The New Rules For Credit Union Innovation In 2020

Five industry leaders share how they keep innovation at the forefront in a challenging, changing environment.

 
 

In mid-March of this year — when businesses across the country were closing their doors to comply with state-mandated lockdowns aimed at preventing the spread of COVID-19 — Atlanta Postal Credit Union ($2.4B, Atlanta, GA) was executing an ambitious plan to launch a new division and expand into new markets.

A year in the making, Atlanta Postal’s roll out of Center Parc Credit Union involved working with Walmart to open two new branches; with the city of Savannah, GA, to create a four-acre community garden; and with Georgia State University for naming rights to its stadium. The looming pandemic forced the credit union to consider developing an exit strategy in tandem with the opening of the new cooperative, but Chris Maume, vice president of business intelligence and innovation at Atlanta Postal, resisted the move.

CU QUICK FACTS

Atlanta Postal Credit Union
Data as of 06.30.20

HQ: Atlanta, GA
ASSETS: $2.4B
MEMBERS: 100,774
BRANCHES: 13
12-MO SHARE GROWTH: 11.7%
12-MO LOAN GROWTH: 4.1%
ROA: 0.13%

“You can’t do both at the same time,” Maume says. “There’s too much focus on how to get out and not on how to get it done — too much focus on the risk and not enough on what can go well.”

The pandemic caught other innovation programs in the credit union space off guard as well. Many organizations sidelined plans; others accelerated programs to unheard-of timelines. Long-discussed digital initiatives became top priorities as credit unions implemented myriad ways to work and bank remotely and challenged basic practices such as ideation, brainstorming, and collaboration.

The times are quickly changing, and industry leaders share how they keep innovation at the forefront in such a challenging environment.

Focus First On Immediate Needs

When the pandemic hit, many credit unions faced new priorities that needed to take precedence over long-term projects. Major initiatives underway at Visions Federal Credit Union ($5.0B, Endwell, NY), for example, included moving from text to conversational banking, evaluating new strategies for payments and fintechs, and undergoing an overall digital transformation.

CU QUICK FACTS

Visions FCU
Data as of 06.30.20

HQ: Endwell, NY
ASSETS: $5.0B
MEMBERS: 216,766
BRANCHES: 51
12-MO SHARE GROWTH: 16.1%
12-MO LOAN GROWTH: 5.4%
ROA: 0.25%

When businesses closed in New York, however, the credit union shifted its immediate focus to keeping all 51 of its branches open; safeguarding employees; and supporting distressed members with 0% loan products, new fee structures, and digital services.

“The speed of change those first three months was amazing,” says Cynthia Schroeder, senior vice president and chief information and innovation officer at Visions FCU. “We focused on one thing — taking care of the member — instead of working in silos.”

Throughout the crisis, Visions continued soliciting member feedback via automated surveys through MemberView. In May, its net promoter score increased 1.93% to 87.12%, and its member effort scores increased to 6.43%.

“The feedback was positive,” Schroeder says. “We dropped everything, focused on members and employees, and made things happen.”

Cynthia Schroeder, SVP/Chief Information and Innovation Officer, Visions FCU

Visions’ major digital initiatives stalled during the first few months of the pandemic, but by June, they were nearly back on track. As for the direction of innovation in 2021, Schroeder says the credit union is focusing on speed and meeting member needs.

“We had too much going on,” Schroeder says. “If you have too much going on, you don’t get things done. If you work together and focus on one or two things, you turn them around much faster.”

Open Channels For Ideation

Keeping up with project workload can be difficult during rapidly changing times; so can keeping track of the flood of new ideas that come in. Credit Union of Colorado ($1.9B, Denver, CO) crowdsources to address these challenges.

CU QUICK FACTS

Credit Union of Colorado
Data as of 06.30.20

HQ: Denver, CO
ASSETS: $1.9B
MEMBERS: 141,370
BRANCHES: 17
12-MO SHARE GROWTH: 21. 8%
12-MO LOAN GROWTH: 11.3%
ROA: 0.57%

Two years ago, the credit union implemented a crowdsourcing platform, called iNGAGE powered by IdeaScale, that allows employees to submit, support, and comment on ideas. The credit union then assigns them to the appropriate team for follow up, research, and potential implementation. So far, employees have submitted more than 600 ideas. This year, despite the pandemic, the credit union has implemented upward of 15% of all ideas submitted, says Kelly Wagner-Grull, director of innovation and member experience at the cooperative.

