Discover the strategies financial titans are employing to steer through the stormy seas of today's economy with our guest, Mark Meyer, the insightful leader at the helm of Filene Research Institute. As we tackle topics like the effects of high inflation and shifting consumer behaviors, Mark sheds light on the need for adaptability and data-driven decision-making. The conversation promises key insights into how credit unions are not just weathering the storm, but redefining their roles and services in response to evolving demands and regulatory pressures, all the while upholding their foundational values.
Get ready to unravel the ethical threads that weave through the tapestry of financial leadership. Our dialogue with Mark takes a turn into the principles of transparency and the bravery required to own up to missteps—a culture where failure becomes a stepping stone to success. We uncover the importance of third-party reviews in building trust and accountability, as Mark stresses the urgency for credit unions to innovate and align with the expectations of today's tech-savvy consumers. You'll learn how structured creativity can transform the financial landscape and why embracing change is crucial for thriving in an industry ripe with fintech disruption.
As we close the episode, the spotlight turns towards the crucial role of diversity and inclusion in sparking innovation within organizations. Mark and I dissect the 'muscles' needed to incubate new ideas, emphasizing the contagious confidence of leadership that emboldens teams to test, learn, and scale new concepts. We also reflect on how embracing demographic shifts positions organizations for future success and societal progression. And as we part ways, our disclaimer serves as a humble reminder that knowledge is power, and our goal is to empower, not advise, as you navigate the ever-evolving financial terrain.
Discover the strategies financial titans are employing to steer through the stormy seas of today's economy with our guest, Mark Meyer, the insightful leader at the helm of Filene Research Institute. As we tackle topics like the effects of high inflation and shifting consumer behaviors, Mark sheds light on the need for adaptability and data-driven decision-making. The conversation promises key insights into how credit unions are not just weathering the storm, but redefining their roles and services in response to evolving demands and regulatory pressures, all the while upholding their foundational values.
Get ready to unravel the ethical threads that weave through the tapestry of financial leadership. Our dialogue with Mark takes a turn into the principles of transparency and the bravery required to own up to missteps—a culture where failure becomes a stepping stone to success. We uncover the importance of third-party reviews in building trust and accountability, as Mark stresses the urgency for credit unions to innovate and align with the expectations of today's tech-savvy consumers. You'll learn how structured creativity can transform the financial landscape and why embracing change is crucial for thriving in an industry ripe with fintech disruption.
As we close the episode, the spotlight turns towards the crucial role of diversity and inclusion in sparking innovation within organizations. Mark and I dissect the 'muscles' needed to incubate new ideas, emphasizing the contagious confidence of leadership that emboldens teams to test, learn, and scale new concepts. We also reflect on how embracing demographic shifts positions organizations for future success and societal progression. And as we part ways, our disclaimer serves as a humble reminder that knowledge is power, and our goal is to empower, not advise, as you navigate the ever-evolving financial terrain.
Welcome everyone to, In your Best Interest, an ALM First podcast. A show that will explore common depository challenges, give you an insider's view of the latest market trends and share stories and insights from industry leaders. I'm your host, Mike Ensweiler. As top-level executives in financial institutions come to grips with the possibility of enduring high interest rates, while thinking through this new, post-pandemic business environment, there's a noticeable urgency to appoint leaders who can excel in this unpredictable climate. Ceos are grappling with the need to enact significant and occasionally expensive changes within their organizations, even if they are unpopular in the immediate future.
Speaker 1:This frantic search for adaptability highlights the significant changes occurring in the leadership landscape of the finance sector. To talk this through, I'm excited to be joined today by Mark Meyer, President and CEO at Filene Research Institute. Mark is a prominent figure in cooperative finance in North America, adept at translating complex research questions into actionable insights and innovative products. As CEO at Filene, he guides a talented team focused on research and innovation to showcase the potential of cooperative finance and community transformation. Mark's expertise extends internationally, with extensive publications and lectures across multiple continents, including advising the US Department of the Treasury and speaking at esteemed academic institutions like Harvard Business School. Thanks for joining us, Mark, and welcome to the show.
