Embracing a Culture of Continuous Innovation at Scale

Jim Marous (00:10):

Welcome to another episode of Banking Transformed, the podcast that dives deep into the trends, innovations, and strategies shaping the future of banking. I'm your host, Jim Marous, owner, and CEO of the Digital Banking Report and co-publisher of The Financial Brand.

Jim Marous (00:25):

In this episode of Banking Transformed, we're excited to bring you an insightful conversation with three leaders from Meriwest Credit Union, a $2 billion community financial institution serving the greater Bay Area of California and Pima County, Arizona.

Jim Marous (00:41):

Despite the challenges posed by an uncertain economic environment, Meriwest Credit Union has demonstrated the ability to innovate at speed and scale largely due to the strategic partnership with Terafina, a lean provider of digital banking solutions.

Jim Marous (00:56):

Join us as we explore how this forward-thinking credit union has leveraged digital capabilities to transform their operations, enhance member experiences, and position themselves for the long-term success.

Jim Marous (01:10):

Meriwest Credit Union has embraced digital transformation to enhance member experiences, drive operational efficiency and position themselves for long-term success. Our guests today will share valuable insights on the power of strategic partnerships, the importance of balancing digital innovation with a personal touch, and the key lessons that everyone can learn along the way.

Jim Marous (01:33):

So, before we start, can each of you share a bit about your background and what sets Meriwest apart from your competition from your perspective? Mary let's start with you.

Mary Shelton (01:43):

Hi, I am the Senior Program Manager for Digital Innovation. My background is in project management, program management, PMO. I've been with Meriwest for just under five years, and my goal is always how we can improve upon the customer journey.

Jim Marous (02:01):

Cindy, how about you?

Cindy Watson (02:02):

Cindy Watson, I am the Chief Risk and Operations Officer for the credit union. I oversee the risks, the compliance, and the operations. So, I work with the digital innovation team from A to Z. That customer experience is in compliance but also the best experience that we can offer for our members.

Jim Marous (02:25):

And Gene, how about sharing a little bit about yourself and what sets Meriwest Credit Union apart?

Gene Fichtenholz (02:30):

Let's find out. So, my name is Gene Fichtenholz, and I'm VP of Digital Strategy. I'm leading digital innovation team. And my background is actually technical. So, I was in charge for business intelligence, quite some time business intelligence and AI, and then eventually moved to my role to expand our digital offerings, what sets apart.

Gene Fichtenholz (02:57):

So, there's couple of things. I would say that we are not afraid to take certain risks especially when we're actually adopting new technologies. And actually, very much thankful for our executive, for this for sure. We always get a lot of support.

Gene Fichtenholz (03:15):

I think the internal culture is amazing. So, that's definitely something needs to be said for. Our department's small, it's only a couple people, we have total four. And it's absolutely impossible to make complicated projects by yourself, it's absolutely impossible.

Gene Fichtenholz (03:34):

So, in order to take something off the ground, especially as big as account opening and digital banking, you need help from everybody. And that's probably our biggest strength. We do work together incredibly well. So, it's a well-oiled machine that actually keep chugging along and keep inventing stuff.

Jim Marous (03:56):

So, it's interesting, each of you, that you brought up so many interesting points in your introduction. Number one, Cindy, you mentioned you're in charge of operations and risk, and I've said it many times in the podcast that you can't move forward, number one without the back office working on your behalf. So, you can't build a good experience without the operations elements working well together.

Jim Marous (04:19):

In addition, and you referenced it also in the beginning Cindy, that you really need to bring risk and compliance to the table at the front end as opposed to the back end. That right off the bat sets Meriwest Credit Union apart from many of your competitors.

Jim Marous (04:35):

Because we always tend to, as marketing and innovation people, we tend to think, you know what, maybe we'll bring compliance into the end because they're the people that we just dreaded sometimes. But the reality is, if you make them part of the innovation process, it really works to your advantage.

Jim Marous (04:50):

Cindy, in your position, again, knowing that you can't innovate without the back office fixed, how do you do that? And how do you take on not only the operation, but the risk and compliance role in a way does not threaten your people.

Jim Marous (05:09):

Because digital transformation by its own nature is sometimes changing the back office jobs, but also where other people bring you in on the front end. How do you do that? How do you make that work?

Cindy Watson (05:23):

I think it's part of bringing in … they're separate teams, including fraud, so we bring in our teams upfront. I think, involving from the very beginning so that everybody understands what our initiative is, what our end game is, and make sure that we get everybody's buy-in. I think that's the key part of it, is understanding why we're doing this.

Cindy Watson (05:45):

Sometimes when you're on the fraud end, working a fraud case, it's like, "Well, why did we do that?" And so, bringing them in at the beginning helps us all understand why we did this. We all agreed to do this, and we have that buy-in.

