[00:00:00] John Ballantyne: But I have four CEOs of credit unions sitting around the table talking about their businesses, which just blew my mind. Uh, and I was able to work with each of their individual teams to understand, well, where are you on this treasury management journey? What do you need? How do we get that started into business?

[00:00:16] Narrator: Welcome to 22 Minutes in Lending Your Go-To podcast for insights on all things lending from lending practices, regulatory updates, how to enhance lending efforts and more. In each episode, Vince Passione connects with industry leaders to discuss the latest trends. And happenings around the lending industry.

[00:00:36] Narrator: Let’s dive in to the latest in lending.

[00:00:39] Vince Passione: Welcome to 22 Minutes in Lending. I’m your host, Vince Passione. Today I’m joined by John Ballantyne, the CEO of True Treasury, and a leader with deep experience across underwriting, treasury, and payments. John has held sea roles at SunTrust, Amazon Travels, and Vanguard.

[00:00:53] Vince Passione: He’s a US Army Reserve Officer and an Iraq War vet. Under John’s guidance to Treasury has becoming, helping credit unions and community banks compete and serve business members at the highest level and was named Cusso of the year. John, welcome to the podcast.

[00:01:07] John Ballantyne: Hey, so happy to be here, Vince. Thanks for having me on the show.

[00:01:10] Vince Passione: John, it’s great to see you again. Last time I think we’re at a leverage conference in, I was chatting with you and your wife. I think that had to be at least two, three years ago. Uh, but great to see you first. Thanks for your service. And the other day I was on LinkedIn. I saw a social media post first. I thought it was some kind of AI driven image, but it’s you and your brother Mark are twins and you’re both in service.

[00:01:33] Vince Passione: Is that right?

[00:01:34] John Ballantyne: Yeah, that’s right. So there are two reserve officers, two Lieutenant Colonel Valentine’s out there that look and act a lot alike. And it just so happens after 20 plus years of doing that, we are both instructors, uh, in, in that. Instance in the instructors in the same class teaching future officers.

[00:01:53] Vince Passione: Wow, that’s amazing. That is truly amazing. Uh, thank you and thanks to Mark for your service. So John, let’s start off with, I always like to start off with the founder story. John, why true treasury? What did your background got you there and I think it’s five years old. So you’re saying you started this around 2020, which is an interesting time to get started.

[00:02:13] Vince Passione: Yeah. So let’s hear the story.

[00:02:15] John Ballantyne: Yeah, I, you know, my story goes back a lot further. So me personally, my background is in finance and I’ve had held a lot of financial roles. Uh, before I came to True Treasury or started True Treasury, I was a big bank. SunTrust Bank became Truist Bank in a variety of treasury management roles, but before that, I owned a payments company.

[00:02:35] John Ballantyne: So I say my background’s unique ’cause I had this entrepreneurial payments experience, but also big bank working in multiple roles. Variety of roles in treasury management. So that brings us to 2020 or a little bit. Before 2020, a group of credit unions and industry partners of credit unions got together and they realized a couple of things.

[00:02:57] John Ballantyne: One, feel the membership rules changed in 1998 to expand business membership. Commercial loans are like hockey stick growth. So credit unions, it’s been an engine of growth for them. They’re hiring in bankers off the street to, to grow these commercial programs. But as these commercial programs are growing, they start to mature out of just CRE type lending.

[00:03:19] John Ballantyne: And you have bankers who say, Hey, we can get more into C-N-I-S-B-A, start serving the needs of businesses. To do that, they need treasury management officers to help support closing the deposit side of the deal, the fee side of the deal. So our ownership saw that need. They said, let’s do this. Looked around the credit union market.

[00:03:39] John Ballantyne: Hey, the banking industry, big bank industry has most treasury management talent corner. Uh, so they found me through a series of events. We spent about six months talking. What could this look like? March 12th, 2020 was my first day where I said, Hey, let’s do it. Let’s jump into this, start a business, and then everything in COVID shut down the very next day.

