KOLOA, Kauai–The former chief information officer for the United States shared her perspective on issues facing credit unions, including around three areas where she said the dialogue is likely to remain “heated.”
Suzette Kent served as the CIO for the U.S. from Jan. 29, 2018 until July 2020. The office is part of the Office of Management & Budget. Prior to joining the federal government, Kent was a principal on the banking and capital markets advisory team at Ernst & Young’s financial services office.
Kent’s comments and insights were shared during Co-op Solutions’ CEO Conference as part of a Q&A moderated by financial journalist Jean Chatzky.
Here is a look at the Q&A:
Chatzky: How did you come to serve in the federal government?
Kent: My transition to government services came in recognition that financial institutions are one category that is getting (technology) right. When it comes to privacy, the pace of change, globally in many countries, financial services really sets that bar.
I serve on a bank board and work with a large number of technology companies, many of which are focused on cybersecurity. There is a lot of upheaval in the regulatory environment and it’s around many of those topics.
Those are the macro-issues.
Other issues are the war for talent and how you manage risk. I could pick up that conversation and have it with farmers, universities, with people in health care. We are seeing a broader fabric of risk touch every industry and we’re all fighting for that same talent. Those are things being talked about by CEOs, by people growing their businesses and by people in government.
Chatzky: What is the mood like in other industries?
Kent: There are many who looked at COVID, and speaking from a tech standpoint, we knew we had the ability to work remotely and to deliver services digitally. But we were kind of were trudging along in adoption. What happened during Covid was that usage flipped to the digital channel. Customers found new services they didn’t even know were there and they were thrilled about it. But it's also been an opportunity for businesses.
On the flip side there is fear. What has gone in in the cyberworld has created a little more fear about how information is used. The worker talent issue and pace have overwhelmed some. We are in a new normal and there is no a going back to how we did business in 2018. Those who are embracing that are moving on really quickly.
Chatzky: As you think about being a participatory fly on the wall at this meeting, what is your impression of the leaders in this room and their preparedness to respond?
Kent: I think coming in I had some thoughts from working not only with financial institutions but with other organizations. With the importance of using partners to move more quickly and the impact of the war for talent, I saw and heard things that were a lot different. I would encourage you to think about talent and how you access talent, not necessarily how you attract it. There are lots of ways to bring in talent. I work with universities where businesses in a community put a problem set into the university discussion. It creates a talent set.
I was thrilled by how bold some folks are in their thinking, but also a little taken aback that some felt stuck. Some of the stuck is because there are so many choices. If you don’t have that laser focus, it’s really hard to navigate through all those choices.
Chatzky: In choosing partners ether are so many choices. How do you filter that?
Kent: I think that goes right back to that laser focus on the thing you are trying to solve for. Using the characteristics of the problem you are trying to solve and where threat expertise and talent is resident can help make the match. That is the magic CEOs hold in their hands—you alone understand your business model. I think it’s exciting, because there are a lot more choices.
Chatzky: You spoke about the regulatory environment and how heated it has become This seems like a problem plaguing personal finance and financial services more than any other.
Kent: There are three areas where the dialogue is heated and there are multiple proposed laws.
I don’t know what the end-outcome will be, but there will be change in this space operationally: transparency and government involvement in cyberactivities.
The concept of fee assessment is another. Is it perceived that the customer had a choice and there is another pathway? If there is another way, regulators are more lenient. If there is not another way, they are very harsh.
And the last thing and the one that is most nebulous, is privacy, and what level of control your members have over the data they give to you and what you do with that data. You heard many speakers talk about how they use data to grow, and that’s important, but respecting individual rights has to also happen.
Chatzky: Going back to the idea of fees for giving someone something extra, is there a pathway for credit unions for giving people something extra for a fee?
Kent: There absolutely is a pathway. But there has been across financial services a significant rise in affinity and purpose-based investing, too. It’s the option to put your money to work for good. Customers judge their digital experience by the way they are treated digitally everywhere else. When we see things happening in other industries, we know that is an opportunity. People will pay for things that fit their lives. People will pay for things that save time.
The way many of the fintechs have cemented their choice is the customer makes a choice once, and then they never make a decision again. The ability to put both payment products and financial services into the context of very common transactions, like Instacart, is what cements relationships. And it’s only when there is an issue that someone thinks about changing it.