Cindy Watson (06:00):

I'm sure Gene is going to add on to that. Because on all of our projects, we work together to get them involved upfront with testing from the configuration, from risk assessments, all of it.

Gene Fichtenholz (06:15):

I would like to add also, I think, it’s interesting. So, I think that's actually a very good point. And something Jim, that you touched that's actually quite dear to us. We bring on, on the complicated projects compliance from day one. And we actually prefer to be ... it's both, we usually do compliance and training.

Gene Fichtenholz (06:36):

And sometimes training, they didn't do anything to just observe, what they do is they'll learn from the process and the same thing. But with compliance, what's happening is that you really do need to know when you're speaking to the members, when you're actually doing anything digital with your members.

Gene Fichtenholz (06:52):

You need to know you're not doing anything stupid. Something's not allowed, something that's going to shoot you any farther later. So, that's why compliance is incredibly important. That's number one.

Gene Fichtenholz (07:04):

Number two is that what people overlook often is that, "Oh, yeah, we created this account opening, it works marvelous, but what's happening on the back end?" Because what somebody's holding back. So, you have only so many successful sessions obviously.

Gene Fichtenholz (07:21):

You have successful, smooth, wonderful conversions of accounts, so many of them. But you have so many of them that doing it go well. Something needs to be reviewed, something needs to be declined, something needs to be verified … that.

Gene Fichtenholz (07:34):

So, how's that process looking? So, if you improve your additional experience for members but you degrade experience from your backend, then your efficiency going down as well. So, that's really important.

Cindy Watson (07:47):

There's nothing worse than developing a process that you think works great, it's efficient, and then in the end, you're at a compliance. You forgot a disclosure, you're not disclosing X, Y, Z correctly. It does not work and it's inefficient. So, that's the reason why we do what we do.

Jim Marous (08:04):

So, Mary, you are the hat of innovation, in charge of innovation and from that perspective, there's a lot we have to do, and I'll call it innovation, but transformation and innovation to modernize our financial institutions as in general. How do you prioritize what you spend your time on or what you want to move to next?

Jim Marous (08:27):

And for instance, let's go back a little bit. Let's see what innovations have you done in the last 12 months? And then as you look forward, what is on your to-do list?

Mary Shelton (08:39):

That's a big list. That's a big list, Jim.

Jim Marous (08:42):

That's right. I'm going to hold you accountable for it too.

Mary Shelton (08:46):

In the last 12 months, our focus is on how do we add convenience and efficiency for our members. So, we're coming from this generation of convenience now. Regardless of age, regardless of generation, we have this tendency to focus on one demographic, but in reality, regardless of age, we all are focused on convenience.

Mary Shelton (09:12):

We have DoorDash, we have all of these apps that allow us greater convenience in our life and banking is no different. People want a convenient, quick ... they expect a convenient, quick solution. So, our focus is on how do we accommodate that for our membership community.

Jim Marous (09:31):

Looking at that then, what have you done in the last year? What are some of the things and maybe 18 months, what are some of the innovations or improvements, let's say, because innovation is an overused word. And a lot of what we talk about in banking is innovation to us is just normal business for members. But what have you done in the last year to make banking easier?

Mary Shelton (09:52):

We converted our online and mobile banking solution, and that was pretty significant project. So, we've seen huge improvements and on our mobile banking alone, what our members are able to do in mobile banking is quite significant compared to what they would do prior to this conversion.

Jim Marous (10:16):

So, I'm going to take this one to Gene here. You know, change overall sucks. I mean, it's just not something we like as people, and it may be our employees, and it may be our members. So, when you're doing a major conversion, you did both online and digitally, and I'm going to probably run this by all of you.

Jim Marous (10:34):

How did you communicate it to your own employees, so they weren't threatened by the change you were putting in place, but even more importantly, how do you communicate it to your members who sometimes, if my app is all of a sudden green, when it used to be red, I freak out because I think the whole world’s changed when it really hasn’t.

Jim Marous (10:55):

How do you communicate to your employees what you're doing? And how do you communicate to your members what you're doing from an innovation and digital transformation perspective?

Gene Fichtenholz (11:04):

You hit it right on the nail in terms of the managing expectations. So, that's a huge aspect of any type of significant change. And interestingly enough, you need to communicate success as well. That's incredibly an important part.

Gene Fichtenholz (11:26):

So, in terms of digital banking as everybody understand, if you convert digital banking, convert completely your experience. Like, “I am a member, I used to log in here, I used to see the specific screens,” all of a sudden goes away. So, I'm going to be upset.

