After years of turbulence, the auto lending market is finally leveling out–and credit unions are primed to capitalize. In the latest 22 Minutes in Lending we talk to Eric Stradley, president of auto refinancing fintech Caribou, about the growth opportunity for credit unions, and the potential positives for millions of consumers.

Key takeaways:

00.56: The organization’s initial vision to enhance credit unions’ reach and impact through an innovative marketplace.

02.49: An overview of the auto refinance market and the potential financial benefits for millions of consumers.

03.55: The nuances of auto refinancing vs. traditional mortgage refinancing–namely how credit typically improves during the duration of an auto loan.

05.30: The vast majority of auto loans being refinanced were not originated by a credit union, but instead are an opportunity to win market share from bigger banks.

06.57: How the turbulence of loan-to-value ratios has skewed underwriting and lending over the last few years, and what the future holds for credit unions.

09.09: A major portion of credit unions took a step back from auto lending in the early 2020s but are using refinancing as a lower risk re-entry strategy.

11.09: An overview of the Caribou process–how it works for consumers and credit unions, and why that’s a benefit for both parties.

14.02: The shifting picture of typical FICO scores for auto refinancing, and how credit unions can reach and engage members that they wouldn’t typically take a risk on.

16.53: Auto refinancing provides non-prime members for prime risk, and helps credit unions support members on their upward credit trajectory.

17.48: Caribou is essentially national, and is looking for credit union partners to meet consumer demand.

19.50: This isn’t about replacing existing credit union services; it’s about augmenting them at a larger scale, reaching potentially millions of more consumers.

Resources Mentioned:

1. www.caribou.com Caribou
2. www.qedinvestors.com QED Investors
3. us.dealertrack.com Dealertrack Insurance product

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#CreditUnions #AutoLending #GrowthMarketing

From embedded finance and fintech partnerships, to upsell/cross-sell marketing and education lending, in this episode of 22 Minutes in Lending, Casey Mauldin, Chief Revenue and Lending Officer at Jovia Financial Credit Union, discusses the deposit strategies that could help credit unions grow in 2025.

Key takeaways:

00.40: An overview of Long Island-based credit union, Jovia Financial Credit Union, its field of membership, and the competitive landscape.

02.23: The implications of having a dual role that oversees both revenue and lending.

04.06: How the cost of funds has influenced the credit union’s deposit growth strategy, and how they navigate significant competition.

05.43: Detail on how Jovia has successfully partnered with fintech to drive deposit and membership growth.

08.42: The opportunities for smaller credit unions to maximize their marketing efficacy to reach new members and grow deposits.

10.40: How education lending can help credit unions reach and engage younger members, grow deposits, and increase loans.

15.40: Why business lending has been so critical to Jovia Financial’s growth–so much so that the organization recently launched a business lending CUSO to support other credit unions.

19.16: Ongoing uncertainties around office space lending, particularly in highly dense urban areas.

Resources Mentioned:

1. www.jovia.org Jovia Financial Credit Union
2. www.lendkey.com/podcast/community-lenders-the-best-kept-secret-in-town 22 Minutes in Lending episode with Barry Kirby
3. www.unioncredit.app Union Credit
4. www.lendkey.com/lend LendKey’s education lending platform

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#CreditUnions #Lending #Deposits #GrowthMarketing

In the latest episode of 22 Minutes in Lending, we’re joined by Elizabeth Adcock and Darcie Morgan of MAC Federal Credit Union who have helped oversee transformational growth at the credit union, driven by a diligent approach to AI and digital investments. Discover how this credit union has bridged the gap between traditional and technical services while still keeping their communities loyal and engaged.

Key takeaways:

01.35: An overview of MAC FCU and how they strategically expanded their physical footprint to more effectively serve their members.

03.00: The rationale behind MAC FCU’s expansion into real estate lending, both commercial and residential.

05.36: How MAC FCU’s digital transformation addresses both the needs and wants of its membership.

07.34: The infrastructure roadmap and additional investments necessary to upskill and launch MAC FCU’s digital services.

