Alex Habet shares a Q2 panel discussion between Sam Kilmer from Cornerstone Advisors, Stacy Armijo from Amplify Credit Union, and Erica Pilon from Capital One about tactics for gathering deposits and building relationships.
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Alex Habet
Hi and welcome to The Purposeful Banker, the leading commercial banking podcast brought to you by Q2, where we discuss the big topics on the minds of today's best bankers. I'm not your host, Alex Habet. That's right, not your host. Today I'm just merely the opening credits. I'm actually turning over hosting duties to my friend, Sam Kilmer.
I hope you had a chance to catch the last time Sam was on the show. It was an awesome discussion that, like any episode, covered a wide range of thought-provoking topics. That's even the episode that I remember playing Stump the Chump with Sam by dropping a news article that just was big during that week and had Sam react on the show on the fly, completely unscripted. And like a true pro, he has demonstrated just how easy he made it look to provide some thought-provoking insights on it.
We talked about the deposit crisis and the impacts to banks like First Republic and others six months before the events in 2023. You're all in luck today because he moderated a panel discussion in cooperation with Q2 in our Relationships Matter series. Well, it’s a look on the consumer side of things. As we sometimes do on the show, I think you'll appreciate the perspective, as there are certain relevance to not only the commercial side of things, but also to what we might experience as consumers ourselves. So, sit back, relax, and enjoy. And I'm going to let Sam Kilmer take it away.
Sam Kilmer
Alright. Well, hello out there. This is Sam Kilmer, managing director from Cornerstone Advisors, host of Fintech Hustle podcast, and also a contributor to Gonzo Banker. Good to be with you today and I'm joined by a couple of rock star guests for a discussion. This is a huge topic right now. Deposits. I think all of you out there are seeing people … I'm really impressed by people who are sharing lots of insights on what some of the things they're learning as they're getting competitive in the market. I started out in banking many years ago back when I had hair as a marketing chief digital officer of bank. And working in some of these areas of really competitive deposit environment. And it seems like we're back and it's like back to the future.
But enough about me. Let me introduce you to our two guests, and let's get a lively discussion going around this. My first guest is Stacy Armijo, who's the chief experience officer of Amplify Credit Union in Texas. And I know, Stacy, I believe your background in addition to being credit union c-suite, and you also bring a lot of great perspectives from a background in public relations from multiple industries over the years. So really looking forward to hearing from you today. So welcome, Stacy.
Stacy Armijo
Thank you. Glad to be here.
Sam Kilmer
Yep. And my other guest today is Erica Pilon, who is the managing vice president and product leader at Capital One. And Erica … you may or may not have heard of Capital One out there I suspect, but Erica's background prior to Capital One, we had the opportunity to work together, where she was at NCR, product community at NCR, as well as FIS. And so, like Stacy, comes with a really varied background, both as a banker but also as someone else that's supporting the industry out there. So welcome, Erica.
Erica Pilon
Thanks, Sam. So, happy to be here.
Sam Kilmer
Yeah, great to be with you guys. And so, today in the discussion over the next half an hour, over 45 minutes or so—let's see how long-winded the facilitator is—but for the next half an hour or so, a couple things we want to talk about. Deposits, but not only deposits, but the long game. Not just how to juice the rates and get into hot money, but how these organizations have set about to create loyalty and create value for customers and members to be attracted to bring those deposits to the organization. I think it's important that you all know that you might notice that there's difference in the size of these organizations. While Amplify is a significantly large credit union, I think roughly about a billion in assets, I think, Stacy, plus or minus?
Stacy Armijo
A billion on the balance sheet and a billion off the balance sheet. So, about $3 billion assets under management.
Sam Kilmer
Yep. And I think Capital One somewhere in the $400 to $500 billion range. So, there's a little difference between your shops. But I think what we're going to look for is any consistent patterns that organizations really of any size can take away from this and put to use in their deposit gathering efforts. I think another area that we're going to be looking to delve into is what does it take not just in terms of the technology, which we always like to talk about marketing campaigns, but also just people processes. Get into the nitty gritty, as they say, of how this works, but also again, back to driving long-term loyalty.
So, again, enough about me and what we want to get done with the session. Let's talk to our guests today and get into their shops a little bit. And Stacy, if you don't mind, we'll start with you. Can you tell us a little bit about the day in the life of Stacy? After the coffee gets poured in the morning and you're ready to get rolling, what's the day in the life of Stacy look like?
Stacy Armijo
It's fast and like most people would guess. So, as the chief experience officer, I like to say my job is whatever it needs to be on any given day. That seems to be the trend. Practically speaking, I'm responsible for four lines of business. So, for us, that's marketing, communications, and social impact. So, that's the world I came from. That also includes retail. So, for us, that's our branches, contact center, and wealth management. Payments, so all the money movement in and out of the credit union. And then HR and training, what we consider talent. So, those four functions are considered the experience function. The theory behind putting those teams together is to combine the folks who make the promises to the customer, the employee, and the community with the people who have to keep them.
