With $8.4 billion in assets and more than 950,000 members as of first quarter 2014, San Antonio-based Security Service Federal Credit Union is the eighth largest credit union in the United States by assets and the fourth largest by members. It is also the largest of Texas’ 529 credit unions, which has more credit unions than any state, or republic, in the country.
In early 2012, SSFCU had to decide whether it wanted to upgrade its online platform, adopt a new solution already available on the market, or build a new platform in-house. As more of its members interact with the institution via online and mobile channels, the importance of SSFCU's online service experience has expanded beyond user-friendly websites and decent online banking providers.
In this Q&A, SSFCU’s vice president of online services, Jay Tkachuk, talks about the process and hurdles of building an in-house platform as well as what opportunities the Texas-based credit union hopes to take advantage of as a result.
Why did the credit union decide to build its home banking suite from scratch rather than buy it off the shelf?
Jay Tkachuk: The credit union was at a decision point, and we had three choices: we could upgrade our aging online platform, shop around, or build a new online banking platform ourselves. We spent time thoroughly evaluating those options and identifying solutions available on the market in terms of their fit to our needs, resulting in a short list of potential providers.
At the same time, our IT department was estimating the amount of effort required for the in-house build option. Armed with that data, our senior management team made the call to build for several reasons. We wanted to control our own destiny, not be tied to a vendor's roadmap. We are a large enough credit union to have our own IT muscle, but at the same time we are small compared to the big banks that vendors cater to in terms of development resources. We also wanted to control the user experience. And lastly, we wanted to control the long-term cost of ownership, which we expect to be much lower.
Did the credit union build its mobile banking platform as well?
JT: No, we went through a similar evaluation process with mobile banking, but we were apprehensive about tackling two large build projects at the same time, so we partnered with Tyfone in this space.
How long did the build process take for online banking?
JT: We began discussions in early 2012 and launched the new online banking platform in March 2013, so it took us about a year from start to finish. However, we began developing the online channel by revamping the public website about a year and a half prior to our initial online banking discussions. The fact that we had a skilled team already in place that worked well together and had a strong knowledge of the user experience we wanted to achieve was critical to our decision.
Was anyone at the credit union skeptical about the decision to build it yourself? How did you get the full team on board?
JT: There was some skepticism and that is why the initial conversation and evaluation took six to eight months – we had people on both sides of the fence regarding whether to build or buy. Eventually, our IT department was able to convince the skeptics by proving that they had the muscle power and the skills needed. Ultimately, our COO and CIO agreed it was the best way to proceed.
Who comprises the team and what are their various skill sets?
JT: The way we have it structured at Security Service is that my team, online services, sits between business and IT. We are a separate user experience management layer, so we consider the user experience aspects of everything we do in terms of platform operation and design. The IT department does all of the development and testing, and that is the model we honed through our public site project.
My team is comprised of experts in each of the following areas: user experience and design, content management, and analytics. Today we have 10 people on my team and 10 people on the IT team dedicated to the digital channel. During the initial building phase, my team had only four members - including myself – and worked with seven to nine developers, business analysts and other technical personnel. We have expanded over time, as we think sustaining a robust online channel is a long-term effort.
Was member feedback used during the development process?
What has member reaction been like? Do you have future plans for additional development?
JT: Although initially rattled by the migration from the old platform to the new, our members have embraced it – the total active user base has more than doubled, and the satisfaction rates are consistently in the mid-to-high 80s.
When we made the decision to build, we understood that this effort would have a continuous nature, and we have continued to iteratively improve the platform's user experience and self-service capabilities. Some specific examples include the automated skip-pay program. This popular offer used to require members to mail a form in, call us or walk into a branch. Now that it is automated within online banking, nearly 60% of those who take advantage of the offer do so online.
A lot of the conversation at NetFinance revolved around the different ways people interact with their devices. What is your view regarding those different channels? Are members looking for different things in each?
JT: Absolutely! People tend to use mobile phones primarily where it offers a significant convenience advantage over other channels – to check account balances, deposit a check remotely, make quick transfers, etc. Those using online banking tend to spend more time managing their relationship – using bill payment, conducting complex transfers, etc.
Even though today we don't offer tablet banking, all our research and conversations with our peers indicate that tablet users also tend to interact with their financial relationships on a deeper than mobile level, but utilizing a different set of features, such as personal financial management tools.
Tablets tend to serve more as personal entertainment or leisure devices, thus the user mindset is very different from that of a person in front of a laptop who sees it as a tool to perform work. In general, people using online banking are proactive and task-oriented, while those using tablets are information consumers. That said, the share of loan applications being submitted through mobile and tablet devices is growing rapidly. Even though the process is fairly strenuous on a mobile device or tablet, that is likely what consumers have with them while they are sitting in Starbucks or on their couch at home.
Do you have any recommendations for credit unions considering in-house development?
JT: Yes, I would offer a few pieces of advice for others based on my experience in the credit union industry, but also prior to that when I held senior web analyst and web strategist positions at AMD, U.S. Global Investors, and Apple.
Make digital a stand-alone function reporting to the CEO. Create a Chief Digital Officer position, if necessary, and hire from the e-commerce or high-tech fields if experienced executives with financial technology backgrounds are not available. Such a team must be led by an executive reporting to the highest levels of the company to ensure that the channel receives the focus and resources it deserves.
Prepare for the long haul. This space moves very fast, and the company's leadership must be 100% committed to it for the next five to seven years at the least, and fund these efforts accordingly.
Hire the right team, be picky. In the online services or digital channel space, the team can make or break your efforts. Hire for talent, attitude, and fit to the team.
— As told to Sharon Simpson