.png?width=575&name=Podcast%20Blog%20Post%20Header%20(1).png)
Connect & Collect Podcast - Season 2, Episode 14
In this episode of the Connect and Collect podcast, we're joined by Denise Wymore, a seasoned credit union professional with over 40 years of experience. Denise shares her journey from starting as a teller to becoming a consultant for credit unions across the U.S. They discuss the critical mission of credit unions, the challenges faced by small credit unions, and the efforts of the CU De Novo Collective to start and save credit unions. Denise passionately talks about the importance of financial inclusion, the predatory nature of payday lending, and innovative solutions to support underserved communities.
For more information, visit:
Skip Ahead
[00:00:00] Introduction to Denise Wymore
[00:02:00] Denise’s Journey in Credit Unions
[00:04:00] The History and Mission of Credit Unions
[00:08:00] The Decline in Number of Credit Unions
[00:12:00] CU De Novo Collective’s Mission
[00:19:00] Serving the Underserved and Financial Inclusion
[00:27:00] Technological Challenges for Small Credit Unions
[00:35:00] Innovative Solutions: QCash and Lexop
[00:45:00] Future of Credit Unions
[00:49:00] Conclusion and Final Thoughts
Read the Transcript
Michael Pupil - VP of Sales, Lexop 1: [00:00:00] Welcome to the Connect and Collect podcast brought to you by Lexop. Connect and Collect is a podcast created with the credit union professional in mind. Our goal is to bring you the latest innovations and trends in the industry by speaking with incredible credit union leaders so you can hear what's happening at the ground level.
Here's your host, Michael Pupil, Vice President of Sales at Lexop.
Michael Pupil: Good morning, good afternoon, good evening, everyone. Welcome to LexOps Connect and Collect. It is great to be back in action. Today, I get the opportunity to introduce Denise Wymore. And if there was a definition of a credit union lifer, this is going to be the bio of bios.
Michael Pupil: Now, Denise has started her career as a teller at a small credit union in Portland, Oregon, over 40 years ago.
Michael Pupil: And Denise moved up and around the organizational chart before heading out on her own to start her own consulting business and has worked with credit unions all over the U. S. ranging in asset size from 3 million to [00:01:00] 3 billion. Denise is a graduate of the Western CUNA Management School, a certified Net Promoter Score Associate.
Michael Pupil: In 2012, she was named a CU Times Woman to Watch, and in 2022, was inducted into America's Credit Union Museums, Her Story Hall of Fame. Denise has spoken for CUES, CUNA, World Council of Credit Unions, almost every credit union league across the United States. And she is also the co founder of the CU De Novo Collective, a volunteer grassroots effort both to start and save small credit unions.
Michael Pupil: Denise, we were just laughing before going live onto this. We have a great time and a great rapport, and I am so excited to have you aboard today and thrilled that you were able to carve out time with us.
Denise Wymore: Thanks, Mike. I'm excited to be here.
Michael Pupil: We all joked around where we said we need to get two or three more jobs to feel a little more youthful in our lives after looking at that bio.
Michael Pupil: And by the way, ladies and gentlemen, that was a little bit condensed in order to put in a little more easy flowing. Denise comes with a wild amount of experience and this conversation is going to be a lot of fun.
Michael Pupil: [00:02:00] Where I'd love to start, Denise, is really at the beginning. The history, the mission of credit unions, you know, what your experience has been for the four decades that you have been serving, the credit union experience, both on the credit union organization side, as well as the members. And, you know, let's, let's start with the cooperative models and focusing on credit union members.
Denise Wymore: Yeah, so my career, like you said, began as a teller, and one of the questions I like to ask people when I meet them in the movement is, how did they come to the credit union movement? How did they end up in credit unions? And I've yet to meet a person that says, when I was a little girl, I dreamed of working in a credit union.
Denise Wymore: I've never met that person. Everybody just kind of fell into it somehow. And that was my story. But when I realized what credit unions were all about, you know, the whole financial cooperative, and I learned this because I was asked to teach the history of credit unions at this program that we had through the league, at a community college.
Denise Wymore: So I got to teach the history of credit unions. And when I read the [00:03:00] history, I was, that was the Kool Aid drinking moment for me. It's like, Oh my gosh, this is so cool. You know, it began when people didn't have any choice, but to use payday lenders, right? The little guy that we refer to him today, the little guy, but it was true.
Denise Wymore: I mean, it's absolutely true. It was true then it's true today. We're going to get to that. But when I just look at the beauty and the simplicity of the financial cooperative model, I got hooked. And so I've always wanted to do work that matters. And I think that when you, serve other people, that work matters. And what credit unions do, matter. That it matters to members. It matters to lives.
Michael Pupil: Absolutely, well said. Right at the end of that biography, I talked about how you're the co founder. I think today you sit as the chair of the board for the CU DeNovo collective. You know, there's been quite a bit of challenge in informing and growing new credit unions, I think on that website, and we'll post the link in the comments here.
Michael Pupil: But CU DeNovo on the website, it was a wild statistic that is just jaw dropping. And it starts with [00:04:00] since 2011, there's 2, 582 CUs that have been lost, 145 for mergers and acquisitions, and in that span, only four newly created CU.
Denise Wymore: I have the new data. Fresh off the press. Yeah.
Michael Pupil: So, so what's different, what's, what's different from those numbers or did I get that correct?
Denise Wymore: No, that, that's correct. That's on the CUNM collective. So real quick, this is how I got obsessed. This is how I got completely obsessed with starting and saving new credit unions. Cause up until a couple of years ago, I was merely going about my way, helping credit unions understand brand. You know, I was kind of known for brand and called the brand guru and a lot of years in marketing. So that was kind of my thing.