08.30: What taking “a foundational approach to AI” means, and how credit unions can safely adopt open source solutions.

12.26: Navigating member perceptions, usage, and risks of newly launched AI solutions.

14.30: Working in primarily auto-lending to support people with “bumped and bruised” credit.

16.19: How credit unions can navigate increasingly high delinquency rates, and support personal and commercial members through financial difficulties.

17.42: Increasing process efficiencies and focusing on products-per-member growth are critical growth areas for 2025.

Resources Mentioned:

1. www.macfcu.org MAC FCU

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#CreditUnions #Lending #AutoLending #DigitalTransformation

In this episode, Capitol Hill insider John McKechnie takes an unflinching look at the Consumer Financial Protection Bureau's (CFPB) Rule 1033, unpacking what it means for credit unions, consumers, and fintech. In this top-level discussion, McKechnie and host Vince Passione discuss the liability risks posed by third-party data sharing, the rule’s black, white, and grey areas, and the roadmap for navigating further regulatory complexities in the year ahead.

Key takeaways:

00.47: Key implications for credit unions of the Consumer Financial Protection Bureau’s (CFPB) Rule 1033.

02.20: The origins of the rule’s intention date back to the turn of the last century with the dotcom boom, but were really brought to bear when the Dodd Frank Act passed in 2010.

04.15: The intent of the rule has long been contentious, with parties pointing out that consumers already have access to a wealth of data and can control it how they choose, therefore why would it now need regulating?

04.50: What party is obligated to protect consumer data remains vague, and the CFPB’s own director still seems elusive on details.

08.10: The day after the rule was announced in final form, the Kentucky Bankers Association filed a suit challenging the regulation.

09.10: The rule’s inclusion of major fintech providers like PayPal and ApplePay shouldn’t have come as a surprise–although it was widely reported as one.

10.45: How the objections to Rule 1033 are strong enough that we may see credit unions and banks working together to challenge the legislation.

15.08: The law doesn’t provide for oversight of third parties that have access to consumer data, which is a “huge legal sticking point.”

17.48: With the incoming political administration, there’s a high likelihood that the House and Senate will repeal the regulation and require a new iteration be presented.

19.00: Credit unions have cause to be nervous with so much potential change to the tax legislation in 2025.

Resources Mentioned:

• https://www.consumerfinance.gov/ Consumer Financial Protection Bureau
• https://www.consumerfinance.gov/about-us/newsroom/cfpb-finalizes-personal-financial-data-rights-rule-to-boost-competition-protect-privacy-and-give-families-more-choice-in-financial-services/ Rule 1033
• https://www.cftc.gov/LawRegulation/DoddFrankAct/index.htm Dodd Frank Act
• https://www.congress.gov/bill/118th-congress/senate-bill/1838/text Credit Card Competition Act

Thanks for listening to the 22 Minutes in Lending podcast. If you enjoyed this episode, please leave a 5-star review to help get the word out about the show and be sure to subscribe so you never miss another insightful conversation.

#CreditUnions #Lending #Data

In this episode of 22 Minutes and Lending, host Vince Passione welcomes Juan Fernández Ceballos, president and CEO of Luminate, the credit union league for Louisiana. From helping smaller credit unions build economies of scale to challenging core providers to do better; addressing succession issues to navigating the incoming political administration, Juan Fernández offers a bold new vision for how credit union leagues can adapt and evolve their services to ensure every credit union can thrive. This conversation is a must-listen.

Key takeaways:

0:00 Intro

1:15 An overview of Luminate, the credit union league for Louisiana, and its three core pillars: Collaborate, Innovate, Thrive.

4:50 How complacency and an aversion to risk at the Board and executive level could be contributing to the credit union system’s contraction.

8:27 Why credit unions need to be more intentional and proactive in ensuring their Board of Directors reflect the type of members they are (or want to be) serving.

10:12 Fintech is omnipresent and necessary, but it cannot replace the personal connections and relationships that credit unions offer.

