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Michael R. Wilson, President and CEO of Members 1st Federal Credit Union, explains how rebuilding trust after a five-year succession let his credit union move fast on AI, and why he only buys AI he can explain to a regulator.
Every loan starts with a story. So does every lender.
Origination is where the leaders of consumer lending come to tell their story.
Each episode unpacks the origin story behind a leader's progression in lending, and the industry challenges they're working on right now. They’ll dive into topics like growth strategies, modernizing legacy processes, how to adapt to changing borrower expectations, and competing in an evolving lending landscape.
If you make lending decisions for a living, or are building the technology behind them, this show is for you.
Origination is brought to you by Zest AI who provides AI-driven underwriting, fraud detection, and lending intelligence for credit unions and banks.
Learn more at zest.ai.
Michael Wilson (00:00)
freeing up their time to do more meaningful work. It's not meant to replace them.
Curtis Wagner (00:34)
All right. Good to see y'all again. I'm joined today by Mike Wilson, who's the CEO of Members 1st.
Curtis Wagner (00:39)
friend of the family who's an investor in in Zest and customer since since last year. Mike, thanks for taking some time. I
Michael Wilson (00:44)
Yep, more than happy to be here.
Curtis Wagner (00:46)
I wanna start before we dive into some of the challenges at at Members 1st. I wanted to maybe talk about your story a little bit. how'd you find credit unions? What does your origin story kind of look like as it relates to credit unions?
Michael Wilson (00:56)
my gosh. I think my life is like the modern day version of Forrest Gump. kind of like the feather that just kinda goes with the flow and it ends up where it ends up because I've had a a little bit of a a a wild ride that led to my pathway into credit unions. So interestingly enough, my background is actually in public education, with a specific focus on helping students in underserved communities.
Michael Wilson (01:23)
And I did that for quite some time and then I ended up getting involved in politics and found myself working for the governor of Pennsylvania with an expertise and as a a cabinet official focusing on that particular area of education. And then when his administration was done, I ended up getting into advocacy in that same space. And while I was lobbying, lobbying is a little cyclical, seasonal.
Michael Wilson (01:49)
and I kinda reached a point where I was just like, Okay, this is not making the impact or the difference that was my why getting into it. I ended up getting involved with starting a business and I got involved with starting a non profit and my credit union Members 1st helped me with both of those things at that time.
Michael Wilson (02:08)
And so that's how I got to know their executive team really well, and their CEO at the time, two CEOs ago, just went on a recruiting mission, a pretty relentless one. And ten years ago I joined Members 1st and came up through the C suite and it just hit the the three and a half year mark as CEO. It's been a wild ride. Very unpredictable.
Curtis Wagner (02:28)
Yeah. I wonder as you think about your leadership style, what do you take from those early days when you were serving the underserved, working in the in government? Do you take any of that stuff into how you lead the the credit union today?
Michael Wilson (02:40)
Absolutely. I think it's really important to remember we all come from somewhere and we all need somebody to help us along the way. And there are some people that live in perpetual cycles, really terrible situations that many people just will never understand and cannot identify with. and at the end of the day, we're all here to help one another.
Michael Wilson (03:00)
I didn't realize it at the time, but it's been hugely instrumental in shaping you know, from a leadership perspective, what we do at our credit union. Because after all, we are a credit union and we are supposed to be taking a chance on people that deserve to have a chance taken on them. And that requires us to look beyond the surface and to dig deeper. And it was actually my why.
Michael Wilson (03:23)
in wanting to partner with Zest because it frees up the time of our people to be a better credit union and dig deeper and take a chance on people that should have a chance taken on them.
Curtis Wagner (03:32)
I love that. what do you attribute your success to personally? Before we talk about the success of the credit union, which is significant, what do you attribute your personal success to? if one or one or two things?
Michael Wilson (03:44)
very entrepreneurial. so I I will absolutely take risk. I'm not cavalier about it, but there's such thing as calculated risk and I'm just not afraid to try new things or to be bold and to take risk. And I will also own my failures and accept my failures. I use those as opportunities not to get defensive about them but to learn from them.
Michael Wilson (04:07)
and to grow and to openly celebrate them so that other people feel empowered to fail. I want them to take chances. I want them to, you know, be able to be great. And part of that is being you know, mindful that you're gonna try some things, they're not all gonna work. but if you're willing to do that, you're gonna win more than you lose.
Curtis Wagner (04:26)
On the on the point of calculated risk, I find that fascinating. We've run into this all the time where folks maybe want to take calculated risk, but other stakeholders in a credit union don't necessarily share that same worldview, board members or other colleagues. how
Curtis Wagner (04:40)
do you manage that?