[00:04:00] John Ballantyne: So it was a great time to start a, a new business.

[00:04:03] Vince Passione: Well, let me lemme back you up. I wanna unpack it a little bit. So, was this members development core and leverage? Who, who were the where, where did the original idea come from?

[00:04:15] John Ballantyne: So it, it was really a group of like-minded credit unions that invested in a lot of CUSOs together.

[00:04:19] John Ballantyne: Uh, there were four original credit unions, three of them in Michigan, one of them in Florida, and then LSCU or leverage, uh, seeing all their constituent credit unions and seeing this gap said, Hey, this is something that we can deliver to our credit unions. Let’s get in on us. And those entities with a technology company funded true treasury for us to start.

[00:04:42] Vince Passione: So Steve Willis and Company over at Leverage. Great. We’ve had Steve on a few times and Yep. And at the be from, from the league. So, great. So, so John, your structure then to get started was a CUSO. Talk about the benefits to you in establishing that structure. How it’s helped and then, yeah. Are there any, are there any challenges in doing that when it comes to liquidity management?

[00:05:03] Vince Passione: ’cause we have other fintechs that listen to this, this, this, uh, podcast as well as well. So any challenges you think about capital going forward and what were the benefits of starting out as a CUSO?

[00:05:14] John Ballantyne: One of the big benefits of being in a CUSO is that it’s credit union owners, or primarily credit union owners.

[00:05:20] John Ballantyne: To me that was a great benefit ’cause it’s a built-in marketplace. The collaboration was the biggest difference coming from the banking segment into credit Union segment. Literally at my board, I have four CEOs of credit unions sitting around the table talking about their businesses, which just blew my mind.

[00:05:38] John Ballantyne: Uh, and I was able to work with each of their individual teams to understand, well, where are you on this treasury management journey? What do you need? How do we get that started into business? Uh, and that’s really how True Treasury launched and has expanded, uh, quite rapidly. I might add through the Credit, credit Union movement.

[00:05:54] Vince Passione: So John, you, you’re, you’re not a large organization and you’re pretty young. Yeah. And I was looking at the website and it looks like 70 credit unions. Now, is that the size of the portfolio as far as client base?

[00:06:06] John Ballantyne: Uh, yep. We have a little over 70 credit unions that we serve and we serve, uh, our credit unions across a variety of spectrum.

[00:06:13] John Ballantyne: Some of our clients, I would call our advisory only. So we have a consultant function. Some of our clients need product. You know, you think of business banking, treasury management, product. Some of our clients say, Hey, the ROI, the financial model makes sense to have true treasury, be our treasury management department, and we can deliver the whole team and the product.

[00:06:33] John Ballantyne: And, and typically at a, at a favorable value proposition where. They can attain ROI very quickly on their programs.

[00:06:40] Vince Passione: So John, if you had to describe True Treasury in, in that sort of ten second elevator speech and, ’cause when I think about, you know, credit unions, especially in CNI, for example, I don’t hear a lot about it, right?

[00:06:51] Vince Passione: I mean, 5% of credit union assets are actually in CNI Describe it to me.

[00:06:57] John Ballantyne: Yeah. The, the elevator pitch of true treasury is we’re non-credit business services, which includes cash management, but it’s not just the product piece of it. The talent, the strategy, the structure, even the disclosures that come with that.

[00:07:11] John Ballantyne: Very simply said, we can deliver the whole program and talent for typically less than it would cost to hire just one treasury management officer. That’s product and talent included.

[00:07:21] Vince Passione: Excellent. So let’s dig in. Let’s dig into each of the solutions and, and how you offer them. So I was looking at the website, right?

[00:07:29] Vince Passione: There’s wires there, it looks like a CH. Um, there’s liquidity management, deposits management. Talk us through each of these and then talk about how you deliver them, John.

