The fight community FIs have never had to fight before, with Peter Duffy.

In the latest episode of the Digital Banking Podcast, host Josh DeTar welcomed Peter Duffy, Managing Director of Merger Advisory Services for SRM. The episode explored the sweeping forces reshaping community banking, from a fundamentally changed American consumer to a business model under mounting structural pressure. DeTar and Duffy discussed how technology has weaponized consumers' ability to seek the best deal, how millennials are banking with the six largest institutions at a 75% rate, and why community financial institutions are struggling to attract a younger generation that has little reason — yet — to look elsewhere.

Duffy walked through the structural challenges eroding the fundamentals of community banks and credit unions, including compressed margins, the battle for core deposits, regulatory changes, and the relentless need for scale. He noted that by 2020, the aggregate group of credit unions below $10 billion in assets could not generate net income before fees without relying on fee income — a trend decades in the making. Applying the four Ps of marketing, Duffy argued that product and price are essentially out of institutions' hands, making promotion the wide-open frontier where community financial institutions can meaningfully differentiate by transitioning from a service culture to a sales culture.

DeTar and Duffy debated two viable paths forward: pursuing scale through mergers and acquisitions, or embracing a boutique model built on deep member relationships and bespoke service. As an example of the boutique path done well, Duffy pointed to Southern Chautauqua FCU as an institution quietly executing this strategy with success. Both agreed the dangerous middle ground between these two paths is where institutions go to die. For listeners who want to go deeper on the M&A side of that conversation, Duffy's team at SRM has published the M&A Perspectives Report, a practical look at why consolidation is accelerating and what institutions need to consider before pursuing a transformational deal.

Transcript

[00:00:00] Pete Duffy: The American consumer was always looking for the better deal. But technology has weaponized their ability to discover the best price on a loan or a share or a car or a mattress.

[00:01:13] Josh DeTar: Welcome to another episode of the Digital Banking Podcast. My guest today is Pete Duffy, Managing Director of Merger Advisory Services for SRM. Now, Pete's a pretty boring guy, so honestly, I'm not sure if you even wanna stick around for this episode. Okay, clearly with an intro like that, you can assume I'm kidding, but Pete did self-describe himself as boring. He said, "For me, it's just about my family, my work, my fly fishing, and some reading." That being said, it's everything that comes out of those things that in my humble opinion makes Pete anything but boring. Now, if you've ever been to a conference in our industry or sat in a strategic planning session at a credit union or community bank, there's a good chance you've had exposure to Pete. And one of the things I've always loved about Pete is the brutal, honest transparency you get from him, whether on stage in front of a large crowd or behind closed doors in a small group, you get the same Pete. And one of the things that Pete and I have talked about in the past is the reality of just how much is going on and being talked about in our industry.

[00:02:24] Josh DeTar: And if you do go to any major conference and sit through all the sessions, you're likely gonna come away with more questions than answers. So how do you sort through it all? How do you come up with actions that will drive meaningful value at your institution? To do that, I think you've gotta be willing to have the hard conversations, and you've gotta say the ugly truths out loud. But there's something else that has to be considered in all of that. How do you say the hard thing with positive intent? How do you talk about it in a constructive and respectful manner? That's where the real value comes in. Now, Pete has spent a lifetime crafting himself, and self-admittedly, most of that crafting he said came through failure. Pete said failure is where you learn the most. Failure is not about blame. It's about identifying where do you go from here, So I'm super excited to welcome Pete to the show today to talk about where we are as an industry and honestly, where do we go from here.

[00:03:27] Josh DeTar: So Pete, thanks for joining me. Welcome to the show, sir.

[00:03:30] Pete Duffy: Well, thank you, Josh, and thanks for having me. I think it'll be fun to go through this.

[00:03:35] Josh DeTar: Yeah. You're one of those guests that I have to laugh at because, we always jump on, and before I actually hit record, it's the, "Hey, how are you?"'s, "How's your day going?" kind of what to expect." and you're one of those people where I had to very quickly say, "Hey, Pete, I love you to death, but man, you gotta stop talking," because you're saying too much cool stuff that's not on recording. Like, we gotta wait till we hit record. You've got a lot going on right now, sir. You've been kind of doing the circuit too, right? I think things are slowing down a little bit in the summer, but man, you had a wild kind of January to now, right?

[00:04:11] Pete Duffy: Walked in the door at SRM last March and, in those 14, 15 months, I went from, traveling 30, 40% of the time to nearly 100. After we're done with this, I got another day WFH working from home, and then I hit the road again. The summer's gonna be just as busy as the previous 14 months.

[00:04:35] Pete Duffy: Yeah, a lot going on. a lot of things to talk about and analyze and try to understand what to do with that information.

[00:04:41] Josh DeTar: Yeah. I think that's the challenge, right? 'Cause, I mean, you and I were talking about this before we started recording. I mean, Pete and I see each other a ton on the road, and we're at a bunch of these conferences together. And it is, I mean, like, man, from just January 1st till now, I've lost track of how many different conferences and events I've been to. And if you think about, you know, let's just call it 10 or 15 on a low end, and you think about maybe 10 to 15 different presentations at each of those conferences, I mean, you're well over 100 different presentations and topics and different perspectives. It is hard to make sense of it all.

[00:05:21] Pete Duffy: I mean, and here's the backdrop to that, Josh, as you well know, is there's a lot of stuff coming at you if you're at a conference or even if you're a board member walking into the boardroom once a month, and you're sitting down with a C-suite full of smart people who are dealing with this stuff every day.

[00:05:39] Pete Duffy: Well, this stuff, as a backdrop, is the fundamentals of the business have shifted materially in any way you look at fundamentals of US community banking, from the product to the pricing to where the consumer banks for their stuff and the way you try to reach them. All of that has shifted and shifted materially and in ways that the industries had not anticipated for the most part.

[00:06:11] Pete Duffy: And what it requires therefore is, a real tenacity in sticking with,n despite all the change and, the disruption of technology and other things, people, the consumer, still wants what they want, where they want it, when they want it, in the way they want it, and that's what drives everything else.

[00:06:39] Josh DeTar: Yeah. I've always found that so funny about, I think American consumers, granted, you know, my window of perspective is small, right? But I think especially American consumers, man, do we just embody that whole I want my cake and I wanna eat it too.

[00:06:57] Pete Duffy: Oh, no doubt.

[00:06:58] Josh DeTar: Right? Like, I argue this is why we still have freaking checks.

[00:07:03] Pete Duffy: Yeah.

[00:07:04] Josh DeTar: Like, those things could be done, don't have to deal with them anymore. But we're like, no, you gave that to me once upon a time. Don't you dare take that away from me."

