On-site with NACUSO at 'The happiest place on earth'
April 18, 2018 4:56 PM
NACUSO heads to 'The happiest place on earth'
The National Association of Credit Union Service Organizations holds its annual NACUSO Network Conference this week at the world famous Disneyland Hotel in Anaheim, Calif. Along with updates on compliance trends and cannabis banking , attendees learned about the future of artificial intelligence and its impact on credit unions, got leadership insights from a former NBA MVP and more. Click ahead for a sampling of conference highlights.
Going'Underground'
One longtime credit union consultant believes there are significant issues within the movement that are being discussed around the water cooler but not in the boardroom. While CEO networking sessions used to be a confidential place to share information and set the stage for unified positions, today they are more often a forum for politically correct dialogue rather than for progressive change.
That’s where the Underground Collision comes into play.
Sue Mitchell, CEO of Las Vegas-based credit union consultancy Mitchell, Stankovic and Associates, pictured at right, on Monday told NACUSO attendees she has worked with credit unions and CUSOs for years. Lately, she has spent time looking at the industry through the eyes of the people in the industry.
“We have to ask our leadership to stand up for a common purpose,” she said, noting the concept of the Underground Collision started 10 years ago. “It is time for us to get real. The Underground Collision acts on what is talked about in the hallways. CUSOs were founded to make money and provide extended value to members, but support from boards runs hot and cold.”
According to Mitchell, there are several questions CUSO owners should be asking, starting with: Are you making enough money? Is that money being put back to use for the members? Are you being compensated properly? Are you taking a risk?
“Entrepreneurs bring big ideas to the table, and boards need to be committed,” she said. “The underground collides with conferences and asks questions. We want a dialogue, even if the comments are controversial. Credit unions need to share what did not work – worst practices. These days, some credit unions compete with each other, but our power is in our collaboration. Think of the reality of our society today and the role we play. We need to have a dialog about worst practices.”
Randy Karnes, CEO of CU*Answers, said the Underground Collision draws inspiration from Ed Callahan, former NCUA chairman and founder of namesake Callahan & Associates.
“Ed Callahan was an interesting guy,” Karnes recalled. “He would sit out front of [Credit Union National Association’s Government Affairs Conference] and hold court. He would talk about what was not being talked about in the conference. At conferences people fit in, but they leave things unsaid – which misses the entire point of coming together. If groupthink overwhelms us, what is going to move the ball? There is a lot of apathy in the credit union movement. Do members care that they own their credit unions? Or do they just care about being consumers?
According to Karnes, credit union folks no longer should leave conferences without saying what was unsaid. “Come to an Undergound conference,” he urged.
Underground Collisions have taken place at GAC for several years in a row. The next edition is expected to take place during the World Council of Credit Unions meeting in July.
That’s where the Underground Collision comes into play.
Sue Mitchell, CEO of Las Vegas-based credit union consultancy Mitchell, Stankovic and Associates, pictured at right, on Monday told NACUSO attendees she has worked with credit unions and CUSOs for years. Lately, she has spent time looking at the industry through the eyes of the people in the industry.
“We have to ask our leadership to stand up for a common purpose,” she said, noting the concept of the Underground Collision started 10 years ago. “It is time for us to get real. The Underground Collision acts on what is talked about in the hallways. CUSOs were founded to make money and provide extended value to members, but support from boards runs hot and cold.”
According to Mitchell, there are several questions CUSO owners should be asking, starting with: Are you making enough money? Is that money being put back to use for the members? Are you being compensated properly? Are you taking a risk?
“Entrepreneurs bring big ideas to the table, and boards need to be committed,” she said. “The underground collides with conferences and asks questions. We want a dialogue, even if the comments are controversial. Credit unions need to share what did not work – worst practices. These days, some credit unions compete with each other, but our power is in our collaboration. Think of the reality of our society today and the role we play. We need to have a dialog about worst practices.”
Randy Karnes, CEO of CU*Answers, said the Underground Collision draws inspiration from Ed Callahan, former NCUA chairman and founder of namesake Callahan & Associates.
