In this installment of Q2’s Industry Insight series, Q2 talks with New-York based Visions Federal Credit Union (Visions FCU), an organization founded with $40 in 1966 by eight IBM workers. With more than 50 branches, its assets currently exceed $5 billion.
Q2 Chief Strategy Officer Will Furrer sat down with Tom Novak, Vision FCU’s Vice President and Chief Digital Officer, to hear how COVID impacted Visions’ digital transformation; how Visions’ pre-COVID operations differ from its post-COVID operations; how Visions harnessed innovation to deliver new security features and why quickly implementing loan relief for members was integral to the organization’s mission.
What follows is a transcript of the conversation, edited for flow and conciseness:
Will Furrer (WF): Hi, everyone. I'm proud to spend time today with Tom Novak, who's the Vice President and the Chief Digital Officer at Visions Federal Credit Union in New York. Tom, thanks a lot for sharing some time with us today.
Tom Novak (TN): It's my pleasure, Will. Thanks for having me.
(WF): I wanted to begin by asking you what's happening in the industry. When you think about how member behavior has changed over the last several years, would you tell us how they’re gravitating towards digital; and more importantly, how their banking behaviors are changing?
(TN): With COVID being upon us, the shift to digital banking has now become a permanent fixture. It used to be referred to as an alternative delivery channel, and we'd think of the branch or the contact center as the primary delivery channel. That has completely reversed based on the trends that we were seeing leading up to COVID.
Now what's happening is not only are our members expecting those items that are table stakes – being able to log in and check balances, do funds transfers and such – they're really asking for their financial institutions to help guide them through their financial journeys. So, whether that's putting adjacent innovation in place – where there's products and services that make sense in the financial services realm that weren't traditionally thought of as something you get from your credit union – or whether that's personalized advice, real time in the moment, these are now the new table stakes that we're accelerating towards. That's what members are expecting from other providers, even outside the financial services industry.
(WF): And when you think about how you've seen engagement increase, what did it look like pre-COVID and what does it look like post-COVID for a member – the amount of time that they're actually spending in the application and just how much they are becoming reliant on digital?
(TN): We saw a 12 percent uptick in our active monthly users. Playing with numbers there, that's about 12,000 more active monthly users who are logging in at least once per month. And then, for our power users, which we classify as logging in at least 10 times per month, we saw that increase by tens of thousands of members. So, the engagement has pretty much gone through the roof.
We're seeing transactions and interactions increase exponentially, and none more so than when the stimulus payments came through and people were checking to see when their funds were available. That level became our new high-water mark. It wasn't just a pop or shot in the arm, we've seen those levels sustain themselves, even now in early October, 2021. We recognize this is the new mainstay way our members are doing business with us. They're also commensurately showing that they're taking their traffic and they're moving it to digital, away from other channels.
Those other channels haven't gone away. They're not going to be sunset in any way, but members are voting with their actions on how they can connect with their financial institution. We're seeing things like integrating card controls and card functionality into the digital banking experience, because our members, when they're doing day-to-day payments, they want those to be contactless, touchless.
They want to control their finances, end-to-end, from their fingertips. So that high-water mark has sustained. And now, we're making sure we reward that behavior and commitment from our members by giving them value-added services that they might not be expecting from their credit union.
(WF): When you think about your credit union and your digital transformation roadmap, tell us just a little bit about how that has accelerated along with the utilization and the expectation increase that you're seeing from your members.
(TN): The best way to describe it is with our digital vision statement, which we created during COVID. We realized that COVID was forcing digital transformation upon us. And while we were doing okay with that beforehand, we weren't stepping on the accelerator fast enough or proactively enough. So, we came up with a digital vision statement, which essentially provisions Visions Federal Credit Union to be a digital-first organization, empowering people towards financial independence.
And the way we're going to do that is by offering free or low-cost digital products and services that they would normally have to go to the market and pay for. We’re offering services like Experian’s IDnotifyTM, free credit monitoring and ID theft protection, so they don't have to worry about the safety and security of their assets and information when they're banking digitally.
(WF): That is such a great point. Are these security features for your members that may utilize the digital channel more often if they have enhanced security? Tell us about what you did with IDnotifyTM and how you rolled that out, as well as the timeline of bringing that value to your members.