[00:07:12] Pete Duffy: Right. Well, Americans, it's now wired in the DNA. We shop for the best deal. We have no loyalty except if the company's earned it through value plus competitive pricing. That's not a denigration of the American citizen. That's what they do. We don't go to the shopping mall unless it's 50% off day. And why would you? Because if you wait long enough, you know Memorial Day's coming or Labor Day's coming and there's gonna be another sale. And so we've trained Americans to get the best deal, and they are absolutely doing that on financial products.

[00:07:54] Josh DeTar: Well, I wanna carve out two very specific topics I really wanna talk to you about, okay? And we're gonna start with one, which is the change in the consumer, right? The other one I wanna talk about is actually the change to the business.

[00:08:08] Josh DeTar: But let's start with the consumer side because I agree. I mean, the American consumer has changed so much over the last 100 years, and heck, even in the last 20, 10, 5. And obviously, the advent of a lot of that is just the accessibility of information, right?

[00:08:28] Josh DeTar: You made a comment to me a while ago. You were talking about how, it was not that long ago, like I still remember going to a newspaper to look for where the best deal in something was, or to look for the sale or the ads. And now, Pete, like I don't even have to think about it anymore, Like, I don't even pay attention to it. I just wait until the business that I potentially want to or have done with in the past sends me a text message saying they're having a 50% off sale, and I'm like, "Great. Now is when I'm going to shop."

[00:09:04] Josh DeTar: Like, that has changed us so much.

[00:09:07] Pete Duffy: N- no doubt. And when you walk into the boardroom of a lot of America's community banks and credit unions, they're populated by folks, who have done a nice job of overseeing the institution over the years. But when I give the session that I do at board meetings, around the drivers of the business and how the consumer's changed the light bulbs go off because you have to remind people that we started the century by opening up the local paper to find the best mortgage rate.

[00:09:41] Pete Duffy: Now, people don't have newspapers, right? And you go to that thing in your back pocket, and you pull it out, and you do your security code and hit a couple of buttons, and you've got 10 loan offerings in seconds. get approved at the lowest rate a few seconds after that. And we'll talk later about what that's done to credit unions and banks in terms of what they've had to invest in technology and what it's meant to their margins, which I think is a lost point about the business.

[00:10:18] Pete Duffy: But I have board members telling me, "Yeah, you know what? We knew the earth moved under our feet. We just didn't know how dramatically and specifically, in some cases, how it did." But y-you look at other industries like telephones. There's research out there that says about 12, 15 years ago, 80, 85% of American citizens lived in a home with a landline, and the research says today it's 25%.

[00:10:50] Pete Duffy: Yet, when I speak at conferences with 300 people in the room, and I ask them to raise their hand, "How many of you still have a landline?" It never reaches 25% of the room. Never. and those of us that do, like I'm in New York right now where I live, and I have a landline because the landline, the cell phones didn't work on 9/11.

[00:11:11] Pete Duffy: But that aside, that's how dramatically AT&T's been disrupted. So the $300 million credit union or the 10, 15, 20 billion or Navy Federal, we've all been disrupted by technology and the way the consumer is shifting the way they do things. And those that are doing well today, like really well, the numbers are fewer, and the differences are becoming more stark, and the rest have to get their arms around that and figure out what to do next to deal with it.

[00:11:53] Josh DeTar: So what are some of the big changes you've seen in consumers both inside and outside of financial services that are impacting financial services?

[00:12:02] Pete Duffy: Well, even more unwilling to accept less than the best deal is probably the biggest one. Over the years, it's evolved from after World War II to today that the American consumer was always looking for the better deal. But technology has weaponized their ability to discover the best price on a loan or a share or a car or a mattress. So they've taken their DNA, that is, we gotta get the best deal, and they're adept at using the new technologies to do that. But while that's going on, this is really key. The millennials now outnumber the baby boomers by 50%. The boomers are at community banks and credit unions and the big banks.

[00:13:04] Pete Duffy: The millennials are at the big banks. 75% of millennials say they bank with the six biggest banks, and the main reason is technology and that there are a lot of branches. So even though the millennial doesn't use the branch, they still want it, and that's why Chase is putting up more branches.

[00:13:26] Pete Duffy: It's like Willie Lohman, the old bank robber. Why, why are you robbing banks? That's where the money is. Well, Chase is basically saying, "We're putting the branches there 'cause we're gonna get the money in, and then we're gonna get you hooked on our technology banking, and then we'll probably close some branches."

[00:13:43] Pete Duffy: B-but they have the scale to be able to afford to do that. So the consumer just is… The way they've changed is they've gotten even better at what they do, aided by technology.

[00:13:56] Josh DeTar: Yeah.

[00:13:56] Pete Duffy: And, the younger folks are very trusting of the technology and less loyal than the older folks, is the way the research seems to come out.

[00:14:05] Josh DeTar: You know what's funny, Pete, is as you were talking, I, I literally had an example from yesterday. I'm sitting out there in my backyard, my kids are playing in the backyard, and my daughter, who's now two and a half, is following in big brother's footsteps. And big brother started with a, a little, one of those, like Power Wheels cars, right? And then he graduated into a go-kart that he and I have been modifying like crazy, and many of you have probably seen pictures of, of Grave Digger, my son's go-kart at this point. And, Pete, we don't even have time. Like that has just evolved epically into the most ridiculous thing ever. But,

[00:14:47] Pete Duffy: It's hilarious.

[00:14:48] Josh DeTar: Now my little sister is like, "Well, I wanna drive something," right?

[00:14:51] Josh DeTar: And that poor Power Wheels that my son started with is so beat to heck at this point. Like, I need a new option for my baby sister. And then we're like, "Well, it needs to be something special for her. She can't just have like big brother's broken hand-me-down." and so I started doing some research on it.

[00:15:06] Josh DeTar: And of course, I didn't even bother going to the internet anymore. I literally just went to ChatGPT, and I use ChatGPT because ChatGPT is where I built a lot of Grave Digger out of.

[00:15:19] Pete Duffy: Wow.

[00:15:20] Josh DeTar: And started saying, "Hey, you know, it's time for Annie to get her first Power Wheels. Like, what should I look at?

[00:15:26] Josh DeTar: All of this. And long story short, it was really interesting. There were kind of two things that came out of that that I think are really relevant to this conversation. The first is that it, you know, that was where I kind of defaulted to doing some of my research. But not only was I just doing research, I was doing the shopping, and it was aiding me in the shopping experience, right?

[00:15:51] Josh DeTar: So that's kind of point number one. Point number two was it was interesting when we finally decided on what model and what one I wanted to get her. I'm not kidding. ChatGPT was like, "I know you well enough to know at this point that you're gonna look for the best deal. I found these three different places that you can buy it from. This place is five bucks cheaper." Five bucks, Pete. Like, this is no big deal on a purchase like this. But I guarantee you, it was the one I went to.

