It’s time for credit unions to get innovative, again

Innovation. That elusive characteristic that requires effort, determination, inspiration, and commitment. When you have it, it shows, when you don’t, you blend into the background and resemble everyone else. Innovation doesn’t come naturally—you must work at it constantly. Some notable organizations recognized as being innovative include Apple, Amazon, Microsoft, Pfizer, Telsa, Intel, and Nike. But there are so many others whose names you might not recognize. These organizations search for and develop new products and solutions that make a difference in the lives of people. They are not satisfied with the status quo. They push boundaries.

Credit unions used to be considered an industry that produced innovative products and services. However, we’ve become somewhat complacent on the innovation dimension. We seem content to provide ordinary products and services for the masses. It’s time to get our moxie back and develop innovative ideas and solutions that can turn the financial services industry upside down—in ways that help our members survive and thrive in today’s difficult and challenging world.

Key Attributes of an Innovative Culture

According to leading business thinker Gary Hamel who authored a seminal article1 on innovative organizations in the Harvard Business Review, there are four requirements that innovative cultures must have. They:

  1. Challenge invisible orthodoxies. Within any industry, mental models tend to converge over time. Executives read the same trade magazines, go to the same conferences, and talk to the same consultants. After a while, they all think alike. Innovators, by contrast, are contrarians. In their quest to upend industry rules, they learn how to distinguish “immutable laws” from “ingrained beliefs.”
  2. Harness underappreciated trends. Innovators don’t spend much time speculating about what might be. Instead, they pay a lot of attention to the little things that are already changing, and that are gathering speed. To be an innovator, you don’t need a crystal ball: you need a wide-angle lens. You must be tracking trends your competitors haven’t yet noticed, then figuring out ways of using them to upend traditional business models.
  3. Leverage embedded competencies and assets. Innovation gets stymied when a company defines itself by what it does rather than by what it knows or owns—when its “concept of self” is built around products and services rather than around core competencies and strategic assets. Innovators see their organization, and the world around it, as a portfolio of skills and assets that can be endlessly recombined into new products and businesses. They are masters of recombination.
  4. Address “unarticulated” needs. Customers have their own orthodoxies, so asking them what they want seldom yields a fundamentally new insight. Instead, you must observe them, up close and over time, and then reflect on what you’ve learned. Where are we creating needless frustrations? Where are we wasting our customers’ time? Where are we making things overly complex? Where are we treating customers like numbers instead of people? To be an innovator, you must be relentlessly curious.

Where Innovative Ideas Come From

The emergence of FinTechs has brought some needed innovation to our industry. But as credit unions, we need to be driving the innovation rather than relying solely on outside influencers and occasional partners to provide that innovative spirit. Our industry already has a few programs that are designed to foster and provide an innovative mindset. Filene Research Institute’s i3 Program does just that. The Program teaches innovation skills and organizes teams around finding and testing innovative solutions for credit unions and the industry. The National Credit Union Foundation’s DE Program also has participants identify potential unmet needs and culminates with teams preparing a project that is intended to solve innovative credit union member opportunities. Curiosity and the desire to create new things that have the potential to solve real problems, whether already articulated or yet undiscovered are key to any true innovation effort. Sometimes, sheer “out-of-the-box” thinking can produce significant change and progress.  As a life-long contrarian, I am fond of a couple of inspirational quotes on innovation from the late Apple founder (and master innovator) Steve Jobs:

“It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.”

“You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.”

“Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations.”

To illustrate how innovative ideas can come from anywhere, here are a few examples of innovative product ideas I’ve come up with that could be game changers for credit unions or the industry. Admittedly, some of them might require a “pilot” to test their acceptance among credit union members. But, if anything is true, they are innovative and maybe even radical—and that’s exactly what innovation requires!

  • The Million-dollar Baby: Any credit union can access the local community’s birth records. Offer the creation of a high interest-bearing account in the newborn’s name and fund it with $50 (or any amount the CU chooses). The account is restricted and doesn’t allow withdrawals until the child reaches a certain age (let’s say 25 or 30 years). Encourage the parents and their family and/or friends to make periodic contributions to the account (such as birthday money, allowances, or other monetary gifts) as the child ages. Provide the parents with data to show how the account can grow over time with regular deposits and interest compounding. If regular contributions are made during the child’s life, the result could be a million dollars by the age when the account has fully matured. Not only do you establish a lifelong relationship with a member at birth, but you help instill a financial savings discipline on an entire family and contribute to having a member that is financially healthy (and maybe even independent) by the time they become an adult (not to mention the PR value something like this provides).
  • The Member Car Zone: As credit unions, we love making car loans. And we do it better than banks. But how do we create loyalty with those members who borrow from us for their car purchase? Many credit unions lend indirectly through car dealers and although the member has a “relationship” with us because of the loan, they are too often “one product” members and leave when the loan is repaid. What if we offered access to other car-related products and services through negotiated discounts with providers like auto repair, car insurance, oil changes, car washes, car accessories (tires, mats), or other car enthusiast materials? Not only are we providing the best loan rate, but now we’re going beyond that by providing exclusive access to things every car owner needs. We become a trusted source for all things automotive. Once the member sees that we are on their side for their automotive investment, we have permission to help them find ways to save on our other products and services, thereby expanding and deepening the relationship with the member.
  • The Member Home Zone: This is like the Member Car Zone but designed to serve the member who has a mortgage with the credit union. Again, we provide exclusive negotiated discounted access to things that are related to home purchase and ownership. Special deals from retailers and contractors who provide things like paint, window coverings, accessories, landscaping and lawncare, furniture and furnishings, remodeling, etc. The member gets an added benefit that others don’t provide and know that the credit union is their “partner” in this huge investment. Loyalty is deepened and the credit union is viewed as the member’s trusted financial partner, making it easier to expand the relationship to other products and services. In both cases (Member Car Zone and Member Home Zone), “membership has its privileges”!
  • The Save You Money Guarantee: What if you could grow membership by promising to help new members who switched from a bank to your credit union save money? It’s easier than it sounds. It’s a fact that almost every credit union offers lower interest rates on loans and probably higher interest rates on deposits than banks do. Not to mention fewer fees on products offered. Imagine this—you make a promise to members who switch their entire relationship from a bank to your credit union that you’ll save them money over what they got from their banking relationship (of course you stipulate the type and number of products that they are required to switch to you from their bank). Take a car loan that a customer has with a bank—do you think your loan would save them money? How about credit card balances and fees? What about savings or money market accounts? Checking account fees? All in all, its pretty clear that you’d be saving them money over what it cost them to bank at a bank, right? The risk is low. Offer to pay them $500 if you can’t save them money over the course of 12 months and that you’d switch them back if you don’t. My calculated guess (and we ran the numbers at one of my previous credit unions to make sure) is that you’d have virtually no members that you couldn’t prove you saved them money. The value is in the challenge guarantee—$500 (or $1,000 if you really want to get prospective member attention) to prove that your credit union is better at saving them money than their bank. Again, the PR value is priceless.