Denise Wymore: Until I saw Randy Carnes, the now retired CEO of C U N S speak at an underground event, uh, with Sue Mitchell's group, and he said, in any industry where there are no new entrants, in our case we've got just a couple, and there's massive consolidation of the existing, marks the beginning of the end of that [00:05:00] industry, and that's what's happening to credit unions today.
Denise Wymore: And I was actually interviewing him on stage, and I'll never forget, it was one of those moments where I've got this microphone and he's just said this, and my brain exploded. I wish it had been filmed because my brain exploded. I was like, what do you mean? And my, my little thought bubble was, what do you mean we're not starting new credit unions? What do you mean we're disappearing?
Denise Wymore: And so I became obsessed with it. And at our peak in 1969, there were over 23, 000 credit unions in 1969, 23, 000. Okay. And think about when we started was, you know, the first one was in 1909, but about the thirties, 1934 was the big boom. With the federal credit union act, which the 90th anniversary, by the way, is this year, but 23 000, today, Q1 hot off the press.
Denise Wymore: We now have 4572 federally chartered credit unions left. That's it. Of those, 84% of them are under 500 million in assets. 84%, right? And so how can you not love small [00:06:00] credit unions and how can you not want to fight for the future of credit unions? So I talked to folks that had tried and failed to start a new credit union, tried and just gave up, tried and bailed.
Denise Wymore: And then I interviewed the very few that made it. So I, I went in with this, like, what's the problem? You know, and the NCUA charter processes is very cumbersome. But understand, it is not the NCUA's job to charter credit unions. It's their job to issue charters. There are 17 steps. Many of the steps were kind of antiquated and unnecessary, and I have been working closely with NCUA to make it easier.
Denise Wymore: But through the last couple years and working with, again, groups that are going through it, we actually discovered that many of the applications are just too aggressive. They're trying to do too much. And that this crawl, walk, run approach, or as we're calling it, Operation Cigar Box, which is kind of mirrors after the original simplicity of a credit union.
Denise Wymore: That model is what we need today. That [00:07:00] model works. That model doesn't need as much capital, and so we're working with several groups to create kind of a template approach to make, to giving, a lot of these underserved groups that are now trying to start their own credit union a path that is easy and that we can actually fund at the end.
Denise Wymore: So that's what I've been working with, volunteering with a bunch of other people, not just me. Lots of people have been volunteering their time. To honor Randy Carnes and his statement that day, he felt like we needed a growth engine for the future of credit unions. And that's our mission. Is to fight for the future of credit unions, even though we won't be around to see it.
Michael Pupil: That's the first time that you've mentioned that comment to me. And yeah, it definitely took me back a little bit more. Now you start to think not just with credit unions, but as an industry as a whole, when you have a reduction or no new entrants coming into it, what happens?
Michael Pupil: And, I think that ties very, very well to the marketing background that you have, in terms of trying to communicate and keep alive and adapt and change with times, to be able to identify what [00:08:00] the member truly wants and what that experience needs to be. And then obviously offer those services and have those conversations with different credit unions.
Michael Pupil: And, you know, specifically look at the demographic of the members. If, um, you know, you mentioned the crawl, walk, run approach to credit union development. Maybe, do you want to share a little bit about what some of the specific examples are like, I think the charter now requires, what is it? A hundred thousand, uh, in order to form a new CU?
Michael Pupil: And so that is incredibly small. So the idea is that it should be easier to start, but it isn't, and there's complexities like you were saying.
Denise Wymore: Well, and you brought up the biggest hurdle to actually opening their doors was the capital, right? And the business plan that a lot of folks were trying to raise money for, was to be a full service financial institution in three years. And many people think, oh well, you can't compete unless you're full service financial. But let's look at the last eight credit unions that received a charter. And this is over three years time. Seven of eight of those were black lead, [00:09:00] the other was Native American.
Denise Wymore: So they're all minority based credit unions and if you read, I actually wrote a story about this, it's on see you connection of Sarah Cook's site. But I went back and researched all these credit unions and looked at the press releases when they got the charter. And almost all of them are telling the same story.
Denise Wymore: And Mike, it's the origin story of credit unions in America. They're not being served by traditional banking or credit unions, some of them cited, or their local credit union. And they have no choice but to use payday lending. And so these groups want to pool their resources so that they can lift one another up and they can actually get, you know, wealth eventually in America.
Denise Wymore: So if you think about this, what services do they need? They need a signature loan, right? With a good scoring system, because the current scoring system that we rely on is leaving them out. They need a basic checking account, right? They need to be a consumer. And some of these folks are going to be on check systems, which, you know, most credit unions are like [00:10:00] throwing you out.
Denise Wymore: You can't, you can't come in here. And then they, they need reliable transportation to a job, which is the form of a used car. New cars are nuts, right? A good used car loan. So if you think about it, like savings, basic checking, small dollar loan, signature loan, and a used car. That's a cigar box model.
Denise Wymore: And if you think about the credit unions, weren't even allowed to offer check in until the 1970s. Those are the products and services that credit unions offered for like the first 70, 80 years, that was the credit union.
Denise Wymore: So with that model, and with some in kind donations, of mentoring and you know, things like that, we can get a charter for 100, 000 in capital, which like you said, is not that much money. Some of these, uh, charters stalled because they need 5 million in capital. And they would spend years and years trying to raise 5 million because their business plan was too aggressive.
Denise Wymore: And so this model will serve so many of the groups that want to start a new credit union today. But again, it's not the [00:11:00] N2A's job. to charter credit unions, and it's our job as a movement to help these people through the process. A lot of people don't remember, but the state league system was created in the 19 thirties with one job and one job only. To start new credit unions.
