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Change Has Changed – Your Guide to Adapting

Originally published on CUInsight.com

2016 feels like a long time ago, right? Towards the end of that year, I wrote about how, unlike the way our brains work, change doesn’t happen linearly. Sidestepping any math, this means people are unprepared for the realities of today, never mind tomorrow.

Sadly, few leaders (elected or otherwise) understand this concept. But you, my dear reader and honorary geek, can!

Linear Change

Measuring Tape on Wood
One number after the last. No surprise jumps.

We think in a line. A → B → C and so on. The Industrial Revolution led to mechanical advances which moved forward greatly during (and because of) the World Wars, and this spawned the modern technological age. Transistors launched a million possibilities, and we live in that digital era.

The Small Screen Got Bigger (And Crisper)

Depending on your generation, you grew up with a B&W or color TV available in some fashion. Then came VCRs (or DVD players), along with cable/satellite boxes, and, by then, you might go for a snazzy HD TV. You’re living in the future! A future where you can finally make out the hockey puck!

A few more years passed and 3D was all the rage (and then it wasn’t), only to be replaced by 4K and HDR. For most of us, that’s where we are today (end of 2023). A lot of change, but not difficult to grasp. Screens got incrementally better, with some jumps larger than others.

Banking Goes Digital

During this same timeframe, banking has remained pretty similar. People can have a checking (share draft) and savings (share) account, along with special accounts like CDs, plus lending products. However, the act of interacting with these services couldn’t be more different.

First, there was online banking, which revolutionized accessing account details. In the early days, it was mainly a ledger that supported transfers. The web portal was akin to walking into a branch, only, paper and people-less, and open 24/7 (phone banking is a thing, but it’s a pain).

Mobile Check Deposit
The innovation that put change on an exponential path.

Then, we got what I consider the biggest banking innovation of the modern era: Mobile check deposit. This fundamentally changed how you interact with your banking institution, and eliminated the need for many to ever visit a branch. It also laid the “mindshare” groundwork for future P2P services.

Which brings us into the smartphone era with services like Zelle (bank-owned), Venmo (private company), Apple Cash, Cash App, etc. At this point, if you can’t do something on your phone (in the app or other simple path), and there’s no regulatory prohibition, why not?

These are massive changes, but they’re still pretty much linear. One thing led to the next. Many of us pushed credit unions for years to truly take on digital transformation strategies (that particular ship has sailed). Most are still woefully behind.

It’s time for a new approach. One that aligns with how the world is changing today.

Exponential (or Logarithmic) Change

Exponential Growth Dial

Spoiler: Change has always been exponential, it’s just that the rate was slow enough that we perceived it as linear.

Transistors? While their number (used to) double every 18-24 months (Moore’s Law), the scales in which they existed were shrinking dramatically. There’s a bit of marketing-speak involved, but modern chips have components less than 10nm across (a silicon atom is 0.2nm)!

Climate change, biodiversity, sea level rise, and other environmental issues are also seeing an increased rate of change. In other words, extreme weather is getting both more extreme and more common. Rising seas of last century are now coming up faster. Species loss is increasing.

The challenge today is the rate of change…of change.

It’s Not Just Tech

When we think of change, it’s easy to gravitate towards technology. Its forward march highlights the concept in tangible ways. Your really old phone was hanging on a wall. Your current one is a glass slab in your pocket that vastly outperforms the Apollo moon landers…and Mission Control.

It’s true, tech has revolutionized society and how we interact. At this point, you’re probably expecting me to dive into “AI” and chatbots. I could, but there’s so much already written, and frankly, I think what I already wrote about them explains their issues (and potential) just fine.

Change in Environment and Society

While technology lets us put our finger on specific change, it’s the more abstract stuff that creates real challenges.

The entire concept of “culture wars”, outlawing discussion of systemic racial inequities, and taking away women’s rights…each of these are symptoms of parts of society encountering exponential change and not knowing how to cope. Fear leads to poor choices (and groups taking advantage of that).

So…Banking?

Your credit union isn’t immune to these changes. And it’s not just implementing more streamlined LOS platforms or mobile apps. A credit union is made of its members, and those are just people…people who are facing a rapidly (and more rapidly) changing world.