Michael Wilson (04:41)
transparency and communication. So I don't ever want anything insane to happen to my board to hear about it by surprise. So if I'm noticing things, I'll give them a heads up. Hey, this may or may not happen, but here's what I'm noticing. If it happens, here's what I plan on doing about it. If it doesn't a big deal, just wanted to make you aware. I do the same thing with the leadership team here and I do the same thing with our
Michael Wilson (05:06)
our associates in general, I believe wholeheartedly in frequent, authentic and transparent communications. That's how you build trust and it's how you get great things done as a team.
Curtis Wagner (05:15)
Awesome. Speaking of great things, been CEO since twenty three, right?
Michael Wilson (05:19)
Yes, sir.
Curtis Wagner (05:20)
what do you see as the biggest challenge over the last couple of years that you tried to to tackle? If you look back, taking that seat, what is the biggest challenge you had to face?
Michael Wilson (05:31)
Well, the biggest challenge was repairing our culture. we went through a really long and really, really ugly extended succession planning period of time here.
Michael Wilson (05:42)
it it actually cleared five years. so it was really brutal and it took a toll on our organization and it took a toll on our culture.
Michael Wilson (05:50)
I have very lofty goals that that we're trying to accomplish and we're and we're trying to do an awful lot in a very short amount of time. The only way that you're gonna get that and to be able to move mountains like that is if your your people believe in you, right? And and you can only do that if you establish trust and if they know that you have their best interests in mind. And so healing our culture was absolutely priority number one.
Michael Wilson (06:13)
and nurturing and maintaining our culture, especially as we grow and evolve, is priority one A. And so I'm always gonna put that at the forefront of what we do, because if we do, then great things will happen. so I would say there's a constant focus.
Curtis Wagner (06:30)
And how do you in the age of AI, right? You've you've
Michael Wilson (06:33)
Mm-hmm.
Curtis Wagner (06:34)
deployed AI with Zest and I'm sure AI in other parts of the business as well.
Michael Wilson (06:38)
Big time.
Curtis Wagner (06:39)
how do you preserve that culture in an age of of AI?
Michael Wilson (06:44)
Yeah, I think that especially with the news cycle, right? I mean, people see things in their news feed all the time and it's all sensationalist headlines and there's just so much negativity. You have to be able to sift through what's real and what's noise and talk to your people about what's real and talk to them about what's noise. And
Curtis Wagner (07:05)
Mm-hmm.
Michael Wilson (07:05)
so our adoption strategy has actually been associate driven.
Michael Wilson (07:10)
So rather than mandate from top down, we have engaged and empowered our associates to identify, l let's just talk about automation, for example. we're about to automate just shy of a thousand very mundane tasks here that have long been pain points for our associates. We didn't come up with those thousand tasks.
Michael Wilson (07:31)
Our associates did. And so we
Michael Wilson (07:33)
said, hey, if we were to to give you the tools to get rid of those things that drive you absolutely nuts about your job every single day, what would they be? How would you rank them? How would you prioritize them? and we're gonna build a list based off of what you tell us. and so that's how you know we've been able to do that. And so it's actually had our folks be excited about that kind of adoption.
Michael Wilson (08:00)
because it's freeing up their time to do more meaningful work. It's not meant to replace them. It's meant to allow their work to be more meaningful and to take a chance on someone rather than just check a box trying to churn out unsustainable volume.
Curtis Wagner (08:16)
And how do you stay close to the associates? Like how how do you have your ear to the ground? how do you measure that type of sentiment and how do you personally stay stay close?
Michael Wilson (08:25)
Sure. well it's a it it is actually measured. Everything we do here is data driven. our people world actually is responsible for for managing all of that as well as helping to be the keepers and the drivers of our culture here. but just to give you an idea, even with with me, I meet every single new hire on their first day at Members 1st.
Michael Wilson (08:45)
So I go to every single new hire orientation. I spend about an hour with with our incoming classes. I talk specifically about our culture and how we actually hire for culture and train for competency and what that means at Members 1st. and then beyond that, you you know, there's a lot that we do in our headquarters building here. it's a it's a fun and exciting place to be when you walk into our building. you know, you can feel it.
Michael Wilson (09:12)
Mike and Dan were just here a few weeks ago actually.
Michael Wilson (09:15)
so hop hopefully they they got a chance to experience that. but I talk to our people. you know, I walk the stairwells, I walk down the hallways, I make it a point to stop and chat with our people and I visit our branches as well. we're heavily branch based across a a a fairly wide footprint in Pennsylvania and every community is different.
Michael Wilson (09:35)
And so you're only gonna get a sense of what's happening in that community if you go talk to our associates who talk with our members every day.
