On Jan. 31, the credit union launched AlumniFi, a digital credit union complete with a stand-alone branded website and mobile app that targets its new niche of serving the specific financial needs of MSU's alumni.

AlumniFi was developed through a collaboration between the credit union and its fintech partners, and MSUFCU President/CEO April Clobes predicted it will transform the way people think about personal finance, as well as the way credit unions think about digital banking as a catalyst for a better member experience.

Since it was founded in 1937 by just eight faculty and staff, MSUFCU has been the preferred financial institution of the MSU community and its students, many of whom became members when they arrived on the East Lansing campus.

"What we saw changing is that students are coming to campus with an account that is tied to the accounts of their parents," Clobes explained. "And so, we thought of creating a specific brand for new college graduates because this might be their first account on their own that could also help them develop good financial management."

Clobes and her team presented the concept to the board during the fall of 2019, but the pandemic placed the project on hold.

Last spring, the credit union announced it selected Nymbus to help it launch and grow AlumniFi. The Jacksonville, Fla.-based CUSO integrates everything that is needed to build out and operate a full-scale digital bank through its banking-as-a-service model, eliminating the need for an expensive core conversion and additional resources.

In addition to running AlumniFi's digital bank internal operations, Nymbus will run its call center and marketing initiatives.

"We have spoken and collaborated with hundreds of innovative fintechs and startups through our CUSO, the Reseda Group. The Nymbus approach was unlike any other we have seen," Clobes said. "We're thrilled to have them bring our concept to life with the combined skilled services and transformational technology only Nymbus provides for launching a new digital brand quickly and effectively."

The Reseda Group (RG) recently invested $5 million in Nymbus to help it create supportive structures for credit unions ready to grow and reach new niche markets. RG also invested an additional $3 million in emerging fintechs such as Flow Networks, Prizeout and Larky. Since the CUSO opened for business in 2021, it has completed other investments and acquisitions to deliver new technology, digital resources and industry solutions for credit unions.

John Janclaes

When he served as president/CEO of the $2.4 billion Partners Credit Union in Burbank, Calif., from 2004 to 2021, John Janclaes recalled sitting at his desk reviewing a detailed breakdown of the credit union income statement.

"I could see a fintech on almost every line item that was attacking it, whether it was my low cost deposits, or it was my wealth management practice," he said.

Now serving as president of Nymbus, Janclaes said credit unions can compete with fintechs by returning to their original roots, serving niche markets within the ranks of their memberships and identifying new membership markets within their geographic areas.

"By focusing on a niche, you can really dial into what folks need, and you could put out the most compelling offerings first and then rapidly build on it because you're so hyper-focused," he explained. "I actually see in the future that credit unions could become more like brand managers – to serve groups of members, just like the fintechs are doing. There's no reason why you could not be running three, four or five brands."

Nymbus has developed 20 pre-built digital banking niches to serve the specific financial needs of – to name a few examples – new couples, gig workers, project contractors and families. The organization has also developed MSUFCU's second digital niche bank, Collegiate, specifically for Gen Zers attending colleges and universities across the nation. Michigan's Olivet College will be the first to provide Collegiate digital banking and resources to students, faculty and staff.

According to Janclaes, 16 digital niche brands have been sold or are in the process of implementation, and 12 of them are live.

Clobes said AlumniFi was designed as a unique brand to create a very easy digital experience that is fully integrated with its fintech partners in delivering personalized messages for alumni, which can help them manage their money to maintain financial wellness while also taking steps to advance and reach their financial goals.

"I think in today's environment, people like very personalized messaging, utilizing the data to speak to them," she said. "And this gives us an opportunity to grow our membership and have a very unique messaging proposition. The MSUFCU brand is fantastic, and we love it, but it doesn't resonate with everyone obviously. And so, having some unique brands will help you find a new way to grow your membership."

MSUFCU set a goal of signing up 20,000 members and gaining $30 million in balances within the first 18 months of AlumniFi's launch. Clobes said she believes this is a realistic target because in addition to the 350,000 MSU alums, about 8,000 students graduate from the university annually.

The digital credit union plans to reach MSU's alums with targeted emails and digital ads on social media and streaming networks.

Since it was launched on Jan. 31 and through the end of February, AlumniFi has attracted about 100 members.

AlumniFi offers a checking account with no overdraft fees and a branded debit card that offers spending insights on a digital account dashboard, and a no-fee savings account with digital savings folders and ways to give back to charitable causes. To offer these features and others within the checking and savings products, AlumniFi has partnered with fintechs such as Pocketnest, Spave and Changed.

Changed rounds credit and debit card purchases to the nearest dollar and collects the change. When the change accumulates to $100, Changed automatically sends that money to pay down the alumni's student loan. Coupled with the alumni's monthly student loan payment, the additional Changed payment shortens the time it takes to pay off the student loan debt in full, according to Changed Founders Nick Sky and Dan Stelmach.

The Spave feature enables AlumniFi's users to deduct micro-amounts (spavings) from their checking account whenever they make a debit card purchase. Users define the percentage to "spave," and the service automatically distributes it to a savings account or their favorite charity. Spave also provides insights into a user's everyday spending habits that can help them stay on track and reach their goals.

Pocketnest leverages AI to coach alumni on a comprehensive financial plan with personalized tips and recommendations, all based on a certified financial planning curricula.

However, it may be questionable as to whether AlumniFi's target market of Gen Zers and millennials will regularly use some of these fintech features.

Although millennials and Gen Zers overwhelmingly complete numerous tasks with their financial mobile apps, a Chase Bank digital banking attitudes study of 1,000 Chase Bank customers and non-customers showed less than 30% of millennials and Gen Zers use their banking apps for budget tracking, monthly forecast spending, savings goals and tracking progress.