(TN): As we were going through COVID, we set a five-year digital transformation roadmap. What we found in our research is that the predominant reason people don’t adopt digital banking is because of security concerns. They're worried that their information could be lost or stolen, or that they’d be victims of fraud.
It's a personal feeling – a very personal emotion – when you think about somebody violating your information and taking your information away from you. So, as we did more research, and we bolstered our efforts with Q2, we came across the opportunity to partner with Q2 and the Innovation Studio to offer IDnotifyTM. IDnotifyTM is an experience solution, what we'd like to call adjacent innovation, that you wouldn't necessarily expect from your financial institution, but once you get free credit monitoring and ID theft protection, it just feels right. It just makes a lot of sense.
We wanted to make a big splash and realized that if we were going to meet our vision of empowering people towards financial independence, we had to give this service to members for free. Simply by being a digital banking member, you get free identity theft and credit monitoring – no questions asked and integrated into the interface. Because of the Q2 Innovation Studio, we were quite literally able to take that from initial concept to enrolling members inside of three months or less. It was phenomenal.
Today, we're over 5,000 enrollees. As we continue to show that empathy, educate our members about the service and help them get comfort about adopting digital banking, they no longer have to worry. They know that Visions has their backs covered.
(WF): That's a great example. You and your team have implemented other award-winning solutions inside the digital banking platform, and you've been able to do so very, very quickly. Would you mind giving us some additional examples where you and your team established a roadmap and were able to actually accelerate that roadmap in the innovation that you're delivering?
(TN): Definitely. Another example, pre-COVID, is our Micronotes integration. Micronotes is a conversational AI tool, digital marketing tool, where we use machine learning on the backend to more effectively target and curate offers and messages to our digital banking members. One of the best outcomes we experienced a couple years ago, before COVID hit, was when we were in a little bit of a liquidity crunch. We needed to tell our members that we had great deposit rates, and that they could bring those deposits to us and we’d reward them with nationally leading interest rates – or dividend rates, as we call them on the credit union side.
We developed that through Q2’s SDK (software development kit), which is part of the Innovation Studio. It let us curate those messages and integrate them into the digital experience. In a few short months, we brought in over $8 million in deposits, retaining those deposits on our books. That was one great example that Q2 and the Innovation Studio made things really come to life.
Another great example is that – even before COVID hit – credit unions were already known for offering something called a “loan skip a payment,” where members can opt to skip a loan payment every six months, without incurring charges or fees.
When COVID hit, we realized that skipping a single payment wasn't enough and we had to do more. So, our organization came up with something called the “We Care 3-Month Skip-a-Pay” program a payment which essentially tripled the number of penalty-free payments members could skip. We let them miss three payments concurrently on their personal loans, auto loans, what have you, without impact. With Q2's Innovation Studio SDK, we changed the standard payment functionality and offered it to all of our eligible digital banking members within just a few short weeks.
It was huge. It was something that we notified our communities about. It was something that we were singing from the rooftops about. We want to be there in our members' moments of need and give them the opportunity to skip loan payments without repercussions.
(WF): Tell me how that makes your team feel to have such a strong mission and be able to align new ideas to deliver on that mission. Tell me what that means inside of your business.
(TN): It empowers the team and lets them see what’s possible. Moving away from just a vision statement and rhetoric, which is where things must start, to actually executing and iterating, breeds a culture of success. Instead of all of the red tape that you might see in implementing something like this in a traditional setting – and the difficulties from a tech stack perspective that others have experienced – our team now sees opportunity.
As long as we have a clear vision and the commitment to the best interests of our members, we know can execute on just about anything and stay ahead of our competitors. In a similar fashion to the large U.S. financial institutions, we're no longer behind the scenes or behind the eight ball. We now have the same level of tools that they do, and it allows us to accomplish quite a lot.
Our internal rallying cry here is, "This allows us to punch above our weight class." We're bringing features to market that even the big players don't have, and that really helps motivate us that we can deliver on the passion we have.
(WF): When you think about how things have evolved since you signed up with Q2, can you talk about what it's been like to work with us and incorporate the Innovation Studio? How have you seen the Q2 organizational change – not just from a technology standpoint, but from a mindset standpoint? Talk a little bit about the changes you've seen over the years and the acceleration in innovation.