So, really the goal is let's not be saying we're doing one thing over here if we don't really have the fulfillment on the back end over here. And let's make sure we're getting the insight and Intel from the front line of the customer or the back end of the system, that can inform what we're seeing at the front end. So, most of my day is actually spent saying things like, "Have you talked to so-and-so? Does such and such department know that we are blah, blah, blah? Did you know I learned over here this thing is happening? What if we applied it over there?" That is the vast majority of my day is creating sort of connections between all those different functions and then trying to think a little differently about the information that I get from each of them.
So, instead of I'll get a report of, OK, here's what's happening in the retail environment or here's the analytics on our most recent marketing campaign or here's the debit card metrics and what's going on over there, of trying to create cross-channel opportunities and insights out of those. And that has been particularly important in this environment of where every deposit dollar is precious. And so, being able to do that in this environment is particularly challenging.
Sam Kilmer
What's the day in the life of Erica at Capital One look like?
Erica Pilon
So, I'm fortunate to work for an organization that does a lot of their own internal build. So, while we partner with a lot of fintechs, we also have a pretty large internal technology staff. And so, a big part of my job is determining what is our technology strategy. And that's across the retail bank where I sit on the retail bank leadership team, but I'm also responsible for all of the payments within the entire company. So, that involves our commercial bank, our card business, our auto finance business. And so, I spend a lot of time making those connections across our lines of business too, Stacy. Working on what is our strategy as a company for money movement, as well as things like deposits, and customer engagement, and loyalty.
A lot of my job is not only strategy, but also more tactical execution on our technology roadmap. So, I work really closely with all of our engineering partners on making sure that we're delivering on the things that we want to that are priorities for our bank. And then another focus of Capital One is really around our internal associate life and creating a great environment for people who work at Capital One. So, as a leader within the organization, I spend a lot of time trying to help foster great engagement across our teams because our happy associates create great products for our customers.
Sam Kilmer
Let's stay with that for a minute. I guess, tell me a little bit about ... I mean, we talked a little bit about your day in the lives, days in the life as you were. But when you think about your financial institution from the perspective of the customer, Erica, what's your perspective on how Capital One pops in the market? When they're thinking of competitive alternatives, what's your perspective on how you guys stand out in the market?
Erica Pilon
Yeah, I mean, we obviously have a really strong national brand. People know us from our stadiums, our ads. And that's a huge investment focus for us. A lot of people don't really connect Capital One as a bank, though. A lot of people think about the card business first. And so, one of the things that I love about Capital One is our mission, which is to change banking for good. And so, we're investing in things that help our customers. Like we were a pioneer in eliminating overdraft fees. We also recently rolled out a product where our customers can select their preferred name on their cards, even if it's not their legal name, because we want to create an inclusive environment, not only for our internal associates, but also for all of our customers that want to bank with us.
Sam Kilmer
Very interesting. And yeah, I think your marketing throughout the country, what is it? What's in your wallet? I mean, I think that it's almost become ... Well, Stacy, you're in public relations, you know how this plays out. It's like you become a little bit, do you call it a tissue or do you call it a Kleenex in terms of marketing, in terms of just how pervasive some of your marketing activities have been.
Stacy Armijo
What's interesting about that though, you mentioned that sort of decision about cards and the alignment of the employee experience with the customer experience. That is such an important point. When I first took this role, one of the first things I did was look at the employee experience. So, that's why HR and training is actually part of the experience team now. Initially, that's not how we had concept of the role. But you can't pretend that you're delivering some experience to your customer and that you have some customer-facing culture that is anything different than what your employees are experiencing in their day-to-day lives. And so, it's that you can't pretend that we're going to create a compelling technology-driven, frictionless customer experience. Oh, and by the way, dear employee, that is absolutely the opposite of what you are experiencing all day, every day in your work life. And so, those two things I think are so much more related than a lot of organizations really recognize.
Sam Kilmer
Actually, let's follow on that. When you're thinking, I know you're putting yourselves in the customers’ shoes all the time. If you were to think like them for a moment here, how do you think you pop out in the market in terms of differences versus their competitive alternatives?
Stacy Armijo
So, I'll say something probably counterintuitive. I think the answer is we don't. At least if we're doing our job correctly, we don't. So, we don't have our name on stadiums. We're not going to have that huge brand halo that a large brand will. And so, why would someone come to us? Well, they're going to come to us through either we had exactly the product they needed at the rate that they wanted, at the time that they wanted it, and that's how they found us. So, it's going to start in a transactional way. That's how they're going to find us. Or inertia. So, I was actually on a panel a while back and I thought it was brilliant. One of the other panelists said, don't confuse loyalty with inertia. Because the idea that, OK, we say we have customer loyalty. And really what we have is someone who's just not annoyed enough to do something different because nobody woke up today and said, "I want to do something with my bank." Nobody said that today.
And so, as I think about how do we pop, the way that we pop is we happen to be in front of you when you had a need and we made it super easy for you to turn on that need. Now, that doesn't mean that I don't hope that our members have loyalty around us and that they feel good when they interact with us. I think all that's true. But I don't operate under an illusion that I can walk around in Austin and say, even in just one home market, "I'm with Amplify Credit Union." And someone's going to say, "Oh my gosh, I know everything about your fee-free banking, and the fact that you're a leader in mortgage loans, and you're one of the largest commercial lenders." No one's going to say any of those things. They're going to say, "Ooh, that's cool."
