September 17, 2020

Embracing a New Customer Engagement Paradigm for the Next Normal with Greg Mitchell

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Embracing a New Customer Engagement Paradigm for the Next Normal with Greg Mitchell

How do you get buy-in for a digital transformation project? In this episode of Thoughtline, we discuss how to unlock the power of digital across your financial organization to imagine the branch of the future.

Full Transcript 

Boris Grunschpun: [00:00:00] Yeah, good afternoon, everybody. Thank you again for joining us on our weekly podcast series, sponsored by LiveVox today. We’re lucky enough to have Greg Mitchell, the CEO of First Technology Credit Union on the line with us. Greg, how are you today? 

Greg Mitchell: [00:00:21] I’m great. And yourself Boris? 

Boris Grunschpun: [00:00:22] I’m doing excellent. Thank you. Thank you very much for joining us. Greg, uh, before we get started, uh, if you wouldn’t mind taking a moment introducing yourself. Well, obviously you’ve been with First Technology Credit Union for a number of years, but if you wouldn’t mind giving a little bit of a background of how you came to be in financial services and a little bit about first technology, that would be great.

Greg Mitchell: [00:00:45] Yeah, sure. Thank you, Boris. Yeah, I’m somewhat of a reluctant banker. You know, I came into, uh, the community banking space after a number of years as a federal regulator, a few years as an investment banker. And then I chose to join a great company [00:01:00] down in Los Angeles that was building some pretty exciting things, a California national, it goes back to the early, early nineties.

[00:01:07] So I’ve had the pleasure of, uh, of growing a few companies and repositioning them and, uh, delighted to be here at First Tech over the last, uh, eight years, we’ve grown the company from about four and a half billion dollars in assets to just over $14.5 billion in assets and done a lot of that in an environment that’s full of turmoil, but also opportunity much of which comes out in the digital space.

[00:01:31] Just one of the reasons I’m happy to discuss a digital transformation with you and your viewers. And talk about what it takes to be at least marginally successful. 

Boris Grunschpun: [00:01:42] Yeah. Absolutely, well, it’s a, it’s a, it’s a great topic. Digital transformation. I think it’s sort of on the tip of everyone’s what he’s telling them these days. Everybody’s trying to pull off some more successful than others, but very frankly speaking, Greg, why is it so challenging? Why does somebody, the organizations [00:02:00] I’ll call it succeed versus others? Are less successful in, in, uh, in making this a success for their organization? 

Greg Mitchell: [00:02:06] Yeah, I think the problem is, uh, is one of courage. And, uh, and perception. I think a lot of, uh, boards and leaders, you have to think that this is all about technology. I need to buy a solution and put that solution in place. Give the burden to my it guys. And perhaps some of my change management guys, and suddenly I’m going to be digitally enabled, and have a culture that supports digital.

[00:02:35] The reality is for this to succeed. It needs very significant buy-in from the CEO of the organization, have a high degree of leadership and engagement and unless CEOs and C level team members are willing to commit to the change and the transformation, which means upsetting some people, uh, breaking old processes, you know, killing sacred cows.

[00:02:56] It’s not going to be successful. It requires a fair [00:03:00] amount of hard work, a fair amount of dedication, a fair amount of commitment. So. Anyone is looking to buy these technology solutions, thinking it’s going to be easy. I’m thinking that you can leave it to others. Yeah, they’d be mistaken. And that I think has contributed to a to, a number of broken, uh, broken promises and missed expectations.

Boris Grunschpun:[00:03:19] Got it. So, you know, as you say that, where do you feel like you, we have the biggest gap from just the standpoint? Is it the project managers that are sort of not getting the buy in? Is it that, you know, the CEOs or the executive leadership is too reliant on, uh, on providers where do you see the biggest breakdown?Is it like a process thing? Is it a people thing? 

Greg Mitchell: [00:03:44] I don’t think it’s, I don’t, I don’t think it’s about the Project Managers or technology or process. It’s really about embracing a whole new paradigm and changing fundamentally the way you do business, uh, you know, causing people to embrace whole new processes, uh, causing people to engage with their customers or their members much differently than the past, recognizing that some individuals in the organization won’t have the skills that are needed to do that. So finding the courage to sort of help those folks, uh, uh, do something else or, or, or bridge into this new reality. If you sort of try to hang on to the past while moving into this digital future you’re going to be impaired. It’s not a, like a, sort of a prisoner carrying around a big, big ball and chain in the old days of, uh, of, uh, uh, prison movies. You know, the legacy systems, legacy mentalities are a real deterrent to digital transformation. 

