I’d like to challenge readers to expand their vision. What does it mean to be an innovator in financial technology? It’s more than having clever ideas and cool technology. It’s more than being among the first to make use of new ideas.
A true innovator is pushing an idea forward because it really benefits the user. It’s solving problems, increasing convenience, and speeding customer service. Today’s innovators also recognize that customers want to choose how to use their products, so pioneering products must be flexible and customizable. This is true for both credit unions and technology vendors. The end user should call the shots on how to apply what is being offered.
If a technology provider wants to innovate and lead the industry, it will also need the vision, the resources, the research and development clout, and the service philosophy to carry its ideas forward. It’s a team effort — and the team needs a “change culture” that’s not resistant to new ideas.
The Core And More
When looking at innovation in our industry, it’s critically important for a core processor to have an open platform. Following the maxim that technology users want choices, the capacity for third-party integration provides opportunities that set credit unions free to pursue their goals.
At the same time, we recognize that the technology provider ought to have its own cutting-edge software products, not just a core platform. While openness to third-party vendors is crucial, their products shouldn’t be the only option. An innovator will step forward with its own well-developed and integrated products that support lending, risk mitigation, payments, security, document management, and data warehousing and analysis.
A credit union’s first choice is often these products the core provider builds to integrate with its processor. In many ways, the core provider’s products function as a home base, and institutions branch out from them to third-party applications, depending on their need.
There’s more to consider. An innovative IT partner will have:
Managed IT security.
A strong infrastructure for cloud computing, disaster avoidance, and hardware hosting.
Investments in analytics, because this is a key technology in our field.
Strong vendor management for easy adoption of their products.
Innovation Means Growth
As mentioned above, an IT leader doesn’t innovate in order to be the first or to dazzle with fancy gadgets. It does so to solve problems and to get objectives met in a more effortless and economical manner. The result is growth.
A study by PricewaterhouseCoopers (PwC) interviewed 1,757 board-level business executives around the world. 93% of these executives said that organic growth through innovation will create the greatest proportion of future revenue growth. The study, Breakthrough Innovation and Growth, also showed that the most innovative companies are growing at a fast rate: an expected 62.2% over five years. When it comes to developing new products and services with external partners, the most innovative companies collaborate over three times more often —34% versus 10%.
One quote from the PwC study above is worth considering. It comes from Maxim Nogotkov, a man who founded retail companies and a financial institution overseas: “The more powerful and successful a company becomes, the greater the temptation to maintain the status quo … Very often new business models are created by companies that have nothing to lose …”
It’s a timely reminder for everyone, whether from a powerful company or not, that we can’t sit back on our laurels and continue to do business as we always have. Innovation is part of the process now. There are too many possibilities and opportunities created by new technologies to continue as before. Companies are innovating not just their products but their own business models so they can better take advantage of change.
Collaboration with other businesses, such as FinTechs, is one way to stay sharp and keep innovation happening. It’s not a surprise that many credit unions and IT providers that are succeeding are also negotiating fruitful partnerships with other technology organizations.
We can’t sit back on our laurels and continue to do business as we always have. Innovation is part of the process now.
The Long Haul
Innovation is not a one-time thing. One good idea won’t cut it. As with any enterprise, long-term commitment, as well as what we might call traditional values, sustain a company. A good example of a long-term innovation starts with Monsignor Pierre Hevey, a priest in New Hampshire early in the 20th century.
Hevey saw that local textile-mill workers needed a safe place to put their money and gain credit. In 1908 he helped organize what became the first credit union in the United States. That credit union, a current Symitar customer named St. Mary’s Bank, tells us that its very first safe for keeping valuables was a humble metal box purchased from a local newspaper.
It wasn’t the first credit union in the world, but it was an innovation in this country. Since then, the credit union movement has continually rebuilt itself, changed and adapted, and become the great network of institutions we have today. In other words, many additional good ideas were built on top of the first one. Credit unions are in it for the long haul — they persevered and succeeded due to a strong commitment to serve communities.
This is the key factor that we come back to over and over again: service. The greatest innovations can fail if not backed by the traditional value of superior customer and member service. It should be an integral part of every innovator and innovation that wants to succeed.
Putting It All Together
In today’s environment, everyone must innovate to compete and survive. A core processor and technology provider ought to:
Innovate to solve problems, and only to solve problems.
Promote innovation in its customers by offering a core that is flexible and customizable (open platform, good vendor management, customization tools).
Offer a solid line-up of ancillary products (analytics, risk management) already integrated with the core.
Provide a large, secure hosting infrastructure.
Commit to ongoing innovation via R&D investment and collaboration.
Commit to steadfast, high-level customer service.
Look at any IT company with long-term success and you’ll see something like the values listed above.