How Generations FCU Has Revolutionized the Speed of Lending

Jim Marous (00:09):

Welcome to a special eight-part series of the Banking Transformed Podcast recorded at MeridianLink LIVE in Nashville, Tennessee. I'm your host, Jim Marous.

Jim Marous (00:18):

During this series of episodes, we dive deep into the world of digital transformation in the financial services industry. We speak with executives from a diverse range of financial institutions, each of whom has embarked on a unique digital transformation journey to become more future ready and responsive to the changing needs of their customers.

Jim Marous (00:37):

We explore the strategies, challenges, and lessons learned by these forward-thinking organizations as they navigate the complex landscape of digital transformation.

Jim Marous (00:47):

Whether you're a financial services professional, a FinTech entrepreneur, or simply interested in the future of banking, this series provides you with valuable insights and inspiration as we explore the cutting edge of digital transformation in the banking industry. We hope you enjoy these candid conversations with organizations of all sizes.

Jim Marous (01:09):

Hi, Jim Marous from Banking Transformed here in Nashville, Tennessee at MeridianLink LIVE, where 1,700 financial institution employees are interacting with other, interacting with vendors who service the financial service industry, and are all here on behalf of MeridianLink, and getting to know what is the newest things in the marketplace, and how do we implement them at speed and at scale.

Jim Marous (01:35):

So, today, I have Kate Himes from Generations Federal Credit Union here. San Antonio, Texas. Right?

Kate Himes (01:42):

Yes.

Jim Marous (01:43):

Can you tell us a little bit about your career path and also, about Generations?

Kate Himes (01:47):

Sure. So, I started with the credit unions in the early '90s. I worked in the collections department and then ran some collections divisions before joining Generations in 2017.

Kate Himes (01:57):

At that time, I took over the lending division for Generations and fell in love with originating loans for members. It's a great opportunity to use my past experience and collections to really be able to identify where true risks are, but also, more importantly, identify how to help members, where to help members, and then use a great LOS like MeridianLink to put that into fruition to make that happen.

Jim Marous (02:22):

So, that being said, you talk about making sure that you can match the member, with the risk, with the product.

Jim Marous (02:30):

How do you assess risk today? Are you assessing risk the same way that your organization did five, seven years ago? Have you gotten to more of a managing risk platform rather than avoidance of risk? Can you explain that a little bit?

Kate Himes (02:43):

Sure. So, we're more of a managing risk platform. We know that there's members out there that need assistance. We know that there's members out there that are looking for products and services and are well-paying members, but may have had a challenge in the past. And we have an opportunity to tap into that.

Kate Himes (02:58):

One area, for example, is if you look at your all declines, what loans are you declining? Why are you declining them? What product, what tier?

Jim Marous (03:06):

Would I be declining them if they were my friend.

Kate Himes (03:08):

Exactly, right. And what are the opportunities in there that you can utilize?

Kate Himes (03:11):

And then we take that type of data and then we look at what are instant decisions doing. What are we doing at instant decisioning and how can we tweak instant decisioning to bring on more of these that aren't really declines that we need to decline, applications that we can go ahead and move into fundings.

Jim Marous (03:28):

So, it's interesting when you look at what you're trying to do, you're trying to take the match of their credit score and their credit availability, the ability to give them the solution they want, but do it in a way that actually manages the process. So, when you talk about instant funding, what exactly does that mean?

Kate Himes (03:47):

So, what we did with our no-touch instant funding personal loan is we used the automations in MeridianLink. We used some of the queue logics, we use some of the booking validations, we use some of the filters.

Kate Himes (04:01):

And so, a member can go in and apply online just like they're applying for a normal personal loan. They put in the terms of the personal loan. And then through the process, what happens is we pop in DocuSign, the member gets the documents, they execute the documents.

Kate Himes (04:15):

The funds then transfer from our account into their GL, and in less than five minutes, they have a funded personal loan. Absolutely no touch.

Kate Himes (04:23):

We are able to use the logic for instant decisioning to bake that in there to really make that seamless approach for members.

Kate Himes (04:30):

Now, if a member can't be approved for that, then what happens? We use the logic to then move them into another queue. So, we'll turn around and we'll call them and say, "Hey, Kate, we saw that you applied for a personal loan. Here's some items that we need from you. Here's a way we can help you."

Jim Marous (04:44):

So, you have the fast way and then you have the ones you have to have a little bit more engagement. But you're all working towards the approval not just to put them through more hoops.

Kate Himes (04:54):

That's right.