And then I'll ask them a question about, "How did you decide on your bank?" And they'll say something like, "Well, my parents banked at such and such, and then they got me an account at some point. And so, that's where I am." So, I guess the way that we pop is around the customer experience. Forgive me for centering myself in that sort of answer. But that really is why we aligned the teams that we did is because we don't believe that our member, even our current member is out there thinking about us every day. And certainly our prospective member is not out there thinking about us every day. So, we have to deliver an exceptional experience that is the way that we earn their relationship.
Sam Kilmer
Yeah, I think we're going to give you a forgiveness there to center around you because your role, chief experience officer, is centered around members. So, that's good. You created it in such a way and the way you described your role so pervasive across the organization. You know what? That's OK. It's alright to think for yourself like that one and around your role.
I'd be curious for both of you, especially given the competitiveness of this environment this year, how have you attracted deposits? Is there anything new or different that you all have done or focused on to attract deposits? And I don't know, I don't have any preference here of who wants to go first. I don't know if, Erica, you want to give that one a shot?
Erica Pilon
Sure. I mean, obviously our strong national marketing presence is in our brand. That continues to help us to grow. And we've actually been taking a little bit of a step back from our branch footprint and really investing in our technologies. And that's really served us well. We've seen 13% year-over-year growth in deposits this year. And that's not consistent with the rest of the market. We also offered a really competitive CD earlier this year that drew considerable deposits to our institution. So, just continuing to leverage that strong branding, but then backing it up with the customer experiences, like you said, Stacy. And the thing that just resonated with me, and I don't know if we want to open up this can of worms, Sam, but I mean once we have the CFPB guidance around switching and open banking, it's going to be even more important that we focus on removing the inertia and keeping our customers satisfied. And making sure they're not just staying because it's too hard to switch.
Sam Kilmer
I'm glad you went there. And so, yes, we can absolutely. Cans of worms are encouraged on this session hopefully. But Stacy, what about Amplify? What have you guys been doing to raise deposits in this crazy, crazy 2023 and going into 2024?
Stacy Armijo
Well, if I can jump on Erica's comment first real quick because I 1,000% agree. So, half of me wants to say, why do we allow our industry to be forced into doing what's best for our customer? Why don't we proactively align our business models in a way that says, "Dear customer, this is good for you. And we found a way to make it good for us in our business model too?" Why do we wait until we have a regulator forcing us into things? And so, the organizations that haven't done that, so Capital One of being a leader on the overdraft fees, that's a perfect example. No one woke up today and said, "I want to pay an overdraft fee." Our industry calls it a service. But is it really? No one said, "I want that service today." So, as you think about all of the pressure around what the CFPB is pushing on, now we can argue with different points of it.
But generally speaking, why are we working so hard to defend revenue streams that our customer doesn't value? Why are we spending all of our political capital on that when we could be spending it on innovating around delivery channels and product lines that they actually do? So, just 1,000% have to agree with that statement. And I actually love the idea of it being easier for customers to move institutions, because then that means the institution that's serving them best wins. That's how the market should work. We should all be competing based on the quality of what we're delivering. We shouldn't be competing on how much did we convince them that it was so, oh, so hard to be able to do this. That's just the wrong way entirely. So, to transition to your actual question around what to be doing to gather deposits. I would tell you this year has been a challenge. We are not growing 13% year upper year in deposits, so congratulations. That's amazing.
I would say my tagline for this year is that deposits are gathered in a decade, not a year. And so, as you think about how are organizations that have been building their deposit strategies for decades and investing in the thousand and one ways you're trying to gather core deposits? They are the ones reaping the rewards of this environment today. And if those of us who woke up a year ago or 18 months ago when the market started to tighten and all of a sudden core deposits is the only thing anybody could think about, that's the beginning of strategies that are going to pay off over the course of the next decade. So, yeah, what's the phrase about the best day to plant a tree was 20 years ago? The second-best day is today? So, a lot of us are working on the second-best day.
The second-best day is today to plant that tree. I'll be perfectly honest, that's what we're working on. And so, we have a bunch of small different things that I wouldn't say are necessarily different than what you've seen in the rest of the organization. But two key differences. One is, this environment has really challenged us on one of our philosophies as a business. So, we have defined eight philosophies that shape how we make decisions in our business. One of them is we don't treat new members or employees better than current ones. And so, what that means is, for example, we don't do hiring bonuses. I know that and especially think mortgage is one of our businesses and think how common it was back in the mortgage refi boom, nobody could find an underwriter and there's crazy bonuses being paid. And so, we don't do that because we didn't pay the last underwriter that bonus. So, if we couldn't give that bonus to every single underwriter on our payroll today for the one that we're going to give to the new person, we don't do it. So, that constrains us in the short term.
