Episode 4: Overcoming purchasing challenges in credit unions

Host:

[00:00:00] Hi there. Welcome to the Amazon Business Podcast, the podcast that helps you stay up to date with the latest trends, tools, and stories in smart business buying. I'm your host, Brit Moorer, and today I'm joined by Barb Lowman, President of CUNA Strategic Services. In today's episode, we'll explore the evolving purchasing landscape of credit unions and how leveraging strategic supplier relationships can help.

[00:00:26] Barb, we're excited to have you here. To start, can you share more about yourself, your role, and CUNA Strategic Services’ mission?

Barb:

[00:00:39] Well, thank you so much for having me, Brit. It's a pleasure to be here. I have been in the credit union industry for over 25 years now. So, I guess you could call me a lifer. But like me, a lot of folks that there are a lot of folks in the credit union industry who have grown up in the industry, it's kind of want to lay in there if it's the right fit, you stay there for a long time.

[00:00:59] So, the nature of those relationships and those connections make us a very engaged and collaborative industry. At CSS, our mission is to understand and prioritize the problems that credit unions face and some of the challenges that they have in better engaging with and serving their members. And then we go out there and we source great innovative solutions to solve those challenges and problems and bring them to market for credit unions specifically.

[00:01:31] So, as we do that, we're really looking through two lenses, and at our core, we're focused on does the solution help credit unions drive growth, or I guess I should say, and or does it help drive operating efficiencies? So ideally, our goal is to help credit unions not just survive, but thrive and grow.

Host:

[00:01:54] We just have to go back to the 25 years in the credit union industry. That is amazing. You have to be super passionate about the industry.

Barb:

[00:02:01] I am. It's a people helping people philosophy and it's just it's like a family. It's more like a family than a business industry.

Host:

[00:02:08] And I can imagine throughout your career you've seen it all.

Barb:

[00:02:12] Oh, girl, I can tell you. Yes, that would be another podcast.

Host:

[00:02:15] Okay, we'll save it. We'll save it. So, let's get down to just sort of the emerging trends that you're noticing, what you're seeing within the credit union industry and how those trends really shape the purchasing needs?

Barb:

[00:02:25] First, I'd say, you know, credit unions have been dealing with higher interest rates since around 2021, and that's impacted their balance sheets overall. And I'll give you an example of that.

The average rate that credit unions paid on a money market account increased from 0.13% to 0.73% between 2021 and 2023. That might not sound like a lot, but higher interest rates have led to increased competition across the financial services industry to acquire deposits. So there's a lot of rate shoppers out there that are going to take their money to wherever they can get the higher interest rate, so credit unions have to keep up with that.

That puts a lot of pressure on credit unions to pay more for deposits or lose that money, lose those valuable members. They're also dealing with tougher economic conditions for their members, which can definitely impact liquidity overall for the credit union.

So, with these challenges and headwinds, credit unions are looking to leverage technology more to expand their members service options to attract and retain younger, more profitable members who want to engage digitally and to help their branches run more efficiently.

So, there's a great opportunity right now in our industry to streamline procurement and drive cost savings overall, so that credit unions can then redirect some of those dollars to new technologies that can help solve some of those perpetual challenges.

Host:

[00:03:54] Perfect. And we'll talk more about the technologies in a bit. I'm curious. We mentioned challenges, headwinds. What are the common sourcing challenges of credit unions and how does CSS kind of help overcome them?

Barb:

[00:04:06] Great question. So, we see some credit unions with multiple locations whose strategy includes maybe decentralized purchasing with multiple vendors. Leaders have very little insight in that case into what's being purchased, by whom. And they have zero visibility or zero capability to identify trends, to purchase items, etc., etc., etc., right? So, it really leaves them in a position where they don't have insights into what's being purchased, on what schedules, by whom across the organization.

[00:04:41] And that lack of data perpetuates an inability overall to monitor spending and to drive cost savings. We've also seen other credit unions whose strategy includes decentralized purchasing. But then they centralize the delivery. So and I know that sounds odd. Bear with me. So, they allow the branches and the different locations to purchase. And then instead of having those items delivered to their location, they still want to have them delivered to a centralized location, usually their main branch or their operations facility, where then they have a full-time courier who delivers all packages to the branches.

[00:05:20] So decentralized purchasing, but centralized. And as you can imagine, this still doesn't give leadership visibility into the purchasing details. And they're spending money to employ a full-time guy to get in as van and drive to the branches and to deliver all this stuff that they're ordering, right. So, in some cases where those locations are spread out over miles and miles and miles, in some cases maybe hundreds of miles, it's just an inefficient way to handle their procurement of various items.