Denise Wymore: And you fast forward to today and very, if you google how to start a new credit union, you're going to get the N. C. U. A., and a couple companies I've never heard of, and that's pretty much it for search. So it doesn't make sense for the leagues. I've been working well with the leagues. There's not enough demand yet, for them all to, you know, have a specialist that can help start new credit unions.
Denise Wymore: We want to be that central space. And so we've been working with the leagues to say, hey, when you get a request, don't send them over to the NCOA, which is what's happening right now. Send them to us. Because we're accumulating resources and everything from technology to, you know, in kind donations, to mentorship, to all, you name it. Policies, procedures, acts, free access. So that we can help DeNovo's get their charter.
Michael Pupil: [00:12:00] And it makes a lot of sense because like you said before, the NCUA is not there to create new credit unions. They're there to provide the charter. And so there's a gap that is there in terms of pooling the resources together in order to get the best shot at a launch of success. And if there is a community based, you know, kind of demographic that is coming through, and this is where I want to pivot to, you know, kind of serving the underserved and financial inclusion overall, where, um, you know, the last eight credit unions that were, that were built, sounds like there are some ties to cultural, kind of needs on the financial side and there are plenty other.
Michael Pupil: In fact, one of the earlier podcasts that we had, Maria Martinez from border federal credit union, uh, does a lot of work in her area, you know, South of Texas, near the border, where there is the underserved that needs to be helped. There are other credit unions that have very similar demographics as well.
Michael Pupil: Is that where you're, you're pointing specifically towards, or, talk to me a little bit about what you see from [00:13:00] the cultural perspective or serving the underserved.
Denise Wymore: Well, and we talk about that a lot, right? Serving the underserved. And, There's a, I'm originally from Portland, Oregon. I live in New Mexico now, but I'm originally from Portland. And one of my favorite credit unions that I actually worked at for a short time is Point West Credit Union. And they, not a huge credit union, but they identified that in Portland, Oregon, there, there was a large immigrant population, Hispanic, primarily Hispanic, that were not being served.
Denise Wymore: And part of the problem was having a tax ID number, right? And so in 2008, that credit union in 2008, before it became this real popular thing, uh, they, they said, you know what, nobody else is loaning to these folks, we're going to loan to them. And if you go to their website, they actually published an impact report and they will make home loans, auto loans.
Denise Wymore: You name it. And they're helping this underserved population from a marketing perspective. When they redid their website, it was all around this theme of you [00:14:00] are a citizen of Point West Credit Union. I get goose bumps when I think about that, you know, because we talked about you're not a citizen of the United States.
Denise Wymore: Well, you're a citizen of Point West Credit Union, right? And so, what they did by launching that and taking a chance on these folks, and this is what we know about very small credit unions in the real power of common bond, when you are borrowing from your friends, family, coworkers, neighbors, and you know it, right?
Denise Wymore: You are borrowing and you're pooling your resources. There's what I call the shame of repayment. And I mean that in a good way, but they don't, they don't have losses and they also don't need to market because those members are marketing for them. Yep. They're going into that community and they're saying, hey, come over here.
Denise Wymore: You're a citizen of Point West. They're going to help you. I love Maria, in, um, Many people know Winona Nava, now retired CEO of Guadalupe right here in my backyard in Santa Fe, New Mexico, but it's also been fun living here is to watch Guadalupe and what they've been able to [00:15:00] do with, you know, obviously Santa Fe, very Hispanic population.
Denise Wymore: They're a hundred, pretty sure they're a hundred percent bilingual. They have always, they're not the biggest credit union in Santa Fe. In fact, I think they're second to the smallest credit union, but who cares? Bigger is not better. Right. And they're serving their market, they actually have a higher loan yield.
Denise Wymore: I look at their call reports and one of my favorite things to do is kind of compare them to other credit unions in their market and just see that, are they the biggest? No. Are they making more money? Yes. Because they're loaning deeper. They're taking a chance. Is there delinquency hire? Yes. Is it out of control? No.
Denise Wymore: I mean, it's like, all those numbers are there. And I just feel like with Maria and Winona and, Amy with, you know, these three credit unions, interesting, they're all run by women. Never thought of that. Uh, that they're really, yeah, they're doing what credit unions are meant to do. And that is truly serving underserved.
Denise Wymore: I love those stories, and they're very [00:16:00] successful, and it's not because they're over a billion in assets.
Michael Pupil: I do too, because it speaks directly to the purpose or the core mission of a credit union, which is the financial health and inclusion of a community, right. And so you're now, New Mexico resident. I am still unfortunately north of the border back in Montreal where I had lived in the United States for a time and I will get back there legally, but I will, I will get back there.
Michael Pupil: And the banking system in Canada is wildly different than it is in the United States, despite the products being the same. All right, the checking account, the not alone, et cetera. The underwriting is different. The access to both banking and credit unions are very different.
Michael Pupil: In Quebec and the province of Quebec, we have one. It's Desjardins. And they are so large that many credit unions don't consider it a credit union. On the traditional banking side, we have six, seven banks across the entire country. And so it is, it is wildly different. Now, when I lived in the United States, shamefully, I moved to New York and the first account that I had was a [00:17:00] Citibank account.
Michael Pupil: And that Citibank account was, uh, talk about being a number, uh, my entrance into the United States required me to prepay everything that I needed to get, including cell phone, et cetera, because there was no scoring system, um, that you were talking about. And this was, you know, immigrating over from Canada.
Michael Pupil: Now, as I aged, what I realized was that banks were primarily marketing, based on the number of ATMs that were available for people. So that way, anywhere you went in the country, if you needed to pull out cash, you wouldn't have those transaction fees that drive everybody crazy when you go to the non branded ATM, right, to pull out money. What I started to learn and like you, you know, you fell into credit unions by accident. I did also where you fall in love with the idea of, you know, the financial inclusion and providing services financially because what is more important out there aside from family and health, etc. But it is the financial wellness of individuals that provide for a lot of those other things.