These are just a few innovative ideas that I’ve dreamed up over the past few years using acquired innovation skills. None of them are copyrighted, so feel free to use them if you like. Hopefully these ideas sparked some interest to let your own creative juices flow. Is there a problem or solution you think your credit union could address or your members would benefit from? Explore them.

It Takes a Team

I would never suggest the “Lone Ranger” approach to innovation. To be successfully innovative, you will need the support of others. The brain power of others and the inspiration of others at your organization is a powerful force. It requires everyone working together toward the common goal of being innovative. That said, it does require a vision and commitment.

Successful innovative organizations understand that innovation should be embedded directly into their culture and way they do business. Innovative teams should include individuals from different departments and from various levels within the credit union—this assures different perspectives and points of view. This assembly of different personalities and styles can help foster creativity because individuals bring their own unique history, values, and roles within the credit union. The group’s team leader is responsible for establishing processes, facilitating discussions, and collecting input. The team leader should be someone who inspires and is able to “bring the best out” of everyone involved in the process.

The innovation team will use design thinking and innovation methodologies and activities to brainstorm, collaborate, design, and develop solutions to overcome key challenges the member may be facing. Aside from collaboration, the innovation team must also fight against a “failure” mentality. Innovation as a process involves failure – so the team must not be afraid to make a mistake, present a “bad” idea, or try something that ultimately doesn’t work. In fact, failure can be an incredibly positive part of the innovation process because it can help teams locate the right answer by discovering something they wouldn’t have if they hadn’t “failed.”

Smart organizations understand that innovation goes beyond a single collaboration workshop or event. To sustain and continue to enable innovation, teams need to have buy-in from the top-down. This involves providing the time, resources, and support needed to innovate over an extended period. An innovation culture is one built on the ideology that anyone can contribute and produce the next “great idea” and that failure is not only inevitable, but also needed to obtain success.

The Time is Now

Did you know that now may be the best time to be innovative?  According to a recent article2 from Forbes, the best innovation often comes during or on the heels of a crisis.

The COVID-19 pandemic has upended everything–personal lives (how we live and connect with others) and professional lives (how we satisfy changes in consumer behavior and how we manage our employees) have been disrupted.

There was no playbook for the disruption we experienced; many credit unions worked through it and tried some things never tried before. Some worked well, others didn’t. But it was an environment that created the opportunity for change. We can choose to either go back to the way things were before the pandemic (our safe zone) or we can continue to push boundaries and try new things (our non-comfort zone). The best innovation and change occur when we think and operate outside of our safe zone. Crises can be like electricity for innovation.

Crises force us to identify longstanding problems, learn and adapt quickly, and move forward in the face of unexpected challenges. Embracing the urgency of a crisis inspires innovation.

As credit union leaders, we can capture the challenge of aligning employees’ focus toward a common goal and inciting the energy needed to achieve it. Credit union employees will know they have a common goal to achieve through collaboration and quick decision-making. This spark of collective energy can create a snowballing of ideas. It’s amazing and gratifying to see a team tackle an issue head-on with an urgency rarely displayed. And while such employee innovations are inspired by, and designed to solve, an urgent problem, they reflect the desire as devoted credit union employees to serve members in need.

The COVID-19 pandemic has triggered an urgent sense of innovativeness and togetherness. Let’s take advantage of this opportunity. Let’s return to being innovative—our future depends on it. Happy innovating!



  1. The 5 Requirements of a Truly Innovative Company, by Gary Hamel and Nancy Tennant, April 27, 2015, Harvard Business Review
  2. The Best Time to Innovate is During Times of Crisis, by Lauren Irwin-Szostak, November 18, 2020, Forbes
Alan Bergstrom

Alan Bergstrom

Alan is a passionate credit union veteran, having served as CMO for two different $B+ credit unions and Brand Director for CUNA Mutual Group’s TruStage, from its launch to ... Web: Details