Curtis Wagner (09:43)
That makes that makes a lot of sense. I I wonder as you talk about automating some mundane tasks, it feels like potentially the nature of work for them could be changing pretty dramatically.
Michael Wilson (09:53)
Sure.
Curtis Wagner (09:53)
Are you are you thinking about hiring differently for the different skill sets for those roles? Or how do you think about as the nature of work is changing, what that means for you as a leader building the workforce?
Michael Wilson (10:06)
Yeah, our leadership team is definitely focused on that right now.
Michael Wilson (10:10)
this is very much an unregulated area that will very much be regulated and probably in the not so distant future. So you know it's really important before deploying anything to have a governance framework and for that governance framework to take into account what you already know the non negotiables are in our regulatory environment.
Michael Wilson (10:29)
But build it into the workflow in an educated way based on what we see forthcoming.
Curtis Wagner (10:34)
Talk to about any other pitfalls or advice you have as you roll out AI, specifically in lending as it relates to our products and services. Anything you would have changed
Michael Wilson (10:41)
Sure.
Curtis Wagner (10:42)
or any pitfalls that you can advise on?
Michael Wilson (10:45)
I mean pitfalls I can advise on are it's easy to get distracted by shiny objects. I mean, there are some really cool things that can be done, but what's the value? You know, what what's the ROI and can you measure it? Can you put data behind it to prove that it's worth that value? we recently did an entire strategic planning retreat with our board solely focused on AI. We did it this spring. And what I wanted to show the board was just how far we can go.
Michael Wilson (11:12)
With some of these things. So, as part of this retreat, we actually broke up the board into six different small groups, and we we built AI board members, six of them, one for each group. And so each of those AI board members then relayed some AI-oriented scenario that each group had to talk through. Some were market-driven, some were tech-driven, but they were all six very different scenarios.
Michael Wilson (11:42)
And they would relay the scenario, spark conversation, ask questions, seek differences of opinion, then certain trigger words got them to share their views as the AI board member. then trigger words sent it into transcript mode where it summarized everything. And then all six AI board members shared their six summaries with an AI avatar of me that we built that conducted and facilitated the remainder of the entire retreat. It was pretty wild.
Curtis Wagner (12:12)
Crazy. Crazy. was the feedback from from all that? Yeah,
Michael Wilson (12:15)
They were blown away.
Michael Wilson (12:16)
but what we had to explain to them was in order to get to that point this spring, we started all of that work late last summer. that's how we were able to secure it, lock it down, you know, make sure that it had enough built into the news cycle to be able to kind of lead and facilitate the way that we wanted it to.
Michael Wilson (12:41)
and and even just thinking about how much has changed technologically speaking from last year to where we are this year, it's it's been it's been pretty wild. And getting my board to understand, yeah, those are table stakes now. That's that's the pace of change and and that's what we're dealing with and we wanna make sure that we're relevant.
Curtis Wagner (12:57)
you did a big R F P for AI vendors for underwriting and decisioning.
Michael Wilson (13:02)
Mm-hmm.
Curtis Wagner (13:02)
Talk to me about how you think about choosing the right the right partner.
Michael Wilson (13:06)
Yeah, I've actually been speaking about that a great deal this year because I rarely get involved with RFPs as a CEO. but with AI underwriting I did. and the reason for that is because again, we're in an unregulated world that I know is going to be heavily regulated at some point in the not so distant future.
Michael Wilson (13:27)
we had non-negotiables to be able to become a finalist, and then when it came down to our finalists, I asked a very basic question of our finalists. Can you show me and explain to me with transparency how your decisioning model works? And there was one company that was willing to do that, and that was Zest. And so it became a no-brainer, and I think that's really, really important for CEOs to understand.
Michael Wilson (13:54)
There's a lot of vaporware in our industry. there can be a lot of smoke and mirrors. And when you start talking about you know the regulatory aspects of some of these things, that's where you as a CEO have an obligation to be able to explain everything to your regulator, to your workforce. You have these responsibilities. and that doesn't mean just buying into the buzz or the hype train because
Michael Wilson (14:20)
some major company as a vendor or a broker for some product that's falling short on what should be basic due diligence. And we didn't even get into cybersecurity yet.
Michael Wilson (14:29)
but from a decisioning standpoint, that was just absolutely mission critical for me to have confidence before going into my regulatory exams.
Curtis Wagner (14:37)
Got it. And why did you choose to get involved in that specific RFP? Just the how mission critical
Michael Wilson (14:42)
I chose the
Curtis Wagner (14:44)
that line of business ki is or that area?