Gene Fichtenholz (11:44):

And message to everybody, if you convert to digital banking, everybody will be upset. Nobody's going to tell you that they thank you so much for doing this like to me. To make change they did not expect. So, what needs to be done is that we manage our communications a lot. So, months and months in advance communications went out to our members.

Gene Fichtenholz (12:06):

We also, I'm going to give kudos to our marketing, yet see in other cooperation effort. We created a persona called Scout. And that persona is basically is part of our chatbot and that persona, marketing created a lot of videos. Very cute videos were actually explained different aspects of digital banking. And this was communicated way, way in advance to build up the anticipation.

Gene Fichtenholz (12:36):

Another part of it is how do you actually communicate internally? As I said, if you get everybody on board early on, they'll be on board. It's not your project, it's their project, so they own it. They feel pride about it. They feel that they're not only part of it, but they're helping and helping a lot.

Gene Fichtenholz (12:57):

But you do need to manage success, meaning that when you convert the only things that you're going to convert, I'm talking about digital banking, you only going to hear bad things, period. Because good things, nobody's going to call you. You will only hear negative feedback. Because positive feedback is just no feedback that's all listed.

Gene Fichtenholz (13:19):

So, you need to communicate to your internal team that this unhappiness, that's okay. I mean, that's exactly how we expect. So, we were quite prepared for this. So, we knew that we're going to have a lot of telephone calls. We hired an additional outside contact center to manage the calls. So, additional influx of calls, so that's for digital banking.

Gene Fichtenholz (13:42):

Now for account opening is a little bit different story. For account opening, it's somewhat easier because if you introduce slick experience, and slick is a very important word here, so I hear from a lot of members. So, we did some initial testing, and that's exactly the feedback they got from Terafina onboarding was, "It looks great, slick, thank you."

Gene Fichtenholz (14:05):

But they see it first time, they have no recollection or no knowledge when they open the account of what happened before, they have no idea in process. So, from them, you actually expect a positive feedback. You may have both which is actually quite rewarding.

Gene Fichtenholz (14:22):

And you will hear negative, only if somebody will not be approved obviously. They will be complaining, no questions about it. But everybody prepared and everybody on board will work just fine. So, that's basically the idea.

Cindy Watson (14:36):

We also put together with our training department, we have an excellent training team. And we did a post conversion training for our members. We opened it up for the entire membership to come in and see the new functions that our online banking does for us.

Cindy Watson (14:57):

So, it was actually really great. We interacted with our members. They learned, and we also invited staff, "Come in and look, see how to use it. It'll help us learn and explain what the new features are to our members."

Mary Shelton (15:11):

That was so well done. It was so well done and so well received by the members.

Jim Marous (15:16):

Well, we can't over communicate, but it's a thing we kind of either leave to last or we don't do. And Cindy, I was going to ask you about this, that the operations, I'm going to call it the entire back office has done things the same way as an organization since I was in banking, which is a long time ago.

Jim Marous (15:37):

And any improvement, especially as we're moving to the digital now, it comes with a lot of challenges because you have to rethink. You're not moving from paper to PDFs. You're really completely changing the way you look at things in a digital world.

Jim Marous (15:55):

You have a partnership with Terafina. Part of that partnership says they're going to bring solutions to the table but invariably, I see all too often organizations get in the way of what your partner says they can do. Because operationally you say, "Well, we've always done it this way, or we don't want to change that."

Jim Marous (16:17):

How do you encourage your team to accept what your partners will be able to bring to the table and able to do if you open up your mind and think of things differently?

Jim Marous (16:28):

I mean, because it's hard. Especially when you're talking about unless a loan adjudication officer, or the person that was in charge of making sure that driver's license is, or the first part of the new account opening experience.

Jim Marous (16:40):

Whatever it may be, we're all stuck in our own mindset in much the same way. I don't know how long each of you have been in total in banking, in much the same way we thought that signature cards were required, when we realized all it was, was know your customer and we could think of it differently.

Jim Marous (16:55):

Cindy, how do you encourage as a leader, your internal team to accept what your partners are bringing to the table in the way they're bringing to the table? Because there's times when you've bought it and you didn't realize, "Oh, I've got to change this, this, and this. I wasn't ready for that." How do you encourage them to do that?

Cindy Watson (17:17):

Let's look at it from this perspective, why have you been doing it that long? Why are you doing it that way? What are we gaining out of it? And then actually learning how much more efficient we're going to be. And it is okay to accept it this way. We don't need that signature card anymore. Everything comes through DocuSign, e-sign.

Cindy Watson (17:40):

And it's funny you mentioned that because that did happen the very first time. "What do I do? I didn't get a member's signature. How do I verify their signature?" So, let's look at this together, let's learn.

