Buy now, pay later has become increasingly popular in recent years. As its use only continues to grow, credit unions will need to be ready to provide the option for this type of financing for members who need it. This is what FedFinancial Federal Credit Union has done with the help of its new partner, Equipifi. Sarah Snell Cooke, our publisher/co-founder, sat down to talk with FedFinancial COO JJ Johnson, FedFinancial Director of Lending Carlton Brooks and Equipifi Founder Bryce Deeney to discuss this new partnership and the importance of BNPL.
Watch the video or read the full transcript below!
Disclosure: The transcript below is an excerpt of the full interview. The transcript is automatically generated.
JJ Johnson: FedFinancial, we're actually located in Silver Spring, Maryland, our Field of Membership, our federal employees who work in the Baltimore, DC, Maryland and Virginia area. And our mission has always been to help members meet their financial needs. And that's why we're partnering with Equipifi. So do their buy now pay later program, which we're going to call SpendFlex. So you just give us an opportunity to let people flex their budgets in a personalized, meaningful way. And like you said, it's federal employees, we're just trying to reach a younger generation as they start to come into the workforce.
SSC: And so I'm going to throw this out to everybody. But Bryce, let's start with you. How do you see the current economy inflation, you know, wage stagnation affecting consumer spending and borrowing behavior? And is that is that generational? As Carlton kind of mentioned a bit ago?
Bryce Deeney 02:09
Yeah. And in the high inflation era, that we're all living through right now. I can only speak personally. You know, I, my, my water heater broke week ago, I had a plumber come out. And I got sticker shock when he told me and he said, Well, they were the last batch was stuck on a barge in the Pacific. So now the price is twice as high. So you know, this is impacting not just low income, but but really everybody, all the working working class throughout the United States. So, you know, with inflation to high, we still need to run our day to day lives. And the nice thing is credit unions are here to offer credits, it's literally in their name to two members that need it. And the most important thing is where do Where do consumers get the credit from? Is it priced fairly? is a price to adequately and is it delivered in a channel where I want it as a consumer?
Sarah Cooke 03:11
Yeah, definitely that consumer demand driven experience coming to the forefront about you guys from FedFinancial. Are you seeing, like similar behavior in your specific areas of service? As far as like super spending and borrowing?
JJ Johnson 03:33
Yeah, we're starting to see that more members want that financial flexibility. Because right now, before we brought on spin, flex, they would use use our debit card, but they'd have to go to the pay panels, and the affirms to get that split plate split pay payments. So now, we've SpendFlex money, we're now able to offer that to them all in one place. And I think that's something that people want it. They want these quicker answers. They want to be able to go to our online banking app and say, Hey, can I borrow against this for the things like Bryce said, the water heater? Can I borrow for those things? We've given them that opportunity. And that allows us to like we always say wouldn't meet members where they are. And I think that's something we get to do in this environment now.
Carlton Brooks 04:09
Yeah, and as director of lending, ICI loan applications come in, and we could tell over the last week, the economy the way it is, over the last year or two, that we are seeing a decrease in our personal loan application. So when we did some of our research to say, you know, looking at our members and where they are, a lot of them have already embraced by now pay later. solutions like JJ mentioned the corner your Affirms, your PayPal, and trying to meet our members where they are, knowing that we are a trusted financial institution for them. We thought it's been flex would be a great way for them to flex their payments, flex their budgets, and we wanted to again meet them where they were.
Sarah Cooke 04:49
Yeah, no, absolutely. The BNPL has really grown exponentially in popularity. I mean, the market As I was looking at some statistics, the market is currently at $132 billion, with 360 million people using Buy now pay later platforms. And that's projected to go up to 900 million people in 2027. So what kind of trend are you seeing in FedFinancial's service area? Do you have measurements on what member demand has been like or what you've already launched? So what's the usage been so far?
Carlton Brooks 05:26
So for us, it would actually launch live to our membership next week. So okay, what we're doing now is, we're wrapping up our testing, working alongside Equipifi. But what we've done is we researched our members and their transactions in the past. And we saw that they were already embracing Buy now pay later, we don't have a percentage of what that looked like what it was significant enough that we thought we needed to try to meet our members, as JJ mentioned earlier. And so we thought it's been flagged meeting Equipifi kind of all just lined up together, to where we can and again, be one of the first financial institutions to bring this solution to our members. And they already know us. So we're not a third party organization or FinTech offering this type of solution. They know us we know them. There's a trust there. And we were really happy about bringing it to our members.
