Small Canadian Credit Union Carves Out Tech Niche by Filling the Vacuum
MOUNT LEHMAN, British Columbia -- You probably remember Ms. Thermodynamics, your high school physics teacher, quoting Aristotle's statement that nature abhors a vacuum.
Gene Blishen agrees. He's general manager of Mount Lehman Credit Union and has gained a reputation for taking the credit union--$40 million assets and 1,800 members--to technological heights not ordinarily expected in a small credit union.
"The key is not operating in a vacuum," Blishen declared. "We have to recapture the agenda for small credit unions ourselves. Credit unions have phenomenal advantages. Now, after the financial crisis, it's exponential. Small credit unions have a huge advantage. We can turn on a dime. What we can do in a week would take a large credit union three months."
The latest example of innovation at MLCU occurred recently when the credit union became one of the first two financial institutions in Canada to offer text or short messaging service banking. The other is Coast Capital Savings, Canada's second largest credit union with $11.9 billion in assets, 380,000 members and 49 branches in metropolitan Vancouver.
MLCU members can text "MONEY" to obtain account balances and transaction histories. Unlike other mobile banking approaches, there is no need for Internet access.
Blishen explained how MLCU has positioned itself to thrive in an era when bigger has been touted as better.
"We have tremendously large credit unions here, such as VanCity and Coast Capital," he noted. "We're a small, single-branch credit union. All the small credit unions were merging, and we wondered what we could do. So we decided we would become a niche credit union.
"We couldn't battle the giants on price. That's kind of like the corner grocery store going up against Walmart. We decided to use technology, and as contracts from suppliers expired, we began to pull in various things."
About four years ago MLCU came up with the idea of MessageNotes, which sends a member a text message on their cell phone whenever a transaction occurs on one of their plastic cards. The message usually arrives within two to five seconds. The credit union has a patent pending on that process.
"We call that a 'push' technology. In other words, it pushes the message out when the transaction occurs. We've found most credit unions around here can't do that, for a number of reasons. A lot of the mobile banking products you see from Wells Fargo and others are actually pull technology," Blishen said.
MLCU has already introduced its second generation of MessageNotes and is now working on a third version, expected to be rolled out late this winter or early next spring.
That version will allow members to choose any type of transaction or calendar event for MessageNotes, including loan payments, automatic payroll deposit or even interest credit or safe deposit box access.
How can a credit union with a staff of 10 accomplish all this?
Blishen explained that in the late 1990s MLCU looked at its banking system and asked what the credit union actually wanted it to do. Most people, he noted, want the system to do everything.
"So they go out and buy the latest and greatest. We decided we wanted our banking system to just process transactions. If we have a system like that--and they are fairly cheap--we can then take that information, bring it over into some of the tools the computer industry has basically given us, and hire people who are programmers to take those mundane back-office features and create exactly what the user wants," Blishen said.
He indicated every time a financial institution wants a change in a vendor-developed banking system, the price is probably five times the cost of handling the change internally. In addition, he believes the understanding developed in-house allows the credit union to make extremely knowledgeable, valuable decisions.
He cited the example of an MLCU program that creates PDF statements with check images. A standard product, he acknowledged. But the credit union has taken it one step further by allowing a member to create a statement covering specific dates in the current month, an entire six months or any other period. A lot of businesses, Blishen said--and the credit union does offer business accounts--want a statement with everything combined in a PDF format so they can analyze cash flow or some other data.
What mistakes does he think credit unions make when it comes to technology?
"They're not aware of what's happening," he answered. "Your second highest cost after staffing is IT. You have to understand how business needs within the credit union can be solved by technology. I think that bridge is often lacking at credit unions.
"They listen to experts or to their own technology people, who don't understand the business rules. That means they don't understand what you can do from a technology standpoint. There's a lot of misplaced trust. It's part of your job to understand what's happening."
That commandment extends down the food chain. For instance, when the iPhone became available in Canada, each staff member was provided with one. The idea was to place the latest technology in the hands of every employee.
Blishen is convinced another hurdle to technology is people don't believe they can do it. A small credit union, he said, always hears the noise around them. Instead, he suggested adopting and improving technology is like golf. Work on improving your own game instead of trying to beat Tiger Woods.
While MLCU is an innovator when it comes to technology, Blishen insists a prime consideration is whether a given piece of technology works as a humanizing factor. Does it take the drudgery out of work? Does it keep the end user in mind? In fact, he's been described as the beat cop at the intersection of technology and humanity
"When you develop things with the end user in mind, whether it's staff or a member, and you get their input, then you create a humanizing factor in technology," Blishen emphasized.
"The really great thing is when someone who is 60 years old comes up to the counter and says, 'You know, I use MemberNotes and it's great.'
"Someone asked me how many credit unions there would be in 2015 and I said, 'Ten.' 'Ten? Which ten?' 'Mount Lehman Credit Union will be one. I don't know who the other nine are.'"