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  • Writer's pictureFred Kelly

How Credit Unions Can Build Great Products

How often do you talk about product development in your credit union? Are you still selling the same old products as everyone else or is your portfolio constantly evolving to compete in the age of FinTech?

As we discussed in Why Your Credit Union is Losing Members (and How to Turn it Around), when it comes to building your membership, there are three main areas in your credit union that we should focus on:

  1. Marketing - what channels and messages are you conveying to start a conversation with potential members? How to improve your credit union’s marketing was covered in 3 Reasons Credit Union Marketing Isn't Working.

  2. Sales - are the conversations leading to people using your product? How to improve your credit union’s sales function was covered in Is Your Sales Process Losing You Members?

  3. Product - do people love the product? What we are really talking about here is the member experience. It’s great experiences that drive retention and attract more members through word of mouth marketing. (Product is one of the 4 P's of business - see This is What Separates Success and Failure in Every Credit Union)

Today we are looking at the process for developing products that your members will love without having to move your credit union to Silicon Valley!

Like most things in business (and life!), it is a process. Most credit unions don’t have an efficient product development process that matches members’ needs with your resources. This is the responsibility of the product manager, one of the most important roles in your credit union.

Indeed, the future of your credit union depends on its ability to innovate and evolve. Sadly, too many credit unions are heading towards a slow death spiral as they rely on an outdated portfolio of products which will appeal to less and less people over time.

The future of your credit union depends on its ability to innovate and evolve

When innovation and product improvements turn into big projects requiring a business case, roadmaps and a convoluted sign-off process before you even test for demand you are reducing the odds of success.

Discovering What to Build

“Make Something People Want” is the motto of Y Combinator, the world’s most successful early stage startup accelerator that has supported the launch of companies like airbnb, reddit, and Dropbox.

How do I build something people want?

Perhaps a better way of expressing this is “Find out what people want and then build it.” You see most companies do this the wrong way around. They build something (create a new product, add a new feature, create a new subsidiary) before they know whether people will want it.

Principles of Product Design

So how do you avoid getting bogged down in cumbersome projects that fail to deliver what was expected? Marty Cagan, author of How to Create Tech Products Customers Love, has three principles gleaned from years designing and building products for Hewlett-Packard, Netscape Communications, and eBay.

Principle 1

Risks are tackled up front before deciding to build anything. Most businesses still do this the wrong away around. As a credit union you want to derisk innovation.

These risks include

  • Value risk - whether customers will buy it

  • Usability risk - whether users can figure out how to use it-

  • Feasibility risk - whether we can build what we need with the time, skills, and technology we have access to

  • Business viability risk - whether this solution also works for the various aspects of our business—sales, marketing, finance, legal, etc..

Principle 2

Products are defined and designed collaboratively, rather than sequentially.

The traditionaly model was one in which a product manager defines requirements, a designer designs a solution that delivers on those requirements, and then engineering implements those requirements, with each person living with the constraints and decisions of the ones that preceded.

In effective teams, product, design, and engineering work side by side, in a give‐and‐take way, to come up with technology‐powered solutions that our customers love and that work for our business.

Principle 3

Finally, it's all about solving problems, not implementing features. Conventional product roadmaps are all about output. Strong teams know it's not only about implementing a solution. They must ensure that solution solves the underlying problem. It's about business results.

“ Projects are output and product is all about outcome” Marty Cagan

Who Are You Building For?

The first step is understanding who you are developing the product for. Your membership is not a homogeneous mass. The better you understand the different segments (and sub-segments) within your membership, the clearer you will become on what elements in your products you wish to improve.

In fact, when you design your product improvements you want to be thinking of a single person, a person that represents your target audience. Even though you will be selling to thousands (if you get this process right!), you sell one person at a time.

Marketers often use the term buyer persona a research-based profile that depicts a target customer/member. Other terms include avatar or ideal customer.

Many times when people talk about buyer personas, they either make it complicated, or they only teach you to create a story about your persona. While this is useful information (and better than not having one), you need to define your persona in a way that helps you create products your members actually value.

Conventional wisdom says you can get to know your target audience by studying demographics such as age, ethnicity, and education. A few go beyond that by taking psychographics criteria into consideration, such as attitudes, values, and desires into account. Unlike demographic data, which identifies broad categories of potential customers, psychographic data tells you about these people’s attitudes and beliefs.