15:02 The important role that credit union Leagues play in helping smaller and medium-sized credit unions leverage economies of scale.

17:55 The core conundrum: How core providers are locking credit unions into long-term deals that can inhibit growth and innovation.

19:06 What the incoming political administration could mean for credit unions.

22:31 The state of the credit union league system–what they need to focus on to support the long-term growth and success of the credit union system.

Resources Mentioned:

• https://luminate.coop/ Luminate website
• https://www.lendkey.com/podcast/think-inside-the-box-the-growth-opportunities-staring-credit-unions-in-the-face/ Dr. Brandi Stankovic episode of 22 Minutes in Lending

Thanks for listening to the 22 Minutes in Lending podcast. If you enjoyed this episode, please leave a 5-star review to help get the word out about the show and be sure to subscribe so you never miss another insightful conversation.

#CreditUnions #Lending #Fintech #Advocacy

In this second of two episodes with Kareem Saleh, Founder and CEO of FairPlay AI, host Vince Passione continues the conversation on how AI, to date, has fallen short of its potential to deliver a fairer lending environment for all consumers, but how addressing historical bias in the learning data can create a more equitable future.

Key takeaways:

0:00 Intro

1:00 How historical data–the data that AI is typically trained on–contains bias, and therefore can perpetuate bias in the future.

2:27 The challenges for lenders of using historical data that contains bias, but also has valuable insights, such as an individual’s repayment performance.

3:25 Sometimes lenders have to “test and learn” into new markets to define their risk parameters.

5:26 Racial and ethnic minority groups are often wrongly stereotyped as always being underserved and/or in need of fundamental financial services.

6:44 The more financial stimulus to enable lending in under-represented populations, the greater the opportunity to remove long-term bias from data sets and have a fairer AI-driven underwriting system in the future.

8:21 A detailed overview of FairPlay AI, the algorithms it uses to pursue fairer lending for all, and its outputs and outcomes.

13:02 The double-risks posed to lenders by climate change: The risks to their members and the commodities borrowed against, and the physical risk to lenders’ collateral.

14:47 How climate change also represents a powerful opportunity for credit unions to grow and deliver on their mission.

16:14 The lending opportunities for credit unions interested in addressing climate change.

16:48 The NCUA has made it clear they are hyper-focused on fair lending, particularly in the auto market.

Resources Mentioned:

• https://fairplay.ai/ Fairplay AI
• https://www.novacredit.com/ Nova Credit
• https://www.lendkey.com/podcast/credits-new-frontier-cross-border-records-and-the-role-of-cash-flow-data/ Misha Esipov episode
• https://www.cooperaconsulting.com/ Coopera Consulting
• https://www.lendkey.com/podcast/service-or-stereotypes-can-credit-unions-engage-multicultural-consumers/ Victor Corro episode
• https://www.filene.org/reports/the-changing-climate-for-credit-unions The Changing Climate for Credit Unions
• https://ncua.gov/regulation-supervision/regulatory-compliance-resources/consumer-compliance-regulatory-resources/fair-lending-compliance-resources Fair lending resources from the NCUA

Thanks for listening to the 22 Minutes in Lending podcast. If you enjoyed this episode, please leave a 5-star review to help get the word out about the show and be sure to subscribe so you never miss another insightful conversation.

#CreditUnions #FairLending #AI #Lending

In this first of two episodes with Kareem Saleh, Founder and CEO of FairPlay AI, host Vince Passione takes a deep dive into the world of AI underwriting: How it’s been used in the past, how it has fallen short of its potential to remove bias in lending decisioning, and how the pioneering concept of Fairness-as-a-Service may yet revolutionize the AI lending game.

Key takeaways:

0:00 Intro

2:06 How the murder of George Floyd compelled Kareem Saleh to look for ways he could more effectively change the system he operates in, and increase fairness for everyone.

3:08 Machine learning is capable of learning, but also of learning the wrong things.

