Five Myths about Going Digital

Before an organization can break its digital gridlock, it is necessary to dispel the myths that prevent it from moving forward. In the past 20 years I have visited hundreds of credit unions and spoken to hundreds of executives and board members. Based on this experience, I have identified the top five myths that prevent that bank executives, board members, and staff from believing in digital. The first step in moving forward with digital transformation is to realize the truth.

Myth 1: We Are Too Small for Digital

This is my favorite myth, and it's the easiest one to dispel. In terms of digital transformation, being small is actually a huge advantage. If you don't believe me, consider this for a moment: Why did the Titanic sink? Most people believe it is because the ship hit an iceberg.

Nope, I say. The Titanic's crew saw the iceberg and may have had just enough time to correct their course.¹ I argue that the real reason the Titanic sank is because it couldn't turn in time. It's hard to turn a large ship, and large organizations face the same difficulties. The more people, branches, and assets an organization has, the longer it takes to retrain, revamp, and retool the people, places, and things required to support digital transformation. Smaller institutions have the advantage because they are more nimble. In fact, the biggest challenge for the smaller institution is not turning too quickly and throwing people overboard.

Myth 3: Our Board Won't Get on Board

I often do board sessions with CEOs to help everyone understand what is going on in the tech space. I am always excited to meet members of the board and executive leadership. In the case of credit unions, the board is made up of volunteers that usually represent each of the employee segments that credit unions serve.

What I have discovered from these sessions is that board members are passionate about their institutions and, when they are presented with facts and figures regarding the digital shift, they easily get on board. Of course, sometimes I see gridlock at the board level or meet obstructionist board members. In most cases, these people aren't opposed to adopting new technology; they just want to see data to support the move. This is something that many institutions cannot provide, in large part because they haven't done their research.

John's Story

I would like to introduce myself before we get in to the deep, dark places that digital transformation will inevitably take us to. I grew up as a military brat, and a lazy one at that. I spent most of my life traveling around the world with my father, usually coming up with Tom Sawyer–like ways to get out of work. When I was nine years old, my dad retired from the army and we moved to Stuttgart, Germany. This is where I did most of my growing up. My dad was some sort of engineer who worked with computers on a military base. I attended American schools on base and, when I was 11, I built an ASCII emulator for the school science fair. It was a breadboard with dip switches that represented binary positions, and when you flipped them in the right order you could make a letter appear on the digital screen. I got an ASCII Char 70 (otherwise known as a capital F) for a grade on that project. The teacher said my dad helped me too much. I guess she didn't believe I could solder wires or understand binary. I was especially discouraged because my dad was away for work much of the time, so he wasn't able to help me very much. I drowned my sorrows by spending hours on his VIC-20 typing in programs from a magazine called Compute.

Yes, there was a time when, if you wanted to play a game, you had to spend hours typing code in line by line and save your work to a cassette tape. As we all know, this wouldn't work today, because computer games are millions and millions of lines of code. My dad eventually upgraded our home computer to a Commodore-64 and floppy disks, and at that point I started programming my own games. Since I was in Germany during the 1980s, I didn't get out much because it wasn't always safe to wander around by yourself, so I had tons of time to play with computers and my dad's electronics. I would dismantle Atari games, Sony personal stereos (apparently, Sony disapproves of calling them Walkmen), and basically anything electronic I could I get my hands on. I didn't know it, but I was preparing for my future.

Fast forward to 1996: I was a year married to my amazing wife and had my second child on the way. I was trying to make a living as a teacher or quasi teacher in the Hillsborough County School System in Florida. Some forward-thinking schools had decided to bring in technology specialists to teach the kids during the school day, and I was lucky enough to have gotten one of these jobs. It was the best job I ever had. I loved hanging out with the kids because they didn't live by any preconceived notions about what could or couldn't be done. This fit right in with my own philosophy that nothing is impossible. As a matter of fact, this was a family philosophy. If you ever said to my dad, “That's impossible,” he would quickly respond, “Nothing's impossible.” To these kids, anything was possible because their spirit hadn't been broken by life yet, and I would feed off their energy daily. As much as I loved this job, I couldn't stay because I needed to make more money to support our second child. I decided to leverage my natural computer skills and I applied for a job at the information technology department at Suncoast Schools Federal Credit Union (as it was known then). I was a member of Suncoast long before I became an employee, thanks to my job in the school system, and as a result, I knew a little bit about the credit union.