Boris Grunschpun: [00:04:46] Got it. Got it. And so, you mentioned that like in terms of helping people come along and I think that’s a pretty important component because I think we’re of course used to sort of the traditional I’ll call it the banking model that’s heavily reliant on physical location, physical proximity, um, maybe heavily reliant on that sort of face- to-face interaction, which is now being, I’ll call it somewhat skewed from, from a digital perspective. How do you help people that were there to begin with sort of come along? How did you, uh, how do you, how do you essentially, if you will bridge that gap for the people that do want to come along?

Greg Mitchell: [00:05:26] Yeah, I think helping people understand it first you sort of connect up close and personal with how they run in their own life. What they prefer to do is that they engage with other businesses. You know, how many of them choose to buy goods and services on Amazon? How many of them choose a digital experience for their music, a Spotify or Pandora or something else?

[00:05:46] How many of them choose to shop for goods and services in a digital environment versus going to the store? So people begin to realize personally, That their world has changed and they are part of that change. And that I think [00:06:00] they aspire as humans to remain relevant and engaged. And you speak to the fact that in order for the organization to remain relevant, we need to evolve and for them to evolve and continue to be relevant in the workforce here at first tech or anyone else, there’s really a need for them to embrace this activity.

[00:06:19] And I think when you start to connect the dots between “Hey, how do I engage in this world as a consumer, but what do I need to do as an individual to transform myself so that I can be, uh, a vital contributor to that new generation?” And I think they also recognize that, you know, the cost structure for banking and for other services is much different than it was.

[00:06:43] And those organizations that are going to grow and prosper can no longer rely on, you know, fat margins and. High fee income. Yeah. There’s a fair amount of disruption and those things are continuing to be attacked. So if they want to maintain relevancy and want to see first tech [00:07:00] continue to thrive or their institution thrive.

[00:07:02] Yeah. They need to get in the game. 

[00:07:04] Boris Grunschpun: [00:07:04] And 

[00:07:04] Greg Mitchell: [00:07:04] quite frankly, most people really get that. I think the job of the CEO and the, and the change agents within the organization is to really have thoughtful conversations, not just say, we’re going to do this. But explained to team members why and how it benefits them, how it benefits their members, how it benefits their families.

[00:07:23] And when you have that level of engagement conversation, you tend to find a level of success. 

[00:07:30] Boris Grunschpun: [00:07:30] Yeah. I mean, it’s a good point. It’s a good point. I think, I think that’s really, really important. And I think one of the things that you mentioned that’s really important to stay competitive in this, in this landscape that has changed over the last number of years.

[00:07:43] My question for you is how do you handle naysayers, right? The naysayers that may be coming out and saying, well, Greg, you know, we’re not a big. It’s a huge financial institution. We’re not Amazon, we’re not Google. How are we ever going to compete in this space? How do you address folks that are sort 

[00:07:59] Greg Mitchell: [00:07:59] of [00:08:00] questioning the relevancy of 

[00:08:02] Boris Grunschpun: [00:08:02] digital transformation specifically for their financial institution or if you’re challenging them on their core beliefs that they’ve been.

[00:08:10] You know, sort of led to believe over the course of the last, let’s say 

[00:08:13] Greg Mitchell: [00:08:13] 20 years. Well, I think in the case of First Tech it has been pretty easy because we have the privilege of representing the employees of Microsoft, of Amazon, Google, and Intel and HP, and sort of forward-leaning technology companies. And our members help us to say, Hey, you, you need, you need to evolve in this space.

[00:08:32] So they’re having those conversations with our team members. So if you think about it as advice or team members are getting this awareness from leadership that they need to change, they’re seeing it in their personal life and they’re hearing it from their customers as well. And since they want to please their customers, you know, they say, Hey, we ought to do it and we need to do it.

[00:08:51] And I think the other part is you begin to take some small steps of transformation and allow the organization to celebrate those achievements so that [00:09:00] they believe they really can do it. Um, and sort of move away from the, uh, what’s embedded in many organizations is that this is just another flavor of the day.

[00:09:11] It’ll come, it’ll pass. We’ll continue to do what we’ve done. So we don’t need to pay a lot of attention to it. You, you need to, you need to break that perception. 

Boris Grunschpun: [00:09:20] Yeah, it’s interesting. You know, this journey, as you have said that it’s both a sort of people thing, it’s a process thing. It’s got a township component to it for a lot of people.This is for a lot of organizations. This isn’t just a flavor. This is sort, of like a journey. 

