How credit unions can level the digital playing field

A recent survey found nearly half of credit unions want to expand their digital presence in 2019, up 19% from 2018. But the majority still feel that they are unable to compete with top or midtier banks in digital channels. With growing expectations from younger consumers for seamless and intuitive technology, credit unions should seize the opportunity for digital to transform their member experience.

The clock is ticking – Gartner predicts 85% of all customer service interactions will be powered by chatbots by 2020. As institutions that pride themselves on customer service, credit unions can embrace digital to meet and exceed member expectations.

But how can they overcome the unique challenges they face in order to keep pace with larger financial institutions? The key is knowing the right ingredients when it comes to investing in digital.

Find tech that complements personal service, not supersedes it

Some credit unions are rightfully reluctant to undermine their greatest strength – member service and attention. Credit unions are known for their personalized approach to service, and technology that acts as a barrier between members and member service representatives is cause for concern. Credit unions need to make sure they implement a digital strategy that focuses on building a better member experience, not one that replaces it.

According to the FIS PACE report, credit unions lead the way in customer satisfaction over top 50 global banks, regional banks and community banks, but saw a 9% year-over-year dip in the consumers identifying themselves as “extremely satisfied.”

The right technology and consumer experience can bolster a personalized member experience, instead of detracting from it. Rather than rolling out flashy digital offerings to match industry fads, credit unions should be implementing technology that enables better service. Examples include automation to digitize or optimize back office processes or tools to help identify significant financial moments such as marriage or buying a first home to allow these financial institutions to preempt their members and meet their needs.

Get the board on board

The case for new digital tools that improve the user experience might seem clear, but getting the board to sign off on the cost of implementing new technologies can require more sway since the ROI is not immediate. Credit unions need to be clear in their long-term goal of building an overall digital experience to attract members of all ages and stay ahead of their needs.

According to Greg Crandell of Query Consulting, credit union boards need to establish their vision for the organization in the digital age. Boards needs to establish their readiness for digital leadership by establishing the board’s literacy and understanding of digital services, as well as the digital culture of the board. C-suite buy-in to digital is not the same as board-level buy-in, and the board needs to be willing to take risks and innovate.

“With this knowledge in hand, the credit union should look, as well, to build out an expanded leadership model that promotes the needed ‘speed, agility and structure’ to [affect] timely change, and institutionalize the culture that drives continued transformation,” writes Crandell.

With new data showing that 65% of millennials have not visited a branch of their financial institution in the most recent month and that even baby boomers are turning to online and tablet banking services at a faster clip, credit unions can urge their boards to bridge this gap and reconnect with members by innovating in areas that matter to them most.

Listen to your members … and then get ahead of them

The credit union space is now selectively dabbling in the most popular digital services such as digital wallets and mobile apps. Real-time payments and fraud management are popular as well. Credit unions need to listen to their member base to decide on their next digital tools – while also avoiding a piecemeal strategy that won’t lay the necessary groundwork for the years ahead.

Credit unions need solutions (and partners) that address the full spectrum of digital member engagement and ease the process with simple and affordable integration.

Individual CUs should look three, five and 10 years down the line to anticipate needs and implement the right technology with the right partners that can help them start building solutions before demand reaches a critical mass.

Team up

A challenge for many credit unions is their small scale relative to their global counterparts. When it comes to investing in tech, credit union leagues should collaborate on joint digital products. Consortiums of digitally driven credit unions can more agilely compete with larger regional banks.

While top 50 banks have the benefit of scale, credit unions have the benefit of a tighter-knit network of institutions that have the capability to invest as a group to elevate their technology capabilities. Some digital consortiums already exist, including CULedger’s blockchain initiatives for identity verification.

The pieces of the puzzle for credit unions to build an innovative, digital platform for their members are already available. Through strategic implementation, industry collaboration and embracing member expectations, credit unions can set an efficient digital strategy that supports their strengths and addresses member concerns, making credit unions true leaders in financial services.