“Ed Callahan was an interesting guy,” Karnes recalled. “He would sit out front of [Credit Union National Association’s Government Affairs Conference] and hold court. He would talk about what was not being talked about in the conference. At conferences people fit in, but they leave things unsaid – which misses the entire point of coming together. If groupthink overwhelms us, what is going to move the ball? There is a lot of apathy in the credit union movement. Do members care that they own their credit unions? Or do they just care about being consumers?
According to Karnes, credit union folks no longer should leave conferences without saying what was unsaid. “Come to an Undergound conference,” he urged.
Underground Collisions have taken place at GAC for several years in a row. The next edition is expected to take place during the World Council of Credit Unions meeting in July.
CUs and AI
Artificial intelligence is not some Hollywood fiction – it is happening right now, according to Rojin Nair, general manager of fintech for Calgary, Canada-based Celero Solutions.
“Today, we have intelligent automation. The next step is autonomous systems,” he explained during a breakout session on AI. “Today we have artificial general intelligence. The next step is artificial super intelligence.”
The AI panel at the 2018 NACUSO annual conference included, from left, Rojin Nair, Celero Solutions, John Best, Best Innovation Group, Scott Daukas, TwinStar CU, Srinivas Njay, Payjo. Standing behind Brian Lauer, partner with Messick, Lauer & Smith, moderator
Artificial general intelligence goes past machine learning to deep learning, Nair continued. He said most of what a loan officer does at a credit union today can be repeated.
“Consumers want to get financing where they buy. They do not want to be at a dealership ready to by a car, then have to go back to the credit union to apply for loan. They want financing at dealership.”
Nair predicted machine intelligence will surpass human intelligence by 2025. He said with heavily regulated and controlled intelligent systems, human beings and machines can co-exist.
John Best, CEO of Best Innovation Group, Tampa, Fla., said contrary to popular opinion, AI is not exploding due to Moore’s Law – the prediction that computing power would double every two years.
“It is because of data,” he declared. “We have so much data.”
According to Best, AI at a credit union eventually will run through a master AI engine that sees all data. Based on past behavior, this AI will make intuitions. “Autonomous banking will be just like autonomous cars,” he said. “The first step of AI is mastering analytics. Step one is to be analytical, then predictive, then finally prescriptive – can you affect consumer behavior.”
Scott Daukas, chief risk officer at $1.2 billion TwinStar Credit Union, Lacey, Wash., said he is paid to worry about everything that affects the credit union. “So I worry about the risks connected to AI. Many of these risks can be mitigated.”
Daukas said the big question is: with massive amounts of data, who owns the data? He said the problem with “black box” decision making – meaning autonomous decisions made by AI is – will decisions be made that humans cannot audit?
“AI might make decisions that inadvertently discriminate by race or gender,” he said. “There also are systemic risks: what if the AI company fails? Then there are credit union-specific challenges: Is your credit union ready, from a governance perspective, for AI? We have to be ready for the cultural changes AI will bring.”
Srinivas Njay, founder and CEO of Payjo, Inc., San Mateo, Calif., said his company has created an AI-powered banking assistant.
“It is a platform to help employees make decisions to help consumers,” he said. “The best platforms will be language and channel agnostic, supporting multiple languages by voice and text.”
“Today, we have intelligent automation. The next step is autonomous systems,” he explained during a breakout session on AI. “Today we have artificial general intelligence. The next step is artificial super intelligence.”
The AI panel at the 2018 NACUSO annual conference included, from left, Rojin Nair, Celero Solutions, John Best, Best Innovation Group, Scott Daukas, TwinStar CU, Srinivas Njay, Payjo. Standing behind Brian Lauer, partner with Messick, Lauer & Smith, moderator
Artificial general intelligence goes past machine learning to deep learning, Nair continued. He said most of what a loan officer does at a credit union today can be repeated.
“Consumers want to get financing where they buy. They do not want to be at a dealership ready to by a car, then have to go back to the credit union to apply for loan. They want financing at dealership.”
Nair predicted machine intelligence will surpass human intelligence by 2025. He said with heavily regulated and controlled intelligent systems, human beings and machines can co-exist.
