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4 Steps Toward Efficiency and Scale Using Effective Software Management

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4 minute read – Why do you want to grow?  Financial institutions have many different reasons, but one of them is almost always for scale.  Digging deeper, they want to get the boost that size can give in terms of making it easier to grow revenue faster than expenses.   

Ironically, one of the most important areas that makes scalability possible is frequently rife with inefficiencies.  Software is an asset that can often be used to support higher volumes of business with little or no increases in cost.  But the explosion in the sheer number of software packages that must be managed has contributed to the inefficient usage of the software and the resources used to obtain it.  This is an area with so much room for creating an efficient foundation for scale that it deserves special focus. 

Here are a few common areas of opportunity: 

  • Purchases – Make sure there is not already similar software in place prior to signing a contract or purchasing to avoid the additional expense, tracking, and maintenance of near-duplicate software.  Preventing this requires a central repository of the software that is in use, a repository owner, and a specific step in the software selection process that comes before signing the contract.  Features that are available, whether in use or not, should be tracked from the initial implementation forward to provide a complete picture of what the existing software can do.   
  • Customization – Weigh this carefully and get clarity on what it means for future upgrades to the software.  A key question is, are we customizing in order to preserve an old, familiar way of doing things when we would be better off changing? 
  • Implementation Phases – With complex software, there is often agreement to implement certain features initially and add more in later phases.   Getting around to those subsequent phases can be a struggle if they are not prioritized, leaving capabilities on the table that are not put to good use.  The features that will be implemented later should be decided on with the initial implementation. 
  • Upgrades and New Features – Each software package needs a clear owner that ensures that upgrades and new features are vetted timely by a subject matter expert and IT.  If implementation requires significant effort, it should be added to projects for prioritization.  

If features, upgrades, and even updates are put off or shelved because there is too much else going on, you might find that “suddenly” a few years later the software is hopelessly out of date and there is a search for new software going on.  It’s like you bought a car and customized it to get the CD player rather than the Bluetooth stereo.  The dealer offered to install upgraded aftermarket speakers and the nicer wheels you wanted, but you never got around to going back to the dealer.  Later, when they asked to apply a fix to the air conditioning to make it work better, you were too busy.  And now you’re driving a car you don’t really like and… it feels like it’s time for a new one. 

Getting the full potential from software investments requires effort over time, not just with initial implementation.  Recognizing this can help with the realistic prioritization of resources.  Intentional focus on the right things is key.  Features and upgrades that are not implemented should be the result of a conscious choice rather than lack of ownership or falling through the cracks.   

It’s possible that some of the shiny new things can wait while you focus on getting the most out of the software investments you’ve already made.  Enhanced management of your software packages can lead to better expense control, improved efficiency, and a foundation for attaining scale.  

For more thoughts on this subject, listen to our podcast Using Scale and Automation to Control Expenses and Grow Revenue.

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Don’t Let the “HOW” Stand in the Way of the “WHAT” in Strategic Planning

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3 minute read – We find that one of the pitfalls of the strategic planning process is that too much focus is placed on the “how” (implementation) before the “what” (strategy) has been decided. Often, decision-makers will gravitate toward the “how” because it feels more tangible but also because it seems to help determine the likelihood of success. This focus can limit a credit union’s strategy to what can we do today versus what should we do – even if we don’t know how to do it right now. The importance of not letting the “how” stand in the way of the “what” can’t be understated in light of the threats to credit unions’ relevancy and sustainability.

Take Apple’s iPhone and Quicken Loans’ Rocket Mortgage as examples. They both started with the “what.”

For Apple, the goal was to:

…develop a phone with an integrated music player, operated by a touch screen.” They’ve clearly accomplished that and more. However, consider the fact that nothing like this existed at the time. Most phones still had physical keypads and didn’t play music. The “how” was so extensive that “it involved rethinking every part of the phone from how to check voice mail to how to display a calendar.” (Apple Engineer Recalls the iPhone’s Birth, Wall Street Journal)

Rocket Mortgage likewise started with the “what” and then moved onto the “how:”

The goal was to allow a person to get a mortgage or refinance their home while standing in line for a cup of coffee.” Like the iPhone, it took Quicken years to figure out how to allow a person to apply and receive conditional approval in less than 10 minutes. Some of the “how” questions they had to answer were, “How do you pull income information…How do you pull asset information from sources that already exist? How do you pull property information? How do you give someone complete transparency into the interest rate and fees and how a person can adjust the interest rate and see what it does to the fees.” (This Could Be the Mortgage Industry’s iPhone Moment, Tech Crunch)

Apple and Quicken Loans faced a daunting amount of “how” questions but that didn’t deter them from landing on the “what” they felt was best for their company.

For credit unions, the message is clear – start with the “what.” Answer questions like:

  • What is happening in the environment around us?
  • What are potential threats, opportunities, etc. that could occur in the future that we want to test drive today?
  • What should our business model be (target market, value proposition, core purpose)?
  • What are our long-term decision filters and strategies for moving the organization forward?
  • What are our measures of success?

Once these questions have been answered and the “what” has been decided then shift to questions of “how,” such as:

  • How will we implement our strategy?
  • How will we improve our processes and manage our projects in order to implement our strategic planning initiatives?
  • How will our mindsets and talent need to evolve?

