Taking an ecosystem approach to offering financial capability services
By Elizabeth McCluskey, director of the Discovery Fund, TruStage Ventures
Elizabeth McCluskey
Last month was National Financial Capability Month. This concept represents an evolution from National Financial Literacy Month, with an important distinction. “Capability” ensures that Americans have not just an understanding of financial services, but access to unbiased and trustworthy financial services. The month and the intention aligns with credit unions’ mission of serving their communities with tools to support healthier financial lives. It’s also part of TruStage’s mission to make financial services more affordable and accessible through credit union partnerships. We believe that improving financial capability requires an ecosystem approach, involving the collaboration of fintechs, credit unions, and investors.
Fintechs are known for their technical expertise and knowledge, and have built numerous products to promote financial literacy, budgeting, saving, and investing. However, many of them initially offer these services directly to consumers, which can limit their ability to scale due to an increasingly crowded market. We see tremendous value in partnering with credit unions, who already have a strong reputation for building trust and serving their communities. Credit unions understand their members’ financial needs and seek relevant tools to support them. Partnering with credit unions allows fintechs to gain access to an established distribution channel, expanding the reach of their financial capability products and services.
Investors also play an important role, providing the capital needed to develop and scale these products and services. Corporate venture capital (CVC) firms like TruStage Ventures not only provide capital, but the opportunity to tap into an entire ecosystem. For example, TruStage has business relationships with approximately 95% of the ~5000 credit unions in the US, enabling numerous opportunities for fintechs to engage in thought leadership and partnership. Generally speaking, CVCs with deep industry networks can provide guidance to fintechs based on the needs of the market, facilitate strategic introductions, and help with distribution and sales.
Happy Money is a great example of this ecosystem approach at work. The company partners with credit unions to empower consumers to use money as a tool for their happiness. TruStage Ventures’ reputation and credibility helps open the door for Happy Money to get their platform and value proposition in front of credit unions. In forging new partnerships with credit unions, Happy Money enables more borrowers to achieve their goals and brings new members to the credit unions. TruStage’s Payment Guard Insurance is also embedded into the Happy Money loans, providing loan payment protection should borrowers face involuntary unemployment or disability. Again, this ecosystem approach enables a better outcome for all: peace of mind for borrowers, revenue opportunities for TruStage, a differentiated product for Happy Money, and risk protection for credit unions. This exemplifies Happy Money’s mission of making lending happier.
Another example of the power of the ecosystem approach to scaling financial capability is Zirtue. TruStage Ventures’ Discovery Fund was an early investor in the company, which is re-envisioning the way friends and family lend and borrow money. This initial infusion of both capital and connections enabled Zirtue to validate their business model within the credit union context and position them for scale. As potential turned into traction and success, the company graduated to the Ventures Fund and deepened its relationship with TruStage. Like Happy Money, they have embedded TruStage Payment Guard insurance into their platform. Zirtue recently launched a partnership with Michigan State University Federal Credit Union, who wanted to help their members avoid payday lenders for loans of up to $1000, which are typically too small for the credit union to directly underwrite.
These examples reinforce the importance of industry-wide collaboration. Investors, credit unions, and fintechs can work together to develop, fund, and distribute financial capability products and services. Taking an ecosystem approach can help more consumers receive the relevant tools they need to develop healthier money habits and take control of their financial lives. Greater accessibility to these tools can also lead to long-term stability and security for consumers. I challenge investors, credit unions, and fintechs to continue to explore opportunities within their networks to help consumers build brighter financial futures, and to make this an ongoing commitment, not just one that is thought of during National Financial Capability Month.
Elizabeth McCluskey is the director of TruStage Ventures’ Discovery Fund, which invests in underrepresented leaders building solutions for financial inclusion.
Wanda Rich has been the Editor-in-Chief of Global Banking & Finance Review since 2011, playing a pivotal role in shaping the publication’s content and direction. Under her leadership, the magazine has expanded its global reach and established itself as a trusted source of information and analysis across various financial sectors. She is known for conducting exclusive interviews with industry leaders and oversees the Global Banking & Finance Awards, which recognize innovation and leadership in finance. In addition to Global Banking & Finance Review, Wanda also serves as editor for numerous other platforms, including Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.