[00:07:39] John Ballantyne: Yeah, I, and I might even pull it up a level. So our products are really two things that we, we provide. We provide a treasury management program.

[00:07:48] John Ballantyne: So that would be the servicing piece, which, which in a lot of ways I think is the most valuable thing we add, but you cannot deliver a treasury program without treasury product. So we have three digital platforms. One of them is a banking platform, table stakes. The two other platforms we have, I think, are really value driven and differentiating as well.

[00:08:07] John Ballantyne: So one of them. It’s called our Treasury Relationship Management System. And very simply what it is, it’s kinda like a hybrid between Salesforce and an analytics tool that allows you to look at hurdle rates and profitability at the line item level, officer level branch, or even the regional level or the whole credit union level, and allows you to do relationship pricing.

[00:08:28] John Ballantyne: So if there’s a commercial loan, uh, opportunity, a deposit opportunity, uh, some fees, services, payroll, whatever. If a banking officer is looking at that deal and say the prospect is, you know, loan rate sensitive, well guess what? Price it into the deposits. Price it into the fees. There’s a way that you can achieve the hurdle rates that the financial institution needs, but still price the entirety of that relationship to the sensitivities of the prospect and win the deal, and then you get the benefit of the loan, the deposits, and any non-interest income with that relationship.

[00:09:03] John Ballantyne: So that’s our treasury relationship management system. We simply call it RMS. And uh, the third one is our Treasury Risk Assessment calculator, which we call track. And again, this solves for the fact that credit unions are newer to the treasury space for risk management. They, we had one client who would send their a CH risk to the commercial lending department who would sit on it for months.

[00:09:25] John Ballantyne: Like, what do I do with these low exposure rates, these large limits? I don’t know how to set this. We created a platform with industry experts that does KYC risk scoring for total operating exposure of a CH digital wire origination and RDC if a member or client has it. And then dynamically assesses limits recommendations, workflow approvals, and documents it, uh, for those annual reviews or if examiners come in.

[00:09:55] John Ballantyne: So that’s been our most popular platform and product that we’ve created at True Treasury.

[00:10:06] John Anderson: This is John Anderson, chief Lending Officer at Atlanta Postal Credit Union. As our field of membership expanded, we saw a major opportunity to grow and needed a lending partner to help us reach new members quickly and effectively entered Lend Key. Their home improvement loan program not only helped us attract stronger credit profile than we typically see, but it’s also been a powerful tool for bringing in new members.

[00:10:27] John Anderson: In the first year since inception, we gained over a thousand new members helping us turn opportunity into impact, and we’re proud to partner with them.

[00:10:41] Vince Passione: Now credit unions acquired 25, I think it’s 25 banks last year. Um, and they got to a pretty, pretty, a slower start this year. Do you get called in when a credit union is, is looking at the, an acquisition and they see that they’ve got a a, a, C and I team to assess whether or not, you know, this makes sense and what, what, how they might use your products.

[00:11:02] Vince Passione: And do you get engaged at that level on the, on the sort of that strategic planning for an acquisition.

[00:11:07] John Ballantyne: Yeah, certainly. I, I would say we’re typically not engaged on the planning stages, but usually once the acquisition’s announced, start getting into technical, oh no, we have to bring over. Community banks, account analysis, relationships in some of these more complex TR treasury relationships into our own core, that’s not set up at all for that.

[00:11:28] John Ballantyne: We have no experience. That’s usually when the we’ll get a connection and we’ll start to work with that credit union on how to deliver those services. The community bank is delivering in their core how you can round out the products that change management. In one case, with a, a credit union that had acquired a bank, we were a bridge.

[00:11:46] John Ballantyne: To train the team, to process, to work with their members as they started to train some of their bankers in their system. So we, we actually operationally worked as a bridge and now they use some of our products. So there’s a few different ways we approach it, but we’ve gotten very familiar with some of the major cores capabilities around sweep accounts, around account analysis.

