When your members spend their days coding at Intel or developing the next big mobile app at a startup, your tech-based offerings have to be top notch.
That's why credit unions based in and around Silicon Valley have to be on top of the best technology has to offer. Indeed, two such credit unions even have "technology" in their names: First Technology in Mountain View, Calif., and Technology CU in San Jose, Calif.
"Our members are some of the most technologically focused consumers on the planet, and being innovative is crucial to meeting their expectations," said First Tech Credit Union's Chief Digital & Technology Officer Mike Upton.
The $8.6 billion First Tech CU serves 440,000 members, many of whom work at well-known companies such as Amazon, Microsoft, Hewlett-Packard, Cisco, Netflix and Google.
"We take care to ensure our product and technology teams are listening to our members, doing the requisite market research and performing exhaustive due diligence in order to choose the right, best technology to meet our member's needs," said Upton.
Technology CU CFO & Chief Administrative Officer Todd Harris said the credit union's approximately 750,000 members also expect the delivery of new technology feature sets for mobile and online on a regular basis.
"We put pressure on ourselves — it's part of our value proposition and brand promise to deliver technology and personal expertise to help our members succeed financially," said Harris of the $2 billion Tech CU.
First Adopters
While all credit unions want to offer the latest and greatest technologies to membership, Silicon Valley-based CUs have to go above and beyond. The technology stakes are simply too high. To this end, these CUs are often on the bleeding edge creating industry trends.
"We were one of the first credit unions to offer Touch ID," said Harris. "We were also one of the first to support Apple Pay." The CU was also among the first financial institutions to have a web presence and a mobile app.
Tech CU's early adopter status is not surprising considering its history. Founded in 1960 by a group of Fairchild Semiconductor employees, the CU was initially known as Fairchild Semiconductor Federal Credit Union.
"We have a large concentration of members who work in high tech, and this demographic tends to be early adopters," said Harris. "This means we don't have the luxury of sitting back and waiting for what becomes popular—we need to bring new features to market quickly."
First Tech CU can also boast about being early adopters. Last fall, in a partnership with MasterCard, a team of CU employees verified the authenticity of online donations made to Children's Miracle Network Hospitals using either facial recognition or fingerprint matching biometrics.
The pilot program was referred to as "selfie pay." Upton noted that participants found that biometric authentication was overwhelmingly easy to use on its own (88%) and a clear majority found it even easier than password-based authentication (86%).
"We were the first financial institution to participate in the MasterCard pilot program within North America," noted Upton. "Thanks to the success of the employee pilot, we plan to implement the program for our members once its available later this year."
Tech-Focused Branch Offerings
While Tech CU has 17,730 active mobile bankers and 42,007 active online bankers, the CU remains dedicated to ensuring its 10 branch locations are defined by forward leaning technologies.
"We recently redesigned our branches and spent a great deal of time determining the best branch design and technology to accommodate these needs — both from a functional and a brand perspective," said Harris.
New updates include interactive touch-screens, with videos and easy-to-navigate product and services screens, to help members learn about personal finance. There is also a "Wow Wall," which features four large flat-screens that together display a single rotating image that highlights information about Tech CU products and services. An adjacent wall features an interactive mural depicting the CU's history.
"We offer video conferencing with Tech CU financial experts and a 'Discovery Table' with tablets and iPads for members to learn about personal finance and explore Tech CU's website," noted Harris.
Upton explained that First Tech CU has 75,000 active mobile users and 220,000 active online bank users. The CU is currently in the process of updating its 40 branches to be more "consultative," which will include eliminating the teller row in favor of a "Central Relationship Center."
"The Central Relationship Center is where our members and representatives can grab a comfortable couch or stool together and conduct face-to-face conversations or transactions in a comfortable, collaborative, flexible environment," said Upton. "Furthermore, we've armed our financial reps with mobile technology that allow them to move with our members around the branch versus making our members come to us."
Innovative Collaboration
Having some of the most forward-looking tech companies in your backyard does create pressure to "keep up" with regional member wants and needs, but it also affords the ability to collaborate on innovations.
First Tech CU, for example, is currently in the process of launching a partnership with Shift Technologies, a Silicon Valley automotive startup that delivers free on-demand test drives and appraisals on-site at a location of the buyer's or seller's choosing, including car pick-up.
"Shift is adding to the value of its services by offering on-demand auto financing applications through First Tech's auto lending team," said Upton. "This includes the added convenience of pre-populating a First Tech CU lending application online by scanning the buyer's driver's license. It's a great way to simplify private party automobile purchases and also introduce us to potential new members."
While Harris didn't want to go into great detail, he noted that Tech CU regularly forms strategic relationships with FinTechs. "We need to respect the confidentiality of our partners, but we see much activity in the payment and identity security space."
On The Horizon
Despite being in the cradle of technology, Harris explained that credit unions like Tech CU aren't afforded excessive IT budgets like big bank competitors. As a result, many CUs depend on large "conglomerate-type" financial system providers and integrators.
"Many of these conglomerates, however, still employ older business practices, such as integrating with a sister entity exclusively, using dated technology or moving very slowly," said Harris. "These companies need to realize that no two credit unions are alike. They need to embrace, not shun, the Application Programming Interface (API) concept much more aggressively and allow credit unions to shop for systems a la carte as opposed to bundled solutions."
First Tech CU is taking a step in this direction. Upton explained that the CU is utilizing a 24/7/365 hybrid cloud computing solution, Microsoft's Azure. The platform supports a broad selection of operating systems, programming languages, frameworks, tools, databases and devices.
"We have chosen to pursue standing up a disaster recovery environment in Azure, with the goal of being able to approve a disaster recovery fail over. Based on the success of our activity, we have plans to move corporate services, Office 365 and even our core banking to the cloud by the end of 2017," said Upton. "This is all being conducted within a very measured-controlled, test-validate approach to ensure optimum success."