How this is related to deposits? That means we don't do no-money-only in deposit promotions. So, the ability to offer the world's greatest CD or a 1,000% on your liquid savings, whatever the rate-driven thing is you're doing not a chance you can do it and apply it to your entire portfolio without bankrupting your institution. And so, this has really challenged a lot of the foundational principles that we use to drive the business. And so, we've done things here, there and everywhere. But the primary thing we've done is we are in the process of launching treasury management. So, we believe chasing the business accounts, the operating accounts that are large and sticky, we think that is the decade solution to solving our deposit gathering problem as opposed to the rate-driven solution to this year.
Sam Kilmer
Interesting. And we're seeing a lot more with of credit unions going into the business services side of things. And you're absolutely right. You're at the heart of the ... It's not hot money. Meaning it's tied to payments. It's not simply a park fiduciary, but something that's in motion at the center of the commerce. So, very interesting.
But if you go over the consumer side of things for a minute, I'm curious, to your point, Stacy, around solution of the decade. As you look at your younger customers or members, it's pretty common now for everybody to have some type of strategic initiative around what are we developing for different generations or different areas. When you're looking at whether it's Gen Z or pick your cohort, as you think about the next generation of when they're in the money in terms of depositors, are there any strategies that you all have around, let's just call it bringing value to the next generation beyond the business side with treasury? Anything on the consumer side that you guys are working on product wise, or campaigns or anything like that?
Stacy Armijo
Two things. So, on February 2nd of 2022, so 2/2/22, we became the industry's first and still only entirely fee-free bank. So, it is impossible for any depositor of any balance or any behavior to incur any kind of fee ever. And I've learned, I have to say it that way because no one believes us. Yeah, our industry talks about free checking. Free checking, if you have this balance, if you don't do that thing, as long as you, etc., etc. So, we are absolutely entirely a fee-free bank. We still have all the same services. We did wire transfers, overdraft protection to the same limits. All the things. We turned off in total over 50 fees on typical checking or savings account.
So, I mentioned that in this context because guess who pays fees? It's not the older people who have had decades to build their wealth and they maintain balances that are healthy and high. They can avoid fees anywhere. It is the people who are younger who haven't had that time. In particular, what we found was the last time we did this analysis, a typical Gen Z person is going to pay a couple hundred dollars a year in fees. A baby boomer pays less than six. And so, as we think about building a value proposition that is designed on the deposit side for the depositors that we want to earn and keep long term, that's part of it. It's a strategic foundational level piece and a more tactical way, it's about payments.
So, it's about features for payments. So, it's about digital wallet. It's about card controls in your debit card. It's about all those of things. They are motivated by features and functions. So, Click Switch to be able to quickly move your accounts, things along those lines. We've been investing in payments technology along those lines. And this year we're actually doing a payments modernization plan because we want to be in the world of instant payments as soon as we can. So, really it's sort of foundational about alleviating a stress and a penalty really that Gen Z and millennials carry much greater than other generations do. And then features and functions that they're going to consider table stakes.
Sam Kilmer
Interesting. Interesting. I like the interesting focus on just conveniences. And sometimes it's incremental conveniences. It's not like you have to offer a whole new whiz bang product. It could just be incrementally adding value through some of those things. You mentioned card control. It just seems so logical. It's like my son and I were talking about it and he's like, "I don't understand why I just can't turn these things on and off with a click. And it's like I have to jump through hoops and go to a call center." And so, that makes perfect sense to me.
Erica, what about Capital One and thinking through the next generation of depositors and the value that you all are bringing? Any thoughts there?
Erica Pilon
Yeah, I mean I think that when we look about where our space is, banks have traditionally been more appealing to the next generation in a way that they wouldn't be for a Gen X or baby boomer. And so, we've actually had some success this cycle by offering really competitive rates, trying to get people into the door that way. We also have a teen checking product that has been great for transferring wealth on to the next generation and getting teens invested in saving their money, and things like that. Also, really meeting our customers where they are. So, we've invested in our cafes as opposed to our traditional branches. And those have been really successful for us for not only our card business, but also for our banks. And then a new feature we also just rolled out is the ability to deposit cash at a CVS or a Walgreens. So, you don't actually need to be in a branch footprint in order to achieve all of the things that you need to in partnership with us as a national bank.
Sam Kilmer
I'm familiar with CVS and Walgreens. And I remember the Capital One cafes. But just take a second. Take me back through that again. How are the cafes different than traditional branches?
Erica Pilon
Yeah, the cafes are not branches at all. So, we don't have tellers, we have ambassadors that work in the cafes. And I've visited the cafes all around the country and you just walk in, you can order a coffee. People are in there just like a Starbucks. But we have ambassadors there that advertise our bank accounts, our cards, etc. And so, you can go talk to an ambassador as well. We also have them there to talk about financial health. So, that's another important thing as you're attracting that next generation and helping them to build their wealth, is how do they start savings and work toward that financial plan.
Sam Kilmer
Interesting. Interesting.
Stacy Armijo
I was just at a cafe recently, which is fantastic.
Erica Pilon
They're really cool. I try to go, I try and stop wherever I'm traveling to go in, and get a coffee, and see the operations. So, yeah.