Cindy Watson (17:51):

Let's make sure that we all understand and make sure we communicate with the entire team, not just one person out of five. And also keeping them involved from the beginning. This is why we're doing it this way.

Jim Marous (18:02):

So, interestingly then Mary, when that mindset starts to become the culture as opposed to just individual cells of encouragement, how does that change the speed, but also the mindset around innovation?

Jim Marous (18:19):

Because I would imagine as more and more people — there is no doubt that the three of you are running down the same path together. And it's like, who can catch up to who? But when you're looking at internally, how does that empower you to do more from an innovation perspective?

Mary Shelton (18:37):

I think we're really lucky in having such a great group of people that we work with, that when those conversations start to take shape, like Cindy mentioned, because they have happened quite often where there is this new technology, but we like what we're familiar with.

Mary Shelton (18:56):

And those conversations, like Cindy said, take shape from kind of a stubborn position of, "But, but, but to, okay, I see your point." And I think the other thing that we typically do as well is we'll go back to the vendor and say, for instance, Terafina, "What do you see other FIs doing?"

Mary Shelton (19:17):

When we kind of hit that bumping heads where nobody's willing to change their position, we go to the vendor and say, "What are you seeing out there? What can we do better? And what are the results of that difference?" So, we're lucky in that most people will go, "Okay, I get it now."

Jim Marous (19:37):

Well, it's interesting, you just mentioned that you reference your partners, and I'm sure you have other partners on beyond Terafina for different solutions, be it a chatbot or anything else. The reality is that is one of the major advantage smaller organizations have who have always used partners to build their organizations.

Jim Marous (19:57):

When you realize that one of the best advantages you have is that they have a lot of other partners that have fought the battles on your behalf. In other words, you're not the first one taking the slings and arrows, as you say, down the battlefield.

Jim Marous (20:10):

You're the 400th or the 35th or whatever it may, I'm sure there's sometimes you're the first, but it's like having that GPS system where if you get the red line, you go, "Okay, I have to make the decision. Am I going to still take that route I was going to, am I going to take the GPS's version of it?" And that interaction becomes key. And that's why our solution providers become so valuable, is they bring the experiences.

Jim Marous (20:37):

They can be your third party that says, "Okay, I'm tired of beating my head against the wall. Can you do it for me?" And it makes it so, especially when your culture's aligned. And Cindy, I think you said as part of the introduction, that the organization from the top to the bottom has embraced digital transformation, innovation, change, and doing things entirely differently than what we've done them in the past.

Jim Marous (21:04):

And you guys, being where you are in the San Jose area in Olson, Arizona, it's not like you're not surrounded by innovative companies and as a result, consumers in your marketplace kind of expect better.

Jim Marous (21:22):

Now, the good news is your employees are also the same kind of consumers. They've changed to streaming services. They understand the difference between cable and streaming. They're doing all these things.

Jim Marous (21:33):

Gene, when you look at the overall digital transformation, moving to digital, what do you see as the biggest change in your organization from the perspective of digital engagement? And what do you see in the near future really changing the way you do your business?

Gene Fichtenholz (21:55):

So, I'm going to probably repeating like millions of people that's saying the same thing. Obviously, everything that has to do with AI but it's becoming a cliche really quickly, that's what I'm afraid. I don't want to repeat the same thing, so I'm going to mention generative AI for sure, it's true.

Gene Fichtenholz (22:17):

But what everybody needs to understand is that, and this is where my technical hat basically I bring on. There's certain things that can do, certain things that cannot. And if you have certain expectations for technology, it'll work.

Gene Fichtenholz (22:36):

And specifically for generative AI, what really does work when people do not realize if it's a focused specifically build experience, that's solved one thing that works really well. So, something that we see from generative AI, something like open AI or from Gemini from Google, or from Lambda, we've be looking at Facebook, everything like that.

Gene Fichtenholz (23:02):

You can't quite repeat it because they spent enormous amount of money on this so-called generative intelligence. It's not generative intelligence, not even close, but still, they can answer many, many, many questions.

Gene Fichtenholz (23:14):

So, if you narrow your focus for a specific thing, you can build a tool that's incredibly helpful for your people, there's a way to do it. So, that's probably going to be biggest change, but I'm not saying anything new here.

Gene Fichtenholz (23:29):

But the only thing I'm saying is that you need to realize what this change bring, number one. Number two is that no, nobody's going to lose their jobs. That's not going to happen. And we’re going to evolve as we always evolve with any technology.

Gene Fichtenholz (23:43):

So, look at our unemployment rates, what are we, everybody on the streets? How many years we've been talking about automation and it's like still, it's true. I mean, certain manufacturing is automating a lot, but so what there's other jobs. So, that's going to change a lot, which brings me to another point, what we’re seeing a lot is that we’re building help for the customer.