“The ideation tool has proven invaluable in listening to our employees and allowing us to answer questions faster than we could have if we didn’t have a resource to collect ideas,” Wagner-Grull says. “This ideation model has set us up to deliver innovative changes to business processes and member experiences. We did some of this as a precursor, so now we are walking the talk.”

Kelly Wagner-Grull, Director of Innovation and Member Experience, Credit Union of Colorado

During the pandemic, the credit union accelerated the launch of a feed-based employee intranet, which then served as a central place for COVID-19 updates and remote employee engagement. Using Drupal — a free, open-source web content tool — the credit union’s e-commerce and innovation teams supplemented the old, static intranet with a modern platform with blogging-style posts, kudos boards, and the ability to search for content — all in a matter of weeks. The need to evaluate video banking, new service hours, chatbots, and enhanced member self-service tools have increased in priority for the credit union during this time.

Embrace Virtual Teams

Whether credit unions used Microsoft Teams, Skype, WebEx, or Zoom, chances are, most employees got a crash course in collaboration tools. One Detroit Credit Union ($49.9M, Detroit, MI) was using Microsoft Teams when most of its back-office staff shifted to remote work at the onset of the pandemic, and employees have since expanded their usage of video conferencing, instant messaging, screen sharing, and virtual teams.

CU QUICK FACTS

One Detroit Credit Union
Data as of 06.30.20

HQ: Detroit, MI
ASSETS: $50.0M
MEMBERS: 11,501
BRANCHES: 3
12-MO SHARE GROWTH: 31.3%
12-MO LOAN GROWTH: -5.8%
ROA: -0.58%

“If you are working on a project, you can create a group in Microsoft Teams with multiple people,” says Joumana Mcdad, chief strategy and innovation officer at One Detroit. “They can directly send messages and share docs. You can stay organized because you can revisit the messages between the team.”

Vermont Federal Credit Union ($706.8M, Burlington, VT) joined the ranks of organizations using Zoom for collaboration. Doug Robinson, director of innovation and strategy at the Green Mountain State cooperative, says he likes the system’s white board and breakout room capabilities.

CU QUICK FACTS

Vermont FCU
Data as of 06.30.20

HQ: Burlington, VT
ASSETS: $706.8M
MEMBERS: 44,168
BRANCHES: 6
12-MO SHARE GROWTH: 21.6%
12-MO LOAN GROWTH: 17.3%
ROA: 0.98%

“This has been a good opportunity to re-imagine what we do and make it better,” Robinson says. “We re-created some of our educational content to deliver virtually. It isn’t just different, it’s better.”

The credit union applied those lessons to its long-term thinking as well.

“Instead of going around different white boards for strategic planning, we ended up doing a bunch of breakout sessions using some nice features in Zoom,” the director says. “I think it’s better. I want to keep it going forward.”

Collaboration tools have presented new opportunities for staff meetings at ONE Detroit, too. For example, the credit union holds virtual huddles in the morning and plays virtual games to kick off team meetings. Plus, the credit union has explored ways to better collaborate outside of meetings, including by leaving the video camera on while employees are working so they can see one another.

“It’s more of a virtual office atmosphere,” Mcdad says. “We have monthly all-team meetings, but it’s not that same as being able to see those team members on a daily basis.”

Joumana Mcdad, Chief Strategy and Innovation Officer, One Detroit

The push to embrace virtual teams is convincing many organizations to permanently adjust their footprint. For example, Atlanta Postal has cut up to 15,000 square feet of office space from the new headquarters building it plans to open next year because of expanded remote working.

According to Maume, he was the only full-time remote employee when he first joined Atlanta Postal. When the pandemic hit, however, nearly half of the credit union’s 275 employees moved to home work within three weeks.

“A lot of organizations, whether they’re in finance or not, tend to manage, manage, manage instead of letting the individual manage themselves,” Maume says. “There’s a lot to be said for allowing employees to manage themselves. A 95-year-old company pivoting that quickly on working from home is very positive.”

Think Digital First — And Fast

Digital initiatives took a major leap forward in 2020. For many credit unions, the surge in digital banking highlighted gaps in capability.

