LAS VEGAS–Will slow and steady win the race for credit unions when it comes to innovation? Contrary to the lesson of the popular fairy tale, during a panel discussion here there was some disagreement over whether the tortoise or the hare will triumph.
That question around the pace of innovation was examined by a panel during Mitchell Stankovic’s Underground Collision here, which was themed, “Grim Fairy Tales or Happily Ever After.”
The panelists included here included Renee Sattiewhite, president and CEO of the African American Credit Union Coalition (who acted as moderator); Tom Davis, president/CEO of Trellance; Jim Hayes, president/CEO of State Department FCU; Ed Chuang, EVP/CIO with Logix FCU, and Brad Bendick, SVP-strategic partnerships with Co-op Solutions.
From left: Brad Bendick, Ed Chuang, Tom Davis, Jim Hayes and Renee Sattiewhite.
Here's a look at what each had to say:
Sattiewhite: What does happily ever after look like to you?
Bendick: Innovation in financial services has been a passion of mine in my 15 years in this space. We have seen an astonishing number of fintechs, so much so it’s almost impossible to keep track of. There’s not a better time for credit unions to jump in and partner.
The key part is how can fintechs be a key ally? Credit unions have a great trust with members. But it’s fragile if credit unions don’t innovate and keep up with what members want.
There are no excuses anymore not to innovate as a credit union. I understand there are certain technical limitations, but inertia is not an option.
So, in terms of the approach to innovation itself…small evolutionally steps is the first step and then get more specialized. Don’t be afraid to take some educated risks and don’t feel like you have to be a trailblazer, it’s proven that being a fast follower is a proven strategy.
Chuang: I will say some provocative things at the risk of angering people. Maybe the tortoise and hare isn’t the right fairy tale. I don’t think speed is the right question in this environment.
What we should think about is something Ron Shevlin wrote about.
‘The fintechs have already won the deposit war.’ I think the fintechs and the big banks have won the product mix war, the marketing war, and on and on. And the gap is only widening. So, what is the difference in what we do versus what they do? They are built to operate on agility. At credit unions we reward people who are good operators and we elevate them
The three components to the winners are strategy, execution and innovation. Where is that in the credit union space?
A Position Absent in CUs
At SoFi, under the CFO is a position called chief creative officer whose job it is to push the boundaries of innovation. I am willing to bet there are no chief creative officers at credit unions. We don’t have R&D teams taking moonshots. It’s not a budget thing, it’s a mindset thing.
We need more digital design people who weren’t tellers a year ago.
Davis: I am a data tech geek and have been my whole career. I do believe the credit union value prop is the collective value of all your data and being able to take that outside your credit union to a place credit unions control. Pull the people who know how to work on that data and let them do so. (Davis urged credit unions to visit the Credit Union Data Exchange, which CUToday.info reported on here.)
With the tortoise and the hare, I think it’s important to understand the psyche of why we do and do not adopt technology. I’m 57. The new technology that came out when I was a kid was a microwave. We weren’t just bombarded with the ability to adopt technology. We didn’t know, so we didn’t build it in. Many people in my age bracket do not have the propensity to adopt technology like I do.
The early adopters were those who play with it and get no benefit, they just enjoy playing with it. We need to understand diversity when we work with technology to be able to move at the right pace when we work with technology.
Technology is being used—the questions are, are you going to embrace it or are you going to be unprepared for it?
A Lesson from Chip Cards
In 2014 when we got chip cards at CSCU (now Trellance) (some CUs) just said they weren’t going to adopt that. You know what that would have cost the credit union industry had they not adopted that tech? There were a bunch of CFOs who didn’t understand the technology and the rails. And the CUSOs had to force them to adopt the technology. It was an incorrect mindset there that was the problem. The fraudsters would have all gone to credit unions if they hadn’t adopted chip cards.
We are going to have to go through this time and time again. We will get used to it.
Hayes: If you think about the pace of change, we had like 100 years with no change. The pace of change today is so drastic. Four years ago, credit unions were asking, how are we going to compete with the fintechs? And here we are now saying how can we adopt it faster?
Number one, the hare wins. Slow and steady isn’t going to cut it. We have to be fast-adopters. The big banks are moving ahead and blowing us away. People expect to be able to self-serve. It’s all integrated. It’s got to be easy.
We as an industry are clunky. We don’t integrate well. My own credit union included. We are not going to win these college students over with the clunky experiences we are offering our members. I have a 13-year-old son who is never going to work with a credit union if we don’t improve the experience overall.
Vendors & Mediocrity
How do we get there? I’m on my third credit union as a CEO. There are trends. Vendors, you’ve got to do what you do well. Don’t come with mediocre solutions. If you are mediocre at what you do, don’t start expanding into other areas. Stop trying to be all things to all people. Do what you do well.
When it comes to implementing software, don’t let my staff tell you how to implement the software. Eleven years ago, we did a core conversion. Six months later we had not seen any of the efficiencies we thought we would. That’s because they implemented the core the way we do our processes. Don’t let us do that. We don’t like changes. Staff who have been around for 20 years know one way to do things. When your software comes with a fresh way to do it, force us to do adopt it.
Vendors, Work Together
Lastly, for vendors, you guys work together, you guys create partnerships. In some ways, especially the smaller the credit union you are, you don’t have the leverage. If you would get together with an integrated solution a lot of credit unions would come to do business with you.
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