[00:12:07] John Ballantyne: And we can provide some, some pretty solid advisory there and how to set up a, a commercial deposit account structure type.

[00:12:15] Vince Passione: John, you referenced changes in, I, I guess it would be the Credit Union Act when it comes to memorization, field of membership. Uh, my business, you know, right at Lend Key. Uh, it’s, it’s straight up consumer, right?

[00:12:26] Vince Passione: We, we fall into the field of membership capabilities of community based, right? SEG based, uh, association based. Can you just talk us through, so the, the change in, in that credit act that allowed this member business lending, is there a cap? How do I take someone who’s not quote unquote. A member, how do I memorize somebody Right.

[00:12:47] Vince Passione: To, to offer this commercial loan. Yeah.

[00:12:49] John Ballantyne: Yeah. The interpretation of that is, uh, dependent on quite a few things, uh, most notably the charter, but you’re right. In 1998, field of membership, TR rules, what I’ll call liberalized, that allowed businesses, different types of businesses to bank more at credit unions.

[00:13:06] John Ballantyne: Now, the problem when those rules change. And some think to appease the bank lobby or whatever, there’s a, what they call a 12% member business lending cap. So a couple things that 12% does not apply to, uh, credit unions that are low income designated credit unions, which is about 50% of credit unions. The idea being they don’t want a cap, they want to help Main Street, they want to help all these businesses that might not have access to financial services elsewhere.

[00:13:34] John Ballantyne: So that opens up about 50% of the credit union market. Uh, for the other 50% that HA is subject to that. There’s a lot of different strategies on how to manage to that. Uh, that’s typically around assets, lending assets, for example. When we start getting into deposits, it really depends on the charter, uh, how it does that business have a branch in within that, if it’s a community charter, within that community charter, the seg based charters have a lot of opportunity in business that I don’t, I don’t know that a lot of, um, credit unions has recognized that they can get a lot of businesses.

[00:14:08] John Ballantyne: So there’s, for many credit unions, they can service businesses as long as there’s a, an affiliation, uh, across the country. So there’s, there’s ways to do it.

[00:14:19] Vince Passione: Great. So John, let’s talk about trends, right? Uh, what, what are you seeing in commercial lending right now? Right. We saw the real estate market. Yeah.

[00:14:26] Vince Passione: So to take, take a huge hit. There were lots of concerns about those loans. Seems like it’s starting to level off a bit, but trend-wise, deposit growth, the account opening, you know, how you see this business growing over time.

[00:14:38] John Ballantyne: I would say right now I’ve seen, within the past two years, I’ve seen more interest in CNI and SBA lending.

[00:14:45] John Ballantyne: From the commercial departments of credit unions that I had seen since we got started in 2020. It’s a big deal and I think eyes were open. One banking talents in-house. We’re acquiring banks and we’re starting to understand, hey, there’s more of a market for us out there. Number two, what happened in CRE markets is a risk, right?

[00:15:04] John Ballantyne: If we put all our eggs in this one basket, there’s other opportunities we can right into businesses. And a couple of years ago there was a pretty major liquidity crunch. Uh, retail deposits were very saturated. Commercial deposits became a really good place to go out and source liquidity if you had the right setup, if you have the right programs.

[00:15:21] John Ballantyne: Uh, so that’s become more popular. So what are some of the trends I’m seeing? I’ve, I’ve definitely seen a lot of openness. I’ve seen a lot more bankers coming into credit unions. If you look at deposits, uh, the percentage of deposits well called business or commercial deposits in credit unions. Has almost doubled now.

[00:15:37] John Ballantyne: Still a very small piece of the credit union deposits, but it went from about just a little under 3% to well over 5%. You know, I’m talking pretty general now for the credit union movement, which is, which is still a very small piece, but as a long way to go. One other, uh, piece of data that I found really interesting, we were looking at it through treasury, is we, we took the top.

