Spotlight On: Brandon Riechers, President & CEO, Royal Credit Union
January 2025 — Fintechs are among the biggest challenges for the banking industry, but they are also a big opportunity. “We seek strategic partnerships with those trusted fintechs. Those collaborations help us leverage their innovative capabilities,” Brandon Riechers, president and CEO of Royal Credit Union, told Invest:.
What have been some of the main highlights and key milestones for the Royal Credit Union during the last year?
This past year has been truly remarkable for Royal Credit Union because we celebrated our 60th anniversary. We’re proud of the strides we’ve made. One of the significant achievements has been our continued expansion in the Twin Cities market, both on the consumer and business fronts. In 2024, our membership saw a substantial increase of over 12,000 members. That brings us to just over 320,000 members in total. That growth just further underscores our commitment to providing value through less fees, higher interest on deposits, and lower interest rates on loans.
Community support is also at the heart of what we do. In 2024, Royal donated over $227,000 in cash to various community causes. Additionally, we have a separate foundation that has been instrumental in supporting capital projects focused on education, the arts, and wellness. In 2024 alone, the RCU Foundation contributed over $1.3 million to community projects in our region.
From a financial perspective, we’ve exceeded our strategic plan metrics in terms of safety, soundness, and member growth. We’ve also made significant advancements in technology efficiency, including implementing a new mortgage loan origination system.
What is your overview of the banking and financial services industry in the Twin Cities?
The Twin Cities have experienced several transformative trends over the past year. One of the most significant is digital banking. Financial institutions, both banks and credit unions, are increasingly adopting digital technologies to enhance the member experience and to improve operational efficiency overall. These can include things like the development of user-friendly mobile apps or AI-driven member services as well as the use of blockchain for secure transactions. All of that is on the rise.
The post-pandemic economic recovery has been a major focus in the Twin Cities, particularly emphasizing supporting small businesses and underserved communities. Financial institutions play a critical role in that recovery by providing essential loans and financial advice to help these sectors. Royal Credit Union was a significant player in the Paycheck Protection Program a couple of years ago. We originated 2,401 loans totaling $81.25 million to help small businesses bounce back.
There’s also a significant push toward reskilling and upskilling the workforce to meet the demands of the evolving financial services landscape. Training in digital skills and financial literacy are becoming more and more important.
Fintech collaborations are also on the rise. For those nontraditional providers of financial services, embedding ancillary services such as cellphone and subscription services into financial apps is on the rise.
What are the trends in the commercial sector and the banking industry itself?
If I look at the commercial real estate sector in downtown business districts, there are several challenges due to the shift to remote work. It has reduced demand for office spaces in some cases because there has been a little bit of a migration of that workforce. Figuring out new ways to utilize the vacated office space will be critical. Housing affordability remains a concern. Higher home prices, higher interest rates, and a lack of inventory continue to drive demand toward suburban and outer-ring housing. The impact of higher interest rates and cap rates on commercial real estate could cause strain over the next couple of years, particularly in downtown areas.
Despite these challenges, liquidity and financial performance continue to be a focus for financial institutions. At the end of the day, well-positioned and strong-performing organizations are poised to leverage those growth opportunities.
From our standpoint, mergers and acquisitions are increasing. It’s something that we look at from an opportunistic viewpoint, and we expect that to continue over the next year or two because it’s such a dynamic time for the sector.
What measures or initiatives is the credit union implementing or using in terms of new technologies?
AI and digital tools are a focus. These technologies help us improve member services by providing more personalized and efficient interactions. It also helps with security measures, such as preventing financial crimes using data analytics. That proactive approach ensures that our members’ information is secure and that we’re able to quickly identify and mitigate potential threats.
Digital banking enhancements are another significant area of focus for us. We’ve introduced new online applications for lending and deposits. We use member risk scores to detect and prevent fraud. Personalized member portals are more tailored and are designed to drive members to customized solutions that meet their specific needs. Even in the background, technology and innovation have had a profound impact over the past couple of years, and will continue to do so. We’re using things like robotic process automation, bots, and AI to handle routine, mundane, and predictive tasks.
What are the primary challenges for the banking and financial services space?
The banking and finance sector does face several challenges today. We’re proactively addressing each one of these. If you’re not investing in technology, you’re quickly falling behind. The rapid pace of technological change requires continuous innovation. We’re committed to integrating the latest technologies to enhance our services and improve the member experience.
Second is the regulatory environment. Navigating the complex regulatory landscape is always a challenge, and it seems to be at a peak. We have to adapt to new compliance requirements, changes in data privacy laws, and anti-money laundering regulations. We need to stay ahead by ensuring our practices exceed those standards.
Third is cybersecurity and economic conditions. We deal in a lot of data, so protecting our members’ data is paramount. We invest heavily in cybersecurity measures to safeguard against those threats, and we remain vigilant and adaptable to changing economic conditions to maintain that stability and trust.
Lastly, there is the competition from nontraditional banks, fintechs, and embedding banks. There’s certainly a rise in the number of fintech companies and the trend toward embedding banking. That is a challenge and an opportunity for us. It’s an opportunity in that we can partner with or buy fintechs for their technology, area of expertise, niche lending, deposit gathering, or whatever it is they might be doing. We seek strategic partnerships with those trusted fintechs. Those collaborations help us leverage their innovative capabilities.
Where would you like the Royal Credit Union to be in the next two to three years?
We have a strong commitment to continuous innovation and implementing new technologies so that we can stay ahead of the curve. We know that that’s only going to be more and more competitive. We’re going to invest heavily in leveraging AI and digital tools with a focus on improving member services and streamlining processes. We will also continue navigating the complex regulatory environment. As we get larger and more complex, it means more regulatory challenges, and we need to ensure we’re staying out in front of those from a compliance standpoint.
We look forward to continuing our improvement in cybersecurity, which remains a critical concern, making sure that we’re safeguarding against those threats.
We also expect to continue facing a competitive landscape, while always evolving. We will see increased competition from fintechs, but by collaborating, we can help them navigate compliance while bringing innovative solutions to our members.
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