Boris Grunschpun: [00:09:38] And as you can imagine in the beginning, it has its own peaks and valleys. And as you start to make these investments, uh, at times the returns aren’t necessarily there day one, Alright, you should give to either executive CEOs that they make, how they made better position, sort of this change, maybe even to the [00:10:00] board around the fact that, Hey, we’re going to invest. We’re not going to, we’re not going to get to see an immediate return, but there is sort of this much, much bigger return at the end of the day. How do they bridge and how do they have that conversation? 

Greg Mitchell: [00:10:11] Yeah, I think from a, from a strategic perspective, they just have an honest conversation, uh, much like the conversation that I would have with employees about the need to remain relevant and, uh, ask people how they engage with their finances so that the directors upfront get to see the future because they’re living in the future personally.

[00:10:34] And then from a financial perspective, talking about what they think it will take. To move the organization from an old school to new school. And from a financial perspective, you can use an internal rate of return analysis to say, Hey, it’s costing us $23, uh, to complete a transaction with a consumer coming into the branch.

[00:10:55] And we think that if we get this digital thing, right, that same transaction will cost us about 97 [00:11:00] cents. So as we, as we move to a place where margins are narrowing. Uh, where consumer demand is, uh, more significant than it’s ever been. You know, how do we do that? Because we know we can’t sustain $23 or $27 or whatever the metric is for, uh, a pure sort of brick and mortar, uh, interaction.

Boris Grunschpun: [00:11:24] Yeah, that’s interesting. Well, it’s interesting because probably what’s also happened over the course of the last few months as the country has been going through this, uh, academic. Clearly that has probably propelled more and more people to go to and utilize digital channels. What impact or what 

Greg Mitchell: [00:11:41] have you seen, maybe that’s surprised you, or maybe what 

Boris Grunschpun: [00:11:44] has, uh, sort of caused you to double 

Greg Mitchell: [00:11:47] down on your vision 

Boris Grunschpun: [00:11:48] of First Technology Credit Union 

Greg Mitchell: [00:11:50] specifically?

[00:11:52] Yeah, it has been really good for the organization. It served for us as it has for many as a significant [00:12:00] accelerator. Uh, of the digital transformation, you know, we’re blessed to have a pretty diverse membership base and about 650,000 people, uh, that live throughout the world. And while the average age is 45.

[00:12:11] Now we have a number of people who are in their twenties and a number of people who were in their fifties, sixties, and seventies, who were accustomed prior to COVID to sort of migrating into a branch, having a cup of coffee and a cookie speaking with the teller, getting a check deposited. Uh, and then, and then leaving the branch, the population.

[00:12:33] Yeah. Didn’t really believe that they could successfully interact with their financial institution or with their money in a digital arena over the last four months. They’ve been doing that quite successfully. And we’ve seen here about a 60% reduction in. The branch transaction, although many of our branches are still open and it’s a very significant lift in our, in our digital, uh, in our digital footprint.

[00:12:59] We know [00:13:00] that because humans tend to be and longterm patterns and behaviors are typically changed in 60 to 90, 90 day periods because of the length of this, a pandemic. Uh, many of the behaviors that have been learned and adopted in the cycle are going to persist. So we’re anticipating on a go forward basis, you know, materially lower numbers of, uh, branch visits.

[00:13:24] And that helps us take it to the, even the next level of digital transformation where we’re doing, uh, you know, much of our work, uh, digitally and causing our, our branch locations to really be solution centers, to help people who have complex problems. Yeah, and that allows some really cool things to happen for people and some wonderful experiences to happen for our members.

Boris Grunschpun: [00:13:47] Yeah. So as you’re, as you’re thinking about this, and depending on how long this sort of goes, that this may go on many different, many different directions, how are you? I think you mentioned a little bit of that, but how are you [00:14:00] sort of reimagining and if you will, the branch of the future, if there’s sort of like a word for that. I mean, I think we have some idea of that, you know, prior, ] uh, prior to March of this year, has your view on that change going forward? Or what are you, what are you thinking? Uh, the branch of the future strategy will be? 

[00:14:19] Greg Mitchell: [00:14:19] Yeah, I think  our branch of the futures strategy has been evolving for the last several years because we’ve been on this digital journey for, for a number of years now.

[00:14:26] So we’ve changed, uh, the size and function of branch locations, uh, in many parts of our company over the last few years, uh, we see them sort of continuing to shrink in size. Hmm, uh, continue to be, uh, you know, much more focused again on that solutions delivery instead of being staffed with 15 or 16 people, because you want to be, you know, have all the rights, the people there in case of a member, a customer walks through the door, I think you’ll see more, uh, utilization of, of banking by appointment.