[00:15:59] John Ballantyne: 20 commercial lenders in the country, credit union lenders in the country. And we said, how many of these credit unions are funding their commercial loans with commercial deposits? What do those ratios look like? And when we looked at it, there were exactly three of those 20, right, that came a little bit close to funding their commercial loans with business and commercial deposits.

[00:16:21] John Ballantyne: The rest of the ratios were really outta whack. So that tells me. There’s a lot of work and a lot of opportunity in credit unions to start funding at least a better portion of their commercial loans with commercial deposits so that retail deposits can be used to fund home equity lines or fund auto loans.

[00:16:42] Vince Passione: John, there was, you talk about niches. I still remember a conversation at a conference. We were talking about municipal deposits. Can you, can you talk a little bit about that and how credit unions get involved in it? Is it through CDFI, is it through low income designation? How did they get there and are they getting any traction there?

[00:16:58] John Ballantyne: Uh, it’s, it’s, it’s a mixed bag. So I will say there are still some states, particularly in the southeast where they just can’t play in the space. They just can’t. But, you know, they’re. Prohibited from taking any sort of public fund deposits. But then if you go to a state like Michigan, some of our clients, we’re seeing really good success in public funds.

[00:17:18] John Ballantyne: And I’ll tell you why. It’s because these municipalities, they wanna bank in their community. They want to bank at the credit unions that are in their communities where that maybe if it’s a a community that banks have left or largely left, that’s who they want to bank with. School systems. School systems have been a really powerful source of deposits.

[00:17:38] John Ballantyne: Business relationship for some of our credit union clients. Again, if you think about credit unions, a lot of them started as teachers, unions, people helping people. There’s an affiliation with schools. So I think there is excellent opportunity in the public fund space. It’s just starting to get tapped by the credit union movement right now.

[00:17:57] John Ballantyne: And those are the types of deals, uh, my team likes to work on. ’cause they come with really big deposits and really big feat relationships as well. So we, we really encourage. Our clients to look at municipal deposits, look at public funds.

[00:18:12] Vince Passione: Great. So John, let’s talk about what’s next. We had, we were chatting earlier, we had Becky Reon, she’s the COO from bank social, and we were talking about stablecoin and, and how you’d like look at stablecoin.

[00:18:23] Vince Passione: Right. And with this genius act, you know, Becky did a great job of explaining how. This could be, this is really a payments play, right? It, it’s a, it’s a new, it’s a new payments rail. How do you see stablecoin and new technologies impacting your products and how does it help the credit union’s adoption of it?

[00:18:43] John Ballantyne: Yeah. Stablecoin is really interesting, so, so there’s a lot of talk in the crypto space right now. There’s a lot of talk of how the use cases can go and it’s here. It’s here to stay. Uh, we’re starting to see it come out in some tools. However, I don’t think it’s so much of a revolution of payments as it will be an evolution of payments.

[00:19:03] John Ballantyne: It, it provides another means of doing payments and, and particularly crypto has a, a really strong use case. Actually, let me even take it even broader than just crypto. Let’s talk blockchain. There’s a really broad use case in international payments, so how does settlement works if you’re in liquidity type situations or if you’re.

[00:19:23] John Ballantyne: Working across foreign exchanges. And then blockchain more in general is excellent for security. So authentication, embedded digital fingerprints where no passwords required, so no password, no theft. So there’s a, there’s a good security component of that. So that’s, that’s what I have to say about crypto and true treasury.

[00:19:41] John Ballantyne: We’re still evaluating. Some of the business use cases that we can do, we’re definitely looking at it from a security perspective and starting to look at it what it can do for some of the international, um, mainly international use cases. Other things on the horizon that we’re starting to do more of and see more of are things like fraud prevention, uh, predictive or behavioral analytics.

[00:20:05] John Ballantyne: So of course we have things like positive pay check, positive pay, aach positive pay, payee, positive pay, but there’s this whole other component of. How do you stop any, any sort of behavioral elements that are outta sync with how that business typically transact to alert and then incorporate in that exceptions engine.

