Mission Fed Weighs Fintech Returns Against Real-World Fit

One of the greatest benefits of having a CUSO active in the fintech space is the access we get to the universe of fintech companies and the solutions they provide, along with some preliminary vetting of those companies, particularly if they’re a CURQL portfolio company. It’s also facilitated networking with other similarly oriented credit unions, allowing us to obtain unsolicited references on a variety of different solutions and companies.

Mission Federal Credit Union ($7.2B, San Diego, CA) doesn’t treat fintech as just another vendor category. Through its CUSO, Mission Federal Services (MFS), it has developed an investment approach that values both financial returns and opportunities to support long-term growth.

Through MFS, Mission Fed invests alongside peers in CURQL Collective, a network of more than 160 credit unions that pools capital and access to emerging fintech companies. That participation has widened the credit union’s visibility into the market while deepening its ties across the industry.

Doug Wright, who became president and CEO in 2024 after serving as chief financial officer, has helped guide that fintech evolution. Ron Araujo, a former Mission Fed CFO and current president of MFS, has also played a leading role in building credit union’s fintech strategy.

This interview has been edited and condensed.

How does Mission Fed approach fintech innovation and investment?

DOUG WRIGHT: Although we’ve maintained a CUSO for many years, we didn’t start using it to invest in fintechs until around 2017. Our first investment was in a startup digital banking platform and app aggregator along with a number of other credit unions.

Unfortunately, that investment has not panned out as we hoped. Subsequently, we invested relatively small amounts into a few additional fintechs before becoming aware of the CURQL funds. These have been our primary fintech investing vehicle since. We’ve made investments in both CURQL I and CURQL II funds, side investments in a few of their portfolio companies, and a few additional fintechs not in their portfolios.

RON ARAUJO: In 2016, Mission Fed decided to more fully use MFS. This initially led us into more traditional lines of business, but we eventually recognized the financial and member service opportunities with direct fintech investing. Mission Fed runs MFS as a holding company CUSO, with each of the investments being subsidiaries. To date, our journey in fintechs is only internal to Mission Fed.

How are credit unions approaching fintech investment? Future Bets explores how leaders balance immediate needs with longer-term bets, evaluate potential partners, and define success alongside mission and member value. Read the series today.

When choosing what to invest in, how do you balance your day-to-day business needs with longer-term strategic goals?

DW: From the credit union’s perspective, one of the greatest benefits of having a CUSO active in the fintech space is the access we get to the universe of fintech companies and the solutions they provide, along with some preliminary vetting of those companies, particularly if they’re a CURQL portfolio company. It’s also facilitated networking with other similarly oriented credit unions, allowing us to obtain unsolicited references on a variety of different solutions and companies.

We don’t require the credit union use the specific solutions of the companies we invest in, even if it’s a service we’re implementing. From the credit union perspective, we continue to look for fintech partners that best meet the needs of our members and Mission Fed.

If one of those partners is also a company we’ve invested in, we view that company more favorably, but it’s not a guarantee. We have several companies where we’ve done both, but we’ve made other investments where we’ve chosen another solution.

RA: For the most part, our fintech investing is based on the potential financial return that the opportunity can provide. Obviously, the main driver of a fintech’s success will be its ability to partner with many credit unions (and others), so we look more broadly at that as one consideration of investing. In some cases, this has led to the fintech partnering with Mission Fed, which generally gives the credit union a strong voice in the fintech’s development.

When those compete, which wins? How do you balance those two imperatives?

DW: From the investment perspective, we choose companies we think will provide a long-term financial benefit. As noted above, the credit union’s choice of solutions is based on our member and organizational needs and influenced by our investments but not driven by them.

What does success look like for a fintech investment? How does purpose play a role in your definition of success?

DW: Fintech investment success is primarily based on the financial return we receive. It’s a bonus if the company also provides a solution we use, particularly if we receive discounted charges. We’re also looking for companies that serve, promote, and advance the credit union industry.

RA: Because MFS does not have a Mission Fed usage mandate, success is measured by the financial return that we can realize. However, an interesting side benefit is the network we’ve developed not only with other fintechs but also with other like-minded credit unions and CUSO investors. MFS has close relationships with many other investors, and this keeps us in the loop on deal flow.

What’s one lesson you’ve learned about bringing along internal teams?

DW: Several years ago, our CUSO was not very connected to our internal credit union teams. We’ve worked hard the past few years to change that, and it’s benefited both our CUSO and the credit union. The close collaboration creates better credit union solutions and better investment selections.

RA: From my perspective as an investor working with Mission Fed, there is a great deal of passion and, more importantly, curiosity around the fintech activities of the CUSO. This is largely due to the fact Mission Fed is on its own technology journey, but it’s also a function of the teams recognizing the potential successes that technology can provide to members.

What’s one thing you’ve gotten wrong or would do differently if you started over today?

DW: I wish there had been a CURQL fund around with professional management when we first started. It’s a better way for credit unions to get their feet wet in fintech investing than to start with individual companies.

RA: MFS now has a robust network of investors and fintechs, but I would have worked much harder to develop those relationships earlier. It’s the collaboration with others that will help us continue to generate success. And nearly everyone is willing to work with you.

What’s one thing fintechs consistently misunderstand about working with credit unions?

DW: The concern I hear most frequently from fintechs is how slow the evaluation, selection, and implementation process can be. Fintech founders want to move quickly, and most credit unions are not built to do so due to internal caution, regulatory requirements, legacy technology, higher priorities, or other reasons.

Credit unions need to think about the founder’s motivations. Many are looking for an exit within a reasonable time period, which often means either selling to a larger company or going public. Both cases can change the nature of the partner relationship significantly, so credit union management needs to ensure they’re comfortable with this.

RA: As Doug already mentioned it’s the “pace of play” issue, with no close second. Fintechs need to understand credit unions are highly regulated industries with a lot of protocol. This is not largely explained to or understood by fintechs that are accustomed to a much faster pace.

On the flip side of this question, one thing credit unions consistently misunderstand about fintechs is that they need feedback to improve their product. Be open and brutally honest with fintechs; believe me, you won’t hurt their feelings.

What’s one piece of advice you’d give a fintech about how to partner with credit unions?

DW: Spend time building relationships, learning, responding, and adapting your solutions to multiple credit unions’ needs and pain points, and ensure your solutions can address those needs profitably.

RA: I explain to my fintech partners that credit unions are not competitors with one another; we share a lot about our business. So, if they’re pitching a credit union that maybe doesn’t need their product at this time, they should keep that relationship alive as it can be one of the best sources of leads.

Again, on the flip side, the most important advice for credit unions is that investing in the fintech space is not a passive investment. Your greatest success will come from being actively engaged with these startups every step of the way.

Interviews have been edited and condensed.