John Best, CEO of Best Innovation Group, Tampa, Fla., said contrary to popular opinion, AI is not exploding due to Moore’s Law – the prediction that computing power would double every two years.
“It is because of data,” he declared. “We have so much data.”
According to Best, AI at a credit union eventually will run through a master AI engine that sees all data. Based on past behavior, this AI will make intuitions. “Autonomous banking will be just like autonomous cars,” he said. “The first step of AI is mastering analytics. Step one is to be analytical, then predictive, then finally prescriptive – can you affect consumer behavior.”
Scott Daukas, chief risk officer at $1.2 billion TwinStar Credit Union, Lacey, Wash., said he is paid to worry about everything that affects the credit union. “So I worry about the risks connected to AI. Many of these risks can be mitigated.”
Daukas said the big question is: with massive amounts of data, who owns the data? He said the problem with “black box” decision making – meaning autonomous decisions made by AI is – will decisions be made that humans cannot audit?
“AI might make decisions that inadvertently discriminate by race or gender,” he said. “There also are systemic risks: what if the AI company fails? Then there are credit union-specific challenges: Is your credit union ready, from a governance perspective, for AI? We have to be ready for the cultural changes AI will bring.”
Srinivas Njay, founder and CEO of Payjo, Inc., San Mateo, Calif., said his company has created an AI-powered banking assistant.
“It is a platform to help employees make decisions to help consumers,” he said. “The best platforms will be language and channel agnostic, supporting multiple languages by voice and text.”
Nussle on CUs' super powers
According CUNA President and CEO Jim Nussle, in today’s competitive business climate, credit unions need to be aware there are, “So many ways to be disrupted.” Addressing a NACUSO audience Tuesday, he pointed to several companies that were among American royalty for decades who today are dead or dying.
“Sears, Kodak and Toys-R-Us had their meetings and their mission statements,” he observed. “What caused them to get off track?”
According to Nussle, the “people power” of the credit union movement is “our secret sauce.”
“We can do anything,” he said. “Geese fly in a V-shape formation, which allows them to go 70 percent farther than flying alone. The geese take turns being the leader. They gain strength and momentum from each other – and that is us. Whatever organization you are part of, the people are what matter. People don’t come to credit unions just to put their money someplace. They want something – a home, a car, to send their kids to college.”
Despite this potential power, the credit union model is “under pressure,” Nussle warned. He pointed to three areas of concern: a war for talent, data security and compliance.
“There is a war for talent,” he said. “We need to be able to attract young people to pull us forward in the future. Data security is the No. 1 issue keeping credit union people up at night. Compliance also is a big issue. For a long time the CFPB was issuing Harry Potter novel-length rules that we all had to read.”
The credit union tax status is “being attacked,” and not just in Washington, D.C., Nussle continued. He noted there is a fight going on in Iowa, with some state legislators there looking to tax CUs. “We have to defend the reason for our tax status across the country,” he said. “We need to use the V-formation. We have 5,700 credit unions, 5,000 credit union service providers, 70,000 board members, 110 million members, 300,000 credit union professionals, 11 corporate CUs and 950 credit union service organizations. If we could harness all of that – in business or in advocacy – we would be unstoppable. Those are our superpowers.”
According to Nussle, CUNA’s strategic plan for 2018 to 2020 will focus on “fierce and bold” advocacy, best-in-class credit union solutions, and awareness-building consumer engagement.
“We are not just going to be ‘nice’ anymore, we are going to revolutionize the operating environment for credit unions through expanding powers and removing barriers to serving consumers and businesses,” he said.
“Sears, Kodak and Toys-R-Us had their meetings and their mission statements,” he observed. “What caused them to get off track?”
According to Nussle, the “people power” of the credit union movement is “our secret sauce.”
“We can do anything,” he said. “Geese fly in a V-shape formation, which allows them to go 70 percent farther than flying alone. The geese take turns being the leader. They gain strength and momentum from each other – and that is us. Whatever organization you are part of, the people are what matter. People don’t come to credit unions just to put their money someplace. They want something – a home, a car, to send their kids to college.”
Despite this potential power, the credit union model is “under pressure,” Nussle warned. He pointed to three areas of concern: a war for talent, data security and compliance.