Stacy Armijo
It was a good experience. Well, and it's interesting. We're actually doing something similar but in a totally different way. We just launched something we call community bankers. So, these are bankers that go out into the community. So, speaking of going to where people are. So, in this case in particular, we're trying to reach lower income segments of the Austin community with things like financial education and access to services. And so, the only thing that your phone can't do for you at Amplify is it can't spit out cash or print an official check. It can do everything else. From a capabilities point of view, it's not ... But what we understand is communities around Austin, it's not that they don't know that they can do that. It's that their relationship with financial institutions has been colored by their past experience and it has often been a very negative experience that they've had.
In particular, if you live in a low-income area where you don't have access to things like traditional branches, where that environment can be intimidating, where maybe you got told one thing in one language and then you got delivered documents in a different language that said something different. There's a number of experiences that folks have had that color the way that they interact with financial institutions. So, what we want to do is say, "We're not going to try to make you come to us. We are going to go to you." And so, as opposed to building our own physical place and inviting room with coffee, we are exploring a relationship with the public library system. And they've got branches all over. And they've got the ability for us to have office hours and because we're delivering a community service of financial education, being able to bring that into them so that we can talk to them.
But I think that this idea that we establish this broad and large network of branches all over the place so that people can come to us. Or even let's deploy a fleet of ATMs, let's say. Even just machines. It's like all of those things still require me to go to you and to work on your schedule when you're open versus teach me how to use this, teach me how to do this more effectively, and interact with me in a way where ... So, our community bankers are part of our virtual branch. So, you can do this with one of our bankers. And you can have this conversation over video that feels personal, but I can do it at home. I don't have to come to you and your place. So, I think to me, that feels like the future of banking is we used to think of a bank as a building. And I realize we're far beyond that now. But what we, I think, have forgotten is that banking is also about community, and interaction, and education. So, how can you bridge that in person in the technology piece?
Sam Kilmer
Love it. I think you're right that we are obviously well beyond it being just buildings. But isn't it amazing though, whether it's when you're talking to a son, daughter, niece, nephew, whatever, how that's their perception. Oh, it's this big austere building over here. I never hear from anyone there. What I love about what both of you're saying, maybe different channels, Walgreens, CVS, library, whatever is take it to the people. Love that. I'm curious as you're thinking about who to take it to or whatever obviously will be accessible in the mobile app, how are you guys using data? And I realize that you probably both have probably pretty elaborate data strategies or whatever. But what are one or two things? Are you guys using data in the deposit gathering or in the customer or member development? I'm just curious of anything that you're working on. And I don't know. Erica, we'll start with you this time.
Erica Pilon
Yeah. We have a fairly large data strategy at Capital One. And I think that the biggest thing that we can do is to know who our customers are and be able to market effectively to them. So, we're using machine learning in our marketing and I think that's really helpful. I mean that's table stakes. People use the Amazon analogy, a lot of presenting ads that are relevant. I actually personally love cooking and I love the New York Times cooking app. And to me, I'm a vegetarian. And so, I don't want to see recipes like for steak, or sausage links, or things like that. In my recipe queue, I want to see things that are relevant to me as a vegetarian. And so, we need to do the same type of thing as a bank. And we do that across our mobile apps. If we know someone is a card customer, they're using the same app if whether they're card or they're a banking customer, we're able to cross sell effectively that way.
So, just leveraging data, it's table stakes these days. It's not even something that I look at as innovative any longer. It's expected that we know who our customers are and that we're able to market to them effectively. Especially as you get into that next generation. I mean, I remember back, I've been in fintech 20 plus years, and when we first started talking about using data to service our customers, and I was talking to banks and they're like, "This is Big Brother stuff. We're not into this." But then now as you go down to the next generation, they're not afraid of it at all. It's expected that you know who they are, and that you're marketing effectively to them, and that you're using the data consistently, and not giving them ads that are not relevant to them at all.
Sam Kilmer
Yeah, it's like, "Hey, where's Big Brother ad, and why am I getting sausage link ads?" Right?
Erica Pilon
That's great.
Stacy Armijo
Where is my Big Brother?
Sam Kilmer
I really want Big Brother to be around. I need a hug. What about you guys? What about Amplify, Stacy? How are you guys using data?
Stacy Armijo
So, we talked about the differences in size and scale here. We are almost entirely reliant on our partners for the access to data that we've gotten. Not necessarily just the access, but the ability to use it. So, the ability to actually analyze it, and cross-reference it, and learn from it, and let it drive things. So, we generally rely on choosing among our partners who has the best solution. And our lean is very similar to what Erica described. So, our legacy membership is as the IBM Texas Employees Credit Union. That's kind of how we were born. And then we became a community credit union in 2006. But that's relevant here because we started from IBM and that's still a big part of our heritage. And so, we have this tech lean that a lot of credit unions otherwise might not.
So, for example, one of our board members most recently asked us, "Tell me how you're using AI in our business. I want to be sure that we are using AI in the ways that we should be, that we aren't getting left behind." And I shared that story at a roundtable of other credit unions. They were like, "Oh my God, in a thousand years that question would never be asked." It would be more so, “We're not using AI. All of the risk and all of the things associated with it, assure me that we are not.” I think that has to change in our industry. We have to understand and recognize that we are either part of the technology evolution or we will get left behind. And so, does our leadership really support that from a philosophical point of view? And then after that it's like how can you use it? So we're using it in a thousand and one ways.