3:55 Financial services regulators have clearly defined definitions of “fairness”: One focusing on disparate treatment, the other focusing on disparate impact.

5:18 One of the core challenges (and/or failures to-date) for using AI to mitigate bias is that it can only learn from the data it is trained on; and that typically over-represents certain populations.

8:49 Traditional logistic regression models don’t always work because they assume credit behaviors are linear. In reality, an individual’s financial behaviors are non-linear.

9:31 Unfairness can be born out of AI-driven models when seemingly independent variables interact with one another in a way that most humans wouldn’t interpret, but machines do.

10:01 Underwriting regulation and compliance hasn’t yet caught up with the technological capabilities of our AI-driven world.

11:56 Why monitoring an AI model’s fairness trends is critical.

14:40 Examples of ways seemingly disparate or arbitrary variables can interact with one another to bias an outcome–and how personal attributes are still being leveraged to a greater or lesser extent in decisioning models.

19:53 Concerns vs. regulatory comfort with using personal attributes like age and gender in decisioning.

22:44 The privacy implications, particularly in light of 1033, and how finding a way to share your personal information in some way–even if it’s just through the census–will help contribute to a fairer credit system.

Resources Mentioned:

• https://fairplay.ai/ Fairplay AI
• https://www.fdic.gov/system/files/2024-06/iv-1-1.pdf Fair lending rules and regulations
• https://www.justice.gov/crt/equal-credit-opportunity-act-3 Equal Credit Opportunity Act
• https://www.justice.gov/crt/fair-housing-act-1 Fair Housing Act
• https://www.lendkey.com/podcast/modern-credit-reporting-can-old-tech-handle-new-data/ Christian Widhalm, Bloom Credit, episode

Thanks for listening to the 22 Minutes in Lending podcast. If you enjoyed this episode, please leave a 5-star review to help get the word out about the show and be sure to subscribe so you never miss another insightful conversation.

#CreditUnions #FairLending #AI #Lending

In this episode, Misha Esipov, co-founder and CEO of Nova Credit, joins host Vince Passione to discuss the millions of “Credit Invisible” people in the country, and how innovations in credit reporting can help more lenders reach and serve them.

Key takeaways:

0:00 Introduction

1:29 Millions of people arrive in the U.S. each year, many of whom have been credit-worthy in their respective nations but the U.S. credit system doesn’t recognize their credit history.

2:19 There are around 100 million Americans whose credit data is inaccurate or incomplete and are missing out on loan opportunities as a consequence.

5:04 An overview of Nova Credit’s three core products: Cash Atlas, Income Navigator, and Credit Passport.

8:10 How, as a credit reporting agency (CRA) Nova Credit furnishes data to lenders and other credit bureaus.

9:00 The three core swimlanes of Nova Credit’s operations: data collection, analytics, and FCRA compliance.

9:48 The challenges preventing cash flow data from being recorded in traditional credit reporting bureaus' data–and the benefits for consumers and lenders when it is captured and used.

13:35 How government stimulus incentives issued through the pandemic may have skewed consumer credit information, and is leading to long-term underperformance on certain loans.

15:57 How Buy Now Pay Later transactions remain under-reported.

18:47 Augmenting underwriting with cash flow information is a journey. Any step towards it is progress.

21:09 Key takeaways from the inaugural Cash Flow Underwriting Summit, held in September 2024.

Resources Mentioned:

• https://www.novacredit.com/ Nova Credit
• https://www.unfcu.org/ United Nations Federal Credit Union
• https://www.novacredit.com/cash-atlas Cash AtlasTM
• https://www.novacredit.com/income-navigator Income Navigator
• https://www.novacredit.com/credit-passport Credit Passport®
• https://www.cashflowunderwritingsummit.com/ Cash Flow Underwriting Summit 2024

Thanks for listening to the 22 Minutes in Lending podcast. If you enjoyed this episode, please leave a 5-star review to help get the word out about the show and be sure to subscribe so you never miss another insightful conversation.

#CreditUnions #Lending #CreditReporting