“There is a war for talent,” he said. “We need to be able to attract young people to pull us forward in the future. Data security is the No. 1 issue keeping credit union people up at night. Compliance also is a big issue. For a long time the CFPB was issuing Harry Potter novel-length rules that we all had to read.”
The credit union tax status is “being attacked,” and not just in Washington, D.C., Nussle continued. He noted there is a fight going on in Iowa, with some state legislators there looking to tax CUs. “We have to defend the reason for our tax status across the country,” he said. “We need to use the V-formation. We have 5,700 credit unions, 5,000 credit union service providers, 70,000 board members, 110 million members, 300,000 credit union professionals, 11 corporate CUs and 950 credit union service organizations. If we could harness all of that – in business or in advocacy – we would be unstoppable. Those are our superpowers.”
According to Nussle, CUNA’s strategic plan for 2018 to 2020 will focus on “fierce and bold” advocacy, best-in-class credit union solutions, and awareness-building consumer engagement.
“We are not just going to be ‘nice’ anymore, we are going to revolutionize the operating environment for credit unions through expanding powers and removing barriers to serving consumers and businesses,” he said.
Life lessons from an NBA MVP
David Robinson is one of the most decorated players in the history of basketball. After starring for four years at the United States Naval Academy, and then a two-year stint serving in the U.S. Navy as a civil engineer, Robinson enjoyed a lengthy career with the San Antonio Spurs of the National Basketball Association. He was NBA Rookie of the Year in 1989-90, Most Valuable Player in 1994-95, a 10-time NBA All-Star, and helped lead the Spurs to two NBA Championships. He played on two U.S. Olympic teams that won gold medals. He was inducted into the Naismith Memorial Basketball Hall of Fame in 2009, his first year of eligibility, and was named one of the 50 greatest players in NBA history.
But even with that glittering resume, Robinson does not define himself by accomplishments on the basketball court. A man of strong faith, he has dedicated his life to giving back to those less fortunate. In particular, he is driven by reaching out to disadvantaged young people to impress upon them the importance of staying in school and going to college.
“I am very passionate about education,” he told the NACUSO audience Tuesday. “My dad made me read the dictionary every day. He made me memorize a page and would come home from school and quiz me. I didn’t like it at the time, but now I am thankful to my father now for giving me a base.”
Today, Robinson is part of the Basketball Commission with Condoleezza Rice. The group is attempting to fix what is wrong with college basketball. “Kids are being paid under the table by the shoe companies,” he lamented. “College should be a place of learning. We don’t want college to be a one-stop pit stop before the pros. The AAU system is getting more and more corrupt. Agents are getting to kids younger and younger. We want to bring back a good relationship between colleges and the kids.”
According to Robinson, there are some good aspects of college basketball – starting with a large number of minority kids are going to college and getting degrees, thanks to sports.
“We need to solve problems, but the dialog is wrong,” he argued. “Anything you do to get a kid on campus is a good thing. Only 20 kids a year are going to go play in the pros. The other 99 percent are going to stay on campus, and they are going to experience things that will help them live their life. There is a mass delusion that kids are going to play pro – 71 percent of Division I players and even 52 percent of Division II players. The opportunity is not the NBA, it is the education.”
Robinson’s father was a career Navy man as a sonar technician. He said the opportunity to get a free education at one of the top engineering schools appealed to him, which is why he chose to attend the Naval Academy. “The discipline, the structure and the focus taught me to prepare day in, day out.”
But even with that glittering resume, Robinson does not define himself by accomplishments on the basketball court. A man of strong faith, he has dedicated his life to giving back to those less fortunate. In particular, he is driven by reaching out to disadvantaged young people to impress upon them the importance of staying in school and going to college.
“I am very passionate about education,” he told the NACUSO audience Tuesday. “My dad made me read the dictionary every day. He made me memorize a page and would come home from school and quiz me. I didn’t like it at the time, but now I am thankful to my father now for giving me a base.”