[00:16:27] Josh DeTar: What I did find interesting about myself, and I'm curious what your perspective on US consumers is around this, and I actually think that a lot of this, where my head was at, is influenced by the industry I work in, right? One of my follow-up thoughts, though, as I looked at, "Okay, this one's five bucks cheaper," is I was like, "Hang on. Timeout. Which one of these businesses is gonna be the most reputable?" Right? Like, so many of these kids' Power Wheels today, like, they're knockoff versions, right? And then these companies kinda fly by night. They'll pop up, they'll get a bunch of these knockoffs from China, they'll sell them, and then when yours goes kaput in a week, there's no... Nobody cares. There's no recourse. There's nothing, right? And so I was like, "Hey, it may be five bucks cheaper, but am I gonna regret this a week after I get the thing?" And so that did slow me down a little bit, but I thought it was really interesting that it picked up on, like, you're gonna care about saving five bucks on this thing. And so, you know, how do you think that mentality of the consumer and this next generation of even ability to get insight into the products and services we're looking at through AI tools, how much do you think that's impacting financial services, and specifically the community financial services?

[00:17:50] Pete Duffy: You can start with this. fintech began making consumer loans in the year two thousand and five. By twenty eighteen, seventeen years later, fintech and neobanks were originating more mortgage loans than the banks and credit unions combined according to the Federal Reserve and the Treasury.

[00:18:14] Pete Duffy: On personal loans, they grew to about a twenty-eight share in that roughly fifteen to seventeen-year period. So, there's good and bad with that. We know what the good is. It's easier to get a good deal, and it's easier to shop. The bad is, not as easy to identify. And the reason is I go around the industry and speak at conferences, facilitate roundtables, do board meetings, and no one's aware of the market share that SoFi and the fintechs have built.

[00:18:55] Pete Duffy: They just know they're out there nearly ubiquitous now. But to think about that the first bank of the US, which is what that bank was called, back in eighteen thirties or so, started out as the first bank, and we come all the way to twenty twenty-six, and there were thirty-two thousand banks and credit unions, and now there's eighty-eight hundred.

[00:19:21] Pete Duffy: And most of that decline came before fintech made their first loan. But now fintech is impacting the business, but they're doing it at a time that's misleading. And here's why. This is key. What drives the economy? Being employed and low rates. The consumers enjoyed in this century about twenty-one of the twenty-five years of very low rates.

[00:19:54] Pete Duffy: So credit unions and community banks have enjoyed some nice loan business for most of this century, but it's because low rates have brought everybody and their cousin into the consumption game. So why is that bad? Well, that's not for any of us to say. The bad is that when your goal is to be loaned out versus my goal is to have more market share than my competitors, here's what happened in the last twenty-five years.

[00:20:33] Pete Duffy: I'm a community bank or credit union, and I'm loaned out, and my market share has gone down. And I'm making less because now there's more competition, and this thing's weaponized the consumer's ability to get the lowest loan rate and the highest deposit rate. So I'm not only not growing like the market, I'm not earning like the market.

[00:20:56] Pete Duffy: And now I look up, and after five or six years of basically flat growth for almost all the players and declining earnings for nearly all, I'm realizing that what I thought was big enough in order to be able to invest in marketing and technology is now nowhere near big enough. And therefore, I now realize I can invest the way the big guys can, and I need to figure that out because that's the only way we're gonna be able to add more members or customers and keep the ones we have is by investing in the business.

[00:21:43] Pete Duffy: So it all occurred in a way that masked the underlying fundamentals and how they've changed.

[00:21:51] Josh DeTar: So that's a great transition over to kinda, we talked a little bit first about the change in consumer behavior. Now let's talk a little bit about the change in the business. Like you said, I mean, there's been a significant consolidation over the last 100 years and especially over the last, you know, 20 or so.

[00:22:13] Pete Duffy: Right.

[00:22:14] Josh DeTar: What does that mean for the industry? So dive a little bit deeper into, you know, kind of the challenges that the market is facing in terms of, compressed margins and, you know, inability to attract new account holders, and talk me through that.

[00:22:32] Pete Duffy: Well, that's a real mouthful, and there's a lot of stuff we can, can and will cover. So one of the things that I find useful in these kinda conversations and in boardrooms is to set a level set, well, what's driving the business? And those, those very things are alsp they're all accelerating, and they're also becoming dri- and have become drivers of consolidation.

[00:23:01] Pete Duffy: So the drivers of consolidation, I think there's about a baker's dozen. There's about thirteen, fourteen drivers of consolidation, starting with consolidation itself as a driver. What does that mean? When First Tech and DCU announced that they're merging, I got inbound calls. The point being that the credit union that had a billion five years ago in assets and was feeling pretty good about things now has five years of, of, little to no growth and, and eroded earnings.

[00:23:34] Pete Duffy: And a lot of that is, again, not somebody's fault. It's just the way the business has evolved and the other drivers, which we'll get to. But you're now one point three billion, and it's nowhere near enough, and you're saying it out loud. And when big deals get announced, it gets more of the others to say, "Yeah, I gotta figure this out."

[00:24:01] Pete Duffy: And so more are getting engaged in it, and it ends up feeding on itself, You'll see that as we did with banks and in other industries. You know, for example, where's Braniff and TWA these days? They're gone. Eastern Airlines, gone. Continental Airlines, gone. Why? 'Cause the consumer wouldn't get in the seat if it wasn't the lowest airfare.

[00:24:25] Pete Duffy: So we're just experiencing that in financial services. The more drivers of consolidation is the need for scale. Let me give you a couple of data points on the economy of scale. Back in 2000, as I was going around the industry, I was pointing out that actually at that time, a hundred million in assets seemed like an adequate economy of scale.

[00:24:56] Pete Duffy: Here, here's how I look at that, and many more are starting to. At a hundred million, your net interest income paid for your non-interest expense. So mathematically, on a balance sheet, what that means is the income I make off of loans and investments, subtract cost of shares or deposits, and that leaves me a net income that I then subtract non-interest expense: salaries, branches, marketing, conferences, telephones, or technology.

[00:25:36] Pete Duffy: What is that in the income statement? At that moment, net interest income minus non-interest expense is ROA before the provision and before fees. Putting the provision aside for a second, what you're looking at is the net income off the core business before you add in fees. In the year 2000, at a hundred million and above, the aggregate group of credit unions had a net income before you add in fees at a hundred million.

[00:26:11] Pete Duffy: I was telling whoever would listen, "Next year, it won't be a hundred million, and the year after that, it won't be two hundred." Every year in this century, except one, it took a larger asset size to have an ROA before fees. And in twenty-twenty, the aggregate group of credit unions with assets less than ten billion didn't have an ROA before fees.

