20 April 2009

Kicking the Tires - CUECU

Screenshots and white papers aren't enough to sell most credit union decision-makers on an innovation - no matter how promising it may be. Instead, the sheep among us wait until another financial institution is brave enough to implement said innovation before it is truly considered as a viable option. This mentality creates a network of precious few innovators, and a glut of late majority slackers or, worse, laggards.

What if there were an easier, more timely, way to prove an innovation's worth? I realize that not everyone has innovation in their blood...the risk is too high, and the potential reward simply isn't worth it to them. I get that. But what if we could speed up the time it takes for this group to kick an innovation's tires? What if we could allow them to experience a financial services innovation risk free?

Could we set up a Credit Union Employees Credit Union (CUECU) that could adopt innovations FOR credit unions? I picture it like this. Credit union employees across the nation deposit money into the credit union (call it dues, deposits, investments...I don't care). The credit union, then, negotiates with vendors to get free use of their newest innovations. Better yet, the credit union can also create their own. Member owners can choose a la carte which innovations they want to kick the tires of, and test them out for themselves in a real-time environment. Members could choose any core processor and any associated interfacing products they like from a menu of available innovations...and change their account settings any time they wish.

Vendors will want to be involved because it gets their product in front of their target market. It would also give them an opportunity to find bugs in their plans before launching to the "public". Operations would be extremely inexpensive, with very few staff positions or physical office space needed.

This won't turn laggards into innovators, but it may shorten the time it takes for the former group to come aboard. For a cooperative movement of cooperatives, this improves us all.


Anonymous said...

Love this crazy idea. When I saw you tweet the title of this blog post, I was expecting a completely different reason why.

This a great idea, but won't get the results you are looking for. Here's the reason why: a CU composed of CU employees has a VERY unique membership. What works or resonates with this CU will NOT work or resonate with CU composed of other types of people.

CU innovation is not about technology in a vacuum from everything else. CU innovation is about employing the RIGHT technologies that work for YOUR CU's particular membership and employee culture. That's going to be different for different CUs.

I was expecting your call for a CU Employees CU as a great addition to a national, single SEG credit union such as the new Realtor's FCU. That way this CU could focus on the UNIQUE needs of CU EMPLOYEES (a strange and beautiful bunch), just like the Realtors FCU can focus on the UNIQUE needs of Realtors nationwide.

-Morriss Partee

Eric said...

@CUWarrior - I think this an inspired idea. I started my savings account at my local CU when I was 12 to sock away my paper route money. Now, 24 years later I wish there were innovative youth programs and savings incentives back then that might have kept my savings on track. This cooperative of cooperatives might really break some ground and make our historically boring industry a little quicker on its feet.

Matt, the Credit Union Warrior said...

@Morriss I wouldn't call this a vacuum at all. Members are putting real money into their accounts. Adoption of different technologies would be fully tracked and will help credit unions identify which innovations are attractive, have staying power, and which ones are just flops. While these results won't be 100% indicative of what may happen with external applications of the innovations, it's definitely a better system than we have now.

Take online account opening/funding vendors, for example. There are some really big players in this market, all with very good solutions. How cool would it be for a credit union decision-maker to be able to try all of them real-time with a real account? Members can be periodically surveyed about their experiences with each service, and have results publicly displayed.

It's up to the credit union decision-maker to use this data to pick the right solutions for their own applications.

Anonymous said...

Matt, you are only reinforcing my argument. "Results won't be 100% indicative of what will work in external applications."

Then what good is the project? As soon as you have one technology that worked in this CU, but didn't work elsewhere, then no one can trust any of the results, and you haven't gained any knowledge or insight.

While technology is critical to business success, the need is not for new, more better technology, it's for GOOD technology that works flawless for PEOPLE. You've go to START with the PERSON, then build the technology to fit. Do it the other way around as you are suggesting here, and it is guaranteed to fail.

-Morriss Partee

Elaine said...

