,” said Austin, “and we build an entirely new subsidiary brand around them that's co-branded with the credit union, so still feels very much like the credit union.”
The aim, said Austin, is to create a feeling in the member’s mind that “I belong to a special group within the credit union, and they're taking extra special care of me.”
He added, “You don't have to go invent a new brand or a new financial institution. You just have to focus more deeply on people, and then they will reciprocate by doing more business with you.”
Starting With the 50+ Niche
As Nook emerges from the gate, the company leads with a niche experience targeting members 50 and over. “The first group we're going after is the 50-plus demographic. The whole idea here is for them just to have this specialized experience that involves content, which, in the future, will involve a bunch of tools and different things that are around helping guide them through that stage of life. So, again, it's about building the relationship, building the trust, and then building loyalty as a result of that because you've decided to take extra intention and focus on that group.”
Mike asked Austin why Nook started with the 50+ niche. Austin said, “I know every single credit unit out here is going to tell me we have a lot of them, but I think they can also tell me probably too that we could do a better job of building trust with them and getting them to bring all their products and services in with us. That group, especially right now, is doing a lot in terms of different things in life, like buying second homes, getting insurance products, doing wealth management planning for retirement, buying the boat, and buying the RV. There's a lot of activity happening right now, and we need to be their financial partner.”
Future Niches
As for the future, Austin said other niches are planned. “We're just on the 50-plus today, but longer term, we want to go into small business owners, young professionals, and all these different groups. Eventually, I would like to see this situation play out where the credit union is kind of this middle hub, and we build all of these specialized brands essentially around it.”
An Advantage for Marketers
Austin noted that the niche experiences strategy can help marketers become more effective. “The thing that prompted us to start this business was the idea that credit unions have a really hard time focusing on any one given thing. If you look at the job of the credit union marketer right now, as an example, they have to focus on all of these different things. You have all these different business units within the credit union. They're all telling the marketing team, ‘I need you to help my business.’ So, you now have all these different complexities. “
Austin said Nook doesn’t replace current marketing activities but augments them. “We tell the credit union marketing team to keep doing everything you're doing. We don't want to replace that. We're saying you can keep doing all the stuff you're normally doing, but then we're going to do a niche-by-niche focus to build a deep loyalty and trust with each individual group.”
Nook is Now a CUSO!
Mike congratulated Austin on Nook becoming a CUSO. “We're officially a CUSO,” said Austin. “We’re very excited about it. We set out to be a CUSO from day one. It was designed all along to be one because what we're building is a collaborative approach where we build these brands, and then we can share those across the industry.”
He added, “Where one credit union couldn't do this on their own, they can if they share with the rest of the industry. That's really the whole right idea of the CUSO model. We say we have a problem and we want to solve it but we can't do it alone. We need to come together and solve that problem.”
Welcoming CUSO Investors
Austin noted that Dort Financial Credit Union is a founding investor and host of the pilot project. Austin recalled telling the Dort team, “Let's get it out to your membership and see if there's going to be some true success here, and fortunately, there was. It's an exciting thing for us to be able to say that we were able to find an innovative credit union, prove the concept, and then have them take an ownership stake in the company.”
Austin went on to say, “Our plan is to continue expanding credit union ownership. We're trying to raise a little bit more money this year, and I would love for that to be similar stories to Dort, where it's a credit union that wants to come in and experiment with us, pilot it out, give it a whirl, and then hopefully they'll like it, continue on as a client, and take an ownership stake in the company.”
Next Steps for Nook
Mike asked Austin what the next steps for Nook were. “I think it's really about expanding our ecosystem. So, an example that fits in nicely with our strategy is that many CUSOs out there probably need help selling their products or services. A lot of them are taking what I would call the B to B to C model, which is they're trying to sell through credit unions to the members, which means the CUSO gets squeezed into that marketing calendar, which can be tough because credit unions just being spread thin and having too much to do. So, like Member Mobiles, a company that's offering cell service subscriptions for members. It's a cost-effective way for members to switch their mobile carriers. A CUSO like that will want to have the ability to have someone help them sell to that member, so that's another thing that we're trying to facilitate where we can help lift all tides.”
Wrapping It All Up
Austin wrapped up the interview by saying, “It's fun to see some of the pain points out there and then come up with a solution to solve it and then immediately see people go ‘Yeah, you're right, that is something we need to solve for, and we agree that there should be a CUSO partner for that.’”
Watch the video on CUbroadcast: https://www.cubroadcast.com/episodes/nacuso24-nook-announces-becoming-a-cuso-to-cement-commitment-to-credit-union-industry
