Nearly every bank and credit union faces the challenge that whatever they do in digital channels won’t be compared to what other financial institutions do, but to what companies with the leading digital customer experiences provide. This includes the Amazons, Googles and Microsofts of the world.
That’s a hard enough challenge. Now, imagine providing digital banking services, to the employees of those and other trend-setting tech companies.
That’s the starting point every morning for Mike Upton, Chief Digital and Technology Officer at First Tech FCU, the nation’s eighth-largest credit union.
Competition and member service make listening to those consumers critical, especially when they could switch to a plethora of new competitors. But Upton has an interesting “reality check” perspective on neobanks and other newcomers that bears consideration.
“Chime, Revolut, N25, Varo, the whole host of fintech emergents, so far, tend to be really good at a couple of things. We call them ‘small footprint’ providers. They are not really very good at a lot of other things.”
— Mike Upton, First Tech Federal Credit Union
By contrast, he continues, First Tech, with $14 billion in assets, sees itself as a “full footprint” provider. Upton says many of the people who bank with the credit union also bank with Bank of America, Wells Fargo, Capital One, U.S. Bank and other large players. “Most frequently we get compared to that group,” Upton says.
This doesn’t mean that Upton ignores the newcomers. It’s a matter of priority.
“They’ve got a small footprint, but they are interesting,” says Upton. “We look at, what do they do well? Where are they innovative? Where are they flexible? What can we learn from them that we can add to our playbook?”
“This is a way of keeping ourselves nimble and competitive,” says Upton. Moreso, he says, it’s critical “not to chase bright shiny objects” just because they are cool.
“Much of what drives us here is improving the experience and making it seamless and simple, end to end,” says Upton. “We put a lot of emphasis on servicing. It’s about speed, consistency and performance.”
Listening to People Who Live and Breathe Tech
Upton has a deep grasp of technology. Early on he worked for a startup banking software vendor and other tech firms, and then he moved to Bank of America, where he was SVP for Online and Mobile Banking and then to Capital One, where he was VP for Digital Customer Experience.
Driven by its high-tech member base, First Tech has “audacious ambitions,” says Upton, For example, the institution was the first credit union to adopt Zelle.
“Most of our members aren’t comparing us against other credit unions,” says Upton, “but to the large national banks and to the Amazons and Ubers.”
A Membership of Techies:
First Tech started in 1952 when seven employees of Tektronix, a maker of measurement instruments, formed a credit union. Today, First Tech serves the employees of hundreds of technology firms.
Besides Amazon, Google (outside of California), and Microsoft, First Tech members include employees of Hewlett Packard, Cisco, Facebook, Intel, MSNBC, NCR, Netflix, Oracle, Salesforce, Twitter, Verizon, Yahoo and Zillow.
The point is, Upton plays to an audience who knows tech … and isn’t shy about giving input.
“Lots of people have perspectives, opinions and questions about why you’re choosing to do certain things and why you choose not to do other things,” says Upton. “I look on this as energizing, something that fuels creativity. Tech is constantly evolving and people are curious and also passionate about it.”
Specifically, what Upton often hears from tech firm members is “How are you going to continue to stay relevant and be progressive?” says Upton. “For most people in high-tech companies, that’s in their DNA. They have to continuously be relevant and progressive. They are constantly asking those questions of themselves. So it’s natural that they’d be asking it of us.”
Upton says this input helps shape what he calls the “design thinking” at First Tech. Besides spontaneous advice, this member base provides Upton and his staff with enthusiastic participants for user group meetings where First Tech seeks initial feedback on ideas. They also take part in formal usability studies, which also include people who are not members of the credit union.
Getting it right is important to Upton. “We don’t aspire to be a bleeding edge institution,” he explains. “We want to be a leader among credit unions, so in some cases that means we’re going to be a fast follower, adopting techniques that have proven themselves.”
Adopting Zelle is a good example of this, he elaborates. Big banks proved that it worked, and First Tech was happy to be the first credit union through the door.
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Bright Shiny Objects First Tech Didn’t Chase (Much)
“A lot of new tech stuff comes out, and you see the hype cycle build up,” says Upton. “Banking folks rush out to stand it all up.” Upton believes institutions must pick and choose more carefully. Done wrong, some tech can actually be embarrassing. The Financial Brand asked the tech veteran about trends he was glad he (mostly) avoided.
The advent of automated personal financial management (PFM) software is one example. (“I’m dating myself a touch,” he says.) Much of the screen scraping it relied on, at the time, was “out of synch, limited and terrible,” according to Upton. Worse, trying to keep the records accurate called for much manual work by consumers themselves. Not a great customer experience there.
“So, while PFM had a lot of promise, it didn’t manifest itself in the way the industry expected,” he says. “So many institutions spent a lot of time chasing PFM and poured lot of money down the PFM hole, and got little out of it.”
Alexa skills for financial institutions are something that Upton had some hopes for, he admits.
“One of our tech partners had some Alexa skills sets and we did a proof of concept with it. There was almost no utilization. We thought there would be more interest, but it turned out to be just a flat line. We were quite surprised.”
— Mike Upton, First Fintech FCU
First Tech went no further.
Chatbots are another example of a technology Upton thinks many institutions jumped on too quickly. Chatbots have become more mainstream now, but early on institutions believed they would replace humans, but instead they became yet another new channel added to existing ones. Consumers still opted out at certain points and called real people for a voice conversation, says Upton. (Mind you, he says live chat has had some of the same difficulties.)
Artificial intelligence is shaping up the same way. It works for some things but “it’s super nascent,” Upton maintains. “You’ve got to be very strategic about where you introduce it. And know very deliberately what problem or opportunity you are trying to address.”
“People have less tolerance if they know they’re dealing with a machine,” says Upton. “When AI gets things wrong, it’s hard to tell consumers ‘Hey’ we’re learning.’ This isn’t an area that consumers want to learn.”
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Striking the Right Balance Amid Continual Change
“Although I’m a tech guy, I end up talking a lot less about tech than I do about product experience and change management,” says Upton. “Those are huge components of the job.”
Adoption of the technologies that First Tech deems suitable entails a balancing act. Upton says the pace of change inside and outside First Tech is increasing and he doesn’t see competitors slowing down. The idea is to keep up with the field while also keeping the internal house in order.
Part of what helps Upton handle the job is maintaining the perspective of what First Tech is trying to do. “We are an integrator, not a software company,” he explains. “We do write a lot of software, but most of it is integration-related, to tie outside software packages together.”
APIs are Key to Functionality:
Part of First Tech’s strategy is to partner where it makes sense, with other financial institutions or with fintechs. To facilitate this, the credit union maintains a full API site that is accessible via a portal.
“We are in the coopetition business,” he adds, “and I believe we will remain so.”
Planning for First Tech’s technology function is based on a two-tier approach. There is an 18-month “rolling roadmap” that’s what is being dealt with currently. But that plan is fed by a three-to-five year view that Upton works with.
“Five years feels like an eternity in technology,” says Upton, “but that three-to-five year view is a good way to be conscious of where you are going to be making investments.”
All of that must be tempered with the recognition that technology can change drastically and suddenly, says Upton.
“So you have to stay agile enough to adapt,” he explains.
It paid off during the pandemic.
“The whole world shifted to digital,” says Upton, “and we were fortunate in that by using a three-to-five year time horizon we were already making investments in hybrid cloud structure.”
This helped the transition First Tech went through during the height of the pandemic. Many of its branches are on the campuses of the tech companies it serves. When those campuses were shut down by Covid-19, First Tech had to shutter the branches as well.
“The membership was very resilient,” says Upton, “and pivoted to digital very quickly.”