So, one of the first ways we started using it, we deployed Q2's product SMART. So, that's the online banking, the ads that are shown within the online banking platform. And that gets driven by transaction histories, by interactions with the platform, etc. That was one of the first ways we did it. We use it a lot in risk management, of course. So, we have how we're flagging things for fraud and such. And we are using it on the marketing side now, which I know it gets everybody a little scared. I always have to say we are not using AI with any private information, any direct member access information. But for example, we have a tool called Jasper AI, which is essentially kind of like ChatGPT, but it has a copyright checker so that we can make sure we are not accidentally violating somebody else's copyright by using it. And so, we used to have to pay a freelancer to, for example, create a blog post. And it'd be a couple hundred bucks, they'd spend a few hours on it, etc. And now we can generate that in 30 minutes.
And it's not as if we are just taking that and posting it on our website. It's that all that prework that a human used to do, they don't have to do anymore. And now they just make it better. Make it relevant to our brand. Take the things out that don't work. So, this notion that the computers are all going to take over everything. I did self-checkout last night and I assure you a human being was standing there making sure that I was able to do the self-checkout correctly. But 10 people were getting checked out at the same time instead of just one.
In my mind, that's the analogy that I use as I think about AI and our business. And I think if we are willing to be part of it, if our partners can help us get there. So, as an institution of our size. And as it goes to credit unions, we're relatively large, but as it goes to financial institutions, we're teeny tiny. And so, as we think about relying on our financial industry partners to help get us there, get us there safely, challenge us to go there with them, and then make sure all those systems integrate, that's really where our strategy resides.
Sam Kilmer
Well, and you mentioned integration. And then earlier you were talking about product controls and things like that. I'm curious too, Stacy, from your role as chief experience officer, when you think about deposit gathering right now and just how the environment is on that, do you see any limitations, or whether it's process, tech limitations that you've run into to try to continue to make it more convenient? I mean, are there any barriers or significant barriers that you feel like you have to pop over or consider that maybe you wish you didn't have to?
Stacy Armijo
Absolutely. So, I mean, always the biggest barrier is that there's always the spectrum between risk management and customer convenience. And it's always where are we on this spectrum? And we're always trying to make our best decision about how to balance those things. I'm sure people who are following news about fraud in the industry over the course of the year know that fraud is at some all-time highs as it relates to various aspects of deposit gathering. And so, as you think about how are we responsibly managing fraud is one component of it, and then how are we making ourselves easy to do business with? Because if you can't open your account online in the way that you want to and fund it, somebody else will. Yeah. So, are we sure that we have that spectrum correct? However, one thing we've learned is … so Stacy the marketer is like, "Grease it on through. Let's remove this obstacle. Let's rule that. And let's only collect a minimum of contact information. And let's make sure..."
We recently implemented Plaid so that we can have automatic funding. My thought being the faster and easier it is to get through your process, the more successful of a depositor you'll have at the end of the game. However, a successful depositor is a fully engaged depositor. So, that means they actually fully funded their account. That means they gave us their direct deposit. That means they activated and are using a debit card. Every institution defines it differently. But those being the things. Well, one thing we've seen is when you make it too easy, are they really committed to actually doing all the follow through on those pieces? We have not seen that to be the case. So, I think I have begun to question even my own notion that the biggest problem to solve is convenience. I do think you've got to have the channel. You have to have the option, you have to have the channel. But that doesn't necessarily mean that letting somebody do it the easiest, fastest way actually results in a fully engaged depositor on the other end.
Sam Kilmer
Very interesting. Erica, any limitation? I know you guys have busted through a lot of limitations over the years. And many of us in the industry have always looked at how long does it take when you're working with Capital One? Well, it’s only three minutes or whatever. We should try to get to three minutes or whatever. But I'm sure you guys run into limitations too. What have you guys been running into?
Erica Pilon
We do. But really one of our biggest focuses as a company is creating a modern technology stack. And so, I mean, one of the things that we run up against is legacy infrastructure. And so, I think that any bank is going to have that. I love where we're going with payments, and the new rails, and the ability for us to hook into those and offer consistency across the industry. And I like what CFPB is doing with open banking, too, for that reason, because that will allow us to all at least store data in the same way and try to just make it easier for us to bring new customers on board. Even though we don't want the outflows— we want the inflow of the customer—it still will make it easier for everyone once we can communicate and overcome that technology gap of having different ways of storing data.
We're really focusing on that as a top imperative as a company. And overhauling all of our legacy infrastructure. So, it's a huge amount of work. So, balancing that against your other priorities and still trying to innovate at the same time is difficult even at a very large institution, because we've all relied on this legacy technology for so long. I mean, Sam, I was a vendor forever. I built those systems. I know how old they are, but they work. And so, it's how do you balance trying to become a modern, real-time bank without taking the wheels off of a moving car? So, I think that's a challenge for anyone regardless of your size.