Jim Marous (04:55):

So, how long does it take for a current member to apply for the loan itself, the credit they want?

Kate Himes (05:01):

Yeah. So, on the no-touch personal loan is less than five minutes. A regular personal loan if a member's coming in and they want to get a personal loan, provided they have everything needed, it's about 10 to 15 minutes.

Kate Himes (05:12):

But if they're online and they go through, we cap it the dollar amount. So, less than 4,000 cap a term. Make it really quick for them, and the member can go right through instantly.

Jim Marous (05:22):

They're not looking for an auto loans or something like that. Majority of the customers are looking for the type of loan you're talking about.

Jim Marous (05:28):

So, you're trying to put the automation in place, the back office in place, the insights in place. The tools in place to get it so a person does not to wait an inordinate amount of time to get what they're looking for.

Jim Marous (05:41):

So, this takes a lot of automation. It takes a lot of ... I mean, as I mentioned, you can't make the front office or the front of the mobile device work unless the back office is working.

Jim Marous (05:52):

What have you had to do at Generations to really change the way you looked at processes? Because it's not a matter of moving from paper to PDFs. It's much more significant than that to actually move automation, the processes to a more digital front. What did you have to do at Generations?

Kate Himes (06:10):

Yeah. So, what we did first was look at your processes end to end. Just line it out, scope it out. What do you need? What in that do you need? You'd be amazed what you'll find when you start mapping your processes where you can eliminate some friction points or some double steps.

Kate Himes (06:25):

Then once you have a kind of streamlined process on paper, then you can look at it and say, "Okay, out of these, what can I automate? Where can I put in some queue automations? Where can I put in some filters? What about some automated actions? Where can I pop in these emails?"

Kate Himes (06:38):

So, next thing you know, you have a real streamlined process there. So, I would start with that. That's a real important step.

Kate Himes (06:43):

And then the next thing is, once you got your automations in place, talk to the salespeople. We spent a lot of time with my team discussing with them, where are you seeing friction? Where is this happening? What are members bringing in-

Jim Marous (06:54):

Because if we don't sense it, we're not the person doing it. They hear it all the time. They go, “Why this, why did I have to give you this?” When you kind of knew it already.

Kate Himes (07:02):

Exactly, right.

Jim Marous (07:03):

Yeah, because you don't know what you don't know.

Kate Himes (07:05):

You don't know what you don't know. And so, then you have these friction points in there. So, again, you can take another swipe at moving those out. It's really important.

Jim Marous (07:12):

How does a company like MeridianLink or in any process you're trying to improve, how does the partner help you understand what's possible? Because you've had your own four walls and you benefit ...

Jim Marous (07:24):

I mean, the reason why we go to partners, the reason why we use third party providers is that they have a multitude more of clients that have had some of the same challenges, some of the same opportunities you have. How do you leverage what their skill sets are to help you build a better platform going forward?

Kate Himes (07:40):

Yeah. So, I think it's important what your mindset is. My mindset is everything's figureoutable. So, if I'm at the table with a vendor, I'm sitting down and saying, "Hey, this is my pie in the sky. This is what I'm going for. Here's what my vision is. How can you help me? Where are we partnering out on this?"

Kate Himes (07:56):

And then talking to the vendor and hearing what are they building? What are they seeing? Where can I integrate with them? And don't be afraid of integration, and don't be afraid of change.

Jim Marous (08:05):

What can I buy into that they've done? When I maybe have had a soft spot for something that's something I wasn't doing well.

Kate Himes (08:12):

Absolutely, absolutely. So, it's a really important part there. I think painting that vision and then being adaptable. Really important to being able to move with the times and see what's happening. So, I think being adaptable is important as well.

Jim Marous (08:25):

So, it's interesting, we always look at making it better for the customer, the member, the member experience. However, a lot of these processes you're talking about is in helping the employee experience.

Jim Marous (08:36):

What have you seen overall at Generations around the employee experience getting better? What have you heard from your own employees?

Kate Himes (08:46):

So, efficiency is universal. If I make a process efficient for the member, it's also efficient for the employee. If I make the process efficient for them, it's efficient for the company. So, what I hear from the employees is they use the phrases like, "We're going to work smarter, not harder." And that is money.

Kate Himes (09:03):

And when you have an employee that's bought in and like, "Hey, Kate's trying to do this because she's trying to get it to where we're working smarter." That's fantastic. You've got all of these eyes in on your processes, which is amazing.

Jim Marous (09:17):

Yeah. Do you use them to figure out how to fix the process? Do you use them also as a sounding board?

