How 'American Idol' and Amazon impacted credit union operations

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Kevin Foster-Keddie has worked in credit unions since 1972, and much of the day-to-day work of running the place has gotten easier in that time.

For example, when he started out at Northwest Medical Federal Credit Union in 1972, branch accounting was done with a fax machine, a tool rarely found – and even less frequently used – in today’s offices.

“It of course had its limitations, but it was cheap and it did work,” he recalled.

Foster-Keddie took the job at Northwest Medical when he was in college, leaving a janitorial position to become the credit union’s only part-time employee. These days he's known for his work at Washington State Employees Credit Union, and Foster-Keddie has been CEO at the $3.1 billion-asset shop since 1999. He plans to hang up his hat and retire at the start of 2020.

In honor of International Credit Union Day and in conjunction with the annual A Day in the Life of Credit Unions project, CU Journal profiled the longtime CEO and his successor in order to better understand how the day-to-day business of running a credit union has changed in recent decades and what further shifts might lie ahead.

Foster-Keddie said one of the biggest changes he has witnessed throughout his time in the credit union movement is a shift from an emphasis on organizational hierarchies to what he called a “network structure.”

Put simply, there’s more flexibility today in how the various tasks necessary to run the a credit union are completed. Instead of burrowing into an Excel spreadsheet all day by himself to plan, Foster-Keddie now more deeply relies on his staff at all levels for problem-solving, regularly walking through the office to interact with other team members.

Not surprisingly, he said the biggest disruptor he’s seen throughout his career has been the rise of mobile phones, but he credited an unlikely source with having helped move the needle: “American Idol.”

When Fox debuted the popular singing contest in 2002, the show asked viewers to use their cellphones to text in their votes for various contestants. As the show took off, recalled Foster-Keddie, so did cellphone adoption.

At its peak, the public’s response to “American Idol” rivaled turnout for some presidential elections, and a study from the Pew Research Center charting mobile phone ownership shows just 62% of U.S. adults owning a cellphone as of October 2002. By February 2019 that figure had jumped to 96% for cellphones and 81% for smartphones.


One consequence of the technology boom was a shift in executives’ roles. Today’s senior management must be more tech savvy and assume responsibility for leading the way with new services rather than just delegating those tasks to IT staff.

“We’re seeing [chief information officers] become CEOs in a handful of credit unions,” said Brad Smith, managing director at Cornerstone Advisors. “So just understanding broadly [that] you don’t have to be a programmer but you need to understand how to use technology to help your members manage risk is becoming tablestakes for the C-Suite these days.”

Foster-Keddie was CEO at Xerox Credit Union (today known as Xceed CU) for 13 years before taking the corner office at WSECU, and he said one colleague in that CU’s microelectronics division encouraged him to go beyond just familiarizing himself with technology but to dive in head first every day.

That turned out to be the best piece of advice he received throughout his career, he said, and one that continues to help him determine which technologies are worth investing in.

Not that those decisions are anything new. For example, WSECU installed its first three ATMs back in 1984 at a cost of $20,000 each.

“Now, ATMs are on every corner like a Starbucks – and then some,” quipped Gary Swindler, who will take over as CEO upon Foster-Keddie’s retirement.

Digital evolution

Swindler has been in the industry for nearly as long as his predecessor and has been with the credit union for over 30 years. Chief executive is the only role at WSECU he hasn’t yet held, and a key part of his work moving forward will be continuing the credit union’s digital evolution.

Only about 20% of all WSECU transactions today are handled in-branch or at a contact center. Nearly 50% are completed via a mobile device while another 30% are done via a desktop. But when Foster-Keddie took the helm, those channels didn’t exist.

Swindler recalls when branches had lines of as many as 30 or 50 people stretching all the way out the door – especially on paydays in the era before ATMs were widespread and members had to visit the branch for cash.

“It was very manual, transaction-heavy, but the beauty of that was the human interaction,” he said. “That was where credit unions especially got their niche.”

And that human interaction is what Swindler plans to focus on as WSECU advances further into the mobile age, and fewer people are visiting branches and reaching for their phones instead. As a result, fewer front-line staff are hired since branch traffic is lower. Correspondingly, the executive team has also shifted how it aims to design the member experience, focusing today on making the experience as effortless as possible. But that’s driven by new competitors that didn’t exist 30 years ago, many of which come from outside the traditional financial world, such as Amazon and Netflix, to say nothing of new fintech players.

These days, WSECU leadership is tasked with figuring out how to engage a relationship where two-thirds of its transactions are completed without a human being.

“How do you humanize that digital experience?” Swindler asked. “That’s a tough nut to crack.”

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