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The following is a transcript of the podcast episode between Bruce Dragt, Chief Product Officer at CO-OP Financial Service and Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com.
Ryan: Bruce, from your point of view, what is innovation?
Bruce: “Innovation is something that many people attempt to define. I have a very simple definition: It is making something useful. As I have looked at innovation over the years, I have seen people who have focused innovation on what I’ll call future products or “new to the world” things. But I’ve also seen people focus innovation on practical things, meaning things that you use every day that really isn’t about something about the future but it’s about making something useful in your day-to-day life. This is something that I as a child experienced when in my own life I had a need for something, I created things, things that didn’t formerly exist, which could make it useful. In my business life today, there are many things that I am able to work on, practical things which people look at and say, “We could make that useful and better” as well as a number of things which for the future we look at and we say, “That is a better way of doing something,” or “That’s not something that we were formerly capable of doing which can make it happen.” And there are often enablers which make those future things happen.
When you think about the introduction of the mobile device or the ability to have high-speed internet transactions, all of that fostered a whole new set of innovations. And a lot of those things are what produce the ability to do things that will bring future innovation, but also some of those practical things that we have done for a great deal of time and now all of a sudden with different tools available, we can reimagine how they should be done and find them and make an innovation that will really make it useful for people. For me, innovation boils down to that. It is it is not a specific category; it is really whenever you are able to make something useful that formerly was not able to be done that way.
Ryan: I certainly agree there and love the simple explanation. If we can, let’s put a finer scope on this innovation question. When we take a look at credit unions specifically, why is innovation so important for credit unions in this digital age that we’re living in?
Bruce: “One of the things for credit union has been a focus on members. It’s people helping people. That is the credit union movement and what they have been about the entire time that there have been credit unions. As we think about the focus on the member and about innovation that’s happening in the world, we recognize that many things today in the world of innovation are all about what I’ll call “consumer enablement” or “consumer empowerment.” A lot of that was the introduction of mobile devices and ‘there’s an app for that, or there’s a thing I can do,’ and the blending of mobile and what might formerly have been driven by a browser.
When you think about all of those things and that a credit union is all about its members, then for credit unions the nature of innovation today centers on ‘How do I get my credit union members to be empowered to do all the things that they want to do?’ Even the nature of techniques of doing and creating new solutions [are innovative] today, the introduction of a user-centric design and the digital age are really good examples of how in the credit union movement, the historic focus on members and the current focus from an innovation perspective on consumers have come together and made it very important for credit unions to be able to innovate as others are also striving to make the lives of their members better. So there’s an expectation from a member perspective that the people who have supported them, who’ve been alongside of them — their credit unions — are going to do that at the same pace.
I would also say for credit unions that not only are supporting the member, that credit unions are an additional and important part of innovation in that people often wonder how to consume innovation. There are people who get a new app and immediately go into it and it’s super usable, and they can consume it really well. But there are also large chunks of our population where if there is something new or there is a change, they may not be readily able to utilize that. Credit unions for years have come alongside of their members and been able to provide a physical presence and the service and the support and the help to be able to consume financial services products but also to consume the manner by which those things are delivered.
So for credit unions, if we think about innovation, it’s the integration not just of that digital experience but also the physical experience is how those two can come together in a very seamless way. This means that innovation is remarkably important for credit unions so that if they start with that user and they think about the neat new digital things that can be enabled and are overlaid with the amazing service and support which credit unions can do. That really means that they need to be able to support these experiences whether somebody’s walking in, whether they’re calling in through a contact center, or they’re just having the digital experience itself. In all of that, you see the importance of innovation for the credit unions so that they stay in touch with their members and what their members need to do and that they also deliver that innovation in a way that is inherent in the way that credit unions support their members, which means digital and physical, and that as you’re doing the innovation really thinking through the way in which to make sure that that experience can be supported across all facets of how those members need to be supported today.
Ryan: As I was listening to you, one thing that jumped out at me — and tell me if you think that this is a fair assessment – is that innovation for credit unions, when you’re summarizing, it really means enabling customer empowerment. Do you think that would be a fair assessment if we boil down what innovation is from a credit union perspective?
Bruce: Credit unions are there to serve their members. And so by all means we’re going to through the innovation provided, empower those members to be able to consume financial services in a way that they get great support. And for the type of service which really supports the member versus needing to support somebody’s valuation or P&L, it really is about the members, about enabling them as you said, and doing that in a manner that credit unions have continually delivered financial services to them.
Ryan: Let’s shift gears a bit here. Let’s take a look at CO-OP specifically. What are some of the areas that CO-OP is focused on innovating in 2019?
Bruce: When we think about innovation at CO-OP, we think about it as a way of making something useful. Many people equate innovation to delivering a new app or other things, we definitely consider that important but we’re also innovating in some of the other areas of the business. So when you think about how we deliver service to our credit unions and their members, we are innovating that service as well. This means some of the technology that we utilize but also the models by which we provide service to our end clients and to their clients, we are innovating service and service delivery to make sure that it can match the expectations that our members have.
