One credit union in Michigan is demonstrating the feats that small financial institutions are capable of when it comes to exploration, experimentation and innovation.
The lab at $7.6 billion Michigan State University Financial Credit Union, or MSU FCU, has helped the credit union change its culture by prioritizing and systemizing innovation through experimentation and partnerships. Bank Director’s Kiah Lau Haslett speaks in this episode of Reinventing Banking to the man who oversees the unit, Chief Innovation Officer Ben Maxim.
“The way I define … innovation is, it’s about making things better today than they were yesterday. And that can be big changes, that can be small changes, but it’s about that incremental improvement,” he says.
Before the lab started four years ago, executives had promoted the idea that innovation was every employee’s job and that everyone should innovate within their own business lines. But those mantras ran up against day-to-day reality and long to-do lists. Having a lab that runs external pilots overseen by cross-functional groups, as well as facilitates immersive internal workshops, overcomes that problem.
“We now have people who can focus on and champion and have the conversation and explore the ideas,” he says, detailing the lab’s work. “All those people who are on my team, the first bullet of their job description is to promote an innovative mindset and entrepreneurial mindset across the organization.”
The lab today works with early-stage tech companies, many of which don’t have the legacy security documentation and existing contracts that more established vendors do. Maxim describes how the group approaches its third-party risk management in its pilot programs, and the many benefits to working with early-stage fintechs — as long as the risks can be managed. But ultimately, the lessons the credit union gains from these experiments are the most important for the lab — Maxim says “it’s the biggest output” of any pilot.
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