MSU Federal Credit Union - May 2022

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This is the headline of MSUFCU: A year of fintech the featureand collaboration innovation DIGITAL REPORT 2021

DIGITAL REPORT 2022

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IN ASSOCIATION WITH:

A YEAR OF FINTECH INNOVATION AND COLLABORATION

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A year on since we spoke with MSU Federal Credit Union, Benjamin Maxim, VP of Digital Strategy & Innovation, discusses the success of its Innovation Lab

ouching 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 the lab's success over the past year and is keen to share 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 it 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

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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: “When we were a small and nimble team, there was a lot of organic innovation, but with growth, this has become harder.”

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MSU Federal Credit Union - A year of fintech innovation and collaboration

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.

“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 6

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with ambitious plans in mind, COVID19 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 their 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 doubledown 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

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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 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.”

BENJAMIN MAXIM

VICE PRESIDENT OF DIGITAL STRATEGY AND INNOVATION, MSUFCU

TITLE: VICE PRESIDENT OF DIGITAL STRATEGY AND INNOVATION INDUSTRY: FINANCIAL SERVICES LOCATION: DETROIT, USA

EXECUTIVE BIO

“ 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 [...] Innovation is truly the way forward”

BENJAMIN MAXIM

Ben Maxim joined MSU Federal Credit Union in 2007 and currently serves as VP of Digital Strategy and Innovation for MSUFCU and as CTO for MSUFCU’s wholly-owned CUSO Reseda Group and its subsidiaries Spave and Ever Green 3C. He is responsible for assessing emerging business trends and technologies, providing strategic direction for existing and future digital channels, and leading their innovation centre The Lab at MSUFCU. He is also responsible for the technology and product pillars of Reseda Group and its subsidiaries.

Maxim began work initially as a Web Developer and in 2014, he became E-Commerce Manager before moving into roles including AVP of Software Development. He earned a bachelor’s degree from Michigan State University and a professional certificate in Innovation & Entrepreneurship from Stanford University.

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CU NextGen extends its relationship with MSUFCU As credit unions vie to adopt new technology, CU Nextgen’s Nextly platform becomes a must-have CU NextGen, the Credit Union Service Organisation (CUSO) dedicated to bringing next-generation technology to credit unions, announced at the start of 2022 that it would be introducing its Nextly platform to the world’s largest university-based credit union, Michigan State University Federal Credit Union (MSUFCU). “We’ve been working with them and their wholly-owned CUSO, Reseda Group for a number of years,” says Nicole Williams, VP of Technology at CS, “but this is taking our relationship to a new level.”

Briefly, Nextly is a highly customisable standalone solution that integrates seamlessly with all of CU NextGen’s solutions. Architected on CU NextGen’s no-code platform, it offers credit unions and their members a robust feature set that’s easy to use, reduces downtime, and guides the user so intuitively that they don’t even have to think about it.

“We’ve been working with CU NextGen for several years and knew that together we could build a digital banking solution that would meet our goals for our members and employees and indeed change the way credit unions think about digital banking,” says Ben

Maxim, VP of Digital Strategy and Innovation at MSUFCU and CTO at Reseda Group.

This phase of the partnership started in the summer of 2021 when the companies joined forces to develop a brand new digital banking platform for MSUFCU, “It’s a very mutually beneficial relationship and strategic partnership,” says Williams. “With their digital banking software paired with our cutting edge technology and development resources we’re producing something truly amazing!”

MSUFCU is helping support the Nextly project through a $4.5 million investment from Reseda Group. Nextly will provide a platform that provides access and control for credit unions while creating a superior experience for members. In providing the seamless, intuitive and comprehensive experience that clients expect these days, MSUFCU in partnership with CU NextGen is out in the lead, and is sure to be followed by many more credit unions in adopting Nextly.