With the myriad of threats to relevancy and sustainability, it is critical for decision-makers to not let the “how” hinder the “what” that is best for the credit union’s future.

This post was originally published in May 2016, and has been republished due to its current relevancy. 

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Driverless Car Innovation Drives Impact on Financial Services Industry

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It’s not too soon to start thinking about the possible strategic implications of driverless cars and driverless car technology on the financial services industry. Billions of dollars are being invested by numerous companies and sectors to propel the use of driverless technology.

Self-driving or driverless car technology has an impact on the financial services industry.

The impacts can be far reaching. To leverage possible opportunities requires advanced critical and strategic thinking. We thought the article 24 Industries Other Than Auto That Driverless Cars Could Turn Upside Down, by CB Insights, would help jump-start your critical thinking.

Remember, all advancements come with tremendous opportunities. Your job is to find and leverage them!

Read more about the mix of technology and the credit union industry in our blog archive.

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Remaining Relevant Through Leveraging Technology and Member Needs

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Illustrated Apple® iPhone®As you are probably well aware, Apple’s® iPhone® turned 10 years old recently.  Of the many articles written to commemorate this occasion, a couple in particular caught our eye.  In iPhone Review Redux:  10 Years Later, So Slow, So Small (Source:  The Wall Street Journal), the author describes her experience trying to use an original iPhone for a week in today’s world.  She says, “I made it 12 hours.”  As groundbreaking as the iPhone was back in 2007, that’s a little hard to imagine.  However, given the author’s experience with comparatively slow speeds, poor graphics and sound, a 2-megapixel camera, and no Siri®, we start to realize just how far technology has come in the last decade.  Of course, with these technological developments have come changes in how consumers interact with each other and the organizations with which they do business.  Take stock of how things have changed around your credit union in the last 10 years from a technology perspective.  Have you added new technology?  Upgraded?  Does your credit union have technology today it did not have in 2007?  Is your member interaction different today than it was a decade ago?  The answer to all of these questions is probably a resounding Yes!

Now, fast-forward, as does the article In 10 Years, Your iPhone Won’t Be a Phone Anymore (Source:  The Wall Street Journal).  In this article, the author imagines a future where the consumer is more wired-in than ever before.  Smarter, wearable technology, artificial intelligence, augmented reality—it’s almost overwhelming.  Our gadgets may literally direct our daily lives, according to this article.  Whether or not the future turns out the way this article describes, we can surely bet it will make the technology we have today seem ancient, just as the current iPhone makes the original model look outdated.  How will your credit union’s technology change?  Technology changes how consumers interactWhat new technologies might there be in 10 years that do not exist today?  How might your members choose to do business with you in 2027?  Are you leveraging the data that is already available today, and new data that may be available in the future, to make decisions and anticipate member needs?

These changes not only impact traditional competition, but also have facilitated new entrants looking to disrupt the industry.

How will your value proposition be apparent in this environment?  Consider strategic sessions revolving around this topic with outcomes focused on actions that can be taken in the near term, intermediate term, and long term to be positioned for relevancy in the future.

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Who’s Afraid of the Big Bad FinTechs? A Powerful Value Proposition Can Calm the Fear

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A lot of financial institutions are concerned about the competition brought by FinTechs that seem to be rewriting the script for how financial business gets done. How can a credit union without a tremendous development budget hope to compete with their slick technology? The concern is well-placed, but perhaps, not for the right reasons.

Yes, FinTechs have advanced technology and they are capturing significant market share, but the financial services industry isn’t really competing with their technology; it’s competing with new customer expectations. Remember when mail order meant filling out a paper form, mailing it, and waiting 6 to 8 weeks? People were content with it because that’s what they expected and they did not know anything different was possible. Fast forward to today; thanks to players like Amazon, customers now expect delivery in a few days, even as quick as one hour in some cases.

What the FinTechs have done is change how people expect to do business. Now that they know it is possible to have a much faster and simpler banking experience, there is no going back. We can never go back to 6 to 8 week mail order deliveries, even if Amazon goes away tomorrow. And if today’s FinTechs don’t survive, customer expectations are still forever changed.

So are faster and simpler processes a requirement for most people? Yes. Does that mean you need to look like a FinTech? That depends on your value proposition. If a FinTech’s value proposition is the ability to get a loan in pajamas, quickly, without talking to anyone, what is your value proposition? There’s room in the marketplace for more than one. If your value proposition is very low loan rates, helping people with credit issues, or building strong relationships, focus on delivering that flawlessly. If it is clear and powerful enough to truly resonate with your target market (and that target market is big enough to sustain the organization), you shouldn’t feel the need to copy the FinTechs; own your value proposition.

At the same time, you will still have to respond to those changes in member expectations; the questions are how and when. Most of that leading-edge technology is available today – for a price. Going back to the shipping example, there are plenty of successful online retailers that do not offer 2-day deliveries as a standard, but very few are in the 6 to 8 week range. Using your value proposition as a filter will result in a more strategic allocation of resources by choosing the right offerings to meet your unique membership’s expectations and support your value proposition.

Remaining relevant to your membership requires thoughtful adjustment as the world around us changes, but the key is to have a clear, powerful value proposition – and deliver on it.