Sam Kilmer
Well, I liked how when we started this … it wouldn't be a surprising place for me anyway. And one of the first things that both of you talked about was your teammates, your associates, and now creating an environment for them. And I think, Stacy, in your case, it was not making any promises to new people that you're not making to your current members. Let's go back to that it relates when you're thinking about the deposits game and just being competitive in this environment over the last year … even to be competitive. I'm just curious, how do you keep your teams focused? When you think about this go-to-market activities when you guys both have so much going on clearly at once, lots of spinning plates through another analogy out there. How do you keep your teams focused? Are there any life hacks that either one of you could give to all of us on that? Stacy, I don't know. Anything that that you found helpful to keep your team focused in deposit gathering and growing the value of the credit union?
Stacy Armijo
I would say this is a place where the pandemic taught us a lot actually. So, we became much better at employee engagement over the course of the pandemic. Which I realize probably sounds counterintuitive because all of a sudden on a day's notice, everybody picked up and went home and didn't come back for a year and a half or however long. And so, all of a sudden, we are not in the same in-person environment the way we once were and we're thrust into this new environment. And so, it seems counterintuitive that we would get better at employee engagement and employee communication. But the reality is we did. And the reason we did is because one, we had an urgent and imperative need to communicate way more often, way more formally than we ever had before. Because I mean, the world around us is changing and unpredictable and we've got to be real clear with our employees.
It also suddenly put all of our employees on a much more similar plane. When we're interacting like this, we can have 250 employees in this environment. And we all feel face-to-face with the C-suite for example. And so, even though Stacy walking around these halls that I'm in, you'll notice it's kind of dark and barely anybody's walking behind me. That's because we went to a fully hybrid environment years ago and have no intention ever of making anybody return to any office anywhere. And the reason for that is because, yes, Stacy interacted with people all day long and I felt connected. But the reality is they interacted with probably the same dozen, maybe two dozen people all in the same meetings. And so, that left the other 99% of our employees of not being connected to our C-suite in particular, or even leaders more broadly.
So, I would say that's what the pandemic taught us. So, we went from having one all-employee gathering every year that we did in person in a hotel in Austin, and brought everybody together, and we talked about our plan for the year. And I'm sure everybody memorized every bit of that 50-page PowerPoint that we presented that one time, and internalized it, and went off and followed it exactly. Today, we host monthly town halls. So, we have a monthly opportunity for every employee in the company to be able to interact. And we talk regularly and we communicate often. We formalized leadership team meetings at various levels for similar things, and we just keep saying it over and over.
And when we have these gatherings at the mid-year, it's like, alright, what changed? Well, now we're going to do this thing. Back when I was in my PR days, you would say it takes a repetitive frequency of at least seven times for someone to hear and absorb something. So, I would always tell the people I was training, when you have gotten so sick of saying that thing that you're saying and saying it over and over, it is just barely starting to get through. And I think that is true in employee communications as well. And so, we've been taking some of those lessons and deploying them in our internal environment.
Sam Kilmer
Well, if we've learned anything from social media over the years, whether it's LinkedIn, or Facebook, or TikTok, or anything, and that is that the line between what is marketing, and what is human resources, and what is leadership is just, it's all merged, hasn't it?
Stacy Armijo
Yep.
Sam Kilmer
So, that's really interesting. I love the sense of urgency. And I agree you almost want to hesitate to think of silver linings from the pandemic. But urgency really has been one. I definitely picked up on that. It's made us really be very deliberate about what we're communicating, and how often, and not taking it for granted that in-person is necessarily always better. It's not sometimes depending upon that. So, very, very interesting. And Erica, what about how do you keep that really small team? I know being a top 10 bank, how do you keep the team focused when there's so many people on the team?
Erica Pilon
Yeah, I agree with Stacy on the communication aspect. I mean, selling the vision over and over again is critically important for us. So, we are constantly reiterating what are our top priorities as a bank? What is our vision? And I think that the key to me in any technology environment is balancing what it takes to run the engine with the shiny new object. Because there's a lot of people that only want to focus on the shiny new object. But if you spend the time to sell the vision on how creating a stable platform and a strong loyal brand with your customers enables that innovation, so that they know that they're doing important work to enable us as a bank to do really great things, I think that keeps them rallied around that vision. And they understand that they're doing a big thing to get to something that might be a shiny object down the road.
Stacy Armijo
Absolutely. I couldn't agree with that more, that it's so easy to talk about the new thing and the cool thing. And yeah, that's what everybody wants to talk about. But that's a tiny portion of your organization typically that's focused on that. And so, it's like, what are you celebrating that is that thing we did and have been doing for many, many years? And we need to keep doing it because if we don't do that, well, all the funding for the shiny object goes away. So, how do we keep it one message? One way we try to do that is our CEO and I, we do what we call culture conversations. And so, it's with about a dozen employees twice a month where we talk about things like, "Hey, our core values are this, this, and that. Can you talk about how you see that in your work? Or do you see where we're missing the mark? Where are we not living up to those core values or those service standards?"