[00:05:53] So, what we're looking at and what we've taken on is the ability to empower credit unions to leverage the right tools, the right resources, and provide the support that they need to experience a much more streamlined purchasing process, which results ultimately in both cost savings and time savings for them.

Host:

[00:06:13] Okay. You talked about leveraging the right tools as part of that, leveraging supplier relationships, right?

Like Amazon Business to really improve and centralize purchasing process. Can you kind of take me through how that's happening?

Barb:

[00:06:28] Absolutely. I have three great examples. I guess you could say I can't share the names to protect the innocent or the not so innocent. It's just because we don't have their.. we haven't gotten prior approval. So, I just want to preface these are true stories. I just can't identify exactly what the financial institutions are, but they're still awesome stories nonetheless, right?

[00:06:46] We work so closely with the credit unions and our customer advisors at Amazon Business. We have a great collaborative relationship across the system to focus on how we can improve the purchasing process at credit unions and truly maximize their benefits. Okay, so the first example I'm going to give you is a credit union that has 15 locations.

And their relationship with Amazon Business started with a focus solely on IT spend. Their accounting department wanted price visibility with full and with full transparency and access to that data. We gave them that collectively with our Amazon Business team. They were able to identify an opportunity to enroll in rebates, and they started to drive additional savings on top of the savings from an IT procurement or purchasing perspective.

So that was they were thrilled right out of the gate. They were like, oh, this is awesome. Second Credit Union has 25 branches and they wanted to get control over their non-contract spend. So, we had a couple conversations, talked about what that could look like. And our Amazon Business partners ran an analysis against their staple spend. So, we took all their spending at staples, their purchasing history, and found out right away that we could save them off the top $75,000.

[00:08:07] Not like, like just exactly just by purchasing the exact same things they were purchasing from staples, leveraging other brands, buying in bulk, whatever the opportunity was, we could save them $75,000 right out of the gate, and they were thrilled with that.

[00:08:23] This last story is one of my favorites because it's a friend of mine. There's a credit union in Texas with eight branches that are scattered across literally hundreds of miles. They had an operating model that included decentralized purchasing. So this is kind of like what I was talking about a few minutes ago. They use multiple vendors. So each location kind of purchases purchased through whoever they wanted to. That could be a friend that had a supply business for IT. There's some, you know, some local vendors who support workstations, servers, all that.

[00:08:56] So, it was all decentralized. So, they were already purchasing through who they wanted. But they were they had a centralized delivery solution. So, all that equipment, all those supplies were being delivered to their main office where they had that full time courier, pack up his van, get behind the wheel and do to do, you know, drive around and deliver all that stuff to wherever he had to go.

And it just it was a lot there were a lot of inefficiencies in that process. So, we enrolled them in our associated accounts program, still empowering all of those locations to make their own purchase is. But we worked with them and taught them how to leverage the power of data to identify maybe some red flags in purchasing where there were some odd purchases being made.

[00:09:40] Maybe inefficiencies in spending, where there opportunities now where they could buy some things in bulk and save money. And by leveraging our KVI program, they're driving so much in savings just from their purchasing habits alone, not to mention the fact that now they've repurchased, repurposed that courier, he's still doing deliveries to the branches for mail and stuff like that.

But it's not taking him. He's not spending his time with extra trips to deliver supplies that are needed. We've that's all going directly to the branches now. So another success story. And they're thrilled with the relationship.

Host:

[00:10:18] Lots of layers of improved efficiencies.

Barb:

[00:10:20] Exactly, exactly.

Host:

[00:10:22] You know, 25 years in the game, what piece of advice or just any advice would you give to credit unions looking to really enhance their supplier selection and overall purchasing process?

Barb:

[00:10:35] So, I would encourage them to think differently and to join CSS on our journey with Amazon Business. And I say that because I would emphasize the importance of data and transparency. That's one of the biggest values that we bring. The savings is important, but the ability to access that data and have visibility into purchases across the organization gives them such power to make smarter decisions around procurement and just operate in a more functional way and a much better way, right?

So, it enables them to identify opportunities to purchase in bulk and also to leverage our KVI program to drive savings on so many of those items that we've talked about, in my opinion, Brit, it's kind of a no brainer, right? So, I think every credit union should be a member of our associated accounts program.

Host:

[00:11:29] Boom. You said it right there a no brainer. Thank you, Barb, so much for joining me, sharing your insights on how credit unions can really make smarter buying decisions amid the industry's evolving challenges. It's been great having you. And thank you all for tuning in to the Amazon Business Podcast.