Element Federal Credit Union ($26.6M, Charleston, WV) first garnered national attention in 2009 by developing the nation’s first remote deposit capture application for the iPhone. Today, a culture of innovation still permeates the institution, from its unconventional boardroom — think exercise ball chairs and a cozy fireplace — to its zombie-themed debit cards, currently some of the top picks among the membership.
“We don’t ever want to be exactly like everyone else,” says CEO Linda Bodie. “As an institution, we’ve decided to be proactive instead of reactive. We always want to be ahead of whatever’s coming next.’
Contrary to being put off by this adaptive mentality, Element’s diverse group of members, its board, and its employees are all intrinsically drawn to the institution precisely because of it.
At too many financial institutions, innovation is considered a happy accident, with no formalized process or culture to encourage and grow those notions. At the rare few, thinking outside the box may even be actively discouraged.
Change can go hand in hand with risk — a dirty word in financial circles — and miscalculations in the innovation process have wounded a fair share of companies. However, a far greater number of businesses are done in every year by mere complacency and a lack of adaptation.
The long-term, large-scale shifts required to truly stand out from the for-profit crowd don’t come easily, but a series of small, initial victories can help prime any institution for more novel thinking and earn institutional innovators the right to try more creative approaches.
“Over time, we’ve been able to build up a trust with our membership,” Bodie says. “They know now that we’re always building something that works better for them and how they desire to do their transactions.”
The following pages contain 10 examples of the institution’s most successful innovations, a sort of cultural blueprint that other credit unions can use to indentify their own innovation opportunities and implement those kinds of changes successfully.
1. Create A Brand To Believe In
A rebranding from the previous moniker of WV United Federal Credit Union to Element Federal Credit Union may not have been the cooperative’s first innovation, but it is nonetheless one of the most important.
“We started this rebranding process in April of 2012, and in some ways, we’re still implementing that vision today,” Bodie says.
This move was not without risk. Leadership knew a rebrand would — temporarily — require quadrupling the amount of funds the credit union was spending on marketing, and a corresponding $100,000 branch renovation of the main headquarters would tie up some staff resources and inconvenience members for nearly two full months.
There was also the potential hazard of taking a successful, well-known, growing institution — seemingly right at the height of its success — and resetting to square one, with a brand that current and future members might not understand or identify with.
“I would love to be able to tell you how excited I initially was about the rebranding, but it would be a lie,” says board chairperson Craig Richards. “I’m an accountant and we don’t like change. That stereotype exists for a reason.”
Despite some initial hesitation, Bodie worked diligently with a third-party marketing company to clarify and rationalize for leadership the many ways in which the reward for a properly executed rebrand would exceed potential risks.
“Linda once asked me to name the specific URLs from West Virginia Federal Employees Credit Union, United Federal Credit Union, WV United Federal Credit Union,” Richards says.
“When I couldn’t do it, she said, ‘So which one do you think is going to generate the best member base, have the most brand notoriety, and allow users to quickly identify who they’re doing business with?’” he says. “The answer was very clear.”
If current performance metrics are any indicator, the rebrand has been a huge success for Element. But in many ways, the new brand wasn’t about what appeared on the balance sheet. Instead, it was about giving leadership a blank slate to build and formalize exactly the type of culture needed for the credit union to prosper — free from any preconceived notions of what a financial brand had to be. It also gave members a real alternative from the status quo.
“The reason the rebrand worked is that now people can really understand who we are,” Bodie says. “Members are excited about what we’ve done. They understand that we are building something that works better for them and how they desire to do their business.”
2. Say “TaTa” To Teller Lines
“One of our primary goals with the lobby was to move from an adversarial type arrangement with our tellers to a more social arrangement,” Bodie says. Inspired by the many options in retail and business layouts, the credit union was willing to get creative in finding the best way to accomplish that goal.