Gene Fichtenholz (24:09):

So, something that we have built in right now, we have another partner of ours that does the traditional chatbot and we are thinking to do something with generative AI as well. So, we have that.

Gene Fichtenholz (24:24):

But what we're thinking is that guidance, certain guidance to members, for example, for account opening. I think that's something that's really on our mind. So, how can we help customers feel that they get lost and be above and beyond what was done before.

Gene Fichtenholz (24:43):

Because a lot of people have heartburn from existing chatbots. That technology was [inaudible 00:24:51] let's put this way. It's cute, nice, but it's not always helpful. But new evolution is coming, and I think that will bring the big change.

Jim Marous (25:00):

So, Gene, I'm going to stick with you here, and I'm going to go to the other two people as well. Because I'm not lucky enough on a lot of my podcasts to have somebody from the digital side, somebody from the operations and risk side, and somebody from the innovation side.

Jim Marous (25:12):

So, I'm going to ask each of you, because I know the answer will be somewhat different. Gene, from your perspective, as much as we'd like to think that everything always goes smoothly, it doesn't.

Gene Fichtenholz (25:21):

It doesn't.

Jim Marous (25:22):

What is the biggest challenge you face on a day in day out basis that makes your job just a little bit tougher because of just human stuff or whatever?

Gene Fichtenholz (25:32):

Well, it's definitely unknown. I would say the most significant, and it's not a challenge. It's not a challenge, it's something that you can overcome. So, as I mentioned before, credit unions are spread thin. They don't have a lot of fat. They cannot fire tons of people and just feel nothing.

Gene Fichtenholz (25:52):

So, if tomorrow big company, I'm not going to name any names, fire everybody, 10% of the whole company is nobody's going to notice, and company will not notice at all. We have this examples in credit union business, it's not like that. We incredibly set but it also makes us fast, more nimble than banks by far. No comparison.

Gene Fichtenholz (26:14):

We cannot adopt new technologies. There's certain things that we see and know from behind, I know that for sure. I know stuff about the industry basically that we can achieve that banks cannot, not even close, because they have interesting issues with the huge ginormous sizes of data sets that they need to deal with that's also cost a lot of money, and it takes time.

Gene Fichtenholz (26:36):

But coming all back to my comment is that we are spread thin, which means that all of us kind of need to work together and be in a lockstep. So, that's incredibly important. You always put your ear to the ground and see what's going on.

Gene Fichtenholz (26:54):

But who's getting some sort of either it's a negativity or there's some sort of information that you didn't know about. You need to be always in lockstep with each other, all the departments. So, we kind of big on communication internally.

Gene Fichtenholz (27:09):

So, we have tons of meetings. For example, our department, our small department, we have regular meetings with our departments, some of them every week. Some of them, like we think we meet all the time and every day.

Cindy Watson (27:22):

Every day, every day.

Gene Fichtenholz (27:26):

Every day, yes. Because there's some things going on always, so you need to be on top of things. And faster you address it, the better. So, it's not quite a challenge, I would say it's more result oriented. Does it make sense, so. It's not like-

Jim Marous (27:40):

It's real. I mean, it's not a roadblock.

Gene Fichtenholz (27:44):

It's a hurdle that you need to always, constantly remember.

Jim Marous (27:48):

Cindy, what do you see as the biggest challenge, Cindy?

Cindy Watson (27:51):

I think it kind of adds onto what Gene was saying, is maintaining up to date on constant regulatory changes or upticks and fraudulent trends. Right when you think you got those gaps closed, something else happens.

Cindy Watson (28:07):

And so, it could be a little bit challenging because now you got to brainstorm, figure out, "Alright, we need to take action here. Who do you need to contact? Let's get everybody together. Let's work on this." So, I think it's just constantly keeping up to date with those types of changes.

Jim Marous (28:23):

Mary, how about you?

Mary Shelton (28:25):

Mine's kind of a fun challenge to have. And there's so much new technology out there, there's just so much going on. And it's predict and prioritize. Predict what would be best and then prioritize based on everything that's out there versus the needs. So, it's a fun challenge.

Jim Marous (28:45):

Mary, that is a great comment because the prioritization, we sometimes — and I'm going to refer to Gene's comment too, we think sometimes that … we talk about gen AI. The reality is that is probably further down your sightline than is in Gene. Because you're saying, "I got to prioritize, and I got some basics I got to get right."

Jim Marous (29:07):

And Cindy thinks she's got everything settled until she gets to work that day and finds out that there's been another thing that's gone after the system and you go, "Okay, we avoided that one, but oh my gosh, these guys are all out here beating us up on an ongoing basis from a risk and fraud perspective."