Speaker 2:Mike, it is the bomb diggity to be here with you today.
Speaker 1:Awesome. Well, I always appreciate spending time with you because I learn so much and we don't have a lot of time today, so let's dig right in, mark. As you well know, today's economic landscape is reminiscent of the high inflation, high interest rate era of almost four decades ago. Many of today's financial leaders find themselves navigating an unfamiliar territory. A lot of today's execs were raised in an era of abundant liquidity and easy access to capital and therefore lack firsthand experience in managing a financial institution amidst the challenges of the present conditions. I guess I say all that to lead to this question of, from your seat in the stadium, what do you believe are the primary challenges leaders face today in terms of fostering growth and stability within their organizations?
Speaker 2:Well, you know, I think, as we find ourselves in this strange era of, you know, trying to lead, when we're trying to be everywhere, you know, all at once, it's it's somewhat reminiscent of the movie that won the oscars, uh, back in 2023 and, uh, you know, we are facing a multiverse of opportunities, a multiverse of challenges, and you know when, when a leader in this era is looking forward, there's three somewhat headwinds that are challenging us. Number one is we just have, as you, identified what I call the skid mark of the fiscal policy from the pandemic of 2020. And it just has taken, you know, several years for this pig in the python to work its way through, and all of us enjoyed a 2.25% 15-year mortgage interest rate. We knew it would last forever, and that has led to interest rate risk and, ultimately, some investment decisions that were made in 21 by many credit unions, liquidity pressures as well. So just this kind of working through that skid mark is taking time. I think we're getting closer to the end of it. However, you know, item number two on top of this challenge is how consumers changed how they want to do business with financial institutions, and this has really led to, you know, I say we're getting Netflixed and we've got to redo our tech stack, and we also have to think about who we're partnering with and how we're partnering with other organizations to deliver our members' needs. The final issue is this ill-timed maybe it's well-intentioned regulatory considerations that are pushing on credit unions right now, considerations that are, you know, pushing on credit unions right now. Cecl, the notion of overdraft protection restrictions, as well as interchange income, are, all you know, attacking the business model of credit unions, simultaneous to these other two issues.
Speaker 2:So you know, when you ask the question, what's a leader to do. I think, when you're in a moment of crisis or a moment of challenge, I say follow data first. You know, following data first is a very important attribute of a leader. Number two, making sure, as you're looking at all of these opportunities air quotes, opportunities focus on your zone of control and your zone of influence, on how to make changes. And then the final piece is make sure you're standing on your organizational, organizational values as well as your personal values. You know, I think that formula sets you up for great success.
Speaker 2:Now, what's a little different today, mike, than years previous, and kind of this moment of being everywhere all at once is having adaptability and adaptive building adaptability muscle, and I think that's a little bit different in how leaders need to think about leadership in this current era. And McKinsey recently, you know, focused on what are the kind of components that leaders can exercise to build adaptability muscle, and you know one of them is focusing on your own personal well-being as a foundational skill. If you're not bringing your best self to work every day as a leader, you're not going to be making the best decisions and you're going to struggle to keep alignment with your team. The other aspect in that adaptability muscle is really making purpose your North Star and defining up front what you're not willing to negotiate on when you're being pulled in so many different directions. I think the third is this notion of really looking at the world as though it's a changing place. You know, at Filene, I call it that, we have to do Filene yoga all the time. You have to be swift, you have to be nimble, you have to be nimble, and so having that adaptability lens is so, so critical.