Sarah Cooke 06:19 Yeah, yeah. And so Bryce, it sounds like a great time to be in the Buy Now pay later business.
What brought you to found Equipifi and why credit unions? Yeah,
Bryce Deeney 06:30
well, those are actually the same answer to both of those questions. Prior to starting Equipifi, I was an executive at formerly known as Alaska, USA Federal Credit Union, now they're Global Credit Union, top 20 credit union in the country. And I was head of payments. So my job day in and day out was how do I serve our members and meet them where they are? And how do I ensure that our product roadmap keeps us as a credit union competitive for top of wallet share, and market share within the communities that we service. And in 2019, and 2020, I started to see companies like PayPal and Klarna and Affirm, we're used more and more from the members that called us home. Fast forward to 2021. When we started Equipifi, those numbers continued to double your year in year out, you know, and then the pandemic only made that happen much, much faster. So I knew that my credit union could use a product like this to stay top of wallet and engaged with our members. And after calling a few friends, other credit unions, they all said yeah, if that product existed, we would buy it and launch it too. So I guess like most founders stories, I saw the problem, I felt the pain, and teamed up with a couple amazing co founders and launched Equipifi, and that was a few years ago. Fast forward to today, we are now servicing over 35 credit unions across the country. We're a CUSO. So we're backed by credit unions financially. And why credit unions because I believe in I believe in the mission and purpose and values that credit unions service their communities. Yeah.
Sarah Cooke 08:20
And it's so important credit unions, you know, partner with fintechs. And it's so much better when it's also a CUSO. I think keeping it in the family. So, you know, as you guys have all mentioned, some of the younger generations are the ones are kind of gravitating toward this is like 42% of those adults under 24 50% 25 to 34 50% of those 35 to 44. Apparently, I'm no longer while the younger ones, your generations, but it drops off after that has also been what you've seen at Equipifi guys?
Bryce Deeney 08:57
I think one of the fascinating things, you know, we are the only platform enabling this on existing debit card issuers. Right? So all the stats that you read today, that's how third party FinTech sees by now pay later rollout. So if I'm shopping at an e-commerce website, do I use my bank card issued by my primary FI? Or do I use third party BNPL? And yes, that button at the merchant checkout is very attractive to the 19 to 44 year old as you call it out, but when is provided from your trusted institution, what we've seen is it goes across all demographics, not only generationally, but income bands as well. The the largest power user we see is an older millennial making over $100,000 a year. That is not what the third party see because those consumers prefer to bank with their trusted credit union or you know, financial institution. They're not clicking the PayPal button which were unlocking that market for them.
Sarah Cooke 10:02
That's awesome. That's awesome. And so, JJ Carlton at the same time, I was shocked to learn the average age of a credit union member is 53. 53! And that's up from 47, I think about 10 years ago or so. So while this is reaching all the, all the demographics, are you also hopeful it will add to that younger member as well at that financial?
JJ Johnson 10:30
Yeah, that's that's one of the main reasons we wanted to use the Buy Now pay later program, because to today's kids, they don't want to go to wait fill on application, wait for the approval wait for the funding they want. They want answers now. And I think they get that with SpendFlex. And I think the fact that working with Equipifi and the way it integrates with our online banking and a mobile app, they get that quick information, that quick answer that they want. And we think that's definitely going to entice them to come join the credit union. And that's one of the reason why we think it's very important that you SpinFlex to, to reach that audience. But at the same time, we do realize that our turn older members, once they get the hang of this and use that I think they're going to be just as interested in the product. And I think that's definitely what we're gonna see. Yes, the old layaway that we were applied to it once that I'm just kidding. Baby. So, guys, when you were looking for a buy now pay later solution, what sort of due diligence did you perform? And what would you recommend for other credit unions looking at this type of solution? Because you said trust is so important. So you got to really look know who you're working with. Carlton?
Carlton Brooks 11:48
I agree, 100%. And I think once we met, equipped to find when we did that kind of initial introduction and our own research, we realized that they were the perfect match for us. I'll use the word turnkey solutions. They were they got us down to a science. So where we wanted to go, they knew the map and they were able to ride with us drive with us to get us where we are. They've been very helpful, not just on we partnered, as here's a product, do what you will with it, but they've helped us with the setup, establishing parameters, even in the marketing, how you roll it out to your members, what makes sense, it really has been a very seamless process. That process works very well with our core systems. So it was easy to link that up. And they've really got this down to a science. So it's been very, very smooth process with Equipifi.
For the rest of the transcript, visit the article on The Credit Union Connection.
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