Michael Pupil: And [00:18:00] I can't understand why everybody does isn't part of the credit union as their primary financial institution. That to me is, is, is mind blowing. But you mentioned a very interesting number. You said at the beginning of this journey or at the peak, there were 23, 000 credit unions. Today, just around the 4, 500. I'm going to switch gears and talking about financial inclusion and you know, what makes a credit union special. That number 23, 000 also sits with the number of payday lenders that are out there today. There are more than 23, 000 payday lenders out there. I see your head, you know, kind of shaking. How does that make you feel when I say that?
Denise Wymore: It makes me so sad because another thing I looked up what was payday lending in America in terms of the storefronts, right? And prior to the 1980s, they really weren't, I mean, you just didn't see them, right? There weren't that many. And it really started, the growth of payday lenders in America [00:19:00] started in the 1980s.
Denise Wymore: So think about the credit unions at 23, 000 was 1969. Payday lenders started to grow in 1980. And today there are, like you said, as many if not more than there are credit unions. More Mc more than McDonald's in America. That's how many. So many of them also concentrate around military bases.
Denise Wymore: Which is really not cool. But I've heard that payday lenders are, so think about their access, they're everywhere. I've heard that they are very friendly. It is easy to get in there. It's easy to get the loan. They will work with their customers, and people are in there, obviously because they're in trouble. And so I've heard stories of they will fill out money orders and help people pay their bills. And they're all too happy to renew that loan, right?
Denise Wymore: But they don't realize is it's, you know, 400% interest rate. And then they get in this cycle that they cannot get out of. And those cycles too have also then resulted in people having to file bankruptcy. The worst case, people [00:20:00] losing their homes. I mean, it's, it's, it's a horrible business. What's really sad, if you Google this, you'll see there's a map of America that shows the very few states where payday lending is illegal. Like it's banned. I want to say there's only 16 states where it's not, where it's not allowed.
Denise Wymore: But then you'll also see in that map that maximum interest rate that they can charge. Right next door here in Texas, I think it's 1 of the highest since over 600%.
Michael Pupil: Yeah, it's 650 some odd percent. I, it's not capped.
Denise Wymore: No.
Michael Pupil: that's the average.
Denise Wymore: Yeah, that's the average. Now, in New Mexico, it was 120%, I think, and they, for many years, they were trying to get the cap, uh, legally removed, lower the cap and they were successful, let's say last year. So it went down to 36-38% something like that.
Denise Wymore: Anyway, which sounds like a lot but compared to 120, it's really not. And for an unsecured loan, you know, it's not predatory by any means at that rate. So what [00:21:00] happened was a lot of payday lenders in New Mexico pulled out.
Denise Wymore: I mean, you can go right next door to Texas, right? And charge a lot more. So that sounds like a victory, right? I mean, when I was at a session where they were celebrating the victory of finally getting this law changed, lowering the cap, I have friends that are involved in, you know, the time that it was lowered and everybody was, yay, patting themselves on the back, and licenses were being surrendered and they're leaving the state.
Denise Wymore: Not necessarily a victory, however, because, many of the credit unions here are still not doing small dollar loans and they need them. The need didn't leave the state, right? The providers left the state. And so giving them access to those loans is really, really important. And, you know, some of the arguments, I worked for QCash financial, QSO for a little over a year, loved working with QCash. And they're, they're a cute, Well, they're owned by a lawyer corp now.
Denise Wymore: They started as a QSO owned by Washington State Employees Credit Union. But anyway, what I loved about working [00:22:00] with QCash is they identified that one of the problems with small dollar loan, is the tool that we were using, right? Which is FICO, the F word as I like to call it, right? The FICO score. And FICO is an old antiquated scoring system.
Denise Wymore: They use like 30 data points. It was written in the 50s. It was written in the 50s by wealthy white men. And so when it comes and it makes no sense at all, right? We know it is inherently biased. And so by using that FICO score, the people who really need the loans are shut out of them, right? And so QCash identified that and said, you know what?
Denise Wymore: Let's not use FICO. So how are you going to score someone? Oh, I don't know, let's go back to the three C's, character, capacity, collateral. And character being a really big part of it. Let's look at how long they've been a member. Let's look at the, let's use our direct deposit as proxy for their income.
Denise Wymore: Let's look at their, their activity as a member. Have they had loans with us before? You know, are they a member in good standing? It was really basic, basic [00:23:00] information, and they created an app where people can self serve, go out there, not have FICO work against them, look at value, their membership, and they can get a small dollar loan deposited in their account immediately.
Denise Wymore: So they crack the code on it, right? And a lot of credit unions are saying, oh, it costs us as much to process a signature loan as it does an auto loan. Well, first of all, that's your problem, right? If it really does. And so that's why we're not doing small dollar loans anymore. So my point being, we stopped doing our job.
Denise Wymore: I mean, if you look at the rise of payday lenders and when it happened, we stopped doing our job, man. So, I, yeah.
Michael Pupil: This is probably one of the topics, actually every topic we end up talking about, we get very passionate about, but it is over, I think it's about a 12 billion industry right now for payday loans. And these are the micro loans that go through and you're right. Upwards of 650% for those States that haven't capped it.
Michael Pupil: Like I think Nebraska capped it also at like 36%. There's a few States that tried to put a [00:24:00] lid onto it, but there are plenty that have no holds barred. And it's, it's just wild and you're right. And what's really funny is that, you know, prior to COVID, before the economy shifted, in the last bubble pop, let's call it 2007 2008, I was living in New York at the time.