Michael Wilson (14:46)
Because
Michael Wilson (14:47)
if something was going to be making decisions based on credit, right? Or potentially issuing adverse action letters or something along these lines, right? I know there is a tremendous amount of regulation in that space. So why on earth would I go buy something off the box and deploy it without understanding how it works, how it's making credit based decisions, how it makes adverse action decisions.
Michael Wilson (15:13)
the last thing I want to do is put our credit union in a bad spot where our regulator is saying, How'd you make that decision? You think they're gonna be happy if I say, I don't know, or if I say, that's proprietary. I can't explain that to you. that's not okay.
Curtis Wagner (15:28)
Yeah.
Curtis Wagner (15:28)
Yeah. we feel very similarly. I think we invest a lot of time and energy to make sure, you're not in a defensive position there.
Curtis Wagner (15:34)
on the regulatory Sure. Sure.
Michael Wilson (15:34)
But not everybody does. In fact, most don't. And and so
Michael Wilson (15:38)
these are not decisions that should be made on price, or they should not be decisions that should be made based on a relationship that you have with a vendor broker that's completely and totally irresponsible.
Curtis Wagner (15:49)
Hmm. On the regulatory piece, how are you thinking about the change to your regulatory I guess footprint as you approach and ultimately go over the ten billion dollar mark?
Michael Wilson (16:00)
Sure. another reason why you know these areas were important, when you clear that ten billion mark, the the scrutiny kind of gets to another level. And so I just want to make sure that we have a full understanding with complete and total transparency about how technologies are used, how they're deployed, how the workflows are set up. as long as you do that the right way with the right governance and you have
Michael Wilson (16:24)
complete confidence that you can explain the transparency to your regulator, it really should allow our underwriting team in particular to be doing a much better job in terms of us fulfilling our mission as a credit union.
Curtis Wagner (16:36)
How about what's next? what's what's still left on on your plate? What's top of mind for as we move into 27? I know you're doing planning. what's next in terms of challenges?
Michael Wilson (16:45)
Yeah, there are two major things at a really high level philosophically that I that I think are really important for our industry. And and then a a a third one on that would be helping the really maximize the capabilities of Lulu.
Michael Wilson (16:59)
you know, I I'm really concerned from a due diligence standpoint with third party vendors in the credit union ecosystem.
Michael Wilson (17:08)
And it you know, s somebody or somebody's kind of need to band together and and have the courage to speak up about this stuff because if if we don't, I think a few bad actors are gonna cause industry-wide problems that will bring about sweeping punitive regulations and it doesn't have to be that way. and it starts at the CEO level, that's where the buck stops, that's where the accountability is, right? Like they
Michael Wilson (17:34)
need to ensure confidence with their boards who are supposed to be doing a good job from a governance perspective, they should be holding CEOs accountable for third party vendor due diligence and and not just on decisioning with transparency, also from a cybersecurity perspective. there's a lot of vaporware in this space and I think there are organizations that aren't even SOC one, SOC2 compliant. And you know, these are these are basic things.
Curtis Wagner (17:59)
Yeah, table stakes we think. Yeah.
Michael Wilson (18:00)
but I think that's
Michael Wilson (18:01)
right, but I don't think that people ask the right questions and so there's a lot that rides the buzz train and the hype train in this industry without the right due diligence.
Curtis Wagner (18:12)
what's one thing people don't know about you that they should?
Michael Wilson (18:14)
I'm a very gifted rapper. I
Curtis Wagner (18:18)
Ha ha.
Michael Wilson (18:20)
love love me some nineties and two thousands hip hop. but no, I I care I care deeply about this industry and I know I can get a little passionate sometimes about some of my soapboxes, but it really does come from a good place in in wanting to make a difference so that our industry can be not just viable, but
Michael Wilson (18:41)
but actually be ahead. if we get more of our CEO peers kind of having some of these tough conversations that sometimes people are afraid to to stand up and have the courage to talk about, we could really make a difference with the right partners in our industry.
Curtis Wagner (18:55)
Makes sense. and then maybe last last question. What do you enjoy doing most outside of work?
Michael Wilson (18:59)
wow that's a good that's a good question. I'm really passionate about wine I love doing pairing dinners and trying to be adventurous based on finding the right wine with the right course setting.
Curtis Wagner (19:13)
that's why we love you around here.
Michael Wilson (19:15)
Total blast. Yeah. I enjoy it.
Curtis Wagner (19:17)
Well appreciate you taking the time again, Mike, on on a Monday.
Michael Wilson (19:20)
No, thank you guys. Appreciate the opportunity. And if ever I can help you guys or or help any of our industry peers, call the crib, same number, same hood, it's all good. All
Curtis Wagner (19:29)
Sounds good. Appreciate you, Mike.
Michael Wilson (19:31)
right, thank you.