On this episode of TechSolutions4CUs, Alex McLeod, CEO of Parlay Finance, discusses how credit unions can enhance their small business lending through Parlay's loan intelligence system. According to McLeod, more and more credit unions are recognizing the opportunities in serving small businesses, and lending is a critical component.

Parlay Finance offers a front-end intake system, which they call a loan intelligence system (LIS), designed to help credit unions approve more small business loans faster. The system features a small business portal where members can submit inquiries. Using AI, the LIS processes inquiries in 10 seconds or less, with a mission to help small businesses access capital and improve their readiness for loans, while also making the process more efficient for lenders. McLeod states that a small business can submit an inquiry in 15 minutes or less, and a lender can review it in 10 seconds or less. This significantly cuts down on manual work, enabling credit unions to better assist members seeking affordable products to grow their businesses.

McLeod explains that Parlay's LIS is a unique solution addressing the difficulties in small business lending. Historically, lenders have relied on loan origination systems (LOS), which often involve manual and static workflows not well-suited for the flexible needs of small businesses. The LIS acts as an "orchestration layer" that gathers information, identifies optimal product fits, and directs data to the appropriate systems of record, such as the LOS. This automation eliminates much of the initial triage work often done manually via email, phone, or even paper.

The LIS integrates with a credit union's existing tech stack, primarily the LOS, by seamlessly sending information via API. The system ingests core data blocks for every small business loan request, including information on the business owner, the business itself, and the intended use of funds. It also incorporates validation data such as financials and tax returns. Data enters the system through user contributions and user-permitted pulls, such as credit scores (FICO, SBSS), Know Your Customer (KYC), Know Your Business (KYB) permissions, and tax forms. McLeod highlights that the LIS automates these data pulls, streamlining the process for both small businesses and lenders by reducing the need for manual data collection from multiple sources.

Credit unions often seek Parlay when they recognize an "intake problem"—the inability to provide small businesses with quick, digital answers regarding loan qualifications. McLeod emphasizes that small businesses now expect instant online applications or immediate qualification answers, a standard set by online lenders. Implementing an LIS allows credit unions to meet these expectations, offering a faster and easier experience than traditional manual processes. For credit union employees, an LIS transforms their work from hours of manual follow-ups to quickly reviewing processed inquiries, saving time and enabling them to focus on relationship building and providing guidance.

McLeod notes that Parlay typically serves credit unions in the $1 billion to $6 billion asset range, but can support both larger and smaller institutions. The decision to adopt such a system often depends on whether small business lending is a high priority for the credit union's growth strategy. McLeod believes that within the next two years, the challenge of quantifying small business creditworthiness will be "radically changing" due to advancements in AI, which can handle the vast and varied data points involved.

What started out as a simple interview for a written article ended up becoming a great TechSolutions4CUs episode.

Podcast host John San Filippo recently sat down (virtually, of course!) with the ever-insightful Lee Wetherington, Senior Director of Corporate Strategy at Jack Henry. They were chatting about Jack Henry's brand new "2025 Strategy Benchmark" research, which, as you might guess, polls bank and credit union CEOs on their big priorities. Lee kicked things off by saying the top-line takeaway for everyone rolling into 2025 is a fierce focus on boosting operational efficiency. Apparently, 2024 was a bit rough with downward pressure on net income due to rising costs (think staff, talent, and loan loss provisions), so everyone's looking to tighten things up.

Naturally, this conversation quickly veered into how tech like artificial intelligence (AI), machine learning, and even newer "agentic models" (more on that later!) can help. But Lee, being a pragmatist, pointed out a major "blind spot": Many institutions might not have the data infrastructure ready to actually leverage these cool tools for efficiency gains. He also touched on other big priorities: Banks are all about growing deposits, while credit unions are doubling down on growing loans and, no surprise here, attracting younger members. Lee made a strong case that all paths to growthlead through Gen Z.

Here are some of the top takeaways from their discussion:

• Efficiency is King, But Data is the Kingdom: The top priority across the board is improving operational efficiency. AI and automation are seen as key enablers, but their effectiveness hinges on having clean, accessible, and comprehensive data – a major hurdle many still face.
• All Roads Lead to Gen Z: Whether it's growing deposits or acquiring new members, understanding and attracting Gen Z is paramount. This means seamless mobile account opening (under three minutes!), divorcing account opening from immediate funding, and recognizing Gen Z's unique expectations.
• The "War" for Data: Ask First, Ask Best: With data so fragmented, Lee emphasized that there's a "war," not just a race, for financial institutions to become the primary data aggregator for their accountholders. This means proactively asking members for permission to consolidate their financial data (with clear benefits like better fraud detection and personalized advice) before competitors do.
• Branches Aren't Dead, They're Evolving: Despite the digital focus, physical branches still matter, even to Gen Z. Younger generations want the option of in-person help for complex issues or advice, making it a "both/and" scenario rather than an "either/or" with digital channels.
• Agentic AI and the Mind-Blowing Future: Lee got pretty jazzed about "agentic AI" – essentially AI models that can not only analyze but also act on information and coordinate with other models. He also touched on the rapidly expanding "context windows" of AI, predicting that within three years, institutions will be able to feed all their data into a model, leading to "speech-to-action" or "text-to-action" capabilities where you can simply tell the AI what you need, and it gets done.

Lee wrapped up by stressing that amidst all the regulatory upheaval and economic uncertainty, financial institutions need to stick to first principles. That means truly knowing your member, which requires data. He urged credit unions to leverage the trust they've built to "ask first and best" for permission to aggregate member data, because you can't be a "fast follower" in the AI game if you don't have the data fuel.

In this episode of TechSolutions4CUs, host John San Filippo talks with Chris Cox from Apiture to explore the evolving landscape of digital banking for credit unions.

Chris delves into Apiture's five primary solution sets:

1. Consumer banking services
2. Business banking services
3. Digital account opening,
4. Data intelligence
5. API banking

He emphasizes the increasing importance of a credit union's digital banking platform, suggesting it's now as critical as the core platform itself. The conversation highlights how digital channels are the most significant touchpoint for members today.

A key focus of the discussion is the strategic advantage of integrating digital account opening with the overall digital banking platform. Chris explains how this creates a seamless experience for new members, allowing them to establish credentials for all services from the outset and providing valuable data for tracking marketing effectiveness.

The episode also sheds light on the nuances of business banking, an area where Apiture has a long-standing presence. Chris points out the distinct needs of business members, such as complex payment options (ACH, wires) and sophisticated entitlement structures for employees, which differ significantly from consumer banking. He notes the growing trend of credit unions focusing more on serving businesses, recognizing the opportunity for new loan types and member growth, and solidifying their role as community anchors. The discussion also touches on identifying business accounts that might be currently operating under consumer account profiles.

Looking ahead, Chris discusses the transformative potential of artificial intelligence (AI) in digital banking. He outlines two dimensions: leveraging AI to improve software development processes internally and incorporating AI into client-facing solutions. Examples include a "data explorer" capability allowing natural language queries of data and the future possibility of highly personalized banking experiences and even "prompt-based banking," where members interact with their finances through simple language commands.

Ultimately, Chris envisions a future where credit unions can offer "super personalized experiences" to individual members, leveraging data and AI to truly understand and cater to their financial needs, thereby strengthening their unique position in the market. He concludes by expressing his excitement about the capabilities Apiture has built to support the business of credit unions.