Kate Himes (09:24):

I do use the employees also as sounding board. We're a great team. So, the employees that are working with the members and talking to them and doing those end-to-end processes, again, they're doing it every day.

Kate Himes (09:34):

And so, I definitely sit in with them and we have big huddles, and I say, "Hey, here's what we're trying to do. We're trying to do this no-touches loan. We're trying to get it from start to finish in less than five minutes. What are your thoughts? Where do you think we could do this? This is what we've got baked out."

Kate Himes (09:50):

And they're great. I mean, we've got a great team. One of the important things about having that strong team also too, is when they've got buy-in, Jim, then it's member engagement all day long. Because our employees are really driven and connected and understand their processes.

Kate Himes (10:05):

I want the system MeridianLink, I want MeridianLink to work hard. I want my employees to do the magic. I want my employees to product fit and say, "Oh, okay. Sounds like you came to me with a credit card need, but you actually want a personal loan." And then they provide that exceptional service to them.

Kate Himes (10:22):

So, I think it's really important to include them in as much as possible.

Jim Marous (10:27):

So, there's not many employees who work at back office, or even the teller line that isn't somewhat scared about the future with regard to digital, with regard to generative AI, things of this nature.

Jim Marous (10:40):

How do you alleviate that fear as you're fixing back offices to avoid employees unintentionally, but intentionally disrupting the process to say, "You still need me." How do you separate that and say, "We need you. But we need you in a different way than we did before."

Jim Marous (10:58):

How do you solve that? Because nobody wants to do change. You can tell me how good that New Year's resolution can be, but I'm going to still have my own mindset. And I will put hurdles in the way simply to justify my line of thinking.

Jim Marous (11:12):

How do you work with that within Generations? Because it takes a culture that does that. But how do you do that?

Kate Himes (11:18):

Yeah, you're right. I mean, there's a lot of people that would look at that and be scared or have unnecessary fear. The way I address it with them is kind of like what we talked about. You have this system work hard, let the system work hard. Let's look at AI, let's look at all of those efficiencies, let's look at all of that automation.

Kate Himes (11:36):

Because where I would like the employees is to work their magic. Give me your sales, give me your service. Make sure that that member has a fantastic experience. I mean, there's so many KPIs that we look at in order to really validate that we're doing the right thing.

Kate Himes (11:53):

But to answer this specific question, the employees need to know that that's where their true talent is. All of that sales, all of that service, matching those products. I mean, the team got a 4.9 on their survey and their net promoter score is 93. So, the team kills it.

Jim Marous (12:08):

They're doing pretty good.

Kate Himes (12:09):

They're doing pretty good. They're doing something right.

Jim Marous (12:11):

That's a culture too.

Kate Himes (12:12):

It is.

Jim Marous (12:13):

Yeah. So, how is that instilled from top down? One thing I mentioned last night in a side event we did, was that the thing that can really disrupt transformation is legacy thought process. We can get in our own ways. There's reason for that.

Jim Marous (12:30):

Part of it's because many leaders have been with the organization for a very long time. They have never had a bad year. They've done extraordinarily well. They realize that changes need, but they maybe say, "I'm not too sure if I want it on my watch."

Jim Marous (12:41):

How have you done that in generations where you've involved top management for all people from top to bottom realizing this is the direction you want to be. This is your north star, this is where you're going to end up.

Kate Himes (12:55):

So, I've been very fortunate. The CEO at Generations primary statement is easy to do business with. So, for somebody like me, my personality and my experience and you here, easy to do business with, we are all over that. I mean, that fits perfectly.

Kate Himes (13:09):

And we focus everything on easy to do business with. How do we make the process easy to do business with? How do we make the experience easy to do business with?

Kate Himes (13:19):

So, that really is our north star is making it frictionless, making it easy, making it figureoutable, getting the full team engagement. That is one area that Generations really excels in, is easy to do business with and the member centric member service.

Jim Marous (13:35):

I'm sorry, what's that again?

Kate Himes (13:36):

Member centric member service.

Jim Marous (13:38):

So, it's interesting, we talk about that a lot. We all feel like we do that. I mean, credit unions are historically thinking, “We're member focused. We're going to do this for the member.” But sometimes we fall on that.

Jim Marous (13:52):

As we're looking at digital transformation, automation, new skill sets, how do you blend the need for speed with the need for security and risk avoidance? Because they kind of work in like a tug of war. They're pulling against each other sometimes. How do you align those?

