MSUFCU: A year of fintech innovation and collaboration

Touching base with Benjamin Maxim, Vice President of Digital Strategy and Innovation at MSU Federal Credit Union (MSUFCU), a year has passed since he discussed the launch of the credit union’s Innovation Lab with FinTech Magazine. Today Maxim, is proud of how successful the lab has been in the past year, and shares the company’s journey. 

‘Building dreams together’

As a credit union, MSUFCU’s core mission is to serve its members. Its tagline is ‘Building dreams together’, but when it comes to innovation, Maxim stresses that innovation isn’t just about the big things like the creation of the iPhone or Tesla, it’s also about making your operations better day by day.

“In general as a business, if you are not growing and improving, then there is a good chance you won’t make it long term,” he says. “Innovation is truly the way forward.”

Founded in 1937 during the Great Depression as a way to gain access to loans, Maxim reflects that the service back then was really nothing more than an innovative way to buy financial services at the time. “Innovation has been at our core ever since,” says Maxim. 

When it comes to technological innovations, MSUFCU was one of the first credit unions to tie into an ATM network, one of the first to use Visa cards, and an early adopter of mobile apps, “at the time these were revolutionary,” says Maxim. 

Today the credit union is investing heavily in the fintech industry to keep the organisation moving forwards. “This is where our Innovation Lab comes in,” explains Maxim. “A primary focus of our Innovation Lab is to get our members involved early in our product development, which allows us to utilise our members to find out what they are interested in, how we can help them and to ensure we are developing products and services our members will actually enjoy using.”

The inspiration behind the Innovation Lab

The Innovation Lab was born out of MSUFCU’s need to better serve its growing member base. “We have a track record of building our own technology to serve our customers,” says Maxim. “Almost twelve years ago we launched our own online banking and mobile banking apps.” 

Since Maxim started his digital journey with MSUFCU, its membership base has grown from 170,000 to over 320,000. 

“With this growth, a lot of work was needed to be done to scale our services and make them work better for the larger quantity of people using them,” explains Maxim who adds that: “When we were a small and nimble team, there was a lot of organic innovation, but with growth, this has become harder.”

At the beginning of 2020, Maxim was approached by MSUFCU’s CEO, April Clobes, to establish a formal innovation programme. “I jumped at the chance,” says Maxim. 

He adds: “Fintech had matured quite a bit by that point, there were many large fintech unicorns doing great things, which is where a lot of the venture capital was headed. Meaning there was huge interest in this maturing market and was ripe for tapping its potential.”

Keen to tap into the resources of the industry, MSUFCU set about developing its partnerships and opportunities. “The Lab provided a way to create better partnerships with startups and give us an avenue to test out ideas in a safe way,” says Maxim. 

But as with all the best-laid plans, there are challenges. After starting 2020 with ambitious plans in mind, COVID-19 struck. Fortunately for MSUFCU, while the pandemic brought about a few new challenges, it largely acted as a driving force for its Innovation Lab strategy, rather than a hindrance. 

Closing our branches for a period at the beginning of the pandemic, freezing budgets and hiring, reprioritising projects and an overwhelming increase in contacts to their call centre and live chat services, all became obstacles to overcome and innovative thinking as an organisation was seen as a way to overcome them all.

Maxim said: “Instead of holding off on our innovation plans, we decided to double-down on it. We came to the conclusion that innovating would be our path forward out of COVID-19. So we took on our first fintech partner - a video-banking solution provider called POPi/o. By harnessing the Innovation Lab, something that would have taken 10 months or more, took us just five weeks.”

He adds: “It proved that the Innovation Lab gave us the ability to move quickly and that there was no need for all the deep integration of the past. Not only that, but our members appreciated and benefited from this partnership. We found that our members didn’t really care how deep the integration was or how complete the branding, they just wanted to be able to communicate and interact with us.”

This was a good learning lesson for MSUFCU, and one that allowed the Innovation Lab team, to get the buy-in it needed to officially launch in September 2020 as The Lab at MSUFCU. 

Maxim says: “With The Lab, we are also able to get new products to market quicker. We found that before, pursuing ideas like this would take too long and would sometimes lead to missed opportunities. So with The Lab, we take homegrown ideas, build them into prototypes and get them out in front of our members quickly.”

