Service Credit Union Launches CUSO For Fintech Investments | CreditUnions.com

Brian Regan is on the hunt for ways to revolutionize the credit union industry.

In 2024, Service Credit Union ($6.0B, Portsmouth, NH) appointed Regan as its director of fintech innovation. Though he’d had plenty of previous exposure to credit unions, he described his official entry as a steep learning curve.

“Loans to me have never been assets. Let’s put it that way,” he quips.

Still, in the year that followed, Regan successfully made multiple investments that improved Service’s operations, enabling the adoption of a new deposit-management system and the introduction of an AI chatbot.

Building on this early success, last month the credit union announced the launch of Service Ventures. The CUSO will serve as an independent investment arm of the credit union, partnering with startups that share a commitment to supporting the industry.

“There are always new, creative ways to provide value to your members. That’s the core of it for me,” Regan says. “We have wins, but with every investment we make, we’re also asking what we missed and how we can be better.”

In the following Q&A, Regan touches on his background, the evolution of Service’s fintech strategy, and more.

In your own words, could you briefly walk me through your background and what led you to Service Credit Union?

Brian Regan: My background is mostly finance and the software industry. I started out at a cybersecurity company doing finance for their R&D organization, eventually moving into more of a product strategy-type role working on a cybersecurity platform. Then, I left and started my own software company focused on public cloud environments, helping companies understand what they’re spending in the public cloud and why. Service Credit Union was one of my customers. I also have family ties to the industry, so I had known people there for a while. When I was figuring out what I wanted to do next, I reconnected with [CEO David Araujo] and [CFO Michael Dvorak], and it’s been all uphill from there.

Why has it been important for Service Credit Union to focus on investments in fintech companies?

BR: 1) It’s another way to put assets to work. We make investments for a return, and every return we make we put to work to better our members’ financial lives. That’s one aspect.

2) It’s an interesting way to push our strategy forward faster. We can find technologies that are solving either our specific needs or needs we know are common in the industry and help them to build out those products. And it’s not just us. There are other credit unions out there doing this work and helping integrate fintechs into the credit union industry. It’s exciting. I think it’s a promising path.

Before the launch of Service Ventures, you were brought on as the credit union’s director of fintech innovation. What were your primary goals?

BR: It’s been a lot of learning. How does Service Credit Union work, who are our members, and what are their lives like? We have a really interesting membership with unique needs. I spent a lot of time trying to figure out what problems they need to solve. Additionally, a lot of time went into understanding how others in the organization, like our board, approach the investment decisions we’re making. How do they track success? What’s the risk tolerance we’re comfortable with, and how do we offset that risk? I’ve spent a lot of time setting that foundation, and now we’ve made our first four or five investments.

Is there an example of a partnership you’re particularly proud of?

BR: I think the company that probably has the coolest story and impact so far is ScribeUp. Our CEO saw them in a commercial. At the time, they were a B2C company with a subscription management product. David reached out and said, “Hey, what if we put this in online banking?”

We now have thousands of members using it. Every month, we can see how we’re saving members money with it. They’re finding and canceling subscriptions, and then they’re saying, “Hey, I want to use Service Credit Union to manage more of my financial life.” They’re pulling outside subscriptions and card transactions into our organization. So not only are we making members’ financial lives better, but we’re deepening that relationship.

What is one of the biggest challenges you see when it comes to credit unions making these sorts of investments?

BR: The thing about venture capital investments is you don’t just cancel a contract if you’re unhappy. You’re making a 10-year commitment. That’s the average amount of time it takes to “massage out” a venture capital investment – “massage out” meaning sometimes they’re good, sometimes they’re bad, but hopefully there’s an exit or a way to make your money back. This is a very different type of investment than most credit unions are used to making.

When you’re dealing with early-stage companies like us, it’s important to really look at who you’re investing in. How do we feel about this partnership? How do they want the relationship to go? There are always the core finances of the company to consider, but more than that, what do we think this could do for the industry if it’s successful?

The thing about venture capital investments is you don’t just cancel a contract if you’re unhappy. You’re making a 10-year commitment. That’s the average amount of time it takes to “massage out” a venture capital investment, meaning sometimes they’re good, sometimes they’re bad, but hopefully there’s an exit or a way to make your money back. This is a very different type of investment than most credit unions are used to making.

What was the driving force behind the credit union deciding to establish Service Ventures and expand your efforts?

BR: The real goal is to build a brand in the fintech industry for CUSO innovation. We are a corporate venture capital arm for Service Credit Union and our primary focus is on Service Credit Union and our members, but when looking for investments we are also concerned with solutions that are applicable to the credit union industry as a whole.

Now with Service Ventures officially launched, what’s next for you as General Partner?

BR: Going forward, a lot more of my time will be spent searching for the solutions that we need. For example, companies that aren’t CUSOs yet, who don’t even know what a CUSO is, but want to work with credit unions to solve problems. I meet with probably one company every week where that’s the conversation, and I want to meet with more. Success in the longer term will be looking at how we’re driving operational efficiency and the actual financial return, but I think the member impact metrics and the efficiency metrics stand up right next to the income metric.

This interview has been edited and condensed.