Speaker 2:One of the most important aspects to get through uh moments like this is making sure you've got deep and diverse connections and a wonderful network. Um, I think that is. You know no one can go it alone in this world and, uh, we're so lucky that we work in a networked system where it's collaboration and cooperation are values of the organizations we lead. The final one's a hard one for leaders because we always want to be perfect, but recognizing you have to make it a safe space to learn and one of the most critical functions of innovation in this era is testing, learning and iterating. So you know, in some, mike, you ask a very simple question. It's somewhat of a complicated answer. You know data first, the notion of zone of control and influence and sticking with your values, but also all these attributes of building that wonderful adaptability muscle.
Speaker 1:This is great. Wow. There's a lot to unpack and to dig into there. So you know, as we think about some of these things, you know, in this rapidly changing environment, what skills are becoming increasingly essential for leaders to possess. You know, certainly you talked about broadening your network and deepening those relationships, but are there other skills that you see that may be missing or that people need to maybe hone in on a little bit more?
Speaker 2:So you know we're all a work in progress as leaders in this environment. But in the last decade hierarchy's dead right. You no longer aspire to get to the fifth floor to sit next to Mike Ensweiler, right? That's not the format we're in. We are now digitized and we're networked as leaders. So how we show up as leaders, we're presented in a network of our team. When we show up on a Zoom call, there's not any hierarchy. We're all in the Zoom call together, if you have it all hands.
Speaker 2:And so recognizing the difference and the subtleties in the skills required to lead in a networked way versus a hierarchy way, you know it's very easy to. You know, think of what it was like 10 years ago to ride in the elevator up to the fifth floor to get off the office to see the C-suite and there's an execu-potty in the C-suite. All that doesn't matter anymore. You know we've seen one another with baseball caps on. We're showing up differently and recognizing that network piece to leadership no-transcript, yeah, one is empathy and really recognizing all of us are handling what's being thrown at us in a day to day world that's different, that went sideways and continues to just spiral out in a different direction than what we maybe any of us anticipated is leading with empathy and understanding. You know that goes with, goes without saying in this era, transparency is. Transparency is king. And you know everything is shared, everything that you say.
Speaker 2:This podcast is being recorded. Once it's recorded, it's out there for the universe to see and digest and and ensue. So transparency and sharing you know what's happening, not leaving people, you know, to second guess, especially when we don't have the accidental collisions as much in person or we don't have time for the small conversations that we had in years gone by that that notion of transparency and the third is somewhat related to all of this and it's one I was recently asked by an emerging leader at an organization younger in their career and they said you know, meyer, you've been at this for a couple of decades, you know what have you learned is one of the most important aspects of leadership. And I said it just, it snapped, it came out of my mouth before I could even retract it Effective communication.
Speaker 3:Do you?
Speaker 2:find are you listening? Right, it's like, are you listening, are you processing effective communication and how often it takes to get the message across. I'm sorry, mike, go ahead.
Speaker 1:No, I interrupted you. So my apology there, Mike, because I really like where you're going with that Cause I see that more and more right now is that communication piece, especially in this kind of post COVID era where you had people working from home and now you maybe have hybrids or some shops or they really don't go back at?
Speaker 1:all maybe other than you know some folks to staff the branches. How do you build culture, how do you foster that communication, especially in this digital era where it's easy to hide behind? You know text messages or Teams messages or emails, versus picking up the phone, walking into that office, having that coffee you know kind of conversation, that coffee talk. You know that's a missing element. That was those impromptu meetings were just so critical to me in establishing a good collaborative environment where we're all rowing in the same direction. Collaborative environment where we're all rowing in the same direction. So you know, as whether you're an aspiring leader or you've been leading a long time, certainly a lot of disruption and change just in that piece of the business and love to get your thoughts and takes on that.
Speaker 2:Well, I think the rules are being written. The rules are being written right now and, you know, the learning is being digested right now and Filene is researching this through two different opportunities. We have a center of excellence we launched last year on leadership strategy and governance. We have a second one on the credit union of the future. The leadership aspect of the what you've just identified, you know, sits in both. What does it take to lead the credit union of the future, build culture, all these good things? What does it take, you know, for leaders, for even boards, in this era?
