Credit Union Innovation in 2020 and Beyond

“Innovative” is not the same as “new” and innovation is not something C-level executives can tick off their to-do lists. Innovation is anything that adds value to existing systems to the benefit of all stakeholders and is primarily achieved by developing new processes to create better user experiences. This last part – experiences – bears the most significance for credit unions.

Credit unions have a unique relationship with their members rooted in trust over financial matters, so improving the member experience is key to their survival. They must provide a simpler and more engaging experience to earn and retain their members’ loyalty.

A Positive Culture Is the Lifeblood of Innovative Organizations

When a company launches a unique new project, service or product, innovation is not “done.” Innovation happens when everyone in an organization embraces the notion as part of their daily routines instead of a distant end goal.

Continuous innovation is hard work, but I have found there are four underlying principles that business leaders can focus on to ensure success.

1. Give a targeted definition of company purpose. Innovation is the result of focus. This applies to every member of an organization, which means objectives need to be clearly – and narrowly – defined in a way everyone understands them. The easiest way to do this is to draw on company purpose. For example, if a business sets its purpose to be the “best card issuer in the world,” it will have a difficult time looking at interactions at the point of sale. It may come up with innovative products and services, but its goal will be limited and won’t change the way members interact with merchants. This is because the word “issuer” limits its ability to offer a solution for merchant customers that would add value to the shopping experience.

Finding the right purpose takes effort but in turn enables business leaders to focus on processes that drive meaningful change. Answering four key questions can help arrive at this focus:

• Which areas demonstrate the most growth potential?
• Which areas may involve less competition?
• Which areas can we improve?
• Which areas are good in terms of internal resources?

2. Use scarce resources well. Scarce resources make people work in smarter ways. When it comes to innovation there are two resources where less can achieve more: Time and people.

Time can be considered the most valuable resource of all. If business leaders get comfortable with the speed at which they innovate, they should remember that the world is full of smart people. If they are working on something clever, chances are others are working on it too.

Another important consideration is the organizational structure. Small teams are essential to create. If a company has 1,000 IT professionals, it doesn’t mean they must all work together to create something. Instead, they should organize into task forces, agile teams, work groups and project teams – any of these will work as long as none are named an “innovation department.”

3. Leverage the startup spirit. An innovation department is a certain way to prevent real innovation. First, organizations can’t change through a single department. It’s simply not possible. Second, when innovation is assigned to a certain group of people but not others, those in the “business as usual” team will be discouraged from bringing ideas to the table.

Innovation must come from culture that values every member of the organization. One way credit unions can achieve this is by introducing what I call the “startup spirit” – a unique corporate culture and structure that facilitates continuous innovation and serves as the fundamental operating principle for every startup-like, small, semi-autonomous unit within the company. I discuss the startup spirit in more detail in my book, “The Book of Bonus.”

4. Consider the ecosystem. The most suitable time to launch an innovative product or service is when the circumstances are ripe to build ecosystems around it. An ecosystem refers to an environment that places a product at the center of an experience that is consistent across various points of interactions. Consider Lotus123, iTunes or 3G – these innovations all made their mark because they were introduced at the right time as ecosystems around them were starting to mature.

For credit unions today, contactless payments offer some great benefits in this regard. As the number of contactless POS terminals – and their users – increase, credit unions have the chance to provide their members with the tap-and-go convenience without having to re-issue the plastic card. How? With a device we all carry – the smartphone – and a little help from fintechs. The marriage of contactless payments and seamless banking on mobile, coupled with flexible and wide-ranging loyalty offers makes a mobile app the number one focus area for credit unions today.

Making Innovation Work

Innovation is a brilliant virtuous circle – it can boost member satisfaction, generate higher profits and increase the number of loyal members. Credit unions faced with more competition from rapidly diversifying tech giants such as Apple and Facebook must now work even harder at this.

A clear company purpose coupled with the right structure, resources and culture can help lay the foundations for continuous and successful innovation.

Mehmet Sezgin is CEO and Founder of myGini. He can be reached at mehmet@mygini.com.