Jim Marous (29:24):

So, Mary, when you're talking about priorities, we sometimes get ahead of ourselves as finance institutions, as a result, we get nowhere. We talk about sometimes when you don't prioritize, you end up standing in place, being overwhelmed by what can happen.

Jim Marous (29:42):

I'm going to go back to, because I wasn't going to let you off the hook on that, what do you have on your to-do list because you didn't answer that question. So, from that prioritization perspective, what are some of your priorities for the rest of this year that you say, maybe they're big dreams, maybe they're just little things that just keep on gnawing at you. What is the priority at Meriwest right now?

Mary Shelton (30:04):

To Gene's point, generative AI and how we leverage that actually is a big deal because it works on both sides. The member has a better experience because we're communicating with them in a method that is most convenient and most comfortable for them.

Mary Shelton (30:20):

So, in that aspect, generative AI is a really good tool. On the back-end side of that, using generative AI to help our staff be more efficient, to get answers to their questions in a quick and efficient way when they have a member sitting in front of them, that's big on our list of priorities.

Jim Marous (30:39):

Boy, that's a good one because we tend to take channels as individual channels. So, we take the chatbot here, we take the direct customer interaction at the branch here. We take the customer care area here.

Jim Marous (30:53):

And one of the biggest challenge financial institutions have now, in fact every organization has, is how do I make these so that they're seamless between each other?

Jim Marous (31:02):

Because they don't innovate at the same speed and yet I don't want to have a member get a different answer or different level of understanding of my problem if they go to a different channel. So, Gene, from that perspective and from the whole idea of digital transformation, how do you pick your partners to work with?

Mary Shelton (31:23):

That's a good one.

Jim Marous (31:24):

Because that is one of these things that is not the same for every organization, but when you're trying to figure out who do I partner with to move me forward? What do you look at Gene?

Gene Fichtenholz (31:34):

So, there's a couple of things and that's you making a very good point, actually. So, one thing is that definitely everybody concentrate, let's look at features, what they can do. But the problem is that if you look at it in a silo, it may not work well.

Gene Fichtenholz (31:54):

So, there are better companies that do better things by themselves, it's great. But how do you glue all of it together, so it works seamlessly that's probably the most significant part. So, very often that when we're selecting, for example, our chatbot chat provider. And I'm going to call it chatbot, it's just easier, it's a conversational intelligence. Sometimes they get offended by the name chatbot.

Jim Marous (32:21):

Yes, they do. Yes, I know that.

Gene Fichtenholz (32:24):

Because it's conversational by far more interest.

Jim Marous (32:26):

We're more than a chatbot. Yes, exactly.

Gene Fichtenholz (32:28):

More than a chatbot by far. So, these enormous number of features that we look at, so we talked probably to seven companies at least minimum. And it took us probably several years to make a choice until we realized that by itself will not work well, it needs to work together.

Gene Fichtenholz (32:50):

So, the fact that it does this thing, this beautiful thing works great by itself, doesn't do a thing. So, how do we choose, we choose providers in a consortium, it needs to be collective working effort. So, the first most thing that we do is how do we glue it together and then we'll go from it. And if it doesn't fit, then it doesn't fit, even though it's like the best provider in the world in general.

Jim Marous (33:20):

So, really what you're saying is you got to play well with others. You got to be able to work with the other partners. And you know what, that's interesting because I remember, and I brought this up in another podcast that I believe it was 2019 maybe at the Financial Brand forum. We saw as many providers talking to each other as they were talking to clients.

Jim Marous (33:41):

And I started seeing this whole dynamic where organizations figured out, "You know what, I can't view everybody as a competitor. I've got to view them as everybody's got their sweet spot. And I've got to work with everybody."

Jim Marous (33:56):

Number one, they all realized if they didn't get along with the core systems, it was going to be a blow up right from the beginning. Because even though the core system will say, "Well, we can do that for you, we can do that for you."

Jim Marous (34:07):

The reality is they don't do it in many times as well. You still need your core provider, but you also need to find partners that can work with them. And as you said, I need to make sure my new account opening partner works with my chatbot partner, works with my whatever else. My fraud and risk, online banking partner, exactly.

Jim Marous (34:28):

And that's a very key element. And at the end of the day, Cindy's going to be sitting there with an overarching view going, "You know what, I don't think they're as secure as I need them." Because at the end of the day, her job and her team's job is going to be on the line. If the organization that you're partnering with doesn't make you feel comfortable.

Jim Marous (34:49):

And I always, I use a football analogy and go, "It used to be that we could run down the field with our partners and make sure they're doing what we wanted to the way we want them doing. We got to let go now because we can't move fast enough if we hold their hands.”