I think the big value would be in trying out things with the understanding that they might break once in a while, and that (theoretically) CU employees would be more tolerant, because they know something about how the underlying systems work. Sort of like a test server for the whole industry. :)

It's a wacky idea, and I have no idea how the heck it would work, but it's at least interesting as a thought experiment. Thanks for sharing!

Matt, the Credit Union Warrior said...

@Morriss You're missing the point completely...and when I say "completely," I mean you're not even on the reservation.

In "results", I was talking about adoption rates. Kicking the tires of these new technologies gives decision-makers a better feel for what deployment at their credit union would be like. Credit unions will be better equipped to make the right decisions for their specific fields of membership. That decision maker could call the credit union and be like "hey, I've always wanted to try [this], could you help us research ways to do it and let us try it out?" That's the value here...it's an innovation laboratory.

@Elaine "Wacky" is one of the best compliments I could possibly hope for. Our goal shouldn't be finding ways an idea wouldn't work, it should be trying to find ways that an idea will work. My intention, as always, is simply to get people thinking about things in a different way.

Anonymous said...

Matt, I want to understand, really I do. I love wacky crazy far out ideas.

But I honestly feel that what you are missing is that CU Employees handle/think/understand/know about their finances in a way that is COMPLETELY different than the average member. As Elaine says, CU'ers will think about back-end stuff... which normal members NEVER do. Adoption rate amongst CU professionals has NO, and I mean NONE, bearing to what adoption rates would be in a "normal-member" CU. So what would have been learned?

Again, I LOVE this idea. But I don't think the purpose of it matches up with your stated desired outcome.

Matt, the Credit Union Warrior said...

@Morriss Your concern is valid if and only if CUECU is the sole decision making factor. If that's the case, I question the judgement of the decision maker. I see potential here for member focus groups using test accounts, in branch innovation demonstrations, and CU study groups to fully evaluate each idea so the proper decisions for real world CUs can be made. As someone who has had to evaluate countless electronic services for our credit union, I see real value here in many ways.

Jill Nowacki said...

One technical question: Would your idea still involve economies of scale? I could be reading this wrong, but I'm understanding that I, as an individual member, could pick and choose the features I want to try, while another member may pick an entirely different vendor to provide a similar service? I believe you (paraphrasing here) said that vendors would be willing to lose these economies of scale for the long-term increase in chances to see their product hit mainstream, but I just wanted to verify.

Now, more philosophically: You're dead on with identifying the need for credit unions to get more innovative, but I think there's a bigger obstacle in place than lack of ability to test drive innovtion. You are right that there is a lot of talk about innovation, and not a lot of action backing it up. I'd venture to say that some of that is in the audience.

Sometimes I get the feeling that the credit union movement's biggest innovators are most able to only share their ideas with other innovative thinkers (typically via blogs, twitter, etc.) While this is a kickass group of individuals (am I allowed to say that on your blog?), they are not necessarily in positions within the mainstream CU movement positioned to make change right now.

How can CUECU-- or any new opportunity for innovation-- overcome that obstacle of limited audience and successfully attract the attention of those in position to make change in the U.S. CU movement today, beyond those that are already actively looking for innovation?

Bryan Clagett said...

I love a good debate. So what is the compromise? Could it be member centric technology that targets early adaptors? Could the FOM include vendors, CU technologists and CU marketers?

Matt, the Credit Union Warrior said...

@Jill The assumption is that vendors would want to display their products to credit union employees. In essence, we're giving them a sales tool. Granted, this would involve brutally honest, public dissection of their offerings...but it provides them with a sales tool nonetheless. So, in terms of "economies of scale" you have me completely correct: members would be able to pick and choose any of the offerings in any combination, totally unique to them if necessary.

I agree that there are plenty of additional obstacles...but this is certainly a big one. You are absolutely correct, though. If innovation isn't coming from the top of the organization (or at least embraced by boards/executives), it doesn't matter how enthusiastic or engaged the rest of the organization (or movement) may be.

At the end of the day, only the strong will survive. But, perhaps with the proper channels, converting some of the weak into the strong in terms of innovation will become easier.