As Adele Revella, CEO of the Buyer Persona Institute and author of Buyer Personas, points out, neither solution by itself helps you understand why someone decides to buy. The only way to build a complete buyer persona is to combine relevant demographic and psychographic information with an understanding of what makes your target customers buy.

The Customer Profile

That probably sounds a bit abstract so let’s get some help from a framework you may have come across at some point. The starting point for Alexander Osterwalder’s Business Model Canvas, is the Value Proposition Canvas, specifically the Customer Profile.

The purpose of the Customer Profile is to help us understand our customers so that we can better serve their needs. The Customer Profile has three sections to it:

  • Customer Jobs describe what customers are trying to get done in their work and in their lives, as expressed in their own words.

  • Gains describe the outcomes customers want to achieve or the concrete benefits they are seeking.

  • Pains describe bad outcomes, risks, and obstacles related to customer jobs.

Their accompanying book, Value Proposition Design: How to Create Products and Services Customers Want is a useful guide.

The danger here is that this is a purely theoretical exercise. For this to be useful, we need real insights and those only come from your members.

How Well Do You Know Your Members?

If you go to a great café down the street you will find that the owners of the business know their customers inside out. They know them by name, they know just how strong they like their coffee, which table they like to sit at, whether they like to chat or prefer to be left alone.

I am often surprised how little established businesses beyond a certain size know their customers. Management can become isolated from the front line. Obviously it becomes more challenging as the business becomes larger, but great CEOs are obsessed with the customer experience.

Does your CEO take customer calls; spend time as a teller, send cards to customers on special occasions or highlight examples of staff going beyond to ensure members have a great experience?


Imagine if everyone in your credit union listened to one member complaint every day. What a wonderful way to start the day, empathizing with those you want to serve. Complaints are the fuel of product development. Solving complaints is what creates better products. Check your complaints log, speak to your tellers, call center staff (I’m not a fan of the call center model, but that's for another day!), collections team - anybody who has regular contact with members.

Customer complaints are the best thing that can happen to you. There is always room for improvement. It’s when you have no complaints then you should worry. That means they are telling other people instead of you.

Review Sites

Another fantastic resource is third party review sites. Here are some examples, two negative and two positive, from review sites about credit unions:

  • “I dealt with them for 10 years they treated me like I was just some number to them no matter what I tried to get from them they would never even put in any effort to try to help me or keep me as a member.”

  • “Well, it has been 4 months from then and still no approval in sight.... was suppose to close 4 weeks ago. No communication throughout the whole process.....”

  • “They are all very friendly and helpful. The branch I go to always looks well decorated and neat.”

  • “They were friendly and more informative. Every question I asked they gave me an answer. After submitting my application, they informed me of every step they were taking. Again everything was done really quick and professionally.”

What do you notice from this small selection?


To create and maintain a great member experience you need to listen to your members. As Stephen Hampshire, author of Your Customer Survey: Using Research To Build A Distinctive Customer Experience, explains we should try to get into the habit of asking very open questions, i.e. questions which invite the customer to tell a story or explain their feelings in detail. You want to be spending a lot more time listening than speaking. Work hard to avoid interrupting or correcting a customer. Even if they’re wrong you need to understand their perceptions, and why they think that. The chances are other customers think the same, and only by understanding the perception can you do something to change it.


Net Promoter Score (NPS) is a customer loyalty and satisfaction measurement taken from asking customers how likely they are to recommend your product or service to others on a scale of 0-10. The metric was developed by Fred Reichheld, Bain & Company. It was introduced by Reichheld in his 2003 Harvard Business Review article, "The One Number You Need to Grow". According to Fortune Magazine, at least two-thirds of the Fortune 1000 use the Net Promoter Score, including most or all of the financial service companies, airlines, telecom companies, retailers, and others.

Now that you have a better understanding of your members it’s time to identify the problems you want to solve.

Problem Discovery

Problems are the engine of innovation. Finding the best problems requires that you come up with as many problems as possible. If you’ve read this far, you know where to find them!

I call this your problem inventory. You want everybody in your organization to come up with all the problems they can and then put them in a central repository where everyone can see them and have a chance to build upon them.

Unfortunately, people tend to skip through problem discovery because they are keen to get on with finding solutions. That’s a mistake! This is the most important step in the process. We want to make sure we that actually understand the problem and are focusing on the right problems.