Credit unions have a future in embracing their past. Sure, you still gotta improve your tech stack (look forward rather than just at today’s expectations). But it’s about growing into the credit union you could be. Change will continue to occur; evolve your systems and processes, retain your culture.

Turns out, I went into this back in 2018. And dove deep into the concept in 2020 with a focus on credit union’s role in society. Thus, I inadvertently proved my point that lots may evolve but the core principles should remain true. Didn’t Edward Filene once say “keep purpose constant”?

The Times They Are A Changin’

Time and Change
It’s easy to feel spun around as…the times are a changin’.

Change will continue at an increasing rate, and don’t feel bad if it seems overwhelming. It is. But stay focused on the things that matter: Fair treatment of all peoples (in rights and respect) and our shared planet, plus the prosperity of society (across a wide range of definitions).

Sidenote: That sentence is pulled from our company’s original mission statement in 2008. We strive to “keep purpose constant”.

Oh, and AI platforms will play a role in all of this (the 2023 word of the year is “hallucinate”, for when these systems confidently make stuff up). That role will definitely be to further mix up the status quo. I’m confident you will also find uses to improve member financial wellness!

And here you are, 1000 words in, better understanding and prepared for the changing change of the world (or just with your head spinning)! It’s pervasive across all areas, so keep an eye out for it, as well as for people who are using the uncertainty this change brings to advance their own agendas.

Embrace openness and curiosity over fear. Credit unions were built to make the world a better place, one member at a time. Let’s do all we can to ensure change always leans towards kindness and prosperity for all.

Solving the “Junk Fees” Issue with ChatGPT

What’s a “junk fee”? Simply put, it’s any charge beyond what you’ve agreed or expected to pay for a product or service. For a credit card, it can be a late fee. For debit, an overdraft or NSF fee. For a hotel, a “resort fee” slapped on the bill when you check out.

I didn’t come up with the phrase. That goes to the CFPB, or Senator Elizabeth Warren. Or a nameless intern with a knack for catchy terms.

Either way, it’s in the national discussion. The CFPB has an entire section dedicated to Junk Fees across a range of industries. They have things to say about overdraft fees, no doubt. I mean, we do agree on that.

President Biden Tweet About Junk Fees
POTUS attention

NAFCU took a different position, claiming that the current arrangement is fine and to let credit unions handle it. They’ll come up with the best strategy for their members and institution, as their press release explains.

So that’s one big topic. And the CFPB isn’t stopping at overdraft.

In early February 2023, they issued new guidance for credit card late fee structures. Naturally, the credit union industry had harsh words in response.

On a totally different topic, a certain conversational AI stole the spotlight, reaching 100 million users faster than any platform ever. ChatGPT single-handedly broke education, thought-leadership, and programming…or so the headlines would have you believe.

While it’s an amazing system, it’s also not going to steal everyone’s job, yet. However, it does open up an opportunity to have conversations which let us see different perspectives and expand our own critical thinking.

So as if I were assembling my first lightsaber, I elegantly smooshed (the Jedi term) these topics together.

Below is an unedited discussion on the “junk fees” topic between myself and ChatGPT, taking the role of a credit union executive and lobbyist who isn’t quite so keen on simply eliminating them.

Geek notes: You may notice it totally missed my point about CDFI (maybe I shouldn’t have written it out), but I do believe this is a direction worth pursuing. Reading through, I realize I should have asked for examples. Oh well, next time.

I was also surprised how it eventually started getting “persuaded” to my position, agreeing that junk fees should go, but not on how. I wonder…is this how a person may think, too?

Finally, I asked it to summarize it up in a way a geek would love. Here’s the gem we got:

“Together we can boldly go where no credit union has gone before, providing affordable and accessible financial services.”

ChatGPT

Image credits: DALL-E 2 AI image generator

Eliminating Junk Fees: A Human/AI Discussion

AI Chatting with Geek - DALL-E
No way I’m the “tall” one in this situation. Oh, am I the AI?

Joe

The concept of “junk fees” is in financial news regularly now. With the CFPB leading the charge against a range of punitive fee structures, it’s a matter of time before new rules go in place.

