If you believe what you hear and read, the big banks might be poised to beat smaller players at their own game by increasing customer experience through information technology, specifically, through digital transformation.
If true, this would suggest that the days when credit unions distinguished themselves through highly personalized customer service may be ending. Presumably, larger organizations have larger budgets for technical assets to reach customers through social media.
Hence the competitive advantage between banks and credit unions is diminishing. After all, almost everyone is now tech savvy and glued to their tablets, cell phones and lap tops, and customers are draw towards online services as part of a customer experience.
However, while larger organizations have more money to spend on IT, they also have more data to sift through, larger bureaucracies to navigate, and more complex environments to configure and maintain. As a nimbler industry, credit unions are better positioned to provide a better customer experience. But, some shifts in thinking that must take place. For example, customer experiences traditionally created with personal interfaces now need to be augmented by ones that are built and managed online.
And these services must go beyond the boiler plate services such as electronic deposit and funds transfer. Moving forward, a much stronger push towards self-service, convenience, speed and innovative new services and products is required.
Credit unions will face the same challenges as everyone else when managing the revolution of digital transformation and the expectations of consumers for instant gratification manifested through their hand-held device.
For example, credit unions will find that corporate data may be scattered in multiple locations with incomplete data mapping to identify the existence and location of data. Even if data is well mapped and governed, often there is a lack of tools to effectively analyze, extract and report on data.
To make matters worse, it’s common to have gaps in data ownership, data stewardship or data controls. Addressing these gaps is increasingly important as new privacy laws come into effect and data must be organized in a way that enables required reporting to oversight agencies or authorities.
Finally, almost every company on earth faces the curse of interfacing with legacy systems at some level. The curse come in the form of poor data interfaces, incompatible systems and other issues. These hurdles often prevent many people from moving on.
While there is no “get out of jail free” card for smaller companies, they are, arguably, better positioned to solve these issues. To start with, there is less of everything. There is less data and the interactions of data between systems are not as complicated to establish.
With fewer organizational entities, such as fewer departments and smaller geographical areas, there are fewer silos and organizational boundaries to navigate. Naming data stewards and mapping critical data elements, while daunting, is still easier than it is in an organization 10 times larger. There is also a smaller installed base of tools and approaching the state of a “single source of truth” for data is easier.
Solving these issues in one fell swoop, while tempting, can be risky. There are simply too many variables to deal with to get it right the first time. Also, “big bang” projects take a long time and once completed, they may already be obsolete. It’s wise to consider a phased approach where a particular region, customer segment or service offering is implemented as a proof of concept and subsequently rolled out on a larger scale.
The correct data and tools are only the beginning. Achieving real breakthroughs requires innovative thinkers. In other words, people. Analytical thinkers will be required to leverage data to determine customer preferences not only on a regional level, but on a personal level and demographic level as well.
Identifying patterns of customer behavior might minimize the flight risk of customers and identify services that have never been thought of before. A key part of the journey may be to embrace a “watch but don’t touch” philosophy. For example, maximizing the amount of self service provided to a customer constitutes further steps toward zero friction service. This might include (most of the steps required for) the adjudication for loan approval with automatic incorporation of pre-approved legal paragraphs, conditions of the loan, amounts and interest.
Reaching out beyond the familiar, customers could be provided with features and services that no one has offered before. For example, sophisticated “what-if” applications with extensive point, click, drag and report capability could be linked to customer data to help them optimize their thinking around car loans, college funds, vacation funds and investment portfolios.
A series of portfolios could be linked together to provide customers with a virtual playground constructed from all of the data elements that they choose to use. Included would be professional looking dashboards that create attractive visuals for the customer and their financial planning.
Since the financial business is very data and customer centric, it’s hard to imagine a path forward that does not involve a strong digital strategy. Ironically, the biggest hurdle to digital transformation may not be technology. It may be a different way of thinking.
