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Digital Landscape

Defining the Digital Landscape for Credit Unions – Abishek Bhat and Anuradha M

Credit Unions have been around for more than a hundred years, fulfilling Roosevelt’s law of providing a superior financial service experience for members.  However, according to Credit Union National Association’s recent report, the number of credit unions has shown a sharp decline in 2015, and some of the contributing factors include lack of scale and operational efficiency, rising competitive pressures and members’ demand for more products, services, and access channels. New technology and the resultant digitalization of the financial industry has altered consumer expectations. To summarize, the marketplace has changed and continues to change at an unprecedented pace and in order to remain competitive, credit unions have to keep up with upcoming changes and customer expectations.

Credit unions, due to their community nature, had no necessity to actively hunt for their clients. They were built by people belonging to certain trades or territories, which enriched the member base instantly and automatically. With the new fierce competition, the traditional way of operating is no longer relevant and sustainable. In order to stay in the game, credit unions have to go through a complex omni-channel and digital transformation journey, which includes addressing four key problem areas.

  1. A 360-degree view of the member
  2. Omni-channel data processing
  3. Cross-department lead generation
  4. Operational efficiency

While consumers, especially those who list 4 of the largest US banks among their top 10 most hated brands, and rated banks the lowest of any financial institution on a customer satisfaction survey, support locally owned businesses such as credit unions, they still want the convenience that banks offer.  Technology, mobility, and convenience are important and credit unions are mostly rising up to meet the challenge.  For example Navy Federal Credit Union, the largest federal credit union in the US, is one of the early adopters of Apple Pay, Apple’s mobile payment platform unveiled as part of the iPhone 6.

DuPont Community Credit Union (DCCU), to cite another example, which supports 72,000 members in Virginia’s Shenandoah Valley, detailed a campaign to increase debit/credit card utilization with rewards dashboards. According to Michael Tranum, Vice President of Information Technology, the campaign-enabled members who could sitting at home, see where they were in reaching the next reward tier and see a tangible value of their products – money refunded, saved and so forth.

Following in the footsteps of the early adopters, many players have already increased their IT spend to include digital transformation.  Some of them are favoring responsive design, with a sharp focus on UI/UX enhancements and several others – mobility.  New payment types and analytics integration is also being considered important, but most noteworthy is the fact that some credit unions that continue to stay ahead have distributed their spend across all the above.  Obviously, these credit unions are following the technology predictions for the financial industry and embracing these, to remain competitive.  Based on an analysis of the digital innovations that these early adopters embraced and met with success, we came up with three cannot-be-ignored digital transformers.

Mobility

There is no doubt that mobility is redefining the consumer interaction landscape and credit unions need to include mobility in their digital transformation journey. However, the point to be remembered is that `one size fits all’ cannot be true for credit unions who want a mobile presence.  Nor should it be a replica of their online presence.  What is required is for members to be actively involved in the development process and view the app from the user’s perspective.  Whether the app provides comprehensive coverage or only focusses on a few services depends on a particular credit union.  This calls for a strategy similar in many ways to a DevOps environment.

Data Analytics

Credit unions were created with the idea that people should help people and as a result, they already know a lot about their people or members as you can call them.   Credit unions can cull out tremendous intelligence by analyzing data of their account owners.  The data can include pertinent intelligence, leveraging which they can run targeted marketing campaigns. However, collecting customer data to aggregate intelligence may seem contradictory to the collective character of the credit union business. But, the positives can outweigh misgivings and it is up to a credit union to personalize services while safeguarding its ethos.

The question arises as to what a credit union can do with the intelligence.  For one, it can target customers better.  It is possible to develop deeper relationships with customers by customizing services which will lead to long-term loyalty. Secondly, it provides  a competitive edge.  Banks and larger financial organizations are growing larger simply by adopting digital transformation.   Analytics can help credit unions to offer incentives to compel customers to make decisions based on transaction data and relevant information.

Personalization

Credit unions while sorting members based on demographics must also remember to segment them based on their overall attitude to technology innovations.  Some of them, for example, may be digital enthusiasts. These are the people who are constantly reaching for one device after another to stay engaged online.  For these people, credit unions can create slightly more complex apps.  In the middle of the spectrum, are the digital know-hows who can `manage’ online transactions but shy away from carrying out complicated functions on their mobile device. Finally, there are the skeptics who do not want to have much to do with the digital transformation. They will probably stick to a particular device and use only those functionalities which they are most comfortable with.  An app, in this scenario, needs to offer basic functionalities which are absolutely user-friendly.

Summary

Banks and financial institutions have mostly already adopted the three disrupters mentioned above.  For consumers, this translates into ease of usage, agility and faster turnaround time. Banks are cashing-in on the growing list of both customers and transactions and the intelligence they derive from this.  It is a win-win situation.  If larger, stoic institutions can benefit so much from the digital transformation, how can credit unions not benefit?  After all, the fact remains that because credit unions offer what consumers want – i.e. service, respect, convenience, and of course lower interest rates, they will be the preferred choice of consumers, no matter what technology innovation larger banking and financial organizations may adopt. Keeping this fact in mind, this is a good time for credit unions to adopt digitalization to better what they already do well.

Abishek Bhat

Abishek Bhat

Abishek Bhat works as Senior Manager with the Microsoft Practice at Trigent Software. He has over a decade of experience in technology consulting.

3 thoughts on “Defining the Digital Landscape for Credit Unions – Abishek Bhat and Anuradha M

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