10 Credit Unions Invest $9.5M in CU NextGen

CU NextGen, a Wilmington, Del.-based CUSO providing technology to improve member services, announced Tuesday it had raised $9.25 million of capital from credit unions, exceeding its goal of $7 million.

Ten credit unions with $41.2 billion in assets and 2.5 million members from Phoenix to Atlanta invested in CU NextGen’s initial share offering. They are among the 70 owners of Members Development Company (MDC), a research and development CUSO and co-founder of CU NextGen.

CU NextGen has used the capital to purchase intellectual property and 37 shares from ClaySys Technologies, an India-based technology firm and CU NextGen’s second co-founder.

CU NextGen said it is part of its plan to increase the level of representation of credit unions within its ownership and give them greater control over the organization.

ClaySys offers technologies in no-code application development, robotic process automation (RPA) and artificial intelligence.

Using these technologies, CU NextGen has built several solutions, including a member relationship management platform which includes CRM, RPA, Apps & Workflows, Knowledgebase, Chatbot and Ticketing. It also offers video banking and conversational AI.

One of the investors was Coastal Credit Union of Raleigh, N.C. ($4.2 billion, 282,588 members).

“It is increasingly important to us that we choose strategic partners, specifically fintech partners, that strive to be at the forefront providing technology solutions,” Coastal President/CEO Chuck Purvis said. “Our investment in CU NextGen is a signal of our commitment to remain an innovative and agile financial institution.”

Kent Zimmer, CEO of CU NextGen and a former MDC SVP, said the CUSO’s technologies are designed to help credit unions improve both member service and member experience.

“Our goal is to give credit unions complete control over their member-facing and employee-facing experiences,” Zimmer said. “CU NextGen is very excited to be working to move beyond the start-up phase to embrace innovation and lead the transformation of the credit union industry.”

The 10 investing credit unions now control 18% of CU NextGen shares. MDC owns another 20%, and 62% remain with ClaySys Technologies.

To mirror its new ownership structure, CU NextGen has created an additional board seat to represent its new credit union owners, which has been filled by Steve Koenen, president/CEO of Altra Federal Credit Union.

Other investors on the board are Timothy Antonition, president/CEO of Space Coast Credit Union of Melbourne, Fla. ($6.3 billion, 505,761 members) and James Nastars, president/CEO of Meritrust Credit Union of Wichita, Kansas ($1.6 billion, 107,117 members).

The other six credit union investors are:

• Allegacy Federal Credit Union, Winston Salem, N.C. ($1.9 billion, 163,051 members).
• Desert Financial Credit Union, Phoenix ($7.3 billion, 358,888 members).
• Georgia’s Own Credit Union, Atlanta ($3.1 billion, 204,229 members).
• Hudson Valley Credit Union, Poughkeepsie, N.Y. ($6.3 billion, 310,848 members).
• Michigan State University Federal Credit Union, East Lansing, Mich. ($6.2 billion, 306,346 members).
• Together Credit Union, St. Louis ($2.2 billion, 137,803 members).

Jeff Kline, MDC’s president/CEO, said the investments from the MDC network show the strength of credit union collaboration.

“We identified an unmet need for our industry and the members we served, and — together — we built a new CUSO and committed over $9 million to fulfilling that need,” Kline said.

“CU NextGen is now primed and ready to deliver next-generation technologies and services to credit unions nationwide, helping us all to keep the promises we’ve made to our members: That credit unions will always provide compelling and convenient services that will fulfill their 21st Century financial needs and exceed their expectations,” he said.