[00:14:58] Uh, so the [00:15:00] staffing models will likely shift. For not just first tech, the many institutions throughout the United States so that when a person comes in, they’re going to be served, but then make an appointment just like they do in a doctor with the DMV, whether their insurance agent, their financial advisor, and that creates a better time management approach for the consumer or the members.That’s certainly creates a better resource management tool for the enterprise. And by the way, all that stuff can be done digitally. Right. And then you sort of overlay the need for human interactions, to some digital banking and video banking components that will, uh, that will come in as well. Cause some of our folks don’t want to see a person and they’ll be able to do that through, uh, through, through personal video.

Boris Grunschpun: [00:15:48] Got it. Got it. Maybe, you know, supporting channels or supporting channel questions. So, you know, having gone through this sort of journey, if you will, from a digital [00:16:00] transformation perspective and now, you know, having iterated more and more on how we, we mentioned sort of the notion of, of getting buy in early on in the cycle of this, but what have been sort of I’ll call it. You know, if you’re going to say that David let her run, you know, top we’ll go to the top three lists, types of things. What are the three things that you may recommend to folks who are maybe just getting started, maybe at another three things for people who are sort of  midway through the  journey having, having had these learnings?

Greg Mitchell: [00:16:34] Yeah, I think, I think, uh, Uh, a shortcoming at our early days as we try to cause the new technology to fit old processes that we would cause things that were designed to be much more streamlined and fast to sort of fit, to make it comfortable for, for folks to make the transition. That’s a, that’s a kind gesture, but it’s really inhumane, uh, for the organization, for the individuals and the product, [00:17:00] because these aren’t designed. To have the level of processes and trip wires and delays that exists in the typical, uh, you know, paper, transaction, or a face to face transaction. 

Greg Mitchell: [00:17:13] They need to be efficient. They need to leverage data from other sources and need to have a lot of the work running in the background. If you don’t embrace the technology as it is, and all of its features and costs your processes to flow around the technology, you’re going to be stymied and create a fair amount of frustration.

[00:17:32] And I’m sure you’ve seen that at other institutions. Uh, personally, so that’s, uh, that’s it key learning? I think the second learning is to really. Uh, engage seriously in change management, you know, follow an ad car model of explaining to folks, you know, why this is important, uh, create the level of, of, uh, demand.

[00:17:54] I really want this as, as, as an employee. Cause I think it’s really important. Give them the [00:18:00] knowledge of, of what it’s going to take to succeed and how they need to change some sort of constant recognition as it goes through. If you follow an ad car model and change management, I think that will serve you well and be persistent.I mean, hang with it all the time. You are going to have. A number of, uh, failures. You’re going to have some, some hard times to adjustments. Uh, it’s not going to perform as quickly as you expected, but it will, it will perform, it will perform well. 

Boris Grunschpun: [00:18:32] Great. Great. What about for people who are already in the midst of this?

Greg Mitchell [00:18:36] Right. So I think because we have viewers that are sort of just looking to get started. We have other people sort of, that are in flight right now. What words would be if you will, of encouragement, which would give 

Greg Mitchell: [00:18:46] to the folks that are in the middle of the process. I think if you’re in the middle, uh, hang on tight and have it, have some fun with it.

[00:18:55] Learn. Uh, feel free to, uh, make [00:19:00] some adjustments, feel free to sort of test and learn, uh, feel free to test fail, get up again, uh, and move forward, uh, secure some buy in from, from your board and other decision makers that there are going to be some, uh, disruptions. This isn’t going to be a perfect road and, and cause them to be prepared.

[00:19:21] For some of the bumps and twists and fallen branches that, uh, that, uh, delay, uh, your journey on the trail. So bring, bring people along, be persistent, have fun, and allow your team members, uh, to have fun with it and really celebrate the achievements. That’s 

Boris Grunschpun: [00:19:39] Great. That’s great advice, Greg. We’re close to our time today.

[00:19:45] So I really appreciate having you on the show. Thank you for all of the kinds of advice and words of encouragement to other financial institutions. Um, thanks again, Greg. And hopefully in the future, we’ll get to have this conversation in 

Greg Mitchell: [00:19:57] person sounds very well. Congrats [00:20:00] tabulations to, uh, to you and the team for your, your continued success.

[00:20:04] And I hope these, uh, is words from, uh, A community bank or now a credit union executive, uh, help help, uh, some of your viewers as they, uh, move forward on this path. Thank you, Greg. I appreciate it. Thank you 

Boris Grunschpun: [00:20:20] Lindsey. We can cut that. Awesome. Alright.

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