“It’s not that I’m so smart, it’s just that I stay with problems longer.” Albert Einstein

Einstein believed the quality of the solution you generate is in direct proportion to your ability to identify the problem you hope to solve. The key to innovation is to fall in love with the problem, not the solution.


Well done ! You’ve just done the hardest part! Figuring out which problem to work on. Now it’s time to come up with solutions but, before we do, we want to keep two things in mind at all times:

  1. Almost all ideas fail. So the odds are stacked against you!

  2. Nobody knows which ideas will work before they try them. I am often asked by start ups that I mentor whether I think their idea will work. I can give my opinion but unless I am the target customer, please don’t listen to me!

Does this sound a bit like gambling? Well it is sort of. You wouldn’t put all your money on 32. You’d spread it across the board. Put a dollar on everything. That means we need to generate 100s, hopefully 1000s of ideas. This is one of the most common reasons companies fail to innovate. They focus on one or two ideas, bet the house on them being successful and flame out.

Quantity = Quality

But how many times have you heard quality not quantity? Well, this is an unusual case of quantity = quality. Here’s why. When you actively think, the brain burns 15x more than normal. Your brain always tries to conserve as much energy as possible.

Research shows that when thinking about a problem, the brain tends to give most typical solutions based on experience faster than new and creative solutions.

The brain tends to give most typical solutions based on experience faster than new and creative solutions

In other words, your brain will avoid thinking really hard until it runs out of quick solutions based on your experience of what worked in the past. The only way to make the brain think hard and produce world-class ideas is to make it generate a lot of ideas. And by the way, this is why diversity is so helpful. A diverse group means diverse experiences, which equals diverse ideas.

Ready To Build?

This is the bit in the process where companies get it badly wrong. You’ve got a great idea! Quick check the domain name is free, get out your check book, let’s get this to market before the competition.

The best way to kill innovation in your credit union is to commit a lot of resource to something that doesn’t work. That plays into the hands of the naysayers. They’ll say I told you this wouldn't work. Innovation just isn't for credit unions. That would be a disaster scenario for you because innovation is the key to your future.

The best way to kill innovation in your credit union is to commit a lot of resource to something that doesn’t work.

So we need a way to test ideas quickly and cheaply so that we can make an informed decision about whether to commit resources to progressing it further.

Most of us are familiar with protoypes, an early test version of a product, maybe even MVP, but you may not have heard of pretotypes.

Pretotyping, a term coined by Google's first engineering director, Alberto Savoia, is a very basic expression of your idea that focuses on answering the most critical question: Is this the right thing to create?

That differs from the purpose of a prototype which answers the question, “Can we build this?”—a secondary question. If your members don’t value your idea, there is little point in proving you can build it.

This is important because, as we know, most ideas fail. From your inventory of ideas, you want to de-risk your innovation process by only focusing on those ideas that can provide positive evidence of demand from your target audience.

“Most people fall in love with their idea and assume it will be successful, so they just start building it. They presume to know what people will want. They assume that if they build it right, people will want it. In most cases, these presumptions and assumptions turn out to be both wrong and costly.” Alberto Savoia

Let’s take a brief look at some techniques:

  • Paper - A practice that existed well before the Internet, paper prototyping works best in the early stages of design, mainly for testing product ideas. It’s as straightforward as it sounds — simple screens are drawn on paper and configured to mimic a digital interaction.

  • Storyboards - Telling stories is an excellent way of guiding people through a user experience. Storyboarding, a technique derived from the film industry, is something you can use for early prototyping to allow yourself to visualize the user’s journey or how users would experience a problem or product.

  • Role-Playing or experiential prototyping - is a method that allows your design team to explore scenarios within the system you are targeting physically. This one of my favorite methods and I used it a lot to understand how the bank’s processes impacted our customers. It’s also an incredibly powerful training tool for improving the customer experience.

Product development is an iterative process: We have an idea, we create a pretotype, we test it, we get feedback, we amend our idea, we test it, we get feedback, we amend and so on. With each round we make a slightly better version until we get enough evidence that we should take, what is now a much smaller leap.


The future of viability of your credit union depends on its ability to offer an amazing member experience. That is the ultimate goal of product development. Products are just experiences. If you design products from the member’s perspective you are half way there.

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