CO-OP CEO: Building A Credit Union Innovation Mindset

Demand is a trickle-up phenomenon. As consumers ask more of their financial institutions (FIs), the organizations serving those FIs must also step up their game and adapt to the changing ecosystem.

The PYMNTS and i2c Innovation Readiness Playbook showed exactly this. Top payments performers were demonstrated to be those which made innovation a part of their DNA — and a part of their budget. Size, notably, was not a factor. It was all about mindset.

Todd Clark, President/CEO, CO-OP Financial Services, came to the same conclusion. Clark told Karen Webster in a recent interview that for CO-OP, taking innovation and customer service to the next level meant nothing short of initiating a major culture shift within the company.

CO-OP is a financial technology company that manages ATM and shared branch networks for credit unions in the United States, in addition to offering online and mobile banking solutions. Clark shed light on what it will take to continue serving credit unions, providing them with all the same advantages traditional banks enjoy — and then some.

Partnerships Take New Forms

Until now, said Clark, CO-OP’s focus had been on funneling products and services from third-party providers to credit unions. It’s time for that to change, he said. It’s time for CO-OP to do its own innovation and own the technology it’s passing along to its customers.

Clark noted this doesn’t mean CO-OP is moving away from heavyweight partners. However, when the organization looked at what it really wanted to offer its credit unions, it found that some partners were not moving fast enough in certain respects.

Clark said credit unions are asking for flexibility and the delivery of new capabilities within a relevant timeframe to meet customer needs and demands. The infrastructure that currently serves many smaller FIs, including many credit unions, is not providing that today.

The CEO said it made more sense to continue leveraging those traditional partnerships for their strengths as huge transaction delivery engines. But then, he said, CO-OP plans to layer its own technology (now in development) over what is available from those partners, linking the organization’s innovations into the existing systems to enable communication between the two.

“We’re making a culture shift from a partnership, reseller service to a more agile, development culture,” Clark summarized, adding that 2017 was spent creating the foundation for that transformation.

With contracts, organizational structure, network rules and pricing settled, he said, this will be the year CO-OP delivers meaningful change for credit unions and their members — a shift that began in April 2017 with the company’s acquisition of Iowa-based card processing and payments firm TMG (formerly The Members Group).

 All Part of the Payments Ecosystem

When it boils down to it, all credit unions want the same thing, said Clark. They’re all trying to grow their membership and customer loyalty within their membership. Therefore, any product within those realms is fair game for CO-OP innovation, he said.

That spans from digital banking to the teller line, from card penetration, activation and usage to interchange and card fees, from call centers to artificial intelligence-powered customer service. It’s all part of the CO-OP payments ecosystem, which Clark said makes the organization more than just a card processor.

After all, credit unions are all about their customers. The members are the stakeholders. Customers are always looking for more, said Clark, and as long as that’s true, there will be opportunity in the financial services space.

Right now, he said, credit unions are filling that need for more at a lower price than banks, which is giving them an edge they may not have previously had.

Clark said banks are becoming nervous about the growing profile of credit unions, as they not only encroach on (and exceed) the products and services offered by traditional FIs, but also branch out into national advertising and major sponsorships like arenas and stadiums — territory that once belonged exclusively to traditional players.

Banks are right to be wary, said Clark. There are powerful non-bank companies giving consumers what they want. Millennials and Gen Z are more than happy to trust Google, Apple, Facebook and Amazon to move and store their money and power their payments, because these tech companies are delivering the lifestyle payments banks are not.

The moral of the story, said Clark, is that not innovating is not an option. The acquisitions and investments CO-OP has made and will make during 2018 represent the relentless struggle FIs face to stay ahead of the curve — without which, he said, non-innovators may find themselves faced with the decision to consolidate or fold.