I successfully landed the job of technology monkey boy. (Honestly, I don't even remember my title, but I was happy to have the job.) I was hired by Kevin Johnson, who at the time was one of two people working in the IT department. Today he is the CEO of the credit union and, I am proud to say, still a good friend. You might find us crawling under desks to re-pin RS232 cables, in the ceiling running cables, or hauling a giant printer across the campus in the Florida sun. I discovered quickly that PCs, or personal computers, weren't commonplace in the institution. A few select departments might have one personal computer, but most people worked on dumb terminals connected to a large Unisys A series mainframe. It was a great job, and I was thankful for the work. I enjoyed the people I worked with and I started to get to know what each of the different department's functions were.

One day, I was working in an area near a lady in the ATM department who I would often see early in the morning working at her desk. I was there early to rewire some desks before the regular employees came in so we wouldn't interrupt their work. She was working on one of the few PCs in the department and I watched her print out a long report on the dot matrix printer, sat it next to her desk and began retyping the report into the computer. One thing you should understand is that I am super lazy, and super lazy people always look for shortcuts. Upon seeing her retyping data from a report that so clearly had come from the very PC she was typing on, my super-lazy senses kicked in and I couldn't help but ask her the following question. “Excuse me, you know that stuff was already in the PC, right?” to which she responded, “Yes, but it is in a different program, so each day I print this report from this program, and then I type it back into this program.” As you might imagine, I was confused. Long ago I had mastered the art of cutting and pasting, even in Windows 3.1, which was the operating system we were working on. I asked her if I could look at the program. An hour later, I had written a quick .bat file to bring the data automatically into one program from the other. The lady was amazed. She told me that I had just recovered two hours of her day. I learned two important lessons that day. First, I learned that non-super-lazy people, when they recover time, don't use it to play video games or wander around looking for free office snacks. Instead, they will take that two hours and do something that they had been wishing they had the time to do to benefit the company. I also learned that when you help people, they feed you and appreciate you—two things I really like.

Word soon spread of my good deed and others approached me with similar problems. After that, I spent time creating complicated .bat files to import files from Payroll into ACH. I found myself writing macros in Lotus and doing merges in WordPerfect. Slowly but surely, I helped a lot of people who had very monotonous jobs recover their time and move on to more important tasks. I also gained a lot of weight thanks to all the cookies and treats each department would feed me for helping them.

I was promoted, and I don't even remember what the new position was. I did get a raise and I got to work on our networks and our ATMs. One day I was out at the ATM during my lunch break and I noticed that the line for the ATM was really long. So long, in fact, the Credit Union had put in side-by-side ATMs to accommodate the large number of people using the machines. When I reached the front of the line and it was my turn to use the ATM, I noticed how long it took to perform a transaction, which was over three minutes. I thought to myself, “What if this process could go faster?” At the time, I was working with Motorola to replace our old dial network with a frame relay network, and I had a fantastic mentor named Tom Bennett who enjoyed my crazy ideas. I said to him, I think we could speed up these transactions considerably by changing some parameters in the system. His response was, “Sure, let's do it.”

Tom loved innovation and was always supportive. He was famous for drawing on walls, and at this point we were in the elevator, he quickly whipped out his pencil and drew a diagram on the elevator wall (I had gotten use to this behavior at this point), and we agreed the design should work. We made the changes and we tested it. What used to take three minutes now took less than a minute. I had no idea what the impact of this would be; I had no idea that for each foreign transaction that came through the ATM network, the credit union made money. I only knew that there were long lines and short lunch breaks. I also didn't think about the fact that if I sped up the transactions, the ATMs could do more transactions a day, which translated into more income from the ATM network. The ATM network almost tripled its income the first month after our little adjustment. Once again, my super laziness and impatience paid off.

After this, I was given the task to convert the entire ATM network from one vendor to another. It was one of my first big projects, and it was vastly complex and difficult. That much I knew at the start. What I didn't realize was how dangerous this project could be to my career. I was working directly with the ATM department. As usual, I worked my way through the project, asking questions and learning along the way.

We finally finished the project and I was at home having dinner with my family when what I call “the voice from above” announced that I needed to check in. The “voice from above” was my Nextel cell phone. Those of you old enough to remember them know that they worked a lot like old walkie-talkies and had a distinctive beep before the voice would start speaking. To this day, I still twitch if I hear the Nextel beep. The voice said that something was wrong with the debit card network and that people's debit payments were being declined at alarming levels.