Even the President is in support of eliminating junk fees, as he posts about it often. As a member of the credit union community, I agree with this stance. The poorest members shouldn’t be the ones most impacted by the highest fees on a range of banking services.

Income can still be generated through value, rather than off those getting stuck with late payments and other charges.

Knowing my stance, take the position as a lifelong credit union executive and lobbyist who is against these policies.

They have a range of good arguments why these ideas are not beneficial for small credit unions, their members, or the industry as a whole (I don’t know what they are). With you roleplaying as that executive, let us engage in a reasoned discussion on the topic.

You go first and I will respond.

ChatGPT

As a credit union executive and lobbyist, I strongly believe that the concept of junk fees and the push to eliminate them is misguided and harmful to the credit union industry.

Small credit unions, in particular, rely on these fees as a source of revenue. Without them, we will have to resort to other measures to generate income, such as increasing interest rates, decreasing services, and even closing down branches. This will have a negative impact on our members, who will have fewer options and face higher costs.

Moreover, these junk fees are not inherently bad. They serve as a deterrent for late payments and other harmful financial practices. Without these fees, we risk encouraging irresponsible behavior that will harm both the credit union and its members.

Additionally, the proposed regulations are too broad and will harm the entire credit union industry. They will stifle innovation and growth, limit our ability to adapt to changing market conditions, and increase compliance costs.

In conclusion, the push to eliminate junk fees is misguided and harmful to the credit union industry and its members. We must resist this push and fight for a regulatory framework that allows us to continue serving our members effectively and efficiently.

Joe

I appreciate your position on the issue. On the point of small credit unions needing this fee revenue, I agree that we must find ways to help them remain viable in an ever more challenging financial world. And making sure they can continue to serve their members, often people with few or no other traditional banking options, is essential.

However, why are we immediately saying no to something which can help people, rather than using it as an opportunity to seek out new forms of revenue, enhancing how the credit union model works for their members and community?

This can be a springboard for innovation, not a new “write to your representative and say no” issue. I also agree that some fees make sense to discourage irresponsible financial behavior.

However, a number of large banks and even other credit unions have taken a no-fee approach, with negligible change in member practices.

Instead of using a stick, let’s devise a carrot to incentivize and empower healthier financial practices.

Then, we’re educating as well as assisting.

Whenever regulations are proposed, a standard refrain is that they are too broad and will stifle growth. To the contrary, such rules would only put limits on what isn’t allowed, not telling anyone you cannot innovate.

In fact, this should be taken as a golden ticket to put our thinking caps on and innovate our way out of the challenges faced. We can watch as new rules are implemented and confidently tell members and non-members, “credit unions don’t believe in such junk fees, and we work every day to help build our members and communities.

Financial wellness is at the core of our being, so while we may not always agree on the regulatory path, we will always be at the front of innovation for finding ways to provide banking opportunities to every American.

ChatGPT

I understand your perspective and I agree that seeking out new forms of revenue and enhancing the credit union model is important. However, the reality is that change doesn’t happen overnight, and the sudden elimination of junk fees could be devastating for some credit unions.

We need to be proactive in finding new sources of income, but it’s not something that can be done overnight without causing harm.

I also agree that we should focus on financial wellness and education for our members, and I commend the idea of incentivizing healthy financial practices. However, this needs to be done in a way that is sustainable for the credit union and its members, without relying on junk fees.

With regards to regulations, I do believe that too many regulations can stifle growth, especially for small credit unions that don’t have the resources to comply with them. The key is to find a balance between protecting consumers and allowing credit unions to serve their members effectively.

Ultimately, I believe that credit unions should strive to provide affordable and accessible financial services to their members. Junk fees may not be the ideal solution, but they are a reality for many credit unions, and eliminating them without a comprehensive plan for sustainability could have negative consequences.

We need to work together to find a better way to serve our members and communities while remaining financially viable.

Joe

Change does not happen overnight, which means we can find a compromise on the rule making as well. How would you feel about rules that take effect over a period of time, giving credit unions, especially smaller ones, opportunity to find those new sources of income?

We can also take a look at the Community Development Financial Institution program to see how it can play a role in assisting the transition for more highly affected credit unions.