(TN): We went live with Q2 in 2018 and we've been moving forward and growing the relationship ever since. I've seen over the years that Q2 truly adopts a partnership mentality, where if we want to co-create something – whether it's part of the Innovation Studio, or just in thought – Q2 will partner to see where this potential could lead us. A lot of things have accelerated, and we're able to support client needs even better than we were just a few years ago.
I think before we go into that, it's important to say what hasn't changed. The core of what Q2 is – alignment with credit unions and community financial institutions – is the way Q2 empowers those community financial institutions and make them more successful, which then makes their communities more successful. That very much aligns with Visions Federal Credit Union and our mission to empower the communities we serve. And that's really important to note that that has been steadfast the entire way.
Now, the derivative of that is the acceleration, the Innovation Studio coming about. It used to just be – which was good enough – the SDK. Now, there's the partner accelerator program and there's the Innovation Studio component and a partner marketplace, where you can go out as a credit union executive or a bank executive looking for best of breed technology to differentiate yourself.
It's almost like a shopping experience. And not only that, the best part of taking that open-minded approach that Q2 has had from the beginning: If a great idea comes about, even though the solution from the partner marketplace is productized, Q2 is willing to listen and say, "Hmm, maybe our client has something that they could bring to the table."
The IDnotifyTM, credit monitoring and identity theft protection service that we're both offering, that was a classic example. We wanted to offer that to our members for free, based on the research we did. It wasn't the traditional model, but Q2 was open enough to do it. Now, we have all of these enrollees and we're continuing to set ourselves apart. That's really the story – what has stayed the same, but then how we've accelerated and differentiated.
(WF): That's really great. When you think about what the foundational elements of working with Q2 and our people, can you talk about the talent that you interact with and how they play a key role in helping Visions achieve success for their members?
(TN): The biggest thing with Q2 and its talent – the team that we get to work with, which is a huge team of various different specialties – is they all want to form a relationship with us. They want to understand what our goals are, what our objectives are, and then how they can be of assistance to help execute to bring it to life. I can’t say enough good things about the entire availability team.
And where Q2 is now from an active, active database perspective, two live instances of your environment running simultaneously to minimize any downtime, the amount of security and proactivity to defend against any security concerns – and credential stuffing attacks, as one particular example, which have plagued the industry, unfortunately, over the last couple years. Teams like that actually wanting to partner and understand how we can be better, not just in words, not just in sentiment, but in actual executables. And then, we are co-creating together.
Lou is just one example. I think you, Will, are another one. The Q2 team that works with us every day –these folks actually want to understand and essentially become an extension of our team. It's not Q2 and Visions. It's really one team. So, the best way I can describe the Q2 team is they're really a part of Visions. They've committed to that and they want to help us achieve our vision. I can't say enough about the mentality that they espouse.
(WF): That's fantastic to hear. Now, for the final question: When you think about the future for digital, and you think about Q2's ability to – not only keep up with, but hopefully be ahead and position you effectively for more change – are you feeling this is taking place and that we are well positioned to serve Visions, not only now, but well into the future?
(TN): I do. The primary reason is because Q2 is innovating and forging ahead into new territories and new trends in the financial services space, even before there are labels for those trends. I think embedded fintech and modular banking are just two of the things that Q2 was moving into before those even had phrases that were coined.
What we're doing here with IDnotifyTM, and some other elements that we're already in process with, specifically from the partner marketplace – whether it's digital donations, whether it's Bitcoin and offering a Bitcoin exchange to our members so we can educate them, offering it at a better price, and most certainly offered more securely – these are the things that Q2 is already moving forward on.
It's really up to the client to catch up and make sure they're benefiting from this and adding their value proposition as part of their partnership with Q2. But that's the core of why I feel Q2 is going to help us innovate the financial services industry as a whole, and especially Visions, because they’re ahead of the pack before things are even defined.
That's essentially the mentality you have to have because the market is changing so fast, but Q2’s disciplined approach is not changing. Q2 has maintained their values, and they're very vocal about that, which is what somebody like Visions wants to hear. We don't want somebody who has a different mission statement each day. We don't want somebody who has a different strategy or a different roadmap every day. We want a commitment, and that's really what Q2 brings to the table.
(WF): Well, thank you so much for your partnership and for sharing with us today.
(TN): Well, I appreciate it. Thank you so much.
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