Strategizing Tech for a Credit Union That Serves Big Tech: Part Two

In part two of this two-part Q&A, Mike Upton, chief digital and technology officer for First Tech Credit Union ($14 billion, San Jose, Calif.), discusses reducing member friction in digital channels, chatbots, First Tech’s branch network strategy, and how his banking software career led him back to the credit union he became a member of in 1993. Read part one here.

Responses have been lightly edited for length and clarity.

CU Times: What are some specific digital tools First Tech has implemented to reduce friction for the member?

Upton: Right at the onset of the pandemic, we had already embarked on moving to an enterprise transformation platform. So we adopted the Pega system as an enterprise business process management layer and a CRM, and that was going to be the business platform through which we took our business process. And we do a lot of end-to-end automation in the streamlining of that, because if we make it easier for our employees, and take clicks and manual intervention out of the work stream, not only does it help our employees, it actually benefits our membership because it reduces the number of errors and increases the speed of the experience. We saw a lot of benefit where in the past if you were a member and you came onto the site to dispute a card transaction or request a new card, a lot of those activities would take manual intervention, and we’ve automated all of that. We’re in the process of automating our wires system – we took something that was a 23-step process down to four steps. So we have a very aggressive automation strategy that we’re going to be running across the credit union, and that’s going to be a big part of 2022.

CU Times: AI-powered chatbots have become popular among CUs. What are your thoughts on chatbots, and have they been implemented at First Tech?

Upton: At present, First Tech does not offer an AI chat function. A little bit of that is our acknowledgement that we are comfortable being what we call a fast follower. There are a good number of learnings out there about the pros and cons of being first to market, or being very early with AI and chat. The good news is, members love it, but they love it as long as it works right. What a lot of institutions found is they over implemented some of these tools when they didn’t have the operational infrastructure, or the data management on the back side in a number of cases, and they ended up scaling back those offerings. So as you introduce these types of experiences and capabilities, you really have to have the skills and operational readiness in place, and you have to determine strategically if it makes sense to introduce it, as opposed to introducing it broadly and then finding out it’s become overwhelming and having to back. We feel we are in the right position, that as we introduce these capabilities, introducing them the right way is more important than being the first to introduce.

CU Times: Industry-wide, there’s a consensus that brick-and-mortar branches are not going away, but are changing by becoming smaller and more focused on consultative services as opposed to basic transactions. What is First Tech’s overall branch strategy, and how does its digital strategy tie into its branch network?

Upton: The transformation of that in-person experience was already well underway prior to the pandemic, so we had already moved to an engaged, consulting type of open floor plan and model. We are fortunate that in our network, we already had the retail folks, such as mortgage specialists and wealth management advisors, already physically in the locations, so that in-person engagement model with more complex discussions and financial advisory [services] was the footprint we had rolled out.

One of the things that’s unique to First Tech is a number of our facilities are on the campuses of the employers we support. So being the credit union for Microsoft, as an example, we have several experience centers on the campus of Microsoft, so when Microsoft employees went remote, those locations also had to go remote.

Branches are important to us and they’ll always remain important to us – humans are always going to want to connect with humans. As far as what they connect on and at what frequency they’ll connect on, I think that clearly got a shock to the system, and we’ll see how that settles and evolves, but we always see a future where the in-person experience center will have its place and role, and will be very important to our overall success.

From a digital perspective, we want to make sure that if somebody goes into a physical location and has a conversation with somebody, that the rest of that conversation is known across the credit union. Prior to the pandemic, we deployed an omnichannel strategy where we use our Pega system to capture all interactions with members, whether it’s in person, through the contact center or digital, into that CRM platform. So our agents, whether they’re in an in-person location, the call center or in the back office, have visibility into 360 degrees of those engagements. And again, the automation work in the background will continue to make that even more seamless.

CU Times: You held positions at two large banks before coming to First Tech. What appealed to you about the credit union industry that made you want to make the jump?

Upton: I actually started my career in the software world. Getting out of school in 1990, they didn’t have fintechs, they had start-ups, so my first job out of school was with a start-up based out of Portland, Ore., that made software for thousands of banks and credit unions. The company was acquired, and I eventually ended up at FIS, where I was a manager of online and bill paying. Then I went to a payments software start-up, then to Bank of America as their consumer payments executive, then onto their online mobile banking innovation team, and then onto Capitol One.

But going back to that first start-up I got going with in Portland, they were a First Tech SEG. So my wife and I became First Tech members, I think it’s been 28 years at this point. So [I had] the opportunity to take the experience of start-up software, and [working for] large, global [enterprises], and bring that to First Tech, which serves the tech community, is rapidly growing, and is very ambitious about not just transforming First Tech, but being a leader in transforming the credit union community more holistically. For me it felt like bringing everything full circle.

CU Times: Now that you’ve been with First Tech for a while, what offerings do you think are essential for credit unions to have in order to successfully compete with the big banks?

Upton: There remains a fair amount of opportunity in digital account opening and onboarding. Making that experience simple, seamless and more personalized – that’s an area where the industry can differentiate and be competitive. Clearly, mobile is a key platform, and a number of institutions have opportunities to enhance their mobile offerings. Again, the holistic experience, as opposed to just having the features, is going to be important.

Money movement has always been at the heart of the value proposition of institutions, so again, continuing to make that seamless, offering flexibility of choice to the members and remaining secure [is important]. It’s not the most exciting thing to talk about, but as consumers have gone to digital, so have the bad guys. The velocity, sophistication and frequency that we see the bad guys trying to do bad things has increased. That’s going to continue to be an area where institutions will have to make investments, as well as [figure out] how to offer security and at the same time simplicity and seamlessness.

CU Times: What do credit unions offer that sets them apart from big banks?

Upton: I think folks that are attracted to credit unions are attracted to something more than simply a place to transact. There’s a cause, a community, and a sense that you’re part of something bigger than yourself. That’s a powerful human emotion – that sense of community, belonging and pride. So our job is to make sure that those folks who have chosen to join that community have those experiences that they were hoping for. It’s a deliberate choice to join a credit union, and we need to acknowledge and reward that choice by living up to or exceeding their expectations.