In the meantime, members can benefit from reduced costs. This can also be supported by education campaigns for members to help them best understand how to avoid or reduce fees incurred.

At the same time, making fee structures clear can reduce expenses in collection and placement of them in the credit union. Financial wellness is a valuable part of the efforts, as we discussed and agreed upon.

However, you cannot educate everyone out of challenging financial situations.

Thus, we should look to larger social issues and ensure that credit unions have a leading role in helping address the impacts of socioeconomic pressures on affected populations.

Yes, we must find the balance for regulations to be effective in their goal and also not negatively impact credit unions. I believe we can do this while making sure credit unions are shining examples of affordable and accessible financial services.

Junk fees don’t have to be part of that future, even if it takes some time to get there.

ChatGPT

I absolutely agree with you on the importance of finding a compromise on the rule making, especially one that takes effect over time.

This would give credit unions, especially the smaller ones, an opportunity to adjust and find new sources of income. The Community Development Financial Institution program is definitely worth exploring as well.

In addition, the education campaigns are essential to help members better understand the fee structures and how to avoid or reduce fees incurred. Making fee structures clear can also reduce expenses in collection and placement of them in the credit union.

I also agree that credit unions should have a leading role in addressing the impacts of socioeconomic pressures on affected populations. Providing financial wellness and education to our members is important, but we must also recognize that many are facing larger social issues that impact their financial stability.

Overall, I believe that with cooperation and collaboration, we can find a balance between regulations that are effective in their goal and do not negatively impact credit unions.

Our goal should be to continue providing affordable and accessible financial services to all members, without relying on junk fees. We can work together to build a better future for credit unions and their members.

Joe

It appears we have more to agree about than disagree! I hope we can work together to deliver on the mission of “people helping people”, building financial wellness and empowerment for millions. While still ensuring credit unions can keep the lights on.

Thank you for engaging in this discussion.

ChatGPT

I completely agree. It’s always great to have a productive and respectful discussion, especially on an issue as important as this. I believe that by working together, we can deliver on the mission of “people helping people” and build a better future for credit unions and their members.

Thank you for taking the time to discuss this issue with me. Let’s keep this dialogue going and continue to work towards a solution that benefits everyone.

A Little Intelligence On Artificial Intelligence

A few months back, I shared my first audio post.  It was incredibly well received.  In that I enjoyed it and other people (probably) listened to it.  With such a successful start, how could I go wrong returning to the medium?

I read a lot of industry publications.  Probably too many.  But that means a win for you, my reader, since you glean the best of that time spent!  If trending articles don’t mention Millennials or how to maximize your social media presence, they’re discussing the brave new world of AI, Artificial Intelligence.  Even on my blog, the 2nd most popular post is about AI.  Here’s the degree of impact it stands to make for the industry: Everything you research or decide with a person will be done, faster, more reliably, with a computer system.  So, a big deal.

We’re not talking T-1000s in your branches (though they would be formidable security guards).  Nor does it have anything to do with the AI advances you hear Elon Musk warning us against.  For financial institutions, AI is simply a software system that can dive into a ton of data (that you already have) and make accurate risk and other determinations.  It’s nothing new for your credit union, only doing the same thing better and faster.  While serving your members anywhere, on their terms.

Of course, since this is an audio post, stop reading and just push play!

If, after listening, you have more questions about AI (which you should), feel free to leave them in the comments below or contact me directly.  I can provide a number of references to companies doing all of these things today within the financial world.  Are they a fit for your institution?  That’s for you to decide.  But I will say one thing with certainty: AI technologies will become the de-facto determination platforms for most company decisions in the near future.

PS – AI isn’t just for financial institutions.  It’s going beyond and helping serve the unbanked around the world.  Here’s an example of a company seeking to provide credit for the developing world.  Their system uses 10,000 data points on each person, collected by their phone app only (texts, contacts, and much more) to determine if they are credit worthy in 10 minutes or less.  No credit bureau, no credit risk agent, nothing.  Can your credit union do that?  Because if not, there’s an AI tech which might be a fit (Disclosure: I’ve interacted with one of their team members).

Image credit: Giphy (Terminator 2, but you, an honorable geek, already knew that!)

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