Today, Robinson is part of the Basketball Commission with Condoleezza Rice. The group is attempting to fix what is wrong with college basketball. “Kids are being paid under the table by the shoe companies,” he lamented. “College should be a place of learning. We don’t want college to be a one-stop pit stop before the pros. The AAU system is getting more and more corrupt. Agents are getting to kids younger and younger. We want to bring back a good relationship between colleges and the kids.”
According to Robinson, there are some good aspects of college basketball – starting with a large number of minority kids are going to college and getting degrees, thanks to sports.
“We need to solve problems, but the dialog is wrong,” he argued. “Anything you do to get a kid on campus is a good thing. Only 20 kids a year are going to go play in the pros. The other 99 percent are going to stay on campus, and they are going to experience things that will help them live their life. There is a mass delusion that kids are going to play pro – 71 percent of Division I players and even 52 percent of Division II players. The opportunity is not the NBA, it is the education.”
Robinson’s father was a career Navy man as a sonar technician. He said the opportunity to get a free education at one of the top engineering schools appealed to him, which is why he chose to attend the Naval Academy. “The discipline, the structure and the focus taught me to prepare day in, day out.”
How humanity and the digital world can coexist
Credit unions need to weave together the best parts of analog and digital worlds if they hope to be successful in today’s business climate.
That was the message from Anders Sorman-Nilsson, futurist, speaker and author. He told NACUSO attendees even instant gratification is too slow for some people today.
“Some people don’t like change, but change doesn’t care if you like it or not – change is going to happen,” he assessed.
Sorman-Nilsson argued it may be easier to educate younger people what a credit union actually is and does. He said the next generation is used to using fintech. “They think they can do banking without actually using a bank. Credit unions need to seize this moment to appeal to the hearts and minds of younger people.”
All of us are getting “digitally hacked” every day, and at an increasing rate, Sorman-Nilsson declared. He said technology companies are coming for financial services. “Fintechs are decoupling people from traditional financial players. While banks and credit unions focus on regulation, fintechs focus on innovation,” he warned.
Although some people – including Sorman-Nilsson’s mother – believe the rapid spread of technology is dehumanizing, he insisted the digital world can be “coded for humanity.” He advised credit unions and CUSOs to remove friction to make interactions with consumers seamless.
“Speeding up the user experience can be seen as more humane than making people fill out paperwork and wait,” he said. “Personal financial management tools can help people who have poor skills. Computer-based personality judgments are more accurate than people’s friends or life partners.
“We are living in a transformation economy, in which behavior can be predicted,” he continued. “The digital data is out there. We contribute rich social data all the time. Social data is credit data, and we should reconsider how we give credit. Cyber hackers are going after data because they see the richness in data. Sales and marketing need to combined together to create ‘smarketing.’”
That was the message from Anders Sorman-Nilsson, futurist, speaker and author. He told NACUSO attendees even instant gratification is too slow for some people today.
“Some people don’t like change, but change doesn’t care if you like it or not – change is going to happen,” he assessed.
Sorman-Nilsson argued it may be easier to educate younger people what a credit union actually is and does. He said the next generation is used to using fintech. “They think they can do banking without actually using a bank. Credit unions need to seize this moment to appeal to the hearts and minds of younger people.”
All of us are getting “digitally hacked” every day, and at an increasing rate, Sorman-Nilsson declared. He said technology companies are coming for financial services. “Fintechs are decoupling people from traditional financial players. While banks and credit unions focus on regulation, fintechs focus on innovation,” he warned.
Although some people – including Sorman-Nilsson’s mother – believe the rapid spread of technology is dehumanizing, he insisted the digital world can be “coded for humanity.” He advised credit unions and CUSOs to remove friction to make interactions with consumers seamless.
“Speeding up the user experience can be seen as more humane than making people fill out paperwork and wait,” he said. “Personal financial management tools can help people who have poor skills. Computer-based personality judgments are more accurate than people’s friends or life partners.
“We are living in a transformation economy, in which behavior can be predicted,” he continued. “The digital data is out there. We contribute rich social data all the time. Social data is credit data, and we should reconsider how we give credit. Cyber hackers are going after data because they see the richness in data. Sales and marketing need to combined together to create ‘smarketing.’”
