Flow of Ideas Come to Near Fruition as i3 Group Convenes to Conceive Real Products and Services for Credit Unions

AUSTIN, Texas – For the 39 members of the Filene Research Institute’s i3 group, the flow of ideas that began more than a month ago has progressed to a phase where actual products and services were conceived and one day, members may be on the receiving end. The group, which consists of some of the industry’s innovative thinkers, met here on April 22 to share the progress each had made on projects. Members were split into five teams and charged with coming up with diverse and creative ideas. “The ideas from the i3 group at the Austin meeting demonstrate the power of creativity, cooperation and collaboration,” said Mark Meyer, Filene director of innovation. “It is evident that there is a high probability that in the future this group will bring forth a breakthrough innovation that will not only transform the credit union industry, but the entire financial services arena.” One team took a look at how members can build savings and spend money at the same time through rewards and loyalty programs. The proposed plan takes a percentage from a member’s purchases at a retailer and directs the funds into a special tax-deferred education savings vehicle. Funds earned are then invested into a long-term tuition fund for the member’s children and relatives can also sign up to help the children’s college fund. A second team identified the need to change the way mortgages are offered. With credit unions holding just 2.4% of the mortgage market, according to a 2002 Forrester survey, the team proposed to “widen the channel” by making it possible for small-to mid-size credit unions to offer full-service mortgages. According to Filene, this format has already been tested with Affinity Plus CU in St. Paul, Minn. and Chevron-West FCU in Salt Lake City. Affinity Plus helps the Chevron CU by providing access to their server, software and back office technology. Chevron makes the initial contact and maintains the all-important relationship with the member. “Most organizations get caught up in the weeds. We fail to take the time to innovate,” said Mark Forsyth, National Institute of Health CU, Rockville, Maryland and i3 member. “Credit unions tend to be followers; we need to innovate if we are going to be relevant. We are less relevant to younger folks. You need to take risks. Failure isn’t necessarily failure; it is the building block to success. You keep trying to take good ideas to the next level.” A third team came up with Moneyworks, which is a program designed to allow independent contractors, or “advocates” to market and sell credit union services to families and friends, providing a low-cost delivery channel for credit unions. Following the lead of other multi-level marketing organizations such as Amway, advocates undergo training and hold events where they provide information about the credit union’s services, products and special promotions, Filene said. The Royal Bank of Scotland’s One Account served as a model for a fourth team’s project. Like its European counterpart, i3′s idea is to pool a member’s mortgage, income, savings, loan and credit balances into a single account similar to a large-adjustable home equity loan. By offsetting a member’s saving and income against his mortgage and other loans, the One Account charges a lower interest rate to a lower level of net borrowings than paid on the member’s individual loans. “Banks wouldn’t have this type of shared innovation,” said Ben Morales, Washington State Employees CU, and i3 participant. “At work we are so used to working within boundaries. Here we have no political issues. There is a contagious feeling of running with the innovation and you can see if it would work.” The fifth team came up with the Youth Savings Account, which would offer a $2.50 to $5 a month matching savings deposit as long as a parent maintains at least four accounts with the credit union. According to the team and several industry estimates, the lack of savings has become a national emergency with the savings rate falling to near zero in 2004 and 25% of American households being considered “asset poor.” Besides the preliminary progress on the team’s projects, members got the opportunity to tour the state-of-the-art DELL computer center in Austin. The Texas Credit Union League also hosted a welcome reception along with A+ Federal Credit Union CEO Kerry Parker and her executive team. The group spent 8 to 10 hours performing a “Deep Dive,” which is a process to develop innovations in a short time span, originally pioneered by IDEO, an innovation firm. Four groups developed ideas on changing the branch experience as well as a retail credit union franchise targeting Gen Y. The i3 group will meet again in September in Madison, Wis. to present their final project findings. Filene will publish final findings in a 2005 Filene i3 Progress Report. -