Innovation … One Hack At A Time

Patelco Credit Union ($9.5B, Dublin, CA) is improving processes by bringing together department experts and giving them space to innovate. What it doesn’t provide is a lot of time.

Since 2019, the Bay area-credit union has held two or three “hackathons” every year. During these intense 48-hour events, employees pitch an idea, form a team, and rapidly pull together proof of concept the idea works. Patelco benefits from ideas to improve efficiency while participants get to explore collaborative thinking and action.

“Each hackathon gives teams a chance to work on things they want to learn and do,” says Stephanie Shah, Patelco’s director of portfolio planning and execution. “It’s an innovation engine that allows teams to self-organize and expand their thinking on how to solve problems.”

A History Of Innovation

Given its tech-savvy San Francisco market, Patelco had a long history of adopting leading-edge technology, much of which it built itself, before deciding integration had advanced enough to adopt more vendor solutions.

Shah, who has a background in core processing and startups, joined Patelco as a consultant nearly 15 years ago to work on multiple implementations — including member-facing lending software, content management, accounting, and other solutions. She joined the credit union fulltime nine years ago and has guided the cooperative’s culture of innovation as it moved from the waterfall to the agile philosophy of software and process development and deployment.

“We moved from the traditional method of capturing all the requirements at once and then doing it all at once to a more agile way of taking small, incremental, collaborative steps,” Shah says. “Hackathons are a natural fit for that approach.”

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From Proof Of Concept To Prototype

Approximately a week and half before the event, Patelco announces a “save-the-date” and encourages staffers to submit problems they think can be solved quickly and efficiently. The credit union’s system software architects then vet those ideas to determine what’s realistic.

“We regularly get two or three times the number of ideas that we can actually handle,” Shah says. “Some of them are awesome ideas but way too big to put together as a pitch and proof of concept (POC) proposal in just 48 hours.”

Shah and her team then go back to the business staffers who presented the proposals deemed doable and invite them to team with technologists, product managers, data analysts, and anyone else who can contribute to a final pitch they’ll present at the looming hackathon.

“Each hackathon can have a different focus, but we always allow the teams to bring their own ideas to the table based on their experiences,” Shah says. “In the end, teams vote with their feet. Teams self-organize to bring their interests and their talent to help deliver a solution. It’s all voluntary. No participation is mandatory.”

Then it’s time for the hackathon itself.

“They can work in the space we give them, or they can work at home — whatever they want,” Shah says. “They have 48 hours from start to finish. It’s on them how long they want to go at a time over that stretch, but we’ve never had anyone sleep here.”

The hackathon ends with 10-minute presentations to a panel of judges comprising senior managers and executives. That panel then meets immediately afterward and render its decisions.

Winning Ideas. Immediate Results.

According to Shah, several solutions are in various stages of development and three have been implemented so far, including one that uses a specific machine-learning application to better predict and spot fraudulent transactions.

“That one was easy to test because we could use a set of transactions we already knew were fraudulent to see if the solution would return the same result,” Shah says. “That was key to proof of concept in that case.”

Another solution provides a way to pre-fill routing and transit numbers in online membership and banking forms, which saves members from that manual task. The third innovation is an appointment scheduler that lets members set branch visits through the website.

A Focus On Meaningful Work

The hackathon is one way Patelco keeps its member perspective as it grows toward $10 billion in assets and 500,000 members.

“We’re focused on efficiency but, most importantly, we’re focused on members,” Shah says. “We need innovative ideas from those who do the daily work, and the hackathons are a chance to bring fresh eyes to how those ideas can come to fruition.”

To provide inspiration for potential processes ripe for the hackathon process, Patelco collects and shares data on membership pain points from various sources, including:

• • Complaints and problem-resolution system data.
  • Real-time listening posts for staff and members.
  • Gallup surveys.
  • Unanswered chatbot queries.
  • Member service platform data.

  That information becomes the palette of challenges that participants turn into opportunity.

  5 Tips To Host A Hackathon

  1. Vet pitches for feasibility before moving into the proof-of-concept (POC) stage.

  2. Help business folks understand how to think about a POC and working software.

  3. Tap the entire organization — including teams that don’t typically work with technology — to come up with ideas.

  4. Give teams a place to work, such as conference and online chat rooms.

  5. Encourage people to join a team that interests them, help in any way they can, and learn by doing.

  More Than The Money

  Teams typically comprise three to six people, who split the available monetary award — $1,000 for the winning team, $500 for the runner-up. Those amounts might seem modest, but that’s by design.

  “There’s this theory that if you put too much on the table, people can start to lose creativity,” Shah says. “That would obscure the main point of what we’re doing here.”

  According to the director, the real incentive isn’t money or bragging rights, it’s solving a problem and being part of a creative, collaborative process.

  “They bring us these diamonds in the rough and shape them into something that benefits the organization and its members,” she says.

  Which leads to perhaps the most crucial tip for hackathon happiness: allocate enough time to let creativity flow.

  “We remove two days from our technology team’s capacity that month to allow them the time to innovate,” says the veteran Patelco technologist. “The pitch is on a Tuesday or Wednesday and the demonstration of working software is literally 48 hours later.”

  — This article originally appeared on CreditUnions.com on Jan. 29, 2024.