[00:26:42] Josh DeTar: Wow.

[00:26:43] Pete Duffy: There are some exceptions, but the aggregate group below ten billion lost money without fee income. And the thing is what could we have done differently?" Well, you know, I guess you could try to get the Congress to not let Apple into your business because that's part of it.

[00:27:03] Pete Duffy: Or you could have staved off the in-introduction of this thing in the way people consume and shop for financial services. So much of what's made that happen was outside the institution's control, which made it that much more critical to know what to focus on. and like you shared with earlier before we got on, there's an awful lot of people that advise and do strategic advisory in boardrooms of banks and credit unions that were not giving our clients this information, which would have had I believe, the effect of having them look at the business and say, " Here's another driver.

[00:27:47] Pete Duffy: We need to go out and gather and hunt because being service-focused isn't gonna get you there." Here's what I mean by that. The good old First Bank of the US again. From that moment till about two thousand and three or four, many years later, the CEOs of banks and credit unions would open the front door in the morning, and the community would come in and drop off the raw material.

[00:28:18] Pete Duffy: If you're Starbucks, the raw material is a coffee bean and cups and that kind of thing. The raw material of a bank and credit union is deposits. The finished good is a loan. The building never had to forage. They opened the door , the raw material walked in, and their neighbor came in behind them and took out the finished good.

[00:28:42] Pete Duffy: Unlike many other industries where you have to go out and get the customer and bring them in and show them some presentation, and they say yes or no, and if they say no, you learn from it and figure out how to get them to say yes the next time. The building never had to forage.

[00:29:02] Josh DeTar: Yeah.

[00:29:03] Pete Duffy: And in the throes of having to learn how to forage, in comes Apple, Amazon, Google, SoFi, and technology that allows the consumer to find the best deal.

[00:29:17] Pete Duffy: And it's been a major disruption in the way the business works, and it's driven by the consumer.

[00:29:25] Josh DeTar: Okay, I wanna touch on that for a second. I was just about to make a note of that, but since you gave me a pause. This is something I think we've talked about a lot on the podcast, and I've been, pretty open about my views on this,

[00:29:39] Josh DeTar: But I think that that's one of the fundamental challenges of community financial services, is they are not expert hunters. And the challenge is the new challengers to the space, that is what they're best at. That is what they were bred out of. That was their mission statement at the very beginning.

[00:30:04] Josh DeTar: And so I'm with you. I love my Apple devices. I'm an Apple junkie. I'm sitting here on an Apple computer with my iPhone next to me, my Apple Watch on my hand, my iPad next to me, but they're not in the best interest of the consumer, right? Apple wants to make a dollar off of me. They don't wanna see me a dollar richer, right? Sure, if they can make me a dollar richer and they can make 10 out of it, maybe they'll care, but that's the only reason that they would.

[00:30:30] Josh DeTar: Sorry, not sorry. That's the reality of it, right? The community financial institution, on the other hand, wants to see me a dollar richer. They wanna see my financial position improved, okay?

[00:30:40] Josh DeTar: But Apple is an absolute expert at going and getting customers in whatever line of business they choose to go into, right? Yes, they've had some starts and stops and some failures along the way, but in all reality, at the end of the day, they are phenomenal at this job. Same with something like a SoFi, right?

[00:31:02] Josh DeTar: They came into this, and I would argue if you talk to the people at the very beginning of this whole thing, they didn't say, "We're gonna go create a touchy-feely, feel-good, awesome, super helpful financial services like component." They said, "We're really freaking good at getting customers.

[00:31:22] Josh DeTar: Where's an area we can disrupt and go steal a bunch of customers and make a ton of money?"

[00:31:25] Josh DeTar: And they said financial services, because that was their foundation, customer acquisition, right? And so our competition is an expert forager, as you say, and no offense, but our industry has not kind of been built with that in our DNA to be expert foragers.

[00:31:47] Josh DeTar: That's a challenge.

[00:31:48] Pete Duffy: No doubt. and it's all occurring while the other drivers are accelerating, like regulatory requirements and the cost of technology, something that I call the battle for core deposits, which I hope we have time to get into 'cause it's, it's a hummer. But here's a way that I found to be, for myself anyway, pretty helpful to dimensionalize where we are with this part of the business and how it's evolved, and that's hunting and gathering and getting customers.

[00:32:22] Pete Duffy: It's not the bank and credit union's fault, It's simple math. They never had to go hunt and forage, so why would you? And by the way, you're federally regulated, and that's got a whole nother element of what drives your day every day, unlike Apple or Amazon.

[00:32:41] Pete Duffy: So that said, now let's go back to the fundamentals of marketing and the fundamentals of a business. And if they have taken marketing, they probably are familiar with the four Ps. The four Ps of any business is the product, the price, the place, and the promotion. So if you think about banks and credit unions, the product is loans and deposits.

[00:33:08] Pete Duffy: And I remember when I first got in the business, there was an argument over whether a deposit was a product. It's a product. so product, loans and deposits; price, the rates; place, branches, call centers, website, and now digital stablecoin, the iPhone. And the interesting part about, place is that it's still evolving.

[00:33:35] Pete Duffy: But for years, it was just the branch, and then you added a call center, and then you added a website. Well, here's the point. The final frontier for banks and credit unions on the four Ps is promotion. Because product and price is almost completely out of your hands. If you go a basis point higher on an auto loan, you're not getting the loan.

[00:34:04] Pete Duffy: And if you're a basis point lower on the checking rate or the one-year CD, you're not getting the money. It's driven by the consumer and a competitor who's willing to give it to them because they're a hundred and fifty billion in assets and they can afford to. So product and price are simply we match the market or we don't get the business.

[00:34:29] Pete Duffy: Place is still evolving and there's some investment that's probably going to have to be done there. And it's why stable coin is going to take off and digital and all that. But the fourth P, now that's an area where it's a wide open field. Here's the deal. That's also an area, from my background I can speak with some confidence with this, where a company can spin up and spend a lot of dollars before they know if it's working or not.

[00:35:03] Pete Duffy: 'Cause you've bought the media, the frequency, the messaging, the branding, and all that goes into that, and you're six months in and membership growth is still less than 3%. So where we are in the business is we've got the aggregate group of credit unions, and by the way, community banks for the most part too, at below ten billion, are not generating enough income to invest in technology and marketing the way the bigger folks are.

[00:35:38] Pete Duffy: And those are the areas that you really wanna be investing in, and they're expensive, and there's risk. So it, it's having the effect on boards that not all, but it-it's all are starting to dial in, where boards are saying, "We not only need to take a closer look at inorganic growth merger, but we gotta figure out what we need to aim for in scale so that we don't waste our time on something that's too small.