Michael Pupil: And since that period of time, the market has done nothing but go up. The advancements in technology have also proliferated to a wild extent. There is 35 of everything that you could possibly look at, and it makes the world very, very noisy. But the vast majority of technology that was built, was all built with one focus, and that was to focus on the onboarding side of everything.
Michael Pupil: Credit unions included to open up an account, to get a cell phone, to buy something, just look at Amazon, how easy it is to buy things. Add to cart, you push a button and I'm done. Make it insanely simple. And for some reason, there's been a little bit of a slower adoption to [00:25:00] technology. There's always a pushback.
Michael Pupil: And I tell this story often when I'm on stage and I talk. One of my first, kind of kickoffs where I was in sales with credit unions was surrounding the electronic signature technology. And this was long before it was popular. This was like 2016, 2017. And I got yelled at by credit unions. I was told, how dare you?
Michael Pupil: We value the relationship and the face to face meetings that we have with our members. We want them to come in and
Denise Wymore: Yes.
Denise Wymore: You're pushing him out of our branch. And then COVID.
Denise Wymore: Right.
Michael Pupil: Now that that's completely out the window and COVID was that big adrenaline shock because nobody could go back face to face, but your comment of we stopped doing our job, is powerful. And that's where I'm, I'm kind of leading to this is that, if the credit union is supposed to be the organization that delivers financial wellness for a community based, you know, demographic, then you need to listen to what the community is going with. And the numbers don't [00:26:00] lie 23, 000 or more than 23, 000 payday lenders. These are all micro loans. These are all immediate cash. Now you don't need to charge 656%.
Michael Pupil: And that is like you, like we both agree predatory in nature where you create such a dependency because your next paycheck has to go to them because you're not going to dig your way out of a hole. It just, it doesn't exist.
Michael Pupil: And so I, I've always been curious as to why the pushback from a marketing standpoint, the idea behind payday lender of being so friendly, so easy, so great to work with. It makes a lot of sense. Why don't we, why don't credit unions look at it this way? What, what's your, what's your thought process?
Michael Pupil: What's the resistance? Why, why the resistance to change?
Denise Wymore: Well, I do think that we got, well, one thing, just getting back to the, the, the FICO and the tool. Yeah. I was a, I was a loan officer, pre FICO score. When we had to look at, you know, character capacity collateral.
Denise Wymore: And when I sat in [00:27:00] boardrooms where these, companies were coming in and selling this scoring system, right? And the way that they sold it made sense. The way that they sold it is they said it doesn't make sense for all your members to get the same rate because that's what they got pre FICO. If it was a signature loan, it was tied by the type of loan.
Denise Wymore: It was signature. It was this. It was new auto. It was that used auto. So not all your members, you know, some are high risk. Some are lower risk. It was meant to price the risk price it, okay? And so that's why everybody adopted it. But then I saw something happen. So, I mean, I was all like, okay, this makes sense, you know, because it does, it just made sense.
Denise Wymore: But then I saw something happen. I don't know who the idiot was. It decided that credit scores had to be A, B, C, D, that they followed grading in school. I don't know who did that, but that was a bad idea. Because then I saw these risk averse college educated board members that are like, oh, we want a paper.
Denise Wymore: We want AP, we don't want the risk, even [00:28:00] though it was priced, you know, that was the point it was priced. And so I, I saw this huge swing to addiction to a paper. And when you get addicted to a paper, what happened, I was watching it like, this makes absolutely no sense. You get addicted to a paper where you're, you're loaning at the lowest yield loan, but it's also the lowest risk loan, right?
Denise Wymore: And so what happened when interest rates shot up. First of all, they stayed low forever and ever and ever. So nobody really felt the pain. Everything was happy. And then boom, that interest rate environment went crazy. And that's what you just saw happen in the, with the credit unions with the economy was they couldn't reprice that a paper fast enough to make ends meet.
Denise Wymore: You know, that's kind of what we're still dealing with right now. And I look back on that and just shake my head. Like you stopped alone into people who really needed loans. So that you loan to who your board was most comfortable for, and you know, I'm being really dramatic here, but it's true.
Denise Wymore: And, yeah, and it's totally [00:29:00] true. And so, we're getting back to serving the underserved, my whole point being serving the underserved. And there's a group right now that is, going to, going to get a charter. And it is the African Diaspora Council Federal Credit Union. I had to look up the word diaspora.
Denise Wymore: Because I didn't know what it meant, and it's like a cultural gathering center. So this group, so African immigrants that have come, you know, come over that are getting jobs as, you know, hairdressers and janitors and trying to live the American dream and work their way up, and they are stuck in payday lending, right?
Denise Wymore: So this, because they're not being served. So this credit union is, is getting their charter and they're going to offer those basic services to this community that we talked about. But they, the very first loan that they're going to offer is a payday rescue. And they're going to offer small dollar loans to get folks out of that payday lending cycle.
Denise Wymore: And the reason I went full circle with that story is getting back to the fact that we are using the wrong tool. If you're using the FICO score, [00:30:00] you are using an antiquated model. And imagine if we just said just for fun, you can't look at the score anymore. You've got to go old school. You can look at the report, but you can't see the grade, you can't see the number, and you've actually got to talk to the member again.
Denise Wymore: I would love to see that world. I would love it's like weaning us off our social media, right? What if we weaned the credit union movement off of a score completely? No more score. You don't get to see a letter grade. You don't get to see a number at all. You get the trade lines because that's relevant.
Denise Wymore: You get to talk to the member and you have to hear their story. And now you make a loan to them and you decide what the rate is. Oh, I just came up with that. I think that's actually pretty good.