Jim Marous (14:09):

Because at the end, your member's going to know you better for how you protected them than the loan you did for them, if it goes south. So, how do you balance that in your over internal processes to say, "We want to give as many people as possible a loan, but we are not going to take undue risk." How do you balance those?

Kate Himes (14:31):

Yeah. So, there's two primary areas I look at. One is your LOS system. And we use MeridianLink, we love MeridianLink. We love MeridianLink because it's very robust and we're able to do a lot of automations, a lot of customizations, a lot of safeguards in that system.

Kate Himes (14:45):

So, it allows us to be very nimble, very quick, and not take on unnecessary risk because that would be the first thing.

Kate Himes (14:51):

The second thing I would look at is what kind of reporting do you have? You need to know what you don't know when it comes to risk and charge offs and delinquencies, and they need to see that coming a mile away.

Kate Himes (15:01):

So, you need to have reporting data that's robust and shares and illuminates what's coming down the pipeline for you. So, those would be the two areas that I would focus on.

Jim Marous (15:11):

So, it all sounds good and I'm sure it has been pretty good. However, nothing goes without some challenges. What are some challenges you've seen in the process of truly modernizing your loan platform. What challenges have you seen in the implementation process?

Kate Himes (15:29):

Yeah. So, I mean, and the challenge is really what it comes down to is the time, the investment. So, I think we're so quick. A lot of things are happening so quickly that it causes us-

Jim Marous (15:45):

At the same time.

Kate Himes (15:45):

At the same time. And so, implementations, as we talked about, is no longer a six-month implementation. It's a 90-day implementation. So, I think one of the big challenges that you have is the time and investment in the time.

Kate Himes (15:57):

And then you have to be forward thinking as far as your budgeting and your planning and your timing. And you have to plot that out. I think that that's a challenge too, that a lot of leaders have, is how to be quick and nimble and plot that appropriately.

Kate Himes (16:11):

Because sometimes, candidly, I've plotted for projects, budgeted for projects, and new projects have come in that have been quicker, better, and then more integrated.

Jim Marous (16:22):

Well, it's interesting because you talked about your timing process of 90 days. You've been in banking long enough to know, wow, we came from annualized plans, sometimes three to five year plans, and now, we're getting down to 90 day plans.

Jim Marous (16:37):

And the reality is it can be done if you have alignment between you, your partner, and your employees. And as I say a lot of times, and get out of the way when it needs to be done.

Jim Marous (16:47):

And you need somebody with passion and focus to be able to say, "I'm going to fight the battle and will pick my battles. But I'm going to fight the battle that's going to slow us up when it's unnecessary."

Jim Marous (16:58):

And we're simply getting in our own way because we hang on to things a little was too long. I mean, banking's not the same as it was three years ago, let alone when you started in banking.

Jim Marous (17:08):

And for me as well, a lot of our focus was the same. Back 40 years ago, we were trying to bring the right products to the right customer at the right time. We keep on talking about that. Well, now, you have the tools to do so.

Jim Marous (17:19):

Speaking of tools to do so, banking's continually evolving, and we talked about it last night. All your sessions have talked about what the future's going to look like with Gen AI or whatever it may be. What do you see on your roadmap in the near term? Not gen AI specifically. What are you working on that you really want to see input in the next one to two years?

Kate Himes (17:39):

So, the big thing for me that I'm looking at is the efficiency one and then the member service. I think that 2024, the rest of this year and the rest of next year, some of the secret sauce, if I was to speculate, is going to be in the member service. I know that's a general word, but when I say that-

Jim Marous (18:00):

Yeah. I was just going to ask you what you meant by that. Exactly.

Kate Himes (18:02):

But when I say that, what I mean is how you deliver the product. How you help the member identify what product they need, how supportive you are in that whole process. I think that's a game changer.

Jim Marous (18:13):

So, owning the journey with the customer.

Kate Himes (18:16):

Owning the whole journey with the customer. I mean, really helping them get that high touch service that's really personalized. Rates, fees, everything aside, I think members are going to go where they can feel the service and they know, okay, Generations has my back. That's my bank, that's my credit union.

Kate Himes (18:33):

When they take pride in that and they get that high level of service and it meets their demands or exceeds their expectations, I think that that's going to be where a lot of entities focus on because there's so much talk about rate and cost of funds and different dynamics that all of us are going through.

Kate Himes (18:50):

The end of the day, the experience that the member has is usually what sticks in their mind. And that's usually where they go first is where they get that personalized service.