[00:36:16] Josh DeTar: You know, Pete, I think that's one of the challenges. I mean, there are so many different things to talk about here. So, for starters, let's talk about margins, right? You talk about margins being a big key component of this, and it's because of exactly what you were just talking about.

[00:36:32] Josh DeTar: It's scale, right? Let's say a highly effective marketing campaign costs us $100,000, right? Well, we need $100,000 to spend. But the challenge is, if I make 0.1% on $100 and I do that 10 times, I don't have $100,000.

[00:36:54] Josh DeTar: But if I do it a billion times, I have $100,000. Maybe. I don't know. Siva, check my math on that later, but you get the point.

[00:37:05] Josh DeTar: The volume does it. This is how Walmart became so competitive, right? Hey, I'm able to offer it at a crazy low price. I'm gonna make 10 cents when everybody else is making a dollar. I'm just gonna sell more of them, and that volume will get me the overall revenue that I need, right? And

[00:37:25] Josh DeTar: So this feeds into what you were talking about earlier in terms of, the consolidation and the fact that that $100 million credit union now needs to be a billion or $10 billion to be able to compete at the same level. It's because that compression on margin means that I have less to spend on the things I need to do to be competitive and to attract the next generation of consumers, right?

[00:37:52] Josh DeTar: At the same time, you're also dealing with the fact that you've got so much competition and availability for people to see the competition and the rates for your goods and services more than they've ever had. And so it comes down to the promotion side of things being the key element, and you've gotta have a compelling reason for somebody to choose to do business with you.

[00:38:18] Josh DeTar: Because at the end of the day, everybody's gotta make money at some point, right? So we can't just drive this to a complete and utter zero, like if you offered me a 0% auto loan rate, like of course I'm gonna take that all day, every day,

[00:38:31] Josh DeTar: But we can't just drive everybody to zero, then it ceases to work at all. But if everybody's at 1.9, why do I choose you over somebody else at 1.9? And there's a whole multitude of factors that go into that, so you kinda got all of this happening all at once.

[00:38:50] Pete Duffy: Right. it's a perfect storm to overuse an overused phrase. It really is a perfect storm because the drivers are accelerating. Here's another one for you. We mentioned before the battle for core deposits, and I remember, Well, if you think back to the Great Recession and coming out of the Great Recession, which was a housing crisis in the beginning, and then it morphed into nearly a global pandemic of bad economy, staved off by years of low rates that got the consumers all over the world to go back and spend.

[00:39:27] Pete Duffy: Well, here's the deal. Coming out of the Great Recession, the FDIC turned to the banks and You lever up in the good times, and you build up your balance sheet off of borrowed funds and make a lot more loans than you could if you were just lending out only your deposited money. You borrow, make a lot of loans, pass the insurance fund's ability to pay for your bad loans when the economy turns around and goes bad.

[00:40:00] Pete Duffy: So here's what we're gonna do. You're gonna pay insurance on borrowings, not just deposits." Now, the credit unions don't pay insurance on borrowings yet, but here's the impact that that's had. And why, among other reasons, why I've been saying regulation and changes in regulation are a driver of consolidation, 'cause here's what the banks, the big banks did.

[00:40:27] Pete Duffy: The banks and credit unions were always right on top of each other on the cost of deposit. Now, you'll hear around the industry, "Well, credit unions offer higher rates." They probably do. But what the banks do is they pay the rate that they need to to get the money in, and so they don't go off their rate sheets for the most part.

[00:40:48] Pete Duffy: So the way to understand who's paying more is to take interest paid on deposits, and you can look that up by doing the research on S&P Global off the call reports. So that's a long way around explaining that I started presenting to credit unions right after Sheila Bair at the FDIC changed that on the banks to make them pay insurance on borrowings.

[00:41:14] Pete Duffy: I started predicting to boards, "You're gonna wanna boost your yield on earning assets. Do better in the investment portfolio, keep getting scale, because the banks are about to turn deposit gathering into a war." Because borrowing costs are here, but core deposits cost this, so if you're the bank, you're not gonna borrow anymore.

[00:41:38] Pete Duffy: You're gonna go after core deposits like never before. And here's what happened. The banks and credit unions were on top of each other for years, and after two years of that change on paying insurance on borrowings, they went like this and have been there ever since. And what that's doing is it's making it harder to grow deposits if you're a credit union, and it's costing you more to keep what you got.

[00:42:05] Pete Duffy: So your margins are eroding, as it is for the community banks and all the institutions without economy of scale.

[00:42:15] Josh DeTar: Okay, so that brings us all the way back to one of the things that you touched on at the very start of this, right? Which is a lot of the challenges that community financial institutions have faced, and let's look at, I mean, there's challenges between credit unions and community banks, but I mean, I think you and I both would agree while there's still some jockeying for position in that, there's a whole bigger swath to deal with than that jockeying. But a lot of this is factors that are outside of their control.

[00:42:47] Josh DeTar: Everything from regulatory changes to introduction of new players that were never on the bingo card for being a competitor, to global economic shifts, right? All of those things are having an impact on your business today.

[00:43:06] Pete Duffy: Yeah. And the thing that's interesting about it too, Josh, and you can see it if you're paying attention to it, and, I, like it or not, nerdy or not, I eat, sleep, and drink this stuff. And so I look at how institutions compete, and for the first time since I've been in the business, you can see the money center banks,

[00:43:29] Pete Duffy: JPMorgan Chase. Chase, B of A, Wells, Citi, Truist. For the first time, you can see them almost specifically focused on leveraging their girth, their scale in the marketplace. and I think what's going on is they've-- they now pay insurance on borrowings. They're seeing...

[00:43:57] Pete Duffy: Jamie Dimon told in a town hall to the whole bank at JPMorgan Chase about three years ago, "Look, you guys should all be scared shitless because the fintechs are coming after us and, we better get on the horse." And so the big banks have seen things change on them that's made them say, "You know what?

[00:44:18] Pete Duffy: We're really not leveraging a lot of our strengths the way we should," and one of them is scale. Here, here's some numbers for you. The fourteen publicly traded US banks with more than a hundred billion in assets have together opened more than twenty-five hundred branches over the last ten years with net increases of at least five in ninety-six markets while they're paying up on deposits, while they're marketing on TV, while they're acquiring fintech companies.

[00:44:53] Pete Duffy: They're clearly saying, "We're gonna invest, and nobody's gonna be able to keep up with us, and we're gonna give the consumer what they want," which is why the millennials are with them to the tune of seventy-five percent of millennials. and we're now gonna be much more serious about consumer banking and you can see it in the way they're investing their money.