Michael Pupil: I think you have everybody's mind blown as to if, if that were to happen, right? The power goes out. Everybody's got to go back to paper. You got to do it manual. Everybody's got to make the decision. What up? I love it. Look, to your point, there are ways that you can automate what it is that you're talking about, right?
Michael Pupil: Like the deposits to [00:31:00] the account, there are plenty of technologies that can read both the debits and credits of an account in order to make a financial prediction as to what is the health of that member, right? More deposits or more, more exits. You can get some seasonality if there's jobs that have that, so you can, you can monitor the fluctuations. There's a lot that you can do there, but to your point, one of the, one of the barriers to entry is that if, if everybody is addicted to a paper on the FICO score, you are limiting yourself to a very, very small subset of the financial community.
Michael Pupil: And maybe that is why we've lost. What is it? Close to 200, you know, credit unions per year every year for the last 13 years. And the reason why there are now more than 23, 000 payday lenders that are out there because they make it so easy, so friendly to fall into the trap. There's a reason why potato chips taste so good.
Michael Pupil: You know, it's not because they're healthy. It's because they make you want to eat the whole bag and that is not good for you.
Denise Wymore: It's not good, right? [00:32:00] Yeah.
Michael Pupil: The colorful lettering and the promotional material that and that's exactly what they do. Yeah.
Denise Wymore: And payday lending, I mean, we should have, every state should make it illegal, but I know, like what happened here in New Mexico, if you took that away, it would go back to how it was, and it would be, it would be literally loan sharks, back alley, breaking your legs, because the need is still there.
Denise Wymore: And see, that's, that's the shame, where I feel we stopped doing our job. The need is there. The need has always been there. But for whatever reason, and I know there's lots, but for, you know, we, we really stopped doing our job and, you know, there's products like Qcash and there are other ways to look at, at credit than the FICO score.
Michael Pupil: A thousand percent. Shout out to Q cash. We'll put a link into the bio. We also want to put a link to the newest credit union that's going out to recover from these payday loans that are coming in. I also didn't know what diaspora meant until you told me what it meant. So just clarification there. I did not know what that meant either.
Michael Pupil: And I would imagine that many listening to this, I feel like that's a [00:33:00] great Sharia question. Well, you know, in an earlier conversation, we talked about, you know, that that member experiences is the key. You mentioned to me something on a prior conversation where we've become an errand. And that has stuck with me ever since you mentioned it.
Michael Pupil: Expand on that comment that you made to me. Because I think it's an important one because it ties into your comment of we stopped doing our job.
Denise Wymore: Yeah, you know, it's funny. I'm getting ready on Thursday, two days. I'll be at, in Madison at the university of Wisconsin and teaching at CUNY management school or credit management school. It's called now. And I teach strategic marketing. And I think it's like my 10th year teaching it. I absolutely love it.
Denise Wymore: And I get a half day with the senior students. And it's funny because I talk about strategic marketing. And a big part about strategic marketing is reputation and experience. And I was teaching once and that just kind of I blurted it out. I said, you know, all we are is an errand. Members don't get to go to the credit union They have to Yeah.
Denise Wymore: And there [00:34:00] was this this moment of clarity where we all think, you know, we're so great our service our members love us and all this kind of stuff. And it's like no no, we're an errand right?
Denise Wymore: We're right up there with going to the grocery store, gas station, post office, getting the car cleaned, we're on that list. And they're not, to your point with the electronic signature, they're not excited about taking their lunch hour to go down there, right? And so credit unions are not innovators at our very, very best.
Denise Wymore: We are fast followers. And, and it's frustrating to me that members of that credit unions continually look for that pioneer. Rather than being that early adopter, rather than being that pioneer. I think Covid was probably at some level one of the best things that happened to us because it did just take it.
Denise Wymore: It took it took the branch away. It said, you've been dragging your feet on this. This has been on your to do list for three years. You're bored, still thinking about this. You know, it's a good idea. You're not for whatever reason. You're kicking that can down the road. We just took your branch way. What are you going to do now?
Denise Wymore: And so I think that has been a real, good [00:35:00] thing for credit unions. With technology too, it is very, very hard to compete. The cost of technology is ridiculous. And one of the problems are the core processing systems, right? I mean, the core processors in credit unions. I had no idea until I went to work for QCash because we integrated with the core.
Denise Wymore: Just how many core processors there were? What? Yeah, so I'd never heard of there. There's, speaking of F words, there's two F words in the core processor, uh, arena. Two that are literally holding credit unions hostage with their core processor. That's why we do lose a lot of small credit unions because they can't afford the high cost of technology.
Denise Wymore: And I'm segwaying into another shameless plug for the CU DeNovo collective. And one of the things we identified, we started out with our focus on, on starting new credit unions, right? And that's still really my love. John Hernandez joined our volunteer group, he's the fractional CFO of four [00:36:00] small credit unions
Denise Wymore: I'm sorry, CEO, fractional CEO of four small credit unions. John Hernandez joined our collective with the caveat that we also had to save small credit unions from extinction. You brought up the math at the top of the hour, right? If we're losing 140 a year and we're only gaining three. What does that look like in 10, 20 years, right?
Denise Wymore: And he's absolutely right. So then we dug in on, you know, why are we losing so many credit unions? And there's 99 problems, right? With, with small credit unions. But one, two of the big ones, lack of succession plan, but then their technology and their high cost of technology.
Denise Wymore: So how do we fix that? And we have a group of our volunteers that kind of did an offshoot and they were looking at creating what was the league services core in the 80s and 90s. And the leagues, you know, they started new credit unions, that was her job through the 30s. When I worked at the Oregon Credit Union League under Sarah Bang, she managed the league services core and this is what our league services court looked like. We offered all these back office [00:37:00] services for our member credit unions in Oregon. Card processing, item processing, after hours call center, loan underwriting, collection.