Now in the late 1990s, if you were declined when trying to process a payment at the grocery store, you would be very embarrassed. It would feel like the entire store stopped and everyone was staring at you with their hand over their mouth in surprise and pity. At this point, more than 50 percent of the incoming transactions were being declined, and the worst part was that these people had plenty of money in their accounts. It was not good, not good at all. This was my first brush with adversity. I wasn't yet 30 and I had just broken the payment systems for tens of thousands of people. However, by the time I got in to the office (no VPNs back then), everything would mysteriously have fixed itself. Then around 5 p.m. the next day, it would happen again. I toiled over the problem for a few days, until finally I was asked to come and explain the problem personally to the CEO, Tom Dorety, a legend in the credit union industry. I had met Tom many times before then but I had never had to deal with him with regard to an issue of this magnitude. Before I went to the CEO's office, Tom Bennett told me, “Don't go in there until you have some idea of a solution,” so I started working more frantically to figure this out.

I had discovered that at the end of the day, around 5 p.m., Visa would send what is called a “force post” of transactions down the line to be processed. These transactions would come very quickly and overwhelm our communication lines. I asked if they could run these transactions later than 5 p.m. (a peak transaction time) and I was told that wasn't possible. I was at wit's end, sitting on a curb in the parking lot late at night, watching an amazing lightning storm, and it gave me an idea. When we designed the new network, we had created a backup line in case we lost connectivity on the main line. This was common in Florida, where massive thunderstorms frequently caused outages. So I called my friend at Visa and we fired up the backup line and split the transactions (odds and evens) between the two lines. It solved the problem. I could go to the CEO and tell him I had screwed up by not anticipating the force posts causing line issues, but at least I had fixed it. I learned two things that day. First, I learned that when you play with fire every day, you are going to be burned more often than folks who rarely play with fire. I also learned that being calm in the face of an emergency is far better than freaking out. After that, many more fiery projects would come my way.

In the years to come, we converted the whole organization from one computer system to another, bought personal computers for the entire staff, implemented the organization's first email system, got the credit union on the internet, set up firewalls, and established one of the very first home banking systems to run on the internet. I remember replacing our dial-up home banking system with an internet-based system. A few management higher-ups told me the internet was a fad and the project wasn't worthwhile. Things have certainly changed.

All in all, the job was an amazing opportunity. My co-workers took the time to teach me how things worked, and for this effort I would reward them by finding ways to use my knowledge and computer skills to make things easier for them whenever I could. I had the freedom and trust to explore every corner of a well-respected financial institution and learn all aspects of financial systems.

After that, I left to become a vice president at another credit union across town. I was very excited because this credit union wanted to pursue even my craziest ideas. That was where I started working in a process that would eventually become known as agile development. My team and I were tasked with creating a loan interface that linked to the American Automobile Association (AAA). It would allow our credit union to provide auto loans to AAA customers. We locked ourselves in a room and, fueled by snack food and Mountain Dew, spent almost three months working on the lending project. We had two projectors running, and if team members needed help or wanted to get some code reviewed, they would plug in their laptop and display their screen on the wall for everyone to see. Three or four times a day, a representative of the loan group would show up and we would put what we had on the wall for review so we could get instant feedback while we were working. It was electric when we first turned on the system and the loans started rolling in from AAA. The early results were overwhelmingly good. When I joined GTEFCU, it was a $750 million credit union. In two short years we almost doubled our asset size to $1.4 billion. I was very proud and thought I was in heaven, but I still had an itch.

I accepted a job offer to be chief technology officer at a new credit union service organization (CUSO), WRG. At GTEFCU, my team and I had spent a fair amount of time writing our own home banking product and, in the process, I began to think that some of the systems we were purchasing from vendors could be custom-built in-house cheaper and better. Usually, these proposals were rejected; however, Rob Guilford, who hired me at WRG, had been interested in this same approach for quite a long time. In Rob, I found someone who believed as I did, that in-house products were going to be the future. At WRG we built a team that would go on to build and implement a digital suite of products that now serves over 200 credit unions across the United States. Along the way, we caught the mobile wave and were very early to the Apple App Store with our own in-house product, and we were the first credit union to have an application on the Android platform.

Today, I spend my time with my team at Best Innovation Group, dreaming up new solutions and implementing new products using the latest in technology. My team has been with me for over 30 years, and together we have experienced all the ups and downs of creating systems, developing products, and supporting financial institutions. We have taken this experience and shared what we know with our partners, and we have helped many credit unions navigate the murky waters of the new digital world. We innovate and create, we teach and share, and most importantly, we care about what we do and who we do it for.

If you aren't too scared, read on and find more stories like the ones above and more solutions, and hopefully start to form your ideas and solutions to your challenges. Seize the opportunities that are in front of your organization. Today's world is more connected, more engaged, and has more opportunities for a financial institution to differentiate itself than ever before. We live in a peanut butter and chocolate world, and the best part about that is, you don't have to make the peanut butter or chocolate, you just need the vision to put them together.