Speaker 2:Yesterday we had the opportunity to gather 50 credit union executives here in Orange County, california, at Schools, first Credit Union, and they were all a local core of you know, a varying degree of executives at credit unions. It was very interesting when we talked about this and how we even work About a third completely remote, about a third completely in person, about a third completely remote, about a third completely in person, about a third hybrid-ish, right. So all the culture, what pulses through culture, for that continuum and, by the way, all of that could be working at the same credit union. Some are coming in every day, some are hybrid. So how this is. You know, the norms for this are all being written right now and I would go back to that last competency we talked about momentarily just a moment ago on making it safe to learn, testing. You know, we have found in our smaller organization of 30, some associates, more intentional conversations about where we are in our progress.
Speaker 2:To plan is important. Ideally we'd love to go quarterly. Because we're a small organization, we have to go is important. Ideally we'd love to go quarterly. Because we're a small organization, we have to go at least twice a year. Less than twice a year is not enough. We have taken the House of Ed. We had a beautiful facility in Madison, wisconsin, and had 30 of our 36 employees there. Now less than 10 live in Madison and the rest of us all have moved and scattered across the country. So the House of Ed is now in the cloud. Things that we're doing is, you know, we do in-person, all hands, not less than twice a year. We'd love to go quarterly Again, resources and it takes money to do that Finding those inflection points, attaching some of our own internal gatherings with the external market gatherings to create those moments of connection.
Speaker 2:Your travel budget's a little higher when you go remote, I find, but I think it's a rapid experiment and I don't think I think you have to be more intentional would be one thing. I think you have to be creative, you have to test. I'm watching with a lot of curiosity. My oldest adult child works in the tech industry and their firm is about a firm of 600. And they seem to have found a way to make. I'm watching my adult daughter be very engaged and very supportive and she has a culture, yet she's only met people on her team three times in three years.
Speaker 1:Wow, that's crazy. One of the items you touched on was kind of that transparency and trust and, as you mentioned, those are crucial in today's environment and in the banking sector in general. No-transcript.
Speaker 2:Well, I think you know we've identified that. I think one of the most important is transparency, and I think you know the rise of communication channels. When they identify an organization that has breached you know core ethical considerations or values, what ensues is, you know, the right thing, a light is shined upon it right away. You know the big thing that I have learned in when you run into something that has possibly and I'm a lawyer by training when you encounter an issue that involves, you know, an ethical or a conflict of interest opportunity is the whole notion of disclosure. Disclosure first, like you really, if there's a question, you disclose it and then you don't try to guide it. If you're a leader, you back away and you turn it over to a third party to review, and you know, analyze and share results and you live with those results. You know it's back to the Nixon story. Right, it was the cover up worse than the offense. And so the notion of what I've observed in the industry and in others is you know we all are going to trip and fall. It's how quickly you identify and admit, admonish yourself hey, I tripped, this is and shine a light on it. What have I learned? And then, if there is a possible breach that needs to be examined, you turn over to the third party and let them guide you through that.
Speaker 2:And a human nature is folks are like. I don't want anyone to know. I made a mistake. This goes back to that comment make it safe to learn Leaders go first. You know when we trip we come in. And make it safe to learn Leaders go first. You know when we trip. We identify, we share, we examine and you know I've had a couple of situations. I had that. I had one of my favorite.
Speaker 2:Like I am, I love boots. Right, I love boots. I did a planning session for a credit union and they gave me a pair of if you know the type of boots the Indiana Jones wore back in the the all the you know Raiders of the Lost Ark it was Alden boots. And I got myself a pair of Alden boots as a gift to thank you. Get that right away. I knew in my gut those boots were of significant value and I needed to disclose. And yes, I had to either pay for the boots or send them back. And what do you think I did? I paid for the boots or send them back. And what do you think I did? I paid for the boots. I bought those boots.