“One day the teller lane was on the left side and one day it was on the right side, but we had fun with our members,” Bodie says. “They enjoyed coming in here and saying, “Where am I going to do my transaction today? But now that it’s finally settled, they really like what we’ve done.”
Today, the branch portion of Element’s headquarters is staffed by just two member services representatives in a centralized island complete with PCs, cash recyclers, and two pneumatic tubes that connect to the drive-through. Members also have the option of transacting through two iPad-outfitted “Go” kiosks on either side of the main entrance.
“When you walk into a bank and you wait in the cattle queue until the next teller is available, that’s fine if you’re there just to take cash from an account,” says Richards. “But if you really want to build that relationship and have an institution that will grow with you, then you have to have a different approach.”
The abundant communal space and lack of a defined waiting area took some members a while to get used to, but they soon appreciated the ability to use the branch and employee resources in any number of different ways.
For example, if members are in a rush, they can use a virtual version of Element’s call-ahead banking feature on their smartphone, iPad, or computer to schedule the pickup of a cashier’s check, a cash withdrawal, or any other branch service in advance so they won’t have to wait in line.
“Members can be at work, across town, or at lunch, set this up, and when they get here, we will identify them, hand off their items, or complete their transactions, and say, “Have a nice day,” Bodie says.
But the same system also works from kiosks within the branch itself, allowing those members with a little extra time to sit in the café and set up their transaction from there.
“We’ll serve you, just like you would be served at a restaurant,” Bodie says. “We’re treating branch transactions as a social process and creating a space where we can truly interact with members instead of just saying, ‘Here’s a piece of paper.’”
There is a slight cost associated with being everything to everyone, but members notice and value the difference. Over the past five years, as the credit union added its first wholly owned branch and invested more in its technology and office operations, its return on assets went down slightly and operating expenses increased, according to Callahan & Associates’ Peer-to-Peer Software. However, Element’s revenue per member is also more than $100 above its comparable peers as of 4Q 2012, indicating that these members do more real business with the credit union as a result.
“We still have people from other credit unions come in and they can’t believe how awesome and different our branch is,’” Bodie says. “I take that as a big compliment because our goal is to take banking to a more effective, friendlier level.”
3. Be Social, Not Salesy
Members know the difference between an advertisement or sales pitch and real communication that has their best interests at heart. That’s why Element takes a calculated approach with whom it reaches out to and why.
“We don’t engage in traditional advertising for the mere fact that most viewers and listeners are not our target audience,” Bodie says. “We have a special niche that we target. So we use the marketing methods that best reach those people and also engage with our current membership.” Although it may surprise many credit unions, social media has been one of the most successful channels for Element to connect with existing members and attract new ones, says Samantha Painter, assistant manager.
“We have people contacting us from all over the state who have seen us on Facebook or our other social media channels,” she says. “We don’t like to be boring or predictable with our posts, so we’re not always pushing financial advice or our services. We try to throw in some humor from time to time and be more personable.”
4. Lead, Don’t Follow
Element has been a paperless institution for the past 10 years, and unless the member specifically requests a hard copy of something or it is legally required, the staff sticks entirely to digital options.
“We still have those members who want to present their paper transaction slip or fill out a paper form. But at some point we decided we can’t just sit here and wait for that culture shift to happen on its own,” Bodie says.
The institution started small and led by example, digitizing its own in-house documents and processes before asking members to do the same. “That was pretty radical at the time, but we took some first steps and the earth didn’t fall apart and we didn’t get in trouble,” Bodie says. “So we said okay, now let’s really do this.”
Today, the majority of the credit union’s core systems through CU*Answers are cloud-based, operating from a remote location. This digital environment is not only more efficient for back-office employees but also creates more space on site for members to enjoy. It also allows more time for engagement during branch interactions.
“Instead of processing and analyzing a piece of paper, we wanted employees to be conversing with the member and building that relationship,” Bodie says. “The cost savings of being paperless are also substantial, and it makes everything much easier to report, document, and track.”