@Bryan Exactly. The point isn't for this credit union to become THE answer...just a guide, a laboratory. I would imagine that for something like this to work you'd need buy in from vendors, CU executives, and innovators inside and outside of the movement (at all levels of their organizations). The FOM of this organization should be as diverse as possible to help decision-makers better evaluate innovations, and allow innovators to get their ideas in front of their market.

Tony Mannor said...

Such a great conversation.

I am with Jill - the innovations that really count are always just academic conversations between innovators.

How many times has the spark of genius been doused by the cold waters of pessimism?

I am one of those marketers that listen to the credit union ads on the radio by the credit union leagues and associations and cringe (sometimes resting my head on the steering wheel contemplating driving into a ditch).

We have a book of concepts that we keep that we basically warehouse because "No credit union would do this". We will sometimes bring them out 3 to 5 years later and finally someone will want them and think they are great.

Campaigns are a little like crackers. When they are fresh and new and buttery and delicious they are great. Put them on the shelf for 3 years and they are stale and gray and tasteless.

I know my rant is more about marketing or advertising and less about innovation - but they are kinda related :)

I mean we almost just sent out the concepts to everyone in a catalog and calling it "Too Hot For CUs" in a "Girls Gone Wild" style just to see if anyone would bite.

Ahhh, ok - rant over :)

Matt, the Credit Union Warrior said...

@Tony "Too Hot for CU's"?!? Hilarious! Except, of course, for the sad reality of what would actually be contained in that category. It's cool to be conservative with budgets and lending decisions...but we shouldn't be so scared of new ways of doing things, new ways of getting our message out, and new ways of thinking about cooperation/collaboration.

Tim McApine said...

Great idea. I would love credit unions to test drive what we are doing. I think something like this would be great for Filene or CUES to spearhead. You would have to overcome vendors feeling that their intellectual property may be compromised or copied, but that's a challenge that could be addressed.

GeorgeH said...

Cool idea Matt. Think others have some great comments. Here's an idea to enliven this discussion. Instead of CU Employees why not a credit union for Apple Users (built by Apple) or one for Google account holders (integrated w/ Gmail). That, my friends, would be something to get excited about.


Andy said...

Absolutely love this idea.

I'd actually argue that it would reduce the "vacuum effect" in doing vendor research. Sure, as credit union employees we'd be more apt than your average member to consider the back-end piece of any innovation. However, I think that this would actually increase the attention we all pay to the front-end of the product.

Most demo's that I've seen from vendors have been solely focused on the back-end. Where I see strength in this idea is that we, as credit union employees, would get to experience (at least to some degree) what our members would if the credit union decided to adopt a certain innovation.

I absolutely believe it would pick up the pace of adopting new innovations. Sure, the marketing would be different for the CU employees demographic, but that's just the face of any innovation.

We, as CU employees, still need the same financial services as our members. I think doing something like this would let us try out the technologies, find and test the ones we think would work for our members, and then change the marketing and delivery of that technology for our own FOM.

A sales tool for vendors, and a testing tool for credit unions that want to innovate (but aren't as comfortable with jumping right into implementation).

I love it.

Ben said...

I too like the idea, practicalities be darned.

@Morriss I think it's too strong to say that adoption rates at a CUECU would have "NO" bearing on adoption rates elsewhere. Not 100% certainly, but maybe 62% or 73%?

To George and Morriss's separate points about new affinity groups, I just got off the phone with Tom Glatt of Realtors FCU. He's got 13 employees today and expects no more than 25 once he's ramped up this year. I know it's a unique case, but the thought of chartering more online-only CUs that:
a) Have an initial sponsor with deep pockets, and
b) Don't have to juggle sunk costs
is exciting.

Indeed, I have a greater affinity for most of the people reading this blog than I do with the guy who lives two doors down. No joke. And even workplace-oriented affinities are no longer as strong as they used to be. If young adults have 14 jobs by the time they turn 38 (real stat, source hazy), then workplace affinity is indeed an aging concept.