Speaker 3:So the other examples are if you're a.
Speaker 2:CEO and you've made a mistake. How quickly, once you've made that mistake, you share that with your board of directors and you turn it over to the third party whether it's your chief risk officer, your CFO, whoever to guide through that and lead the board through that and let the board review and if they have to bring even more independent, that that's. You know those are the right things, those are the check and balances we have, especially in financial services. I want to pause and pivot from the ethical piece of the conversation and pivot to trust and the institutional trust and the things that I see happening right now for credit unions that you know I am concerned about and you know in the media there had been some stories about credit union practices whether it's been lending, whether it's been ODP that are being floated into mainstream media and consumer reports. And you know, first, seek to understand what's the data behind that, like what's really happening, and it's hard to do in a frenzied medium but seek to understand what's really happening here underneath. You know these stories and the other piece to this, so you have some behavior that has to be examined. Let's understand what's really happening in these situations.
Speaker 2:And credit unions have always been for the consumer and always for the hard working person. And yet we have to really examine some of our products and programs and services to say are they there, even if it means our business model has become interdependent upon it? And I think there's a lot of soul searching that needs to be done right now. And I heard a credit union CEO say yesterday I'm always felt the credit union was the best deal for my members, but now, with the evolution of innovation and fintechs and my my very low passbook savings account rate versus what they can get online, how do I tell them the credit union is the best deal in town for them? And then simultaneously we have some of our colleagues who are offering, because of the pressures of liquidity, they're offering new money only high rate certificates. And that's just one of those reflections. When you say I understand the business need.
Speaker 2:And when we talk about trust and how trust has been the pillar of the credit union space, some of our well-intended but unintentional behavior is starting to pick away at that. The final element is trust today for the emerging consumer, for the emerging member, for Gen Z, for Gen Y, might have different characteristics that are valued in trust than what the previous generation had, so it might be not the lowest rate anymore. It might be speed, access and convenience. And how quickly can you get me my money? What payment platform are you integrated with? So where you see credit unions losing ground on trust in terms of operations, I think is our overall as an industry, is we are, you know, a little later, little late to market on some of our tech solutions for our members, and I know that that's because they cost money. Yeah, absolutely.
Speaker 1:But the consumer doesn't care, right right. And so that's a good theme, and I know we're getting close to the end here, so we probably have time for another question or two, but let's talk a little bit. You mentioned innovation a couple of times. In a lot of industries, that's a key driver of success. So, as you think about the credit union of the future, what strategies do you believe effective leaders can employ to foster a culture of innovation within their teams while also managing that risk effectively?
Speaker 2:So I think you know the competency. If you look at the evolution of how we talk about innovation in the industry and I even look at our own journey over the last two decades at Filene and what we've been doing with innovation so often individuals think that it's creativity. So let's create an innovation room, put whiteboards and fun chairs to sit in and, you know, pull people together and you know creativity is a. It's actually a fun part of innovation and it's a hard part of innovation if not. If done, if done without some sort of parameters and discipline. And so really studying, what does it take to innovate as a whole, from ideation at the beginning and understanding and the research for member needs that's a lot harder than just creativity and locking yourself in a room and bouncing ideas and throwing stuff up against the wall. Understanding your member, understanding, pain points, understanding life events all that research really precipitates. You know the creativity. What idea, what frameworks are you using for ideation to make sure you're inclusive in your ideation and creativity? And that's you know where. I think we have a much broader knowledge than we did even a decade plus ago of how critical diversity is for breakthrough ideas in innovation people from different backgrounds, perspectives, insights and you create an innovative environment that makes it you know I'm not talking about the anonymous inbox. You know either that you genuinely endure and bring people that are invited from all aspects of your of your membership to help innovate.