ONE Detroit faced some basic issues. When the small community development financial institution (CDFI) closed branches, it had to communicate with its 11,500 members but quickly realized it had roughly half of their email addresses. So, an intern called members to help fill in the contact list.

The credit union also faced an unexpected increase in demand for debit cards, but getting a card or PIN took seven to 10 days

“It was a big deal,” Mcdad says. “Members were saying, ‘You mean I have to wait a week for my card?”

So, the credit union applied for — and won — a $25,000 grant from Inclusiv to implement instant-issue cards at its branches.

“The gaps in our products and services came up like never before, and we needed to act fast in regard to accessibility for products and services,” Mcdad says. “We needed to ensure our team had the proper tools and could deliver from remote locations. Digital transformation was a must.”

Vermont FCU faced a more low-tech challenge when it had to close the lobby of its branch located in downtown Burlington. The branch had no drive-thru window, so the credit union set up a kiosk outside the branch with instructions for how to communicate with employees inside the branch. Members and employees then used the night drop box to conduct transactions while maintaining social distancing.

“Our branch teams got creative,” Robinson says. “It not just about changing what we do, but also how we do it.”

Doug Robinson, Director of Innovation and Strategy, Vermont FCU

Fortunately, Vermont FCU had launched a new website with online accounting opening capabilities before the lockdown hit, which helped the cooperative absorb some of the shock of the pandemic.

“Our member growth was not impacted,” Robinson says. “It just shifted to digital. The percentage of accounts being opened online shot way up.”

And although traffic in some branches is almost back to pre-pandemic levels, Robinson predicts the shift to digital is here to stay.

“There has been a fundamental shift,” Robinson says. “If you deposit your check on your phone, that might save a trip to the branch.”

Don’t Forsake Long-Range Goals

The COVID-19 pandemic hit as Atlanta Postal was implementing a major growth initiative that supports the board’s diversification goal. The credit union wanted to continue its well-known brand in the Atlanta area while launching the Center Parc Credit Union brand for business in other parts of Georgia.

In October, Center Parc Credit Union opened two branches in Walmart stores in the Savannah area and rebranded an Atlanta branch near Georgia State College. Opening new branches during a pandemic might seem counterintuitive, but it was a key strategy for creating a presence in Georgia’s second-largest city.

In retrospect, the decision to stay the course aligned in many ways with today’s new normal. For example, Walmart has remained one of the nation’s key essential service providers, and the credit union estimates 5.2 million shoppers will pass by the two new in-store branches every year. Similarly, the new brand’s emphasis on providing fresh food through community gardens in Savannah and at Georgia State University aligns with pandemic-influenced priorities to feed the hungry and promote sustainability.

Purchasing the naming rights of the university’s stadium, the former home of the Atlanta Braves and U.S. Olympics, likewise might have seemed risky in March, but interest in sports has remained high as people eagerly await the return to normal for sports.

Finally, the pandemic has set the stage for potential mergers and acquisitions under the Center Parc brand. Another wave of coronavirus cases compounded by recession woes, makes it difficult to predict how long it will take to return to normal, or even what normal will look like, Maume says, but the credit union is ready to help where it can.

“We need to look at this as a three- to five-year play,” the vice president of business intelligence and innovation at Atlanta Postal says. “We’re in a position to help other institutions merge or find acquisition opportunities that make the most sense. We are in this for much longer term than we originally anticipated, so we need to staff up and resource up for it.”

Look To innovation In Other Industries

One thing is clear: Despite the fact America’s business community was shaken by COVID-19, many sectors have shown the capacity to rapidly innovate and keep their doors open.

And many of those innovations are digital.

“The business model for the restaurant industry completely changed with online ordering and delivery service,” Robinson says. “There are a lot of interesting lessons to be learned in terms of branch technology. For example, can you do order-ahead transactions?”

The move to mobile services underscores the potential for disruptions by fintechs with online-only business models. For example, how will credit unions compete against mobile telecom providers offering mobile checking and savings accounts?

Wagner-Grull at Credit Union of Colorado says it comes down to answering the big “why” — why should you belong to a credit union?

“We have to figure out how to be consultative in a digital way,” the director of innovation and member experience says. “In many cases, a credit union’s largest branch is its indirect or remote members that might come through as an individual car loan through a dealer. How do we explore those relationships and say, ‘Hey, we’re different.’? How do we stay relevant and make sure we’re part of that greater conversation?”

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