Denise Wymore: You name it. We did that. Why? So that these little credit unions could compete. So we offered that. Then, as credit unions started to grow, the big ones started buying outside of the system. I mean, not all this stuff was the best, right? But it was affordable and it was a cooperative type of a thing.
Michael Pupil: Yeah.
Denise Wymore: So eventually the big ones started buying outside.
Denise Wymore: These core services were no longer profitable. They were either sold or just shuttered off. So that doesn't really exist today. But we had this aha moment where we said, but that is the solution to helping small credit unions today. What if we did that on a national scale with like a revolution QSO that is a shared services program.
Denise Wymore: So huge undertaking, right? And we had a group that was leading it and the gentleman that was leading it, um, had to step off. He got a full time job that was going to take all his time. Anyway, so we kind of, we had this whole research and kind of model [00:38:00] together. And then back to underground and Sue Mitchell, all roads lead to the underground and stuff she does there. Her group took this nugget of an idea and they have been working tirelessly, and I can speak about this now because a press release is actually going out today about it. And they're calling it CUS, the Credit Union Shared Services Model. And she has found the answer. People that are not only going to, I think, donate time and services, but found people to finance it, and she is creating a shared services model that focus on, focuses on a core that is going to be affordable for both boutique credit unions, as she likes to call them, which I think is lovely, and De Novo's, and really a lot, you know, the 84 percent of credit unions under 500 million can benefit from this, so her group has resurrected that model that works so well that disappeared. When, what I just love about that story and that aha is everything we're doing at the CU DeNovo collective [00:39:00] is going back to where we started. It's all there. And if you look at the eight cooperative principles, number six, my all time favorite cooperation among cooperatives is essential for our survival.
Denise Wymore: And that's all we're doing at the CU DeNovo collective is practicing cooperative principle number six. Cooperation with Cooperatives.
Michael Pupil: And that DNA of cooperation within a credit union still exists today. I can't tell you the number of times that when we're in a conversation, even for Lexop, what they'll say is what are their credit unions are using? And we want to speak, right? It just do not pass, go, do not collect 200.
Michael Pupil: You, we need to talk to somebody and we're happy to, to share, and we're happy to share, you know, the expertise and stuff like that. That DNA is still there. It's there. has never left.
Denise Wymore: Getting back to pay the pay day lending. You guys found me through the CU de novo collective website, which is really cool. Now we say we found each other. So, I love that site and true you're, you're getting into credit unions.
Denise Wymore: You have a very unique offering. We are no, nothing [00:40:00] scientific, but we are looking forward to kind of screening, I'm interviewing folks that that offer of affordable services for small credit unions. And that are willing to, you know, get in kind services to De Novo's and we're kind of curating a list of people on our website.
Denise Wymore: So anyway, when you guys you know, approach me, Hey, we want to learn more about CU De Novo collective and I wanted to learn more about you. You educated me on something I had never thought of. And so Lexop, as I understand it, and I saw the app, your collections, right? The thing that credit unions hate to do, right?
Denise Wymore: Loans go bad. Board members, this is the other thing, board members think if your delinquency rate gets above 1%, you're in trouble. I've always hated that. Because I always looked at it the other way. I'm a glass half full person. 99 percent of your members are paying on time. 99 percent that's a miracle in today's economy, right?
Denise Wymore: But if it gets over 1%, we're like, so, you know, you, you focused on this area, which I think is really smart. There are very few CUSOs. I think if any that really focus [00:41:00] on collections. But what you taught us was the mentality of the payday loan and the conversations. And again, I think because they are so hand holding, they're in constant communication.
Denise Wymore: When people are due, right? And yet the credit union model, well, what have we always done, Mike? What do we always wait for?
Michael Pupil: Everybody else to do it first.
Michael Pupil: So, this will probably exclude me off of any Christmas card list, uh, for, for payday lenders that are out there, but it is a false sense of friendship. The reason why they act so nice is to make the experience as pleasant as possible because with the interest rates that we were discussing before, you don't feel like you're getting exploited even though you are.
Michael Pupil: And so in our conversations, we were talking about good profit, which are members that are happy to pay the interest and then bad profit where members feel exploited. It is the same thing. They don't feel like they've been exploited, which is why it is [00:42:00] a 12 billion industry and why there are 23, 000.
Michael Pupil: Imagine. Now, if we turned it around, right, where you're, you're talking about the percentages. 1 percent of, you know, uh, of charge offs or delinquency is 99 percent of people working. I saw speaker not long ago talk about this with like, you know, like a milk carton or, you know, like fat free cream or whatever it was.
Michael Pupil: And it was, you know, 10 percent of one. But if you flipped it around to say, well, 90 percent of the other. You know, all of a sudden the messaging, you know, flips, flips entirely, right?
Denise Wymore: Right.
Michael Pupil: It changes the narrative altogether. And so that's where I think we have a lot of passion when it comes to the collections side of things is that it's not really about collections.
Michael Pupil: It's about communication first and foremost. And so we help a lot of credit unions even change the language that they use when they reach out to members when they are delinquent. And that is really important. And so that, that's not a technology thing. That's a human thing.
Denise Wymore: Yeah, and the payday lenders, like you said, credit unions [00:43:00] typically wait 30 days, you know, or they wait too long to communicate with, like if someone's delinquent on a small dollar loan. And they're used to, if they, cause that small dollar loan is that payday loan, right? It's bridging a gap. It's, it's that 40 percent of Americans that can't afford an emergency expense.
Denise Wymore: It's an emergency. I need, you know, if those small dollar loans aren't, you know, buy new golf clubs. They're usually emergency loans. And so the payday lenders are constantly communicating with them, right? To get that payment in or that reminding them, whereas, you've had to teach credit unions now that it's not mean to kind of mimic that activity, that it's actually more humane and then that's what they're used to.
