Tech Strategy—Become a ‘Fast Follower’

Credit Union Magazine Online
January 22, 2010 | COMMENTS

When David Pavone determines whether to invest in a particular technology, he generally takes the “fast follower” approach.

“I've always kept an eye on emerging technology, and we've been early adopters with things like voice over Internet protocol and virtualization,” says Pavone, vice president of information technology (IT) at $136 million asset Edwards ( Calif. ) Federal Credit Union. “We've learned that when you're on the bleeding edge it can get pretty time-consuming and expensive.

“We've evolved to become fast followers,” he continues. “We let a technology mature a little bit before jumping in, and we tend to spend less money and sleep a little better. I read a lot, try to stay current, talk to my peers in credit unions and other organizations, and talk to members about what they like and dislike about doing business with us. We'll try to use that to guide the technology decisions we make.”

This approach has helped the Southern California-based credit union weather the recession. “We got ready for it early and tried to wring costs out of some nonmission-critical things, using open source software and other tools,” Pavone says. “We learned new ways of doing things. When we get to the other side of the recession, we'll be better off for having learned these new skills and techniques.”

Scott Townsend, chief information officer for $1 billion asset Michigan Schools and Government Credit Union in Clinton Township , agrees it's not necessarily best to be the first to embrace a particular technology.

“We've never gotten burned by not being the first to use a particular technology,” he says. “It has to make sense for the organization. There are technologies we've seen for the member side that are intriguing. But then you think only a small percentage of members may want it and it makes more sense to spend on things the overall membership would want.

“The economic downturn has been significant in Michigan ,” Townsend continues. “It has, however, provided additional incentive for our credit union to look at improving our overall efficiencies. That said, the time is ideal for IT to work closely with operations to bring solutions forward to help solve these newfound business issues, such as the increase in loan delinquency.”

Of course, even the best-laid technology plans don't always pay off. “There will be a dud every once in a while,” Pavone notes. “We spent a lot of time converting offsite ATMs to cellular links from frame relay (wired leased lines), but the service has been spotty and unreliable.

“My mistake was not checking with early adopters to see how it had worked for them,” he says. “I took our vendor at their word. It was supposed to be more cost-effective and reliable, and was neither. I haven't given up, though; we're still trying to make it work.”

Townsend says using wireless technology at the drive-through didn't pan out. “Instead of sending paper receipts through the tube system, we tried to do it wirelessly. But the results from testing didn't go as well as we'd hoped. There would have been a lot of efficiencies realized through not having to scan receipts. But it didn't work the way we wanted it to, so we moved away from it.”

Having solid relationships with vendors helps credit unions get the most from new and current technologies.

“We spend the time to work with vendors, meet with them, and understand what's going on with their organizations,” Townsend says. “We also get to know their other customers and keep an eye on what they're doing. If we see another vendor doing something interesting, we ask ours what they're planning to do.”

Pavone likes to deal with local firms when possible. “This helps get to a more personal relationship where we understand each other's businesses better.

“I've had local retailers come through for us right away when we've needed something,” he continues, “but that's a lot less likely when you're dealing with a vendor who's at an 800 number in the clouds somewhere.”

Reprinted with Permission from Credit Union Magazine online.