Innovation ‘without fear and pressure to present fully polished products’

Maxim stresses that their innovation lab isn’t about failing fast, it’s about learning fast and capturing “what went right or wrong and learning from it.” 

He continues: “One of the main catalysts for creating The Lab at MSUFCU was our need for a brand that was separate from, but complementary to, our official brand. We specifically use the terminology ‘Lab’ when we roll-out innovation, to show that it is coming from somewhere experimental and scientific.” 

He adds: “We have recruited a panel of 500 members that provide inspiration and are also readily available to pilot any projects we are running.”

Forming an Innovation Ecosystem: Reseda Group, Spave, Ever Green 3C, and Foresight Group

MSUFCU is transforming its innovation lab into a full-fledge innovation ecosystem, starting with the formation of Reseda Group, MSUFCU’s wholly-owned Credit Union Service Organisation or CUSO.  Reseda Group has been pivotal in the development of this innovation ecosystem with its goal of helping fintechs scale, focusing on the credit union industry as a growth plan.

Reseda Group accomplishes this through its minority investments in fintechs that started as partners in The Lab such as ChanEd, Pocketnest, and Larky; as well as its majority stakes in its subsidiaries Spave, Ever Green 3C and Foresight Group. 

Resada Group also invests in technologies and services that will benefit MSUFCU like Akuvo. The company offers cloud-based, API-enabled Portfolio Risk and Delinquency Management Solution and Benefis CU that provides executive benefits to the credit union and its business members to offer to their executive teams.

The first fintech to move from The Lab to Reseda Group was Spave, an autonomous giving and savings platform with the goal to promote financial wholeness through the use of microtransactions. MSUFCU started working with Spave as a traditional pilot. 

“We were going to put them in front of our members, supporting Spave like our other fintech partners,” says Maxim. “Along the way, we learnt that there were some banking services that we could offer them to support them, and we learnt that they needed investment to develop their product to its full potential.”

With MSUFCU’s and Spave’s stars aligning, MSUFCU formed the Reseda Group, to invest and support similar projects. Under the Reseda Group, MSUFCU gained 80% controlling ownership in Spave.  

Following the investment in Spave, Reseda Group formed a wholly-owned CUSO Ever Green 3C as a vehicle to sell the services & digital products MSUFCU has become particularly skilled at Diversity, Equity & Inclusion (DE&I) training and its financial wellness centre known at MSUFCU as Financial 4.0 – a financial education blog. 

As a result, Ever Green 3C is looking for credit unions that would like to take advantage of their DE&I consulting services as well as those who would like to private label the financial wellness centre as a financial education resource for their members. 

Finally, its most recent acquisition was of Foresight Group, a traditional print marketing company that was part of MSUFCU’s supply chain that now offers innovative digital products for credit unions who do not have the marketing resources to produce their own digital and print marketing pieces.

By using a service called CU Suite, they can easily add their logos and branding to ready-made marketing pieces on topics like auto loans, mortgages, credit cards and more. 

To support their CUSOs many MSUFCU employees are joining forces with a small group of employees specifically hired to the individual CUSOs, wearing “multiple hats” with roles at both the CU and one or more of the CUSOs. In addition to his role at MSUFCU leading innovation, Maxim serves as Chief Technology Officer to Reseda Group and its subsidiary CUSOs.

Training staff, fostering engagement, and nurturing innovation

For MSUFCU one of the greatest achievements of their innovation lab has been its impact on employee engagement. 

Maxim says: “We recruit teams of eight from all over the business, with managers identifying availability and whether they would be a good fit. Over 20 weeks of workshops, employees learn how to build prototypes and products, as well as learn design thinking, lean startup, and agile methodologies. The hope is that they will take some of this innovative thinking back to their departments and further cultivate an entrepreneurial mindset across the organisation.” 

So far, MSUFCU has put 40 employees through The Lab and hopes to increase the number this year, even hiring two full-time employees and an intern to help with the facilitation of the lab programs.