[00:20:23] John Ballantyne: So that’s where there’s a lot of work being done there. We’re working on some of that right now. Interoperability is really one of the big things as well. So of course you’ve heard of open APIs, uh, but we’re really trying, wanna take it a step further than that and we’re looking at embedded services.

[00:20:42] John Ballantyne: This way, this is how we think, and this is kind of a very credit union specific or FinTech specific, but our idea is you can deliver better services, better, cheaper, and swap ’em in and out easier if they’re embedded services in an application that we provide a credit union. So that’s, that’s another piece that we’re taking a deeper dive into.

[00:21:03] John Ballantyne: How can we make it easier to incorporate new technologies, better technologies for our clients? As the future use cases come. And it is really a much better experience than, you know, going down a menu and saying, I think I want to do a wire there, or I think I wanna do an a CH. We’d rather have intelligent routing on those payment rails.

[00:21:23] Narrator: That’s great.

[00:21:23] John Ballantyne: Yeah. And, and you know, the one last thing I’ll say, there’s realtime payments of course is here, it’s now. Uh, and I would say those are where the use cases are really starting to develop. And on the pay payment side. Of realtime payments, a lot of financial institutions are received. What we’re working on is ways to make them more send institutions and we’re working on some tools right now to, to enable our clients to do that.

[00:21:44] Vince Passione: Yeah. I was gonna, I was gonna back you up into Fed Now and, and, and, ’cause we jumped right into Stablecoin, but on the Fed Now side, you know, adoption of it, credit unions move currents moving there. It sounds like you’re seeing pretty broad based adoption.

[00:21:57] John Ballantyne: Yeah, well definitely on the receive side. So many, many financial institutions.

[00:22:02] John Ballantyne: Everybody’s a little bit nervous on the send side. How do we say which, which is ironic outside for a, for like a member, a business to send through it. Uh, credit unions will send credit unions to credit unions, but we’re, we’re working on those use cases. Things like insurance companies or, you know, attorneys.

[00:22:18] John Ballantyne: So, so there are some very strong use cases. We just need to ensure that the, the comfort level and the risk policies support those real time payments, send opportunities to provide to members.

[00:22:29] Vince Passione: Great, John. So looking ahead, last question. So what does True Treasury look like in 2030? What’s happening with commercial lending?

[00:22:37] Vince Passione: What’s happening across the treasury space?

[00:22:40] John Ballantyne: Yeah, I, so one of the, the great visions for True Treasury is, you know, our first step was. Is there a market? Not only is there a market, there’s a massive market, uh, but right now what you see is a lot of segmentation of commercial lending. CUSOs. You see, uh, compliance CUSOs, treasury management, CUSOs.

[00:22:59] John Ballantyne: What I see looking in the future is starting to bring those together to deliver commercial banking as a service, uh, or the pieces that are needed very modular. So a lot of credit unions, community banks, and even bigger banks. We have a vision for moving upstream to bigger banks. They have most of the pieces, but there are gonna be gaps that, that we can help fill.

[00:23:19] John Ballantyne: So we will have a modular business that’ll help fill those gaps to deliver commercial banking as a service for, uh, the credit union community, financial, insti, uh, institution, industry, uh, and beyond.

[00:23:33] Vince Passione: Excellent. Well, John, look, that’s a wrap for this episode of 22 Minutes and Lending. Thank you so much for joining us today.

[00:23:38] Vince Passione: It was a great conversation. Hey, thanks Vince for having me on. Awesome. And to our listeners, thanks for tuning in. Be sure to subscribe, share, and join us for our next episode of 22 Minutes in Lending. Thanks so much.

[00:23:50] Narrator: Thank you for listening to the 22 Minutes in Lending podcast. We hope you enjoyed today’s episode.

[00:23:55] Narrator: You’ll find links to any resources mentioned in the show notes. If you’re enjoying our show, be sure to subscribe and leave us a five star review.