Credit union Kaizen

In the 1950’s a scientist by the name of W. Edwards Deming worked in Japan helping the country’s post war industry get back on track. In the 80’s a business model called Kaizen was introduced in Japan that would bring continual improvement to quality and consistency across many of the country’s industries making them a well-respected exporter.

These pioneering works to improve production, process, and quality levels – especially in areas of manufacturing – would also be adapted worldwide and taught in many U.S. business schools.

So what does this have to do with credit unions and technology?

Simple, technology and industry changes so rapidly now that it requires continual learning, investment, and focus to simply keep up. But the real question is this: Are you keeping up?

Maintaining viable technology practices requires a commitment from the top down including: allocating necessary funds, having a culture of continual learning, and a willingness to evaluate and where to implement newer technologies.

I recently spoke with a colleague who sits on many of the financial banking committees and was saddened to learn that we are losing approximately one credit union per day to mergers and consolidation. I was also shocked to hear him say that the same scenario was holding true for the community banks. This scenario means operations are more closely aligning with them and we know what that eventuality means – more regulatory scrutiny and consistent rules and standards for both.

Looking down the road in 10 years, I see that business will be more globally centered. Continued migration toward mobile or next-gen financial services is expected and younger millennials will push for ease of use and tech-based financial services.

You may disagree with my assessment, but as a society technology continues to change and evolve so quickly that we are forced to keep pace or we end up behind the curve, as well.

A good example of this assessment is that I have two college age children who rarely visit their credit union branch. They prefer, instead, to use debit cards, direct deposit, and third party apps to transfer funds to friends for splitting dinners, chipping in for gas, etc.

This was driven home to me the other day when my daughter asked me to help her set up direct deposit for her employer. She was concerned because when she opened up her draft account, she did not ask for nor receive any checks. She was now required to supply a voided check to complete the process.

Simply put, their financial lives are out in cyberspace.

Another example was with my son. This past summer we bought a new vehicle for him to attend college and get to his after school employment.

The entire loan process was handled online and through email including the application, signing papers, and money transfer to the dealer. No need to set foot in the branch; we just handled everything via a remote channel. Surprisingly, start to finish was probably in the range of 15 minutes or less and kudos to my credit union for this awesome experience!

Now, back to the idea of continual process improvement. How do credit unions ensure they are future proofing their business?

1. Invest both time and money in good people who share a mindset of continual self-improvement and provide them with ongoing learning opportunities via CPE courses, attendance at vendor conferences, and PKI’s related to their specific job functions.
2. Make a concerted effort to put a realistic tech refresh program in place, which means keeping depreciation times to around 36 months. Yes it hurts, but not keeping up is more costly in the long run rather than saving a few dollars in monthly expense. (Remember Darwin and survival of the fittest?)
3. Create a SWOT (Strengths, Weaknesses, Opportunities, and Threats) team that will continually be on the lookout for ways to improve business processes by automating routine tasks and monitoring industry trends so you are not caught off guard by market changes.
4. Invest wisely in technology. Be very careful with complacency in this area but also balance it against being first in line, as well.
5. Adopt an attitude of best of breed. A Swiss army knife is a great thing for MacGyver, but in the real world the right tool for the job is always the best – and, yes, it will be a bit more costly and require more effort. Not doing so may be the difference between thriving and hanging on, however.
6. Choose business partners that can help you get where you want to be. This choice touches on the best of breed concept. In reality, if you have good partners, they can provide an exponential amount of help so you can achieve your goals because their survival in a shrinking market place is also predicated on your success with their solutions.
7. Set goals that will stretch your abilities but make sure they are obtainable. Obviously, trying to accomplish too many projects at one time will not get you the results you need. Prioritizing, focusing, and executing on a realistic number of them will.
8. Hire or assign a trained and dedicated project manager on your more complex projects. The greatest successes I have seen working with large and small organizations alike was their ability to have someone focused on task. Additionally, support from the management team and access to the resources both internal and external are essential to successfully accomplish project goals.
9. Budget, budget, budget with time, money, resources, etc. Failure to properly plan and budget is probably the greatest threat to a successful project outcome.
10. Make it a winning proposition for all stakeholders internal, external, and for your members, as well. Everyone involved must have a clear idea of expectation and outcome, and a positive buy in to the project.

I am sure there are many things that could also be added to any of these discussion points. But the reality is unless we are like W. Edwards Deming or adopt an attitude of Kaizen’s continual improvement, we are going to be left behind.