PITTSFIELD, Mass. — In an effort to better understand how Millennials interface with mobile banking, Greylock Federal Credit Union is working with University of Connecticut MBA students to develop enhanced apps.
"We are trying to figure out what will not only benefit our own financial institution, but others," said Greylock FCU's Chief Information Officer Kevin Zimmer. "Getting more information from Gen Y is a strategic goal of ours. We want to appeal to that crowd."
For the last three years, Greylock FCU has been an active member in Fiserv's DNAcreator, which gives organizations the ability to enhance, modify and add specific capabilities to its DNA system that in turn allows for the creation of apps.
"Last summer, we began looking for ways to get more innovative apps for our app store, which we rolled out in 2011," said Chris Van der Stad, chief technology officer in Fiserv's Open Solutions Division. "We were looking for some really innovative, out-of-the-box thinking."
The original concept was to tap people outside of the financial industry who could bring a fresh perspective, noted Van der Stad. "Then the idea of young minds came up and we looked to our local school — University of Connecticut."
After reaching out to the university, Van der Stad learned the school of business had in place an "accelerator" program. During the fall of 2013, Greylock FCU and Bank of Danbury signed on in a collaborative advisory capacity.
By January 2014, student recruitment began.
Deep Dive Into Banking Software
"The project gave us the opportunity to do a deep dive into the banking software industry," said Michael Maczka, now a graduate of the MBA program. "We did a lot of research in the first phase of the project and found that smaller regional banks face very different challenges than their nationwide counterparts."
Along with Maczka, the team consisted of MBA students David Dougherty, Sourav Sengupta, Patrick Huang, and Michel Rakotomavo, Ph.D. Associate Director of CT Institutional Programs, UConn School of Business Finance Department.
"College kids can have a tendency to look at the banking industry as not really technically advanced," said Van der Stad. "So by getting the students together, and Greylock, we really got the juices flowing. This generation is the demographic credit unions are looking to attract and attain."
Joining this effort is among an overall strategy Greylock FCU has employed over the years. The credit union has a 5,000 member Youth Club comprised of the Cub Club (ages 0 to12) and Fusion (ages 13 to 22).
"They advise us on things we should be doing to attract and retain this demographic," said Zimmer. "Having UConn master's degree students who are technology gurus and can help us implement these ideas is really exciting."
Named "The Financial Accelerator Project," over the course of the spring 2014 semester, the team participated in weekly meetings either onsite or virtually via conference calls. Members were able to test hypotheses with Fiserv product managers as well as representatives from the Bank of Danbury and Greylock FCU.
"I was shocked at some of the ideas they were coming up with and ones we thought had merit," recalled Zimmer. "One idea was their focus on big data and predicative analytics, which is something we are working on, Fiserv is working on — the whole industry is. They were going down that path and I was encouraging them on it."
Maczka, who recently accepted a position at eBay, explained that the team conducted research on regional banks finding that many lagged behind the use of social media and data analytics tools.
"We realized that some clients did not have any feasible models in place to analyze the lifetime value of the customer," said Maczka. "We also found that data analytics and big data in general were woefully underused by most regional players due to lack of understanding and resources."
Apps on the Horizon
Since it was concluded that bigger banks were using "sophisticated big data technologies" to better serve their customers through personalized offers and better risk managements, the team decided to focus app development around "a better usage of data without the need to invest heavily into complex big data algorithms," noted Maczka.
By the end of the semester, Van der Stad said there were no shortage of terrific ideas and concepts. The challenge would be picking apps to develop. "The team presented to the clients and to Fiserv about a month ago, and now we have narrowed it down to about four apps."
Over the summer further deliberation between Fiserv, Bank of Danbury and Greylock FCU will continue. New students will join the program in the fall, which is when Van der Stad expects to make a decision on what apps will be developed for the market (with a possible roll out date in early 2015).
"From a community banking level there seems to be a lot of commonalities between banks and credit unions. We have long had sense of collaboration and I haven't seen a lot of difference between the two," said Zimmer about working with the Bank of Danbury.
Greylock FCU, as certified DNA developers, has created nine apps over the last few years. The $1.1 billion credit union offers a free 60-day download to its approximately 70,000 members (and beyond). "These apps can be deployed at any time by anyone. You don't have to wait for the next release of the product, which is a huge benefit of DNA apps," said Zimmer.
Only time will tell what app or apps will see market entry, but for Maczka and his team, the biggest take away was discovering a barrier between Millennials and financial institutions, which he believes could be overcome with the right technologies.
"Millenials do not trust their banks and are rather uneducated when it comes to finance and banking. They respond well to personalized offers and to technology fueled processes and applications," said Maczka. "Therefore, we aimed at developing apps that utilized data to allow financial institutions deliver better products, tailored towards the needs of Millennials."