5. Go The Extra Mile For Employees
Element strives to offer competitive benefits and wages, but it also knows full well that it takes more than just money to secure and retain top-notch talent. Thankfully, operating as a small but growing institution creates many opportunities for career development and job flexibility.
“All of our staff wear many hats,” says Painter, the assistant manager. “I personally have taken on some market and business development roles that have opened up a new part to my career.”
When Element finds someone who fits their culture and membership, almost nothing is off the table to keep that person around.
When one long-term employee and her husband were transferred out of state, the credit union made a substantial operational change, investing in the equipment and training necessary to set up that individual as a one-person call center, working from a home office. Although this employee is practically autonomous in her day-to-day operations, she — like the rest of Element’s staff — is still expected to keep in contact via a number of different communications channels.
Employees primarily rely on Yammer, a secure, company-specific social media program, and Skype messaging to stay connected. But the entire team of local employees also meets face to face every Tuesday morning for training, brainstorming, or other activities, with the remote employee calling in through Skype video chat.
“We’ve kind of gamified the way we do business with each other, which has carried over to the way we do business with our members,” Bodie says. “If our staff is having fun, then our members are having fun and everyone is getting more out of those interactions.”
6. Learn From Everything And Everyone
Element strives for a very diverse board membership, including individuals from many different agencies, backgrounds, levels of professional education, and age ranges.
“I’ve always said that if you walk into a room and everyone is wearing an outfit just like yours, you can safely assume that the conversation will not go in any new directions,” Richards says. “Thankfully, that’s not the case with our board.”
But even with a wide spectrum of leadership perspectives, the credit union still needs to keep its eyes wide open to ensure long-term relevance. Good ideas can come from anywhere, so leaders here make it a point to constantly broaden their horizons and expose themselves to both formal and informal educational resources.
“When you have a market that doesn’t have a lot of options in terms of what people want to save and how much they are willing to borrow in unsure times, you really have to be creative,” Richards says. “A board needs to have the dedication to seek out information, scour the web, and then come back and say, ‘Hey, I saw this in the Wall Street Journal, but I think we could put a credit union spin on it.”
However, Richards is also wary of formalizing this process to the point that it stops being creative and starts feeling like work.
“We don’t say, ‘Everyone must read this publication before they come to the next meeting,’” he says. “We say, ‘Read anything you want.’ If you see it in a doctor’s office or in a magazine and you think, ‘Hey, that’s a great campaign,’ bring it back and we’ll discuss it.”
It’s not just outside resources but also outside perspectives that can stir up good ideas.
“We’re always looking out into our membership and into our community to see who else would like to be involved,” Richards says. “We’re undertaking an initiative now where we’re reaching out to college campuses to see what younger individuals expect from the institution, what services they’d like to see, what they like about us now, and what they’d want to see change in the future.”
Lighting doesn’t always strike Monday to Friday, between nine and five, so the credit union has learned to seize creative opportunities regardless of when they present themselves.
“It’s not unusual that I’ll receive a text from Linda at 9:30 at night saying, ‘I just saw this and it got me thinking,’” Painter says. “If it’s a great idea, we’ll start the wheels rolling.”
7. Be An Ambassador For New Technology
“Whether its iPads, Skype, or another new remote service, we are constantly introducing our members to new technology,” says Kristin Miller, member services representative. “We have older members come in who haven’t ever used these things, and we’ll go over it with them one-on-one, so they can see how easy it really is.”
Over time, this process has shifted many members’ toward accepting these emerging, high-tech service options.
“We’re able to be statewide and serve so many more people because of this technology,” Painter says. “Whether the members consider themselves techies or not, they are because of the services they use to connect and do business with us.”
It’s not just members who see a benefit. By walking members through various processes and channels, front-line employees develop the expertise needed to identify and troubleshoot potential issues more proactively.