But one of them is, do you know what our economic engine is? And can you articulate how you contribute to that? And it's so interesting to me how most of what we do in a lot of those conversations is help the employee understand. So, let's say we've got an employee in consumer lending. We are an unusual credit union. We do very little consumer lending. It's a tiny portion of our loan portfolio. And so, if you work in consumer lending, all you hear about is mortgage lending and commercial lending. And it makes you feel like, well, OK, I'm just over here hanging out.
And so, it's like how do you talk about somebody who they have an important role to play in that? And so, then we can unpack it for them to be able to say, hey, if financially responsible auto lending is a crucial part of our tenure target, which is to put the power of home ownership into the hands of more Texans. Because here in Texas, if you don't have a car, you probably can't get to a job. That's just true. And so, your ability to put somebody into a car at a financially responsible rate is actually contributing to their ability to eventually become a homeowner, which is the whole reason that we're trying to do all this. But they would never know that unless you unpacked it with them.
Sam Kilmer
Right. I love how we do that too, because it's almost like it's more important to help the team think about how would you have a conversation the last 30 seconds as it is to give them ... To your earlier point, Stacy, around that of sort of a really, really large PowerPoint that they're realistically not going to look at. Just what's something that would really help someone to know if you were at the library, or the cocktail party, or whatever, so that you can kind of understand your value. And it's not just, "Well, this is my job and this is my professional, this is my personal life." It's like, no, no, no, no. We're trying to help people here. So, whether you're at whatever that event is.
I guess one closing thing for me is I just would just be devilishly curious if there's anything that we haven't talked about today about your deposit gathering, whether it's strategy tactics? I mean certainly for the long game, you guys were both, were talking about the decade and you're talking about Erica leveraging the national branding, and the things that you've built up over a long period of time for inertia. But I'm just curious, anything else or any closing ideas or thoughts that you all have that if for anybody else that's listening out there, looking for ideas. Any other life hacks or things that you've learned about deposit gathering over the last year that you would share with this group? Wide open. We can start with Erica told me to put you on the spot, but anything else before we wrap up that would be good to know?
Erica Pilon
I would just say that, I mean, I've talked a lot about our national brand and our marketing strategy. And that is critically important to us. I mean. As you know. I think anyone knows the Capital One brand, but you have to back it up with great customer experiences. So, for us, even though we're investing more in marketing than most companies out there, it's not just vaporware. We have great customer experiences that we need to make sure that we invest in day to day, and that doesn't really matter how large your organization is. Everyone needs to be customer first and then they will come.
Stacy Armijo
At least I would agree with that. I think as I think about closing thoughts and what's on our mind as it relates to the deposit gathering, I think it's a biggest picture kind of thing. So, I have a philosophy, nothing for me without me. So, never try to create something that you believe is for me, Stacy, the 44-year-old white woman who lives in central Austin and who has two children, etc. break me down as a demographic. Never try to create anything for me without having a representation of my lived experience as part of that creation product. And so, as I think about the way banks generally do product development and product design, we do a whole lot of creating for somebody else. And if you look at the teams of people who are making all those design decisions, who populate the front lines of service delivery, who do all those things, I think there's often a mismatch there.
And I think we would be way more successful, especially at creating innovative deposit products and delivery channels and things along those lines. If we thought a little differently about who is this for? And are we sure their perspective is actually represented in what it is that we're trying to do? And then let's think really differently beyond the paradigms that we've typically been locked into. And give ourselves the time and patience to let a strategy or a solution like that play out. And I think the patience part we struggle with. When it comes to deposits, we want it now. We want to put out a rate and we know we got that much money. And if we want to be simple-minded like that, then we can just pay for money. And then we'll have to pay for it again in some other environment. But if we want something longer and more sustainable over time, I think we think about how we design and create those products, and be willing to be a little creative around that.
Sam Kilmer
Yeah, it's really interesting. Here, a couple of takeaways I have from the discussion too is, I mean, I'm struck by how much you all have focused on the experience and the conveniences. Sometimes they might just be incremental conveniences. But a colleague of mine, Tristan Green, did a write-up in GonzoBanker where he was talking about ... He looked into think it was like 130 or 40 developed institutions that had had four or five quarters straight of deposit, pretty positive deposit growth value. And he was just looking at how are they different than the ones maybe that didn't? And certainly conveniences and being as accessible to possible account opening. All those kinds of things played into it. But I think another thing that I've heard today from both of you that struck me that I don't always hear, I hear a lot about people that want to know the tactics to put a rate out there or a product. But then they're advertising it and waiting for people to come to them.
And something that I heard today in the conversation that really lifts my sense of not just humanity, but of banking and bankers, is that you were talking about going where the people are. Whether it's in an app, or at a library, or at a drug store. Finding out where they need you at and going to them. I mean, it sounds so, but I know there's so much hard work that you and your teams have to do to make that happen. But I, for one, am very thankful that you guys ... You didn't have to. Appreciate you agreeing to share some of your stories, and sharing your tactics, and things that you're focused on with the group today. I've certainly appreciated it. Stacy Armijo of Amplify Credit Union and Erica Pilon of Capital One. This is Sam Kilmer from Cornerstone Advisors. Glad to be with you all today.