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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 10

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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

“ When we were a small and nimble team, we used to do a lot of organic innovation, but with our growth, it has become harder to continue to innovate organically” BENJAMIN MAXIM

VICE PRESIDENT OF DIGITAL STRATEGY AND INNOVATION, MSUFCU

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. msufcu.org

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How Fran the virtual agent is helping MSUFCU boost member satisfaction Using conversational AI to solve the challenge of scaling credit union member service Michigan State University Federal Credit Union (MSUFCU) is the largest university-based credit union in the United States. MSUFCU’s digital member experience was primarily centered around its live chat channel- an 85-person team handling over 10,000 member requests per month. Their challenge was in scaling up support 24/7 as its members were increasingly choosing to interact with it via chat.

The live chat channel saw a 130% increase in volume in spring 2020 and was not sustainable without significantly ramping up resources which would be costly and timeconsuming.

Introducing Fran, the trusted digital advisor In the fall of 2021, MSUFCU relaunched their customer-facing virtual agent - named Fran - on the boost.ai platform. Fran helps answer questions the credit union’s members may have about its range of products and services, providing a friendly and intuitive frontend to MSUFCU’s website. If members are looking for a routing number or a loan application form, Fran guides them directly, instead of needing to click and search through the website.

Initially, MSUFCU was concerned if its members would trust Fran or see the bot as an impediment to them being able to talk

FRAN FACTS:

1,100+ credit union

topics covered Resolution rate:

96%

20% conversation

growth in Q1 2022

The great thing about a chatbot is that people ask it whatever they think it should tell them.

The boost.ai platform makes prioritizing these interactions easy and intuitive. It takes the guesswork out of member service, which is truly invaluable.

Benjamin Maxim Vice President of Digital Strategy and Innovation

with a live agent. Thanks to the boost.ai platform’s conversation analysis tools, the credit union was able to prioritize Fran’s interactions to help frustrated members get the right human help they needed when necessary.

MSUFCU discovered that the more accurate Fran was, the more their members responded positively and trusted her to help. Powered by conversational AI, the boost.ai platform makes it easy to optimize and update virtual agent content in real-time. Common member queries are automatically flagged so that they can be reviewed by human agents and trained into Fran without delay.

The no-code nature of the boost. ai platform means that MSUFCU did not need to hire developers to build and manage Fran.

Instead, they used members of the existing customer service team, leveraging their expertise and experience to ensure that the virtual agent remained an accurate representation of the credit union’s well-loved brand.

A trusted channel between members and credit union MSUFCU’s ability to have total ownership over the building and maintenance of Fran has meant that the accuracy at scale necessary to satisfy its members has been eminently achievable.

To date, Fran can answer questions on over 1,100 topics specific to the credit union with a 96% resolution rate. Furthermore, MSUFCU has seen a 20% growth in the virtual agent’s conversations in Q1 2022 compared to Q4 2021. Members are trusting and turning to Fran as a key channel of communication.

MSUFCU will soon use the boost.ai platform to extend services beyond informational, introducing selfservice functions that interface with member accounts such as transferring funds, checking balances and more. This will extend the credit union’s 24/7 service and further assist with call and chat deflection into the future.

To learn more about MSUFCU’s story or how you can use conversational AI to improve member satisfaction visit boost.ai

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“ One of the main catalysts for creating our innovation lab as ‘The Lab at MSUFCU’ was to create a brand, separate from, but complementary to our official brand” BENJAMIN MAXIM

VICE PRESIDENT OF DIGITAL STRATEGY AND INNOVATION, MSUFCU

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 programmes.

“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 they are more engaged and feel more fulfilled in their work,” says Maxim. msufcu.org

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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.”

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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

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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 programme, thus ultimately paving #SameDreamsNewLook – MSUFCU Reveals New Logo 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 BENJAMIN MAXIM effective ecosystem of chatbots that can VICE PRESIDENT OF DIGITAL STRATEGY AND INNOVATION, MSUFCU work together.

“ With the Innovation Lab, we are also able to get new products to market quicker”

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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

BUILDING BETTER FOR MEMBERS We’re revolutionizing the way credit unions engage with their members and the way members engage with their money.

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Reseda Group is a wholly-owned CUSO of

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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 - one that I have always wanted but never seen - is 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.”

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