Jim Marous (35:02):

But the reality is that means, as you said, Gene, they got to work really well with each other. So, Cindy from your perspective then, as you look at what you look at for a partner, because you wear a couple different hats, so sometimes you're fighting-

Cindy Watson (35:19):

Oh, it's more than a couple Jim.

Jim Marous (35:21):

But sometimes you're fighting against yourself. You're in these meetings going, "Wait, that's my person, that's my person, and they're at each other's neck, this is not good." But what do you look at for a partner?

Cindy Watson (35:32):

We want to make sure to support what Gene said, how they glue together, do they work well? How's it going to affect these processes? And I think overall member experience. We have an intensive vendor management review as well. So, that's a key part of any vendor that we onboard.

Cindy Watson (35:52):

But in terms of the experience, it's finding that balance between the risk and the experience. And on the user side, I'm not a fan of, "Let's bring on this vendor because that vendor can't support this function." We stay away from things like that.

Jim Marous (36:11):

So, I'm not sure who's the closest to answering this question but I'm going to depend on you guys. But I've heard from Terafina that you've just recently implemented direct deposit switch and financial needs analysis for your members.

Jim Marous (36:28):

Couple things, number one, how does it positively impact your members and why did you take on these features? In the prioritization of everything, why did these rise to the top?

Gene Fichtenholz (36:41):

This is something I would like to answer. So, this is something we plan to do, it's not something we've done yet. So, that's what we're planning to do. So, those features so what happens is that during account opening, you kind of have already a captive audience, so member already submitted all the information.

Gene Fichtenholz (37:00):

So, we submitted the most important, know your customer PIIs. So, at this point, switching direct deposit and deepening the relationship with a member is the best time to do it.

Gene Fichtenholz (37:16):

So, that's why we're looking at it, we know from profitability perspective, from relationship perspective, those that have direct deposit means that this particular member has you as your primary financial institution. And that's the goal. So, at the end of the day, we all hoping that members going to choose us as their primary financial institution.

Gene Fichtenholz (37:37):

So, it kind of makes sense, like as a final step in the process that, "Okay, where did you approved, you open the account and it's like really easy-peasy to let's switch you over, okay." And offer you possibly some sort of incentives. I think that's important. So, what we’re looking at is … and that’s not implemented yet. This is something we are looking at.

Gene Fichtenholz (37:59):

So, two things is first of all bundling. We're looking at definitely put together bundles of product. So, if you apply, apply and you get a couple products, plus you get direct deposit, you get spiff. And second is that direct deposit switching. It was high on our radar for many years, problem was that what we find out that switching in online is actually quite challenging so for members.

Gene Fichtenholz (38:28):

It's challenging meaning that the whole process is not necessarily smooth so much that traction for debt deposit switching online is very low. So, what companies prefer, they're trying to do both, and they realize the only branch one that works because person is in front of you, and it changes rapidly with the latest technology.

Gene Fichtenholz (38:51):

And Terafina does have the integration with some partners that's capable of doing it online quite nicely. And that's number one. And something that we kind of worry less about Terafina is that their philosophy is open API, so they pretty much integrate with anybody, period.

Gene Fichtenholz (39:08):

So, if somebody allows them to connect, they'll connect, period. We did a lot of firsts with Terafina as well. So, we were like certain technology we adopted as a first provider, and we were completely confident it's going to help. So, that doesn’t bother us.

Gene Fichtenholz (39:25):

So, if we're going to bring some other provider that does incredibly good stuff, and Terafina usually says, "Fine, yes, it'll cost you time and money definitely,” so no problem. But I know they're going to make it happen because they've done it before so that's understood.

Jim Marous (39:42):

It's very interesting your organization is obviously very focused on continuous improvement, making sure everybody's on the same page, finding the right partners to get things done and you're far from standing still.

Jim Marous (40:02):

It's fun because when having three people on a podcast is challenging at best in my mind especially when it's audio. So, I apologize for anybody who didn't know the difference between Cindy and Mary, but I think you got an idea based on their answers and also what they talked about.

Jim Marous (40:19):

But what was interesting is these are three people that are pulling in the same direction, with the same mission and obviously whatever levels above them is doing the same thing. And by the way, every level below them are pulling the same direction. This makes the whole process of communication, digital transformation, and innovation a lot easier.

Jim Marous (40:43):

Secondly, it is very clear from this conversation that this organization believes in partners and will put a lot of faith in partners but no one's going to have any easy path in getting into the organization if they don't meet the criteria of, you know what I put my life on the line for them.

Jim Marous (41:03):

Because in a financial institution, you kind of are. So, with everything you've done and truly being an organization that I'm very excited about having on the podcast here because there's a lot of great organizations out there I haven't met yet and I'm really honored to be part of this podcast.