[00:45:14] Josh DeTar: Okay, I got a loaded question for you then.

[00:45:17] Josh DeTar: So I'm a consumer. Why do I give a flying crap about a credit union or a community bank at this point? The fintechs, the big banks, they have more scale, so they can, if they want, offer lower rates to me. They supposedly have better technology, right? They've got obviously more reach and visibility and more branches globally and all of those things. Why do I even care? Who cares if credit unions, community banks just cease to exist?

[00:45:50] Pete Duffy: Yeah, just like other businesses, whether it's life insurance or Starbucks coffee or a chain of barbecue restaurants in Dallas-Fort Worth, what do you do? you open the door and go get customers. And the clarion call in the credit union and community bank space is growing louder every day that we gotta go-- we, we need to transition tomorrow to a sales culture, not just a service culture.

[00:46:31] Pete Duffy: In other words, we're gonna give really good service because then we're gonna ask them to do more with us and ask for the order, ask for the mortgage loan, ask for the auto loan, put the credit card application in front of them, and do battle. And th-there's a multi-pronged strategic effort that's gonna need to occur with literally all of them.

[00:46:55] Pete Duffy: The Navy's already doing it, but most of the other ones are saying, "You know what? We, we, either are already doing this, or we're in the throes of doing it," where we're gonna be good at selling and, and in the best definition of the term selling, which is meeting consumer needs in a manner that's meaningful to them and, and they'll pay us for it.

[00:47:18] Pete Duffy: And that's why you see millennials paying fees to bank even though they wouldn't have to pay a fee for some of those services at a financial institution because the fintechs have made it so exquisitely easy for them to do it. So the multi-pronged, strategic approach is gonna be get scale, get younger in the member base, and get even with the market on technology, meaning I gotta give them what they want because the other guy or gal is.

[00:47:52] Pete Duffy: And they're interconnected because once I have scale, just ask the one billion dollar asset bank or credit union fifteen years ago if they think they have scale now and they're one point five billion. They know they don't. So the point there is, once you're making that incremental income, you have to be shrewd in the way you invest it in the things that move the needle on market share, getting customers in the door to bank with you.

[00:48:20] Pete Duffy: And that's the fourth P, promotion, which is marketing, sales, advertising, PR, community involvement, and all those things effectively while doing what you can on technology to where as, as you get bigger, you can sustain the scale and go get more. Because if you don't sustain it, you'll fall behind, and we have many examples of that in community banks and credit unions who did have scale and, and now don't have-- Actually, what I should be saying is competitive scale.

[00:48:56] Josh DeTar: What do you mean by that?

[00:48:58] Pete Duffy: Producing income off of my core business at a level better than most of my competition, which affords me the ability to invest in the things that'll make the consumer bank with me instead of somebody else.

[00:49:13] Josh DeTar: What I'm curious about is, from your perspective, I'm a consumer, and I get an advertisement for a financial product on my phone from Chase, and I get a postcard in the mail from ABC Credit Union in my local community. Why should I do business with the credit union when everything that I'm seeing is that these big banks have bigger scale, bigger tech, bigger this, that, and the other? Why should consumers even care, and what should be the promotion from these community financial institutions that would actually get me as a consumer?

[00:49:49] Josh DeTar: I was actually just talking to two guys within our company who I would consider younger guys and I was talking to them. I think I'm gonna have both of them come on as guests together on the podcast to talk about this sometime. But I was talking to them, and granted, they work here, they work in this industry, right? But I was asking them about their generation and themselves personally and who they bank with, and they were like, "Yeah, dude, big banks. Big banks, the SoFis, the fintechs, that's where we all bank," right? And they were like, they, 'cause they do just fine.

[00:50:23] Josh DeTar: I don't need anything special, so I don't really care about the services that a credit union or a community bank offers." Now, my argument was, there's gonna come a point in your life where you are. Wouldn't it be nice to already have a relationship with somebody that's gonna care? Right? But I'm curious from your perspective, why as a 20-year-old US consumer, why should I give a crap that credit unions and community banks stick around?

[00:50:47] Josh DeTar: And then how does that influence what the promotion should be from those financial institutions to attract my core deposits?

[00:50:55] Pete Duffy: That, that's a book. But it starts with the fundamentals of a business, the four Ps, and you go into that promotion area and, you know, the best companies that sustain great performance year over year over year, if you think of Procter & Gamble, and those like that, here's what they do.

[00:51:16] Pete Duffy: They never stop talking to the actual customer - like you just did with the two colleagues at your firm. Who do you bank with? Why? Why not? Have to leave the desk, go out into the community at the work fairs, the job fairs, sponsor the job fair, all of the community events where you can be and interact with consumers.

[00:51:42] Pete Duffy: And then the thing that comes to my mind is once you have some, pay them to go get you more of their friends. It's fascinating to me that we have this thing called net promoter score, and I get it. I've seen it, and it's not that I don't like it, but there's a lot of attention being paid to it, but we're still declining in number and share growth.

[00:52:06] Pete Duffy: So it, it's not enough to measure. You gotta go and measure different stuff, which is how many people that are potential members or customers did I talk to today and this week, and how many presentations did I make to them? It's trench warfare. You have to go out and, and put your best people in front of the consumer and, and ask them to give you a shot.

[00:52:37] Pete Duffy: And then what you have the shot at is to prove that you actually do care more, which I don't think is gonna be very hard for a lot of our clients, community banks and credit unions. They're good at that. They're really good at it, and they say it, and they mean it when they say it. But with the younger folks, if you're not where they're banking, you're never gonna get to pitch them.

[00:53:00] Pete Duffy: So you gotta get there.

[00:53:02] Pete Duffy: It starts with that.

[00:53:04] Josh DeTar: Pete, I'd love to get your perspective on this. One of the things that I've been talking to a lot of folks about lately is the concept of niche banking services. We live in a commodity market, right? And as a commodity business, back when it was a lot harder, let's just be honest, it was a lot harder for consumers to shop.

[00:53:26] Josh DeTar: I mean, even just go back in the day and when I had to go buy new clothes, right? I would drive to the mall, and I would walk into Sears and then JCPenney and then Macy's, right? And I would go to each of those stores and see who had the best clothes, the best service, the best price, the combination of all the things that fit my style.

[00:53:52] Josh DeTar: Each of those stores had a little bit of differentiation in, well, if you're this type of person, we're gonna have this type of clothes. You're gonna be more likely to shop with us, right? I guess the stark contrast would be like Hot Topic or something, right?

[00:54:04] Pete Duffy: Yes.

