Is Your Credit Union Too Complex?

CUinsight Complexity Article

Originally published October 25, 2012 on

Ray Ozzie, formerly Microsoft’s chief software architect, once famously said:

Complexity kills. Complexity sucks the life out of users, developers and IT. Complexity makes products difficult to plan, build, test and use. Complexity introduces security challenges. Complexity causes administrator frustration.

And how about this statement, one I have frequently shared with credit union clients:

The more complicated the infrastructure, the greater the opportunity for failure.

Then there is a concept called The Paradox of Choice, a dilemma outlined by psychologist Barry Schwartz and which suggests that an abundance of choice has “made Americans not freer but more paralyzed, not happier but more dissatisfied.”

In each of these three observations we find that the possibility exists for excess complexity in areas such as product/service choice, organizational structures, and delivery systems to conspire to make organizations less effective and perhaps even prone to institutional failure. I think credit unions are not immune to this threat.

As I study credit unions through the lens of our Credit Union Industry HealthScore, I routinely find that those credit unions with a clearly-articulated value proposition and simplicity in product, service and delivery channel options are much healthier presently, were much healthier throughout our latest recession, and are positioned to have a much healthier existence going forward than their industry peers.

Unfortunately, this describes a rather limited number of credit unions relative to the total number of credit unions making up the industry. The greater majority are looking at runaway complexity which is causing great frustration and underwhelming performance.

So what are credit union leaders to do about this? Jettison products? Slow the adoption of new delivery channels? Eliminate positions? Return to paper ledgers?

If the challenge were to be simplistic, then perhaps we could say “yes” to each of these options above, but the real answer to most of these questions is, of course, “no.” The solution is not to be simplistic, but simple.

To illustrate, I’ll reflect on a conversation I had years ago when I was working as a mortgage officer at a credit union. We had just launched our new in-house solution and I was a newly-minted graduate of CUNA’s week-long mortgage training school. A member called to inquire about our mortgage offering, and I hardly waiting for the question to come out before I began to dazzle him with our new options and my command of quoting mortgage rates in 8ths. I said, “well, on our 30 year fixed rate option you can get nine percent for no points, but we can get you down to eight and seven-eights for 2 points, of course there is the option of taking a higher rate, nine and one-eighth, which allows you to gain a little cash back to cover closing costs but those options only work for a 30-day lock. If we’re talking 60-day lock then….”

At some point during the conversation I was talking to a beeping phone – a beep that was telling me that the member had hung up. He was no doubt bewildered by my “intelligence.” The funny thing, however, is that you see variations of this way of communicating to members today, not only on mortgage loans but on all products. Check out most any credit union website and you will find unnecessary product complexity which overwhelms the ability of a member to answer their most basic questions about products – not to mention overwhelms the ability of our personnel (in this case our Internet staff) to explain our products.

So back to the notion of simplicity. Simplicity is often defined as, “the quality or condition of being easy to understand or do.” If operational simplicity becomes a credit union objective, then it is the objective of the credit union to ensure that its moving parts are easy to understand and easy to use and/or support – for members and employees alike. The best way to get to this point is to start by asking a very basic question:

How do we bring simplicity to our operations?

In seeking answers to this question you begin to understand what causes complexity in the first place. Understanding the root cause of complexity makes it much easier to bring simplicity to an organization because you will know without a doubt what factors contribute to unmitigated/unnecessary complexity. As they say in so may self-help programs, admitting a problem is the first step to recovery.

As an aside, I would hazard a guess that most credit union leaders would chiefly blame compliance requirements for driving unhealthy complexity, but consider this situation. A few years ago at a planning session I was facilitating we began to discuss improvements in lending operations. The perception was that it was taking too long for members to route through the loan process which, it was believed, contributed to application fallout and declining volume. I can’t recall exactly how the issue came to light, but it turned out that one problem was that the credit union required members to come in and place their original signature on four copies of the same document. Why did they do this? Because they thought it was a compliance requirement. Yes, compliance adds steps to many processes, but the complexity in this case was not driven by compliance but by an uninformed staff.

In any case, I believe that every credit union can attain operational simplicity, a simplicity which enables more effective communication to members about products and services, more effective and focused staff training, more relevant products and services, and easier-to-use delivery channels. To get there, however, requires a commitment to being simple in the first place.

If simplicity is something you want to bring to your credit union, here are a few questions to get you started on the path of discovery. The answers will at least get you thinking about the problems you face, if not uncover the solutions that will drive the simplicity you desire.

  • How do we bring simplicity to our operations?
  • What are our most complicated products?
  • What are our most complicated procedures?
  • What is the most complicated thing our members must do to do business with us?

Use these questions or create your own, but in all cases drive for simplicity. The alternative, to paraphrase Ray Ozzie’s comments, is death by complexity.

For additional background, I recommend:

Barry Schwartz’s TED Talk, which you will find here:

Ray Ozzie’s Dawn of a New Day memo, which you will find here:


  1. Streamlining processes can be good for both members and CU staff with benefits ultimately to the bottom line. Love the questions that you suggest! These are good to reflect on in an ongoing way because simplifying is a continual improvement process.

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