Jim Marous (41:22):

Because you've opened my eyes to the importance of communication, the importance of leadership, the importance of continually looking for the next way to make members’ experiences better. So, Mary, I'm going to start with you and I'm going to go around the horn if you're on the video feed. What recommendation would you give other organizations that are stuck on stop or neutral?

Mary Shelton (41:49):

In regard to growth or in regard to looking for a partner?

Jim Marous (41:53):

Transformation, just overall transformation and on becoming more. Because what you're doing, you are not only becoming more future ready, you're becoming more resilient as an organization. You're extending the life of the organization because you're on the front end of this whole digital maturities curve.

Jim Marous (42:12):

So, what is the one thing you recommend to an institution as they embark upon fast innovation, innovation and speed and scale and just an overall digital transformation process?

Mary Shelton (42:24):

I think there's a couple of things. So, one is listening to your community. We get a lot of feedback and even when it's negative feedback, it's sometimes the most worthwhile feedback. So, I think listening to your community, don't guess at what people need, listen to what they need.

Mary Shelton (42:42):

And also look at what your competitors are doing and then weigh that against the technology that's available to serve as that conduit or that solution. And then also choose the partner in kind of following up to what everyone else was saying that is an extension of your own team that you feel through the course of the conversations and the vetting that this is a team that you feel is going to closely walk with you and your team.

Mary Shelton (43:11):

And we've been very fortunate with Terafina and some of the others that we absolutely have that kind of relationship where we don't feel separation in us and them, it is us, period.

Jim Marous (43:22):

Well, it's interesting because I'll just input my insight just from what I've seen so far. You set the bar pretty high, but you probably also pull along some of your partners because you're at the front edge of what they're doing in medication.

Jim Marous (43:36):

You already mentioned it in a case, Gene mentioned it, but it’s interesting because you bring value to your partners at the same time they're bringing value to you. Gene from your perspective, what recommendation would you have?

Gene Fichtenholz (43:49):

So, I'm going to echo of get everybody on the same page for sure. That's incredibly important part. So, that's number one. Number two is that I know it's kind of obvious, but it's not necessarily taking to heart. IT is your friend by far so you cannot do it alone for sure. So, buy in from IT and everybody pulling in the same direction is incredibly important.

Gene Fichtenholz (44:17):

Because if you think that you can do it yourself, think again, it's not going to happen. And if you think that IT is not involved then it’s going to do it by themselves, think again. That's not going to happen. It's like no questions about it. So, if you do it in lockstep and do it this transformation together, then it'll work by quite nicely for sure. So, that's my message to everybody.

Jim Marous (44:44):

So, Cindy, what recommendation would you give financial institutions today based on what you've learned over the years here?

Cindy Watson (44:50):

Well, Jim, I think, I echo what Mary and Gene were saying and I think listening to community and listening to your employees, I think that employees have a lot to say. They see a lot. They do a lot. Is there better ways of doing things?

Cindy Watson (45:06):

Evaluate your processes, determine are we as efficient as we can be? Are we doing the right thing? Don't let your systems become stale. Just because the process has worked for the last 10 years doesn't mean it's the right thing to continue doing.

Jim Marous (45:19):

The three of you, I cannot thank you enough for being on the show today. You’ve brought insight to me; you inspired me on a ... we're recording this on a Friday and it's always good to get that pump up at the end of a week. And I'll look forward to meet with you again because obviously you're doing some things that many organizations only dream of.

Jim Marous (45:42):

Your digital maturity is high up on the scale compared to others. And you're having fun and at the end of the day, I have to tell you, it is so clear that you guys are just a jolly group. It's as if nothing is getting in the way and that says a lot.

Jim Marous (46:02):

Because at the end of the day, you're going to be able to make change happen if it's fun. So, I really appreciate that. I appreciate you all being on the show today. Thank you.

Gene Fichtenholz (46:13):

Thank you.

Mary Shelton (46:14):

Thank you, Jim.

Gene Fichtenholz (46:14):

Appreciate it. Thank you, Jim.

[Music Playing]

Jim Marous (46:16):

Thanks for listening to Banking Transformed, the top podcast in retail banking and the winner of three international awards for podcast excellence. If you enjoy what we're doing, please take some time to show some love in the form of a review.

Jim Marous (46:29):

Finally, be sure to catch my recent articles on The Financial Brand and check out the research we're doing for the Digital Banking Report. This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage, audio engineer, Chris Fafalios and video producer Will Pritts.

Jim Marous (46:45):

If you've not already done so, remember to subscribe to Banking Transformed on both your favorite podcast app and on YouTube for more thought-provoking discussions on the intersection of finance, technology, and leadership.

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