In the backyard? Well not literally. But innovation isn't always what people think it is. When I tell people my title at Filene Research Institute is Managing Director of Innovation, I often get an intrigued but puzzled look that reads, "Cool … but what exactly does that mean?" Or the "Oh everyone is doing innovation now," response. Both seem kind of hollow.
What is innovation really?
Ask 10 people and you will likely get 10 different responses. The word "innovation" has become such a commonly used buzzword that the online definition reads, "the action or process of innovating." Seriously. It's so common that it is its own definition.
I like to say innovation is an idea that solves a problem or challenge for your member or organization. More often than not, when people think of innovation they think of the big disruptors:
Netflix recognized that people wanted to watch movies on their own time and not be bound to one-day rentals with late fees by starting a DVD mail service. They didn't stop there either. Netflix quickly pivoted to offer a streaming-only service and now produces original content. No longer do people need to drive to Blockbuster to get the latest DVD.
Uber understood that it was an inconvenience for people to stand outside hailing cabs. Their solution was to connect people with drivers willing to take people from point A to point B facilitating by a phone app. At their fingertips, passengers now know where their driver is, how long it will take to pick them up and the estimated fare. The innovation ultimately turned the entire taxi industry upside down.
These are just two examples of truly disruptive innovations that succeeded in a big way. They not only changed an industry from a consumer usage and service standpoint but also put longstanding companies out of business. But innovation doesn't always need to be that big, disruptive idea. It would actually be pretty crazy for credit unions to focus large amounts of time and energy finding that next big idea. It wouldn't be very prudent from a risk perspective either.
The reality is, the successful innovations are often small, not flashy. They're incremental adjustments to your current processes and may include mining and leveraging data, and coming up with new methods for recruiting and retaining staff, and ways to view your members that can lead to increased profit and member growth.
Twice each year, credit union executives from the U.S. and Canada gather to present solutions to consumer finance problems as a part of Filene's renowned i3 – ideas, innovation, implementation – program, which I lead. Over the past dozen-plus years, hundreds of solutions have been presented. Most of them are incremental solutions to problems credit union members are facing right in their own backyard.
Here are some examples of the solutions presented:
Bank Ahead seeks to reduce wait times for members in the branch with an integrated mobile application that gives the member a selection of services to prepare in advance to reduce their waiting times.
Cultivate is a solution that aims to make financing more attainable for aspiring women entrepreneurs by offering a line of credit for those who want to grow their passion into profits that easily separates their personal and business transactions.
Bank on Family solves a reality many of us know – informal lending between family and friends is not only awkward, but repayment rates are very low. Only 43% of informal loans get paid back in full. This solution formalizes the process with the credit union to increase repayment rates for lenders, build borrowers' credit and create loyal members with healthy financial behaviors.
These are just a few examples of concepts recently presented by the Filene i3 teams. We are taking the Bank on Family concepts a step further and testing it with credit unions in our incubator. It's not a tech savvy new app or crazy new platform – just a tweak to something credit unions have the ability to do already. I invite you to see the entire catalog of concepts at filene.org.
The most important step in innovating, whether it's small incremental solutions or the next big thing, is listening to your members. What do people want? Are you solving a problem that people have? Are you solving a problem in a way that's attractive to people?
Your members are playing in your backyard right now and are probably talking about you. Are you listening? Small adjustments in how you serve them can have a large impact in their financial health and the financial health of your credit union.
As our namesake Ed Filene says, "Progress is the constant replacing of the best there is with something better still," and that something better still is probably not as flashy as you think.
Ryan Foss is Managing Director of Innovation for the Filene Research Institute. He can be reached at 952-201-2130 or [email protected].
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