Speaker 2:The third critical piece, I think, is where I would spend the most time. It's where Filene has doubled down on the last three years, and you know we all go to the gym and you know I can think of two things. I hate more than well. Three things I probably hate more than anything, and they all have to do with you know, when you work out, I hate working out with my core. I hate more than well. Three things I probably hate more than anything, and they all have to do with you know, when you work out, I hate working out with my core. I hate a plank, I hate a wall squat and I hate a burpee right, and those all involve your core. So let's talk about how you have to, how the core muscles of innovation really are around incubation, and I think that's where we need to double down.
Speaker 2:I think that final point would be this notion on innovation when you're building a culture is really, what practices do you have in place in your innovation methodology to test for the viability, the desirability, the feasibility of an innovation and, where those overlap, to create scalability, where they are actually going to contribute to a return on investment, to be a true innovation, to have a breakthrough in the credit union business model. And what needs to happen to create that environment is back to making it safe, to learn, back to this notion of iterating, crawl, walk, run. So you test the engineers know this If you've worked in in innovation with building a car what do you do in your incubation process? You test, you learn and you iterate. You test, you learn and you iterate and then you scale and take it to production.
Speaker 2:And I think that muscle, that core muscle in the innovation process of incubation to find that desirability, that feasibility, that viability, that equal scalability, is what's missing in most organizations. And you know, if I were to spend my time, energy, effort, april Clovis at Michigan State University gets it. She's got the lab at Michigan State. That's where Filene came up with the concept to do the lab at Filene. So it's this notion of creating these safe ecosystems and environments to test back to the other comment and get that diverse network going. Man, yeah.
Speaker 1:Yeah, and I'm sure you've seen oh, I'm not, I'm sure. What have you seen, especially since the pandemic, in terms of more diversity, inclusion in thought, in people, in contribution to making their organizations better.
Speaker 2:Well, I would think number one. I would go back to the earlier comment on the leaders who recognized we're moving through a networked form of leadership, Just that recognition. There's not hierarchy anymore, but we're networked across our organizations. You know, I think that right there, you know, has taken hold in many organizations. Where that's taken hold, you're starting to see naturally more diversity and inclusion. You know, I think you're seeing some credit unions attack this with focus, this opportunity with focus, and I think others are, you know, continue to resist.
Speaker 2:What I say is you can never fight a demographic and when you see what's happening around us, in our society, in our country, you can't fight demographic shift and change. And so this is what is happening and it's uncomfortable for some and others who get it are going to, you know, be well ahead of the game and, frankly, we'll probably win because the demographic shift in our country is real and you can't, you cannot put that in a bottle. It's not going back. And so the sooner people deal with the fact that we are where we are and where we're going, you know I think they'll be able to calibrate. The most important aspect of all this. You know what I really think of. What you're asking is just how we as a society, how we as organizations, how we in our communities need to find more space for inclusion and less division. It's a very rough time in our communities. In our country, there's a lot of divisiveness, and this is common as you go through the type of transformation and change that we're seeing in our society.
Speaker 1:Yeah Well, and again being the optimist, my hope that these challenges we're facing ultimately lead us to a better place. You know, I can sit here and talk with you all day. This is so much fun and I really do appreciate you, Mark, so, but we are butting up against the clock, so you know. What closing thoughts do you have?
Speaker 2:for us. You know, I think confidence is contagious. That's what Mike Shank, the chief economist from Credit America's credit unions. The chief economist from America's credit unions. He says that every now and then, when we get down and remembering. You know you don't want to be blowing sunshine, rainbows, unicorns when we are in a time of difficulty, but confidence is contagious and you know, I go back to those principles I started with about how I got through the financial crisis. Baseline is that zone of control, zone of influence, your own personal values, but you layer on what we've learned with that taking care of yourself, building your diverse, you know connections, making you know, making failure and a safe place to learn. These are, I think, the things that we should be focused on as we navigate this. You know everything everywhere all at once kind of world we live in now.
Speaker 1:This is great. Thank you so much for joining us today, Mark.
Speaker 2:Yep Enjoyed it. Mike, Thank you.
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