[00:54:05] Josh DeTar: It's like, "Hey, we got you." And then there came the ability to shop online, and then there became clothing retailers that were like, "Hey, we'll send you… Like, tell us about your profile, and then we'll send you a box of stuff, and then you try it on, and then you just send back what you didn't like. But that way you can try it all on in the comfort of your own home," and all of this. and what happened? Well, you don't see Sears anymore. You don't see as many people at Macy's anymore,

[00:54:32] Josh DeTar: And so I argue where you have an opportunity is to say something, almost use a, like, " We're Hot Topic. If you really like graphic, dark, Black, ominous clothing, we got you." you like punk rock bands, we got you." Instead of saying, "Well, we've kind of got a swath of everything, and we just-- we hope to attract some of you." And I think that's a position that financial services is in, and I'm not saying it's right for everyone, right?

[00:55:07] Josh DeTar: But I do think that there's a really big opportunity for folks to say, "We are not financial services for everyone. We are financial services for you," and clearly identify who you are, and then not just say, "We know you, but we have tailored products to you. It's not just that we have the same CD product as everybody else, we just put a dog on it and then said we were the CD, you know, for dog lovers. Well, no, because you're a dog lover, we know this about your personality, and we know you need this type of financial product, so we actually changed how our CDs work to work better for people who own dogs." That's probably unrealistic, but you get where I'm going with that, right?

[00:55:53] Josh DeTar: What's your thoughts?

[00:55:55] Pete Duffy: Yeah, I think it, it's the marketing opportunity of a lifetime for those with some courage and, and some money, and, and here's why. Think about what we're looking at every day here in the US. I'm speaking as Pete Duffy here, and, and, Josh and I are kicking the business around, and some clients or potential clients are listening.

[00:56:17] Pete Duffy: If you look at how much money some of the competition to community banks and credit unions make in a year and what the owner of the company brings home. You know, think about what is easy to look up and people are seeing it every day, stories about, this company that came into the business as a, as a, a competitor, and they're building their own rocket ship.

[00:56:48] Pete Duffy: And they're getting married and flying a bunch of friends over to Florence for their wedding. And meanwhile, their people aren't making enough to where not only both spouses work in order to put food on the table, but the oldest kid is also. What's the point? The point is, we're a community bank and a credit union, and the profits we make get reinvested in you and the local community because we value you,

[00:57:21] Pete Duffy: You don't have to name names, and you can prove it. You can prove it because the rates will be about the same. Everybody's matching each other on rate. But that's why when you distill it down to, well, the messaging's all there from a marketing standpoint. It's just you and I on the back of a napkin can come up with stuff that would work.

[00:57:44] Pete Duffy: It's where do you put that messaging and with who delivers it and where and how often? That's all marketing 101. But to us, the future of the business is doing that really well, and it's gonna take some investment. And in order to have the investment, you're gonna need to scale.

[00:58:07] Pete Duffy: So you've gotta start thinking about while you're ginning up a better approach on organic growth, you're also putting other stuff aside and saying, "For the good of the company and the customer and our institution, we gotta look at who we should merge with and get some scale, and then look again," because most of us do need more than just one and get there.

[00:58:34] Pete Duffy: Now, that can sound self-serving 'cause Pete is an advisor on merger, but the math is all there. Every math point that we've discussed today is true, and there's no getting around it. And the solution is multifaceted and includes organic, which there are things that can be done to boost organic growth.

[00:58:57] Pete Duffy: It includes better efficiencies with the assets you have, and it includes knowing your customer really well and where they are and how they bank and what they need and want, and it also includes the need for scale.

[00:59:12] Josh DeTar: You know, I wanna provide a thought to that, and it's that I absolutely agree, right? Like we've talked about how business needs scale, but I would argue business doesn't necessarily need scale. Business needs to be sustainable, and a lot of times that comes through scale, right? At the same time, I think one of the things that I personally wrestle with when I think about the differentiation that a community financial, you know, institution offers, is that deep-rooted connection to their community.

[00:59:49] Josh DeTar: And as you get too much scale, you do get disconnected from that, period, end of story, non-negotiable. You reach a certain point where scale is so large that that personal touch gets lost. So I actually argue that too much consolidation is a bad thing for the American consumer. We need small institutions that have 2,000 members, and they're really freaking good at serving those 2,000 members. The challenge is they've gotta be really, really efficient with their business and maintain profitability in that business to stay afloat, to be able to service those 2,000 people, right? And this is where, like, then you have to start thinking about, "Okay, well, do we think of ourselves as a small 2,000-member credit union as a boutique? And you know what? My rates are not as good as someone else's." But what you're gonna get for those rates is something no one else will ever be able to offer you, right? And then it comes back to what you were talking about. It's the promotion side of things. Then your consumer has to see and understand that value and even be able to articulate that value for you to help bring you other customers, driving down your customer acquisition cost, right? So there's more than one way to make a successful, profitable business. Scale is absolutely one of them. Boutique is also absolutely an option. I think that we need both of those, but I think the challenge is, if you can't fall somewhere in a dangerous middle. That dangerous middle is where you go to die, right?

[01:01:30] Josh DeTar: And so we're gonna see value from institutions with scale. We're gonna see value from institutions that do it really well and stay small. I think we need both, but we don't need anything in the middle, and I think the middle is where you see a lot of that consolidation, if you're in that gray middle, you need to be thinking about the consolidation and scale side. If you're not, you need to be thinking about how we are boutique?

[01:01:58] Josh DeTar: How can we be differentiated? How do we articulate that? And how do we run a successful business in that model?

[01:02:06] Pete Duffy: Yeah. You know, I can't argue with that. I'm actually aware of a credit union — Southern Chautauqua FCU — that does things more in a boutique nature, who really understands the members that they're going after, and they're really good at communicating with them. But it's not out there in large numbers.

[01:02:26] Pete Duffy: And I'll tell you, one of the differentiating factors of the way this credit union is run is they are all over their members. They're communicating with them all the time. They really understand them, and stuff becomes bespoke in the way they deliver. That's a shift that some could make, and then there's the shift that is some combination of better organic growth while trying to bolt on more scale through inorganic.

[01:02:59] Josh DeTar: Pete, I'm gonna put you on the spot. Are you able to share that credit union?

[01:03:03] Pete Duffy: Yeah, I don't have his permission.

[01:03:05] Josh DeTar: Okay. Ask for permission, and then when we post in this episode.

[01:03:10] Pete Duffy: I absolutely will.

[01:03:11] Josh DeTar: 'Cause I wanna give him the shout-out, right?

[01:03:12] Josh DeTar: I love to see folks that are really understanding that the game has changed, and so how are we gonna play the new game, and what path are we gonna choose, and how are we gonna go down that, and what are the lessons that we've learned?

