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Delve Talks: Kim Sponem, Summit Credit Union

March 25, 2020

Delve Talks is a podcast that digs into the challenges around design, product development, leadership and innovation. Our second season continues to explore how to create a culture that supports innovation through interviews with leaders of startups, educational and banking institutions, and multinational corporations.

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Dave Franchino [00:00:20] Hello, everybody, and welcome once again. Dave Franchino here and I'm joined by phone this time by our Vice President of Strategy, Stefanie Norvaisas and really excited to welcome today's guest, Kim Sponem. And just a little bit, Kim, is President of Summit Credit Union, and that's one of Wisconsin's -- if you're from this area, you'll recognize the name -- one of Wisconsin's largest credit unions.

[00:00:42] And I don't want to speak too much in advance, but since 2001, Summit has grown amazingly from $200 million to more than $3.7 billion in assets. The branch network has expanded from four locations to 43 across south, central and southeastern Wisconsin and in four of the Madison high schools, which is a really fascinating strategic direction. At the time of becoming CEO 18 years ago, Kim Sponem was named as one of the youngest CEOs in the country to run a large credit union. And so welcome, Kim. Thank you very much for joining me today.

Kim Sponem [00:01:17] Well, thank you. It's an honor to be here.

Dave Franchino [00:01:18] Great. And so just as a reminder to all of our listeners, we started this podcast last year and what we're trying to explore is creating a culture of innovation. And to do that, we've been facilitating conversations with a wide range of people that we've met who come from different backgrounds, who we believe have done a fantastic job of applying innovation into their particular field. Kim, Stefanie and I are really excited to talk to you today. One of the things that makes this interesting is my background is more in engineering. Stef, of course, has a background in cultural anthropology. And so, we tend to have different approaches on innovation, see things differently. I'll try to lead the conversation with a couple of questions, but Stef will chime in with questions along the way. So, I'm really excited for this conversation.

[00:02:03] Maybe to get us started for our listeners that aren't familiar with you, you can give us kind of a brief introduction to your background. Talk a little bit about where you came up through and that'll provide an interesting perspective for your thoughts on innovation.

Kim Sponem [00:02:17] So, I have a degree from the University of Wisconsin in Consumer Science. So, an interest in consumer behavior. And I started out in the credit union world in the marketing area and moved up through the ranks from marketing, adding on operations, human resources training, and became the executive vice president and eventually the interim CEO in 2001. And after a national search, the CEO president role in early 2002.

Dave Franchino [00:02:50] Fantastic. Really cool. And I want to come back to the consumer behavior background because I think it's a really interesting background that I wouldn't have attributed to somebody who leads a large financial situation. But if I can go off script for a second. Some of our listeners might not be aware of the unique charter of a credit union and I think that might be interesting. So, maybe if you could just talk to me a little bit about what are credit unions. A little bit of a history of credit unions because I think that will provide some nice context.

Kim Sponem [00:03:18] So, credit unions were started in the early 1900s when Edward Filene, the Boston merchant, went over to Germany to do some shopping for his stores and he noticed that there was where these financial cooperatives in Germany that seemed to be working really well. And at that time, banks would not lend to the common person. So, Filene came back with these ideas around starting financial cooperatives in the United States. He got a group of folks together to work toward that. Passed the Federal Credit Union Act and credit unions were then started. We were formed in 1935 to serve the credit union movement at that time. Anyone who worked at a credit union could not borrow from the credit unions. So, we were kind of a safety net from that perspective and anyone else who needed a credit union.

[00:04:13] So credit unions are formed as a cooperative not-for-profit. When we make money -- which we need to make some money because we need earnings to fund our capital ratios -- that money is really our members' money. And so, if we were to dissolve, that would go back to our members, not to stockholders. We don't have outside stockholders. Each member is an owner of the credit union. And so, we are fundamentally differently structured than a bank.

Dave Franchino [00:04:46] So let me build on that for a second. Relative to being innovative, you have two things that might be in comparison, I guess, when you're trying to be innovative for Summit and in the credit union space in general, what are the challenges and where are the opportunities for being innovative that a credit union has versus a bank? And then, maybe you could also speak about what are the challenges of being innovative in a very highly regulated industry.

[00:05:13] And one of the unique things about the financial services industry is, for a variety of reasons, historical and otherwise, there's some limitations that aren't present, for example, if you're making breakfast cereal or, you know, other innovations. So, tell me a little bit about the challenges and opportunities that are present for you in the innovation space at Summit.

Kim Sponem [00:05:34] I think some of the opportunities come from that because credit unions' focus is only out about its members and how well its members do from a financial perspective -- We have a singular focus. We're very mission driven. So, all of our innovations, even our operational efficiency innovations, are member driven. And so, it starts really from a place of "Does it benefit our members?" And that's where my consumer behavior background really comes into play here, because the more that we understand consumers and the unique needs of our members and what might help them go forward is really all about consumer behavior and perspective and understanding.

[00:06:22] So I think that is an advantage for credit unions, to really have that that focus in terms of a highly regulated environment. And it is. It's very highly regulated. The pluses of that is that it's difficult sometimes for new entrants into the space, so it does protect financial services from a lot of new entrants that may have otherwise come into the space more easily. However, there are the fintech companies, the financial technology companies, that will pick a very narrow point of financial services and they will work really hard at doing that one thing very, very well.

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“I’ve got far more tolerance for breaking something that’s working right now so that we can come up with something better.” — Kim Sponem

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