Michigan State University Federal Credit Union in East Lansing is teaming up with Debbie, a Miami-based fintech that helps consumers break free of debt and correct bad spending habits, to capture more deposits and strengthen its financial education tools.
The $7.5 billion-asset MSUFCU recently began encouraging members to take advantage of the services offered by the partnership. Consumers establish their profiles by linking bank and card accounts using the data integrator Plaid, and then Debbie helps them set personal goals for paying off debts and building savings. Educational tools are provided to guide these efforts, and small cash rewards can be earned by those who meet their goals.
Ben Maxim, chief digital strategy and innovation officer for MSUFCU, said the credit union has prioritized educational resources for members for more than 20 years. It has hired student interns to develop its
"Financial literacy is an important part of education, and it's been missing for at least a generation here. … People are not learning about finances in their formative years from their family, and some of them just don't have access to education, so [the partnership with Debbie is] a next step to target the college age group," Maxim said.
Maxim emphasized that by using the consumer data compiled by Debbie, the credit union can identify cross-selling opportunities for loans, deposits and other services within pools of current and potential members.
"A lot of our focus has been how do we get more deposits to come to MSUFCU just within the environment we are in for both lending and deposits," Maxim said.
Credit card balances reached record levels
Rachel Lauren, co-founder and chief operating officer of Debbie, explained that the fintech decided to avoid the approach of underwriting loans or structuring automatic payments for users tackling burdensome credit card debt and instead will attack the underlying cause of the debt — bad spending behaviors.
She emphasized that the older methods "do not solve the underlying problem of consumers spending more than they earn" and that employing "cognitive behavioral therapy more than just traditional financial literacy" was more beneficial for helping customers understand and remedy their behavior.
"[Consumers] are making a lot of payments on one side and not saving enough [on the other], and because of that deposits have been hurt. … What a lot of banks and credit unions for that matter are realizing is that we have to target the debt problem before we can help people increase their deposits," Lauren said.
As consumers increasingly demand digital informational services,
David Shipper, a strategic advisor at the Boston-based research and advisory firm Aite-Novarica Group, explained that educational resources have been available in various forms for some time, but consumer tastes have driven leaders to adapt these programs.
"There's always been financial education- and financial wellness-type programs. Usually it's a series of videos or online blog posts. … Banks and credit unions have always offered something, but [Debbie] is probably a little bit more in line with the way people want to learn today," Shipper said.
For institutions looking to adopt or modernize informational services, the first step is building the internal capability for doing so.
"If you can use application programming interfaces, and you have the ability to get the data in and out of the core platforms, then all of a sudden you can start leveraging all sorts of services," explained Mitch Wein, head of community banking for Aite-Novarica Group.
