By Ray Birch
CHICAGO—One credit union that's heavily involved with fintechs has a recommendation for other credit unions looking to do the same: establish an executive position to oversee the efforts.
As CUToday.info reported earlier, the $15.4-billion Alliant CU has named Robert Perrelli vice president of partnership development, where he will be “responsible for sourcing, developing and incubating fintech partnerships across diverse loan categories.”
It's a new position created as Alliant Credit Union has steadily increased its partnerships with fintechs, said Perrelli, who added Alliant looks for fintechs that align with the credit union’s mission and values.
“Having someone in my role keeps Alliant’s finger on the pulse of fintech relationships, so to speak, as we go out into the marketplace and seek new partnerships and strengthen existing ones,” said Perrelli. “We have partnerships in place in the home equity, solar and unsecured lending spaces. It’s all about identifying strong players in a variety of asset classes so we can really build out and diversify our portfolio of relationships.”
‘Very Particular’
Charles Krawitz, VP-commercial real estate lending and loan trading at Alliant, added that one critical issue the credit union examines prior to any relationship with a fintech is its legal and risk compliance “maturity.”
“We are very particular as to who we want to align with,” said Krawitz, explaining Alliant views fintech partnerships as a means of driving growth and expansion. The credit union, he said, believes those relationships bring “prowess and skill” that it might not have been able to develop on its own.
“There's a long history of financial institutions being very effective and finding different niches in the marketplace. But with a fintech you're able to leverage yourself a bit more by combining your knowledge bases, which includes regulatory and compliance,” stated Krawitz. “It’s about finding partners that allow you to parlay your strengths broadly in the market.”
Working with fintechs has been a “learning process” for Alliant, acknowledged Krawitz.
Charles Krawitz
“We've been very discerning and deliberative in how we've approached this marketplace,” he said. “It just made sense to hire a vice president of to oversee what we do here.”
Must Have ‘Willingness to Adapt’
In addition to assessing a fintech’s overall product and marketing skills, Alliant looks closely at how “attuned” the young organization is to the compliance and regulatory environment.
“If a fintech wants to partner with Alliant to get access to capital and broader scale, they must show the willingness to adapt their practices,” Krawitz said. “A lot of them are very caught up in their magic algorithms, their kind of behind-the-scenes recipes. We like to partner with people that will pull back the curtain and let us understand the nuances of their decision engines and make sure that these are compliant, with, say, Fair Lending practices.
“This is a vast marketplace and it takes a lot of getting to know the counterparties, and that is a full-time job,” Krawitz continued. “It’s getting to know the other side, coordinating the proper reviews… There's a lot of rigor and discipline in the processes and procedures and controls that are necessary if you're going to be partnering with fintechs.”
Perrelli said high-level oversight with fintechs is a necessity.
“You need a team that is dedicated to facilitating productive relationships—it's not just me, this is about a whole team,” Perrelli said. “It’s about bringing in new disciplines to the credit union, but making sure we are doing smart things for our membership base.”
The Spectrum
Perrelli came to Alliant from Huntington Bank where he was group senior vice president and group director of vehicle sales. His experience with fintechs began when he was with TCF Bank and launched the organization’s first offering in partnership with a fintech; in that case, a depository product.
Krawitz said that Alliant is looking to expand its fintech partnerships, but is doing so by carefully evaluating the risk versus return.
“Fintechs certainly range the spectrum, from those that are very operationally mature and have advanced integration capabilities from a technology standpoint, and are abreast of regulatory and compliance matters,” he said, noting there are young tech companies, too, that can be lacking in these areas. “But we are making sure as we look to grow by partnering with fintechs we’re dotting our I’s and crossing our T’s. We’re taking a very measured movement into this space.”