[01:03:27] Josh DeTar: one of the things that I also wanted to touch back on that you had mentioned earlier, Pete, was I think the challenge for a lot of the institutions that choose, especially the, "Hey, we're gonna stay more boutique bespoke. We're gonna go that route. We're gonna try and change how we do marketing.

[01:03:45] Josh DeTar: it's actually easier for me to be a completely unknown entity, come in with a colossal amount of VC funds, and just have a full dedicated marketing effort to grow my business than for a credit union to say, "Hey, we're all of a sudden gonna be more sales-oriented. We're gonna go on the hunt for new members, and we're gonna do it this way," and for them to grow. And so they're gonna put in a lot of effort, and one of the things that I, any chance I get an opportunity to talk to executive teams or specifically boards, is do not freak out when six months later you haven't seen this massive change.

[01:04:30] Pete Duffy: Right.

[01:04:30] Josh DeTar: You've gotta stay the course, and you've gotta make the right choices, right? You've gotta have the right people in place, but then you've gotta trust 'em.

[01:04:39] Josh DeTar: Because it's gonna take time, right? I always use the analogy of the Dettar family Christmas party, which there isn't, by the way. but a lot of times how these things work, Pete, is, you throw the annual Christmas party for everybody, and two people show up. And then the next year, three people showed up. And if you say, "You know what? Only three people show up. We're just never gonna do this thing again," then that's the end of it. But if you keep doing it year after year after year, all of a sudden by year 10, you got 100 people at your Christmas party,

[01:05:08] Josh DeTar: 'Cause everybody starts to realize, "Hey, this is kinda the cool party to be at." And I think that's one of the things that we also have to think about, unfortunately, we live in a legacy model.

[01:05:18] Josh DeTar: We have to, to steal the analogy from our CEO, Siva, we have to pedal a bicycle, right? And it takes two legs. You have to keep the current business going, but you gotta spin up the new side of things, too.

[01:05:31] Josh DeTar: But it's gonna take some time.

[01:05:32] Pete Duffy: Yeah. and I agree with that and what's more, I'll bet most of the listeners do too. I think a lot of this,  I'm used to this. The most common thing said about me for a while was, along the lines of, "Wow, that was inspiring." But here's the deal.

[01:05:52] Pete Duffy: There may never be a better time to be on the C-suite and board of America's community banks and credit unions, and the reason is. It was boring and not very challenging before all this upheaval took place.

[01:06:12] Josh DeTar: Okay.

[01:06:13] Pete Duffy: And now where we are, marketing's become and sales culture has become organic growth job one.

[01:06:22] Pete Duffy: We're battling with the biggest, baddest companies in the world. Again, Amazon, Google, PayPal, whatever, Chase, regulatory requirements, all that stuff. The C-suite and board can go to the organization in a town hall and say, "You've never been more important. We need you now more than ever. Here are the challenges, here are the facts, and here's our plan.

[01:06:54] Pete Duffy: And our plan includes you telling us on the fly when we start this program tomorrow. You're gonna input how it gets modified, but you've never been more important. We need everybody pulling the boat, and you've all become CEOs today. There is only one leader, but you're all CEOs for our destiny because you're gonna be talking to the customer, and we need to know what they need in order for us to get that.

[01:07:25] Pete Duffy: So I'm, I'm making this way too simple than it really is, but as, a leader of a financial institution in America today, you have the opportunity to inspire significant change in the way the business is run, in part because everybody needs it and everybody needs to perform.

[01:07:46] Josh DeTar: Pete, man, I love that as kind of a closing thought in that this is a really exciting time,

[01:07:55] Pete Duffy: It truly is.

[01:07:56] Josh DeTar: And I think at the risk of being a little curt with this, the right types of personalities thrive in adversity.

[01:08:06] Pete Duffy: Yep.

[01:08:06] Josh DeTar: Grow. They expand to fill the box.

[01:08:12] Josh DeTar: And we have a tremendous amount of opportunity in a new fight that financial services hasn't had before. And there are going to be certain people that don't wanna fight. There are gonna be certain people that don't wanna change, and there's gonna be certain people that wanna fight like hell.

[01:08:28] Josh DeTar: And there are certain people that are excited by this opportunity to say, "I didn't have to fight for new customers.

[01:08:36] Josh DeTar: Now I do, and I'm excited by that.

[01:08:39] Pete Duffy: So there's that, and there's also, we're gonna do that, but if we have the opportunity to add an institution with us on what's called an MOE, a merger of equal, and we get to double in size, well, here's what's happening, and here's what our clients are looking for. You fill talent gaps, you fill technology gaps, you add to your product suite, you add geographic diversity, which is adding member and economic diversity.

[01:09:12] Pete Duffy: So fighting can include smart merger and acquisition. And in fact, the bottom line is mathematically most are already looking at it. There's a growing recognition in the industry of banks and credit unions that the fundamentals have changed, and we need to do something about it. And there's a reconciliation on what the outcomes need to be, one of which is merger.

[01:09:40] Josh DeTar: I love that there's opportunity and there's more than one way to go about this, and that there's folks like you that are really helping, you know, credit unions and community banks to have really thoughtful conversations about that. So before I let you go, I got two final questions for you.

[01:09:56] Pete Duffy: Sure.

[01:09:56] Josh DeTar: So first up is just where do you go to stay up to date on what's happening in the industry?

[01:10:02] Pete Duffy: Yeah, I go to, S&P Global, is where we drive a lot of our research, and they also have news blurbs, throughout the day bespoke to your interests, right? So it's pretty efficient for me. And then internally at SRM, we're constantly shooting information over to each other that we see in other news outlets, and I tend to look at that rather than some of the other stuff that's out there.

[01:10:32] Josh DeTar: And then if people wanna go straight to you, and they wanna connect with you, or if they wanna learn more about SRM and the services that you guys offer, where and how can they do that?

[01:10:42] Pete Duffy: You can get me on LinkedIn. You can get SRM on LinkedIn. And I-I'm one of those crazy people that if you email me, you get a response within minutes unless I'm in a meeting or, or whatever. And I'm P. Duffy, D-U-F-F-Y, pduffy@srmcorp.com

[01:11:01] Josh DeTar: Pete, thank you so much for this, a really fascinating conversation.

[01:11:06] Josh DeTar: I appreciate that, you're helping people kind of navigate these difficult conversations, and you came to talk to me about it today. So thanks for coming and being a guest on the Digital Banking Podcast,

[01:11:14] Pete Duffy: I appreciate the opportunity. It was fun to do this with you, Josh. Thanks.

[01:11:17] Josh DeTar: Thanks, Pete.

[01:11:18] Outro: Thank you for listening to the Digital Banking Podcast, powered by Tyfone. Find more episodes on digital banking podcast.com or subscribe on Apple Podcasts or wherever you get your favorite podcasts.