Jim Marous (18:59):

That's so key. We talked about it last night too, where by you have a situation where Amazon, justify the amount of money you spent for Amazon Prime, you can't.

Jim Marous (19:07):

However, I don't want to walk away from that because right now, it's working. And I honor the fact that they've held my data very tight. I've not had any issue with data. They understand me more than I think they do because it's invisible in many cases.

Jim Marous (19:22):

At the end, I'm going, "I'm willing to pay for that value." It's the way we address everything. I think we're seeing a major move in the consumer marketplace for a focus on value and experiences.

Jim Marous (19:35):

I know my son is 26 years old. When we were asked about Christmas, what I want for Christmas. He says, "I don't need anything tangible. I'd rather go for the experience." He see that even the way he builds a business, where his banking services. His primary bank is Venmo.

Jim Marous (19:52):

Yes, there's a supporting bank that gives him the money, but the bottom line is the experience he has with Venmo are always seamless. They don't ask a questions, they get it done.

Jim Marous (20:02):

He has a Venmo debit card, and he says, "I'll use that instead of a PNC card in this case. Not because the other organization is bad, but because I've had no problems with that." And that experience is so important.

Jim Marous (20:13):

So, finally, when you look at how all this comes together, how do you see the use of data and analytics to build engagement going forward?

Jim Marous (20:24):

So, we're getting unwound as financial institutions. And we're finding that people are going elsewhere for services that we may offer. How do we build that engagement to a level that says, "I'm going to make sure that the member always knows I'm there and I'm working for it."

Kate Himes (20:42):

So, you have to be top of mind. You have to be present when the member needs you. And how do you do that? You almost have to predict-

Jim Marous (20:50):

Not just chitchat.

Kate Himes (20:50):

Right. Like we talked about, you almost have to predict what your member going to want and you have to be there right when they need it. And so, you have to be present.

Kate Himes (20:59):

What sticks in their mind? Great member service, those type of experiences that stick with them, but also, the products and the services that really deliver and exceed the expectations.

Jim Marous (21:10):

And hopefully you know it before they do.

Kate Himes (21:11):

Hopefully you know it before they do. Right.

Jim Marous (21:12):

I mean, it's interesting is, until you said that, and I I've talked about using my GPS in my car invariably all the time about if you know your north star, this will help you get there. But it's amazing how when they first came out, we used them for longer journeys that we were unfamiliar with how to get to a place.

Jim Marous (21:27):

We now use it to get to the drug store to find out where's there going to be a traffic problem. We're using it as an ongoing interactive tool instantly. And when I'm getting back in the car, my watch says, "You're seven minutes from home." And that's scary.

Jim Marous (21:43):

Or as you're going by Starbucks, it says, “By the way, Starbucks has this many cars away.” There's interactivity that we're depending on but an interactivity that we're not doing really well yet in financial services.

Kate Himes (21:56):

Yeah. No, I would agree. I think safety and soundness, I think credit unions really do a great job with safety and soundness. And I think that that's a really good spot for the credit unions to kind of make sure that the members feel comfortable with that safety and soundness.

Kate Himes (22:12):

Like you said, you're not going to make the change. Why? Because you feel comfortable with them. You know that they have the data and you feel confident.

Jim Marous (22:19):

And they trust you. And that trust, by the way, when you're making changes, customers will get thrown off by a colored change on their mobile app. To be able to implement changes where the customer or the member says, "I believe them. We're good. Where we can go forward that way. It's pretty cool."

Jim Marous (22:38):

Kate, thank you so much for being on this show.

Kate Himes (22:42):

It's been a pleasure.

Jim Marous (22:43):

It's interesting because one thing I've seen is an ongoing consistency among all the people I've interviewed is the passion, the enthusiasm, and the drive. That inner, they going to put a wall in front me, I'll find a way through. It is what really is separating the winners from losers today because you can get thrown off.

Jim Marous (23:00):

There's a lot of priorities out there. And if you can dedicate yourself to getting it done, that's where those 90-day implementations take place. Thank you so much. Appreciate it.

Kate Himes (23:07):

Thank you. Thank you very much.

Jim Marous (23:10):

Thanks for listening to Banking Transformed, the top podcast in retail banking and the winner of three international awards for podcast excellence. We appreciate the support we've received from MeridianLink in making this eight-part series of episodes a success.

Jim Marous (23:26):

This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage; director, Dave Douglas; audio engineer, Chris Fafalios; and video producer, Will Pritts.

Jim Marous (23:37):

Thanks for joining us. Until next time, keep innovating and transforming.