“Eventually, we want to give everyone a chance to come through The Lab and gain such experiences. Of those that have already done so a few have gone on to create their own miniature version of The Lab within their department. Nearly all of them share that are more engaged and feel more fulfilled in their work,” says Maxim. 

Ensuring the Lab doesn’t become an ‘innovation theatre’

Before going forward with any pilot, MSUFCU vets potential partners not only with its legal and risk teams but also its finance people. 

“This is one of the more important parts,” says Maxim. “We do some modelling and projecting as to what we should expect for an ROI before we even begin the pilot project. We then put that into a business case for the pilot itself, based on whether we are paying for it to benefit our members, whether it covers its own costs, or whether it will make a profit.”

MSUFCU and its partnerships with Boost.ai and CU NextGen 

When it comes to its partnerships, the MSUFCU looks for organisations that it can co-create with to mutual benefit. This is the kind of partnership that MSUFCU has with Boost.ai and CU NextGen.

“Boost.ai has helped us to create our internal chatbot,” explains Maxim. “At the time we weren’t looking for a chatbot provider. We already had an existing chatbot known as Fran for our members. But Boost.ai presented the idea for creating an internal knowledge-based chatbot, which is something that I don’t think we would have ever thought to do.”

When Boost.ai presented its ideas to MSUFCU, the world was at the start of the COVID-19 pandemic, as such the credit union had a lot of overwhelming remote service needs for its eService team, its vast numbers of live chat members were growing by the hundreds. “To make it easier for employees that were dealing with those volumes, Boost.ai helped us to build out a chatbot in 10 days, helping us to find a better way forward to manage conversational AI services,” says Maxim.

Out of this project, MSUFCU was also able to train some of its employees to become AI trainers thanks to Boost.ai’s training program, thus ultimately paving the way for creating positions for AI content managers. 

“Similar to a website built in 2005, you wouldn’t leave it alone for the next 17 years, we didn’t set up this chatbot three years ago to never touch it again. So working with Boost.ai really helped us to better maintain this service and to be proactive in serving our members,” says Maxim. 

Due to the success of the project, MSUFCU moved its member service chatbot over to Boost.ai’s platform, creating an effective ecosystem of chatbots that can work together.

Similar to Boost.ai, CU NextGen also provides MSUFCU with an ecosystem. More than 12 years ago, Maxim and his team created the MSUFCU’s own digital-banking products, including online banking, mobile IOS and Android. Fast forward to 2020 and MSUFCU came to a point where it realised it was time for an update. They started searching the digital banking provider landscape to see if there was a good fit or if they would ultimately have to keep building their digital channels in house.

“But we couldn’t find a partner able to give us the level of customisation we needed, at a price that would allow us to grow and be responsive to members,” explains Maxim. 

Among the things with which CU NextGen has been helping MSUFCU is staff augmentation. Like most industries it has become increasingly hard to find talent, coupled with the ‘great resignation of 2021’, MSUFCU has weathered the storm of people seeking pastures new, thanks to CU NextGen’s staff augmentation services. 

“They have really helped to make us stronger,” says Maxim. “As we continued through this process with them, we came to the conclusion that we would need to modernise our digital channels ourselves with our new partnership with CU NextGen. In return, CU NextGen presented us with the idea of creating their own digital banking platform but needed help from someone like us who had done this before.” 

Combining MSUFCU’s knowledge and CU NextGen’s technology and staffing resources, the two have announced plans to develop a new digital banking platform, to be called Nextly, which included a significant investment from Reseda Group to move the project along as quickly as it can.

“The new platform will be a competitor for those already out in the market. One of the great features of Nextly - is one that I have always wanted but never seen - the ability to use our website and online banking facilities at the same time. With other similar services, once you log in you cannot easily get back to the website and return to digital banking, but Nextly lets its users effortlessly switch between researching on our website and their digital banking services, without having to log in and out.”

MSUFCU is also looking to implement CU NextGen’s member relationship management (MRM) system, which has a particular focus on credit unions and will help to automate the digital process from Nextly further enhancing the member experience of MSUFCU’s digital channels. 

“We have a lot of synergy with CU NextGen,” says Maxim. “Working with them will bring us many new opportunities in both the digital banking space and the automation of our backend processes.”