Denise Wymore: And your likelihood of getting them in a situation where they are able to repay, and I loved your app too, because it said, it was so, it was so acknowledging of many people who today who are delinquent, right? Rather than this is your payment, [00:44:00] $297. We need it today, or it gave him those options.
Denise Wymore: Or can you pay this? Or do we need or do we need to just analyze further? Right. And I loved and kind of like Q cash, what people liked about Q cash was the self serving anonymity of it. emergency loans. Many are embarrassed to go into a branch and say, I need 300 bucks for a, you know, a repair, a new tire for my car.
Denise Wymore: Oh my gosh, that, that costs 300. Then I need 300 for a new tire. They're too embarrassed. If they can self serve and get that, they're happy to. Same thing I saw with your app, it's really embarrassing. I heard this, phrase the other day that like, inflation is, it's debilitating and it's humiliating.
Denise Wymore: And because so many people who live paycheck to paycheck are now really hit hard, right? And it, it is embarrassing. Your app looked very humane. In that it was having a conversation, but it was also somewhat anonymous.
Michael Pupil: Thank you. That's a, that's a [00:45:00] very, very kind plug for Lexop and uh, greatly appreciated. I think, the more options people have that they can self serve themselves, the more empowered they feel, the more likely they are to engage.
Michael Pupil: And the proof is out there, not just in the credit union space, but in everything that we do. The more that you can self serve and be able to confidently make a decision for yourself and have multiple options in front of you, the more engagement you're going to get.
Michael Pupil: And that's really at the crux of what it is that we're talking about. Now, to your point, the holy grail of anything that we're talking about is communication. To be able to do this. What's happening? And you're right. Sometimes people don't want to say what's, what's wrong. You're embarrassed. We don't know each other that well.
Michael Pupil: I don't want to tell you my personal, you know, financial business because it's very, very personal. Now, if you do get those smoke signals, like somebody only able to pay a little bit. Where they need an arrangement or they need to spread it out over a period of time. [00:46:00] Where they need the payday loan, because there's an emergency that takes place.
Michael Pupil: What they are telling you is that there's a cash crunch scenario that's in here. What I love about the new credit union that's coming in, is that one of the products that they're going to have is relief from that cycle. And that is incredibly important because what was once upon a time a cash crunch, you know scenario, perhaps with a couple of paychecks, with a more reasonable rate, you could have flattened out the problem. But because you hyper inflated the repayment structure, you are now stuck in that behind the debt. It's kind of like the debt that we all, for some reason, just completely turn a blind eye to, which is the country debt.
Michael Pupil: Both the United States and Canada have a massive national debt. That's out there that most of our payment.
Denise Wymore: Oh, you guys do too? of it. Yeah.
Michael Pupil: We're, we're not digging ourselves out of that. That it's, it's, it's a wild problem. And we all just kind of close our eyes and we figure, yeah, we'll, we'll deal with it tomorrow.
Michael Pupil: But for the [00:47:00] individual, it doesn't have the same lifespan as a country. And, you know, some of these individuals, it's the difference between having groceries on their table or diapers for their children or new clothes for the school, new shoes, you know, things like, and that you're really pulling at the heartstrings.
Michael Pupil: And that's where I think we both get very passionate about the nature of those type of loans. And that if we got back to basics. The way that, you know, credit unions had started, was specifically for that mission and on both sides of the coin. The origination side, making it very easy, very friendly and communicate, on a device that we are all addicted to anyway.
Michael Pupil: And the same on the collection side. Nobody wants to go back to the loan sharks and the brass knuckles on the baseball bats. That is not a good business model for anybody, regardless of the fun movies that we've all seen. It needs to be empathetic. There needs to be, you know, outreach that is there to help the member.
Michael Pupil: [00:48:00] That is where I think we align the most, Denise.
Michael Pupil: Listen, in terms of wrapping up, anything that you want to highlight in spotlight, I know we talked about CU DeNovo. We're going to include the site. There was an article that you did, uh, on CU Connection. Is it with, with Sarah? Uh, we're going to put that link too because that article is amazing.
Michael Pupil: Qcash, shout out to them. We're going to throw a link into there. I'm I've never spoken to them, but I've heard plenty about them from you. And I love it. Anything else that you want to highlight? Any events that you're going to?
Denise Wymore: And I think I'd love, Oh, I was thinking to Point West Credit Union. And yeah, Point West, because the, they're citizens of Point West, is such a great example. They have a good website. So few credit unions, in my opinion, have a really good website. So, [00:49:00] I was like, I like a good website of a small credit union.
Denise Wymore: That's what I love too. Bigger is times do I have to say it? Bigger better. Better is better.
Michael Pupil: I, uh, I don't necessarily disagree with that in lots of ways. So works out well for everybody. It totally fine. Well, Denise, thank you so much for joining us today. I, uh, look, we have lots of conversations that we're organizing over the next couple of weeks, months, and even into next year, we're already planning when we're getting together face to face at a, at a conference as well.
Michael Pupil: So, Denise, thank you very much. Uh, this has been fantastic. Thank you so much.
Denise Wymore: Thank you for having me.
Michael Pupil: Now to everybody else, uh, you know, good, uh, good night, good evening, good morning, whenever you're listening to this, you know, catch us next time on Lexop's Connect and Collect.
Michael Pupil: It'll be an exciting, uh, next session that we're lining up for everybody. And, thank you all for listening. See you guys next time.
Thank you for listening to the Connect and Collect podcast. Find show notes and other resources for [00:50:00] this episode at Lexop. com. And if you enjoyed the episode, make sure to subscribe, like, share, and comment.
