Credit unions have historically been champions at knowing their members. Where knowing isn’t always enough, one credit union took a proactive approach to not only meeting current needs but seeing ahead to where needs were evolving even before their members did. What stemmed from an unconventional idea to build a digital presence in the early 2000s has become an irreplaceable long-term strategic pillar for growth and innovation.
It started almost two decades ago as Michigan State University Federal Credit Union (MSUFCU) faced the challenge of trying to stay competitive digitally and manage the day-to-day. The right combination of an executive with the background and drive to take calculated risks to gain greater rewards, plus a team eager to lead the organization into unchartered territory, led to getting their online banking app into the Apple store. After the idea was pitched and Vice President of E-Commerce, April Clobes, who would go on to become MSUFCU’s CEO a few years later said “Okay, let’s do it!”, the path to their future was paved.
New Role Faces a Global Pandemic
Fast forward to January 2020, when Ben Maxim moved into a new and critical role as MSUFCU’s VP of Digital Strategy & Innovation. Just as MSUFCU was launching this exciting new strategic initiative, investing their time, their talent and their internal structure, COVID-19 swept across the globe. Ben suddenly had a lot of digital ground to cover as credit unions and the world shifted to a virtual one. Everyone knew that moving forward virtually was more than just a nice-to-have to stay competitive, it was a must-have to survive.
It is imperative that credit unions invest in innovation in order to remain relevant to their members’ changing needs.
As the global pandemic and economic downturn continued, credit unions across the country were forced to evaluate their budgets. MSUFCU made the strategic decision to keep their investment and priority on innovation.
“It is imperative that credit unions invest in innovation in order to remain relevant to their members’ changing needs. How members interact with the credit union has changed drastically in the past few years and will continue to do so. We should be the members’ first place choice for all things financial because we provide the relevant tools and resources they need and desire.” April shared.
The Lab at MSUFCU
The Lab at MSUFCU was established in 2020 to identify, create, and execute opportunities for innovation and bring agility, collaboration, drive, and innovation together to turn ideas into advanced financial technologies.
Employees work together to identify member needs and fintech startups who can offer solutions to meet those needs. They explore and test new opportunities in pilots before the organization makes a decision towards a long-term investment by crowd-sourcing perspectives from the entire staff on which ideas are most essential to serving members’ needs. Members are also invited to be part of the piloting process and their feedback is incorporated as early as the development stages.
“With dedicated resources, The Lab is set up in a way to bring products and services to members early on in the process so they can try it out and give us feedback before we put a big investment forward,” Ben explains. “Should a concept go well, then we can make that bigger investment to scale it and integrate it into our other products.”
Since January 2020, The Lab at MSUFCU has evaluated 215 innovative fintech, digital transformation and emerging technology startups resulting in 12 fintech partner pilots. Seven of those pilots were completed with six “greenlit” to be fully implemented. Two of those “greenlit” products were early successes; a new service channel delivered to members in weeks and a chatbot build out in 10 days.
1 in 5 credit union members report that they would be willing to leave their credit union for a bank if innovation was not made a priority.
Ben reflected on one of the early “greenlit” pilots that enhanced video banking services to their digital channels, “we were able to deliver a new service channel including training employee in a fast 5-week period from signed contract to first member video chat. Over the next few weeks we discovered that members didn’t care that it wasn’t fully branded or completely integrated into our site yet. They just wanted to talk to us. This realization allowed us to think differently about how we innovate and that we can move faster than we had originally thought.”
Over 3,000 MSUFCU members have participated in pilots facilitated by The Lab, including 500 members who serve on an ongoing member panel to provide early product feedback and guidance on innovation priorities.
Creating a Culture of Innovation
The Lab is doing more than helping members reach their financial goals through new products, it is also impacting employee retention and engagement at MSUFCU. Through a structured format, teams of eight cross-functional credit union employees, with different roles and experiences make up The Lab. “Bringing together a mix of expertise and providing dedicated space and resources for them to work together turns innovation into more than just a part of our culture, it is a part of the entire employee experience at MSUFCU.”
The second “greenlit” project was a chatbot built out in 10 days in collaboration with Boost.AI to support the internal navigation of MSUFCU’s Knowledge Base located in Sharepoint with an end goal to speed up the time it takes for front line staff to find resources. Following the 10-day build out, 60 employees were invited to pilot what is now called Gene. After 1 week of piloting Gene with employees, only 50% favorably reviewed the chatbot. Taking feedback from staff and sharing multiple iterations, by the fourth week, 100% of employees provided a favorable review. A big reason why The Lab had so much success launching new products early on was the involvement of staff.
Surveys of the 40 employees who have participated in The Lab so far share that they feel more engaged in their position, feel they have a voice at the credit union, and feel like their work matters. These positive sentiments from employees are taken back to their teams and elevates the entire organizations’ culture of innovation.
Accelerating Innovation, Together
Over his tenure in Filene’s esteemed i3 program, Ben gained a clearer perspective on the innovation landscape across the credit union industry. “Since the early launch of The Lab at MSUFCU, we realized that we want to be a leader in the industry and bring people along with us. As we’ve embraced innovation, MSUFCU wants to share our experience with the 5,000 other credit unions out there to make everyone stronger.”
Alongside four of his fellow i3 members, Ben and his i3 team have pulled together key innovation principles that MSUFCU have used to take innovation to the next level.
Key Innovation Principles from The Lab at MSUFCU:
- Make it an employee experience. Innovation isn’t something you decide to just go and do. It happens every day by everyone when you learn and iterate. Employees need to feel that they are empowered with opportunities to make a difference without fear of repercussion.
- Plan…but don’t over-plan. Innovation presents unique challenges to credit unions and their employees because you are trying brand new things. While planning is essential to creating alignment with strategic goals, no plan will ever be perfect. Let your team have enough leeway to be creative and the space to problem solve.
- Start small. Bring along a small group, have some quick wins, celebrate those wins and then scale innovation up and down all you want. We get buy-in when explaining we’re spending 10K to not spend 100K. It’s all about risk mitigation, not avoidance.
- Learn fast. Don't start from scratch! Chances are, someone else is already testing out your idea or, a potential fintech partner has the expertise and skills to bring your ideas to life. The success of innovation is what you learn from it. Think about what you can capture from an innovative concept and then capture it (good or bad).
- Identify a champion. It can’t be everyone’s job to champion innovation, but it is important for everyone to keep a focus on it as an organization and that may require identifying one or two people to own innovation and set milestones. This will help prevent a lack of execution post-idea phase and ensure your organization’s history of innovation is captured for why, or why not, your ideas get implemented.
“At the end of the day, innovation is about making things better today than they were yesterday.” As credit unions work through a never-ending changing financial landscape, we must all learn fast as we embrace innovation.
MSUFCU is a sponsor of Filene’s Center of Excellence for Data Analytics and the Future of Financial Services.
