The Money20/20 Interviews: Mickey Goldwasser, VP of Marketing, Payrailz
Updated: Jan 10, 2020
CU Technologist: I understand you’ve formed a CUSO to deliver Payrailz services to the credit union space. Tell me about that.
Mickey Goldwasser: It’s called CU Railz and it’s the coming together of credit unions and Payrailz. There were six founding credit unions and we’ve since added three more. The founding members are Coastal Credit Union (Raleigh, NC), Farmers Insurance Federal Credit Union (Los Angeles, CA), Georgia’s Own Credit Union (Atlanta, GA), Meritrust Credit Union (Wichita, KS), Teachers Credit Union (South Bend, IN) and TwinStar Credit Union (Lacey, WA).
CUT: How did the CUSO come to be?
MG: The neatest thing that I like about the credit union market is how collaborative it is. There are two other CUSOs we’re working with. One is Constellation and the other is Members Development Company, or MDC. MDC is really known for research and putting groups together.
So Constellation put out an RFP from CU Engage to find a payments partner. We did an RFP, but it was really one of those things where they're like, wow, we really like what we see. Constellation ended up choosing us and the credit unions they were working with said, why don’t we invest in Payrailz?
rWell, the only way that credit unions can invest in fintechs is through a CUSO. That was how CU Railz got started.
CUT: My understanding of Constellation is that their platform is very open and any approved vendor can plug their products in. What does being an actual partner there get you?
MG: They’re a great group to work with. It's one of those things where we align so well and can really create a superior solution for credit unions. To be clear, Constellation is not an investor, but we are working on a partnership with them. MDC is not an investor, but they are what we call a referral partner.
So what that gets us is really good access to credit unions. I like to say that credit unions like to shape and not be shaped, and for far too long, they’ve been shaped. These little partnerships can make a big difference. They allow us to all work together to deliver on a shared vision.
CUT: Do you see CUSO-to-CUSO collaboration becoming more of a force in the industry?
MG: Yes, absolutely. You know back in the days when you were at Symitar and I was at Open Solutions, there weren't that many tech CUSOs out there. Open Solutions worked with some credit unions to form OTS.
Those credit unions got involved because they wanted to invest in technology and innovation and be able to chart their own course.
Now you have all sorts of fintech CUSOs forming. Credit unions have always been very willing to collaborate with each other, but now CUSOs are saying, hey, we should work together, too.
CUT: It seems like maybe 10 or 15 years ago, many times when credit unions tried to do something that was “credit union only,” it bombed. Now they’re being more thoughtful with their approach and it really seems to be working.
MG: Look at a group like NACUSO. They’ve been great at putting form and substance to this phenomenon. There’s a lot more thought going into the formation of CUSOs and a lot more focus on best practices. The CUSO system is maturing and that means chances for success are going way up.
CUT: Is it a challenge to keep a CUSO up to date on every bit of breaking, new technology? I mean, these CUSOs don’t have Fiserv or Jack Henry money to spend on R&D.
MG: That's why you’ve got CUSOs like MDC out there. They’re kind of like an R&D CUSO. And the one thing that CUSOs have that the biggest fintech companies don’t have is the ability to stay nimble.
CUT: Let’s talk about credit union relevance. I see two primary challenges. First, credit unions are faced with these non-traditional competitors – companies that can do the same things, but do them arguably better. Then on top of that, you’ve got this whole shift in money with cryptocurrency and Bitcoin and stuff like that, so it's money being handled and being managed and happening in a whole different way than credit unions are currently equipped to handle. Faced with those challenges, what does the modern credit union need to do to stay relevant?
MG: I know it sounds crazy at first, but one thing credit unions have going for them is that they’re regulated. That means their members can trust them because they know credit unions are subject to regulatory oversight that some of these other companies aren’t. It seems like I’m always reading news about one fintech or another getting into some sort of trouble.
Credit unions can stay in the game because they bring that affinity of great member service, but also the trust factor. They have higher standards to meet and can really turn that into a competitive advantage. And they’ve also spent a lot of time and money building their brands.
But there is still a challenge. Every day there's a new fintech coming in to say, hey, we can move money faster, better. It's a shiny object type of thing.
CUT: You’re in the business of moving money and that seems to be how everyone wants to make money now – move it from here to there a take some tiny fractional amount for doing so. Once the money movement business settles down, what do you think will be the next big thing?
MG: I think it's kind of morphing. I hear everybody starting to talk about financial wellness. And so just like you go to a doctor, I think you're seeing people saying, I really can't do this on my own. I need some tools and advice from somebody I trust.
Credit unions are well-positioned for that because they have a wealth of data at their disposal. So whether it's analytics or AI or machine learning or whatever, you're going to see if you walk around the show floor, what the “so what” vendors are all trying to solve for is how do we help members manage their finances better?
I think you're going to see that curve coming more and more where people are turning for advice. People are coming in for check-ups. People looking for the prescription of hey, you really need to start to do this. That's kind of where I see it going. Money movement is part of that, but there's going to be more of a holistic look – holistically to look at the member and what their goals are. And I think we're going to see all these disparate technologies starting to work more closely together than they do today.
I think that's where you're going to see the financial wellness. For us on the payments side, it's like, have you made your payment, are you saving for this? And there are things that sit on the periphery, like what the data tells you compared to your peers. You're paying way too much money for your mobile bill compared to most people. Why not engage in some bill negotiation?
CUT: It goes back to what you were saying about the regulatory aspect being an advantage. I don’t think these fintechs really care about the financial well-being of consumers. They just want their fraction of a penny for moving $20.
MG: The model has evolved, right? Why do people go to credit unions? They went there because they wanted to feel part of something and they felt that credit unions offered better rates and service. That used to mean visiting a branch. Now that everything is going digital, the challenge is to create a digital experience that really is as meaningful and productive and useful as an in-person experience. In many ways credit unions are there, but in many ways, there’s still some work to be done.
The views and opinions expressed in this article are those of the interviewee,