In addition to innovating our service and how we do that, we are innovating the manner by which we deliver. CO-OP has a long history of delivering innovation. However, when you look at the nature of what I’ll call the technology footprint needed today, it is requiring many companies to be able to deliver in a different way. And so you will hear people talking about altering development methodologies like going from a waterfall approach to an agile approach. CO-OP has done that. When you think about the technology and the infrastructure which we have to build this innovation upon, there are new mechanisms and new architecture to do that.
CO-OP has been building into a microservices-based environment to enable that type of delivery. And so, in addition to service, the nature by which we will do our technological delivery has been an area that we have been innovating and will continue to innovate in 2019. And then the area that most people think about relative to innovating and what we’re focused on would be innovating solutions. These are new kinds of products and services which our credit unions and their members can consume. And so CO-OP has a very specific focus to be able to accomplish that across a number of different items.
Some of those include digital member engagement. How do we make that engagement the best that it can be, be that in the form of a Contact Center, how people work and interact with us across the various channels? This means not just by phone but perhaps an email or other mechanisms by which people want to interact or just through apps themselves and how cardholders in particular can be able to manage the accounts which they have with their credit union.
We’re also doing this in some of our operational areas. In an operational area, when you when you think about it, these are some details, some of those I was talking about in the beginning of this discussion which make innovation practical. This is very much one of those practical areas: if you think about in particular the disputes and the chargeback processes, this is something that has been part of, in particular, cards for many years. We believe that that is something which can be better. We can make that more useful for all parties involved in that from the member to the credit union to all those we have to interact with in order to make that work. So we’re innovating there as well.
When we think about some of the other areas, we have two other primary areas we are working on, one of which is fraud [management]. This is the ability for us to take the capability that comes with artificial intelligence and machine learning and apply that in an environment of great data that processes through CO-OP and be able to get better insights than the insights that are provided today.
The final area is the ecosystem that we create for technology delivery and, within that, the ability for our credit unions to better manage their card portfolios, to do better data and analytics mining, and to have a better integration environment. So that the ability to consume products and services either through some type of app or UI driven piece or to be able to consume that through a restful API (application programming interface) environment that both are enabled and they’re enabled in an equivalent way so that people can put together and can accomplish innovation in a very rapid way by having open and available APIs, which they can consume and which can make new products and services.
Across all those areas — the service, the delivery, and the solutions that I walked through — it really is the focus of CO-OP to continue our history of innovation and to put that into some very practical ways here in the digital age.
Ryan: I’m glad that you pointed out the service aspect. I think many people when they hear the word “innovation,” automatically jump to either technology or the product side of things and they don’t really think of service or innovating service. And so I think that it’s great that service is a key component that CO-OP is looking at in 2019.
Now to move to a last question: When it comes to partnering with other individuals or organizations to make sure that you can help drive innovation, how do you go about finding and bringing on the right external partners to help bring that innovation to your business?
Bruce: Thanks for asking because this really for us is in many ways the nature of what we deliver to our end clients. We either make it or break it in some of these things by that type of choice. So in the ideal environment, one of the things that we’re looking for when we look at those partners is to make sure that they have a shared vision for the credit union movement and members. We look and say, “Is there a way for us to make sure that the promise we have made both to our owners as well as to our clients to be able to deliver in that manner that we believe that that partner can come alongside of us and can help us with that?”
The next piece is that we have a shared innovation approach. As the two companies are talking together, we can see and understand. We have a language and approach that really looks and works together and a lot of things we look at are companies who are able to do things in short, iterative cycles that they can really go through a process ideating, testing, putting things out, making sure they work, and then continuing to build upon it. So that innovation approach is very important for us.
Then there are two other areas that are pretty practical. One is that we look at the serviceability of the solution itself that they have. We look and we say, “This is something that is not just neat and interesting and all cool, but when you get to live people using it, do they have the ability to stand behind that to really provide service? It’s not some person somewhere, right?” It’s a really serviceable thing.
The final piece we look at and say, “Is this something that honestly is fully consumable within the innovation ecosystem that I was just describing at CO-OP?” meaning, “Can they fit into kind of my standard integration environment so that I can provide that as an API? Will they naturally integrate into the reporting solutions I have? Will we be able to make that an integrated building experience? Will it be able to come into our contact and other servicing centers to make sure that it is something we can service?”
So those are the key things that we look at and we evaluate. In some instances there are partners that we work with who have a particular presence within the market but maybe don’t have the credit union focus. If we can get to the place whereby they now understand what we are going to promise our credit unions and they agree that we can bring that, we can make that happen, we will work alongside them. But for the most part we are looking across partners to be able to do this and actually key partners because we recognize that in the world of innovation today, anyone company trying to do everything on its own we don’t believe is going to be successful. We know that we need partners like this and we just have to make sure that we are well aligned going in so that through the life cycle of the innovation plus the lifecycle of that product and its serviceability going forward that that will be a good healthy product for all members involved.
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