“One of our people likes to say she’s just not very good with technology,” Bodie says. “But she will go up to that iPad and help our members complete whatever it is they’re trying to handle. Now she loves it and uses it all the time herself.”
8. Get Your Hands Dirty
As both CEO and self-professed techie, Bodie has a personal and an institutional interest in pursuing various projects for in-house development. The programming bug first bit Element when the institution was seeking a way to offer mobile remote deposit capture.
“Everything changed after Check 21,” Bodie says. “Smartphones came out, and since there were now cameras in the phones, we thought why can’t members just take a picture of the check and send it?”
The lack of a secure development and deployment environment kept the credit union on the fence for some time. But when Apple and the rise of app store development happened, Element saw the writing on the wall.
An IT-oriented employee who also shared Bodie’s interests was willing to learn how to program and get his developer’s license. Together, the two of them created a working app within 60 days.
“It was cool and our members loved it. Then we found out later we were the first institution to do that,” Bodie says. “It wasn’t a race for us. We just saw a need and took the initiative to do something about it.”
The realization that the credit union could proactively create its own solutions, without breaking any rules in the process, changed the way Element thought about its position in the market.
“The ability to create these new things makes you very different from the majority of other institutions out there,” Bodie says. Today, Element is pursuing additional hires and partnerships that will enhance these capabilities further.
The expertise gained from these processes also comes in handy when surveying and negotiating contracts for services the credit union buys outright. “Some of the solutions that sound like they’re the best thing since sliced bread turn out to be cumbersome clunkers and then you’re stuck. So you really need people with a technology background to evaluate those specifications, sit in on the demos, and see how the back end actually works,” Bodie says. “Most CEOs don’t possess that knowledge and even I don’t possess all of it. But it’s helpful to have.”
A future area for development at Element will be to “gamify” online and mobile interactions using game design features such as points, rewards, or social competitions , so that they’re more attractive and rewarding for users. Although Bodie sees real potential in these efforts, few vendors offer those features and credit unions wanting to innovate this way must forge their own path.
“We don’t have hours and hours to spend on gamifying every service we offer,” she says. “When it comes to engaging employees for training, or members for financial education, we’re just not to the point that we can build that yet, but there are certainly options on the horizon.”
9. Be 100% Accessible
When leaders at Element say they want the institution to be accessible to members anywhere, anytime, they’re also expected to hold themselves to the same standard.
“Any time a member services representative is having a problem, upper management is the first to jump in on the front line and give us a hand,” Miller says. “We can go to them anytime or they’ll come out to us and show us a better way of doing something.”
Although the capacity for executives to be hands-on with every employee and member diminishes as the institution grows, technology can be a useful supplement to keep that culture intact.
“When people use our text messaging system to ask questions or get help, those messages actually come directly to me, and I’ll answer them any time,” Bodie says. “I’ve answered a text at 3:00 AM from a member in Europe who discovered his debit card wasn’t working. But I was able to get him fixed up and on his way again.”
10. Believe In Your Decisions
“Technology changes so quickly that we can’t always commit to saying this is the product we’re going to use or that’s what we’re going to do,” Bodie says. “But the idea that you’ll always serve your members in the easiest, most profitable, technologically advanced way can be its own guiding strategy.”
Each credit union has a unique membership with different needs and priorities, so the path that each takes moving toward that goal should be very different.
“If you say, ‘Well, we just want to deploy this because everybody else did,’ that’s not very compelling. But if you talk to members, spend countless hours weighing the risks, and you still have the institution behind you, it lends far more weight to your opinion.”
Be wary if you hear a 100% unanimous response. Great ideas aren’t typically born in an echo chamber, and if no one is voicing any hesitation, the institution may not be pushing the boundaries far enough.
The best innovations will always feel like a leap of faith, Bodie says.
“If you feel it in your gut and you know you’re going to make an impact, you have to be willing to go for it. Things won’t fall apart if you try something new, and in all likelihood, they’re going to get much better.”