The questions credit unions must ask when choosing technology vendors
The average credit union holds $286 million in assets, compared with the average bank’s $3.5 billion. And the annual technology spend for the entire industry is a fraction of what the top four banks spend.
The problem is, members and customers of any financial institution today expect competitive mobile and web features, regardless of size or budget. For smaller institutions, this means that every dollar must be spent as wisely as possible. This is one of the reasons why companies are looking at platforms instead of best-of-breed systems that require complex integrations to improve their online offerings.
At PenFed, we recently worked with our technology partners to launch an omnichannel digital banking platform to create a more seamless, personalized digital experience. With this platform, we can leverage machine learning to automate routine service requests and speed up resolution time – making financial transactions far more convenient for our members.
We looked closely at many leading software providers and considered a wide variety of factors. Here are five questions we suggest asking when choosing a technology partner:
1. What percentage of the features are you getting for what percentage of the cost?
When you choose a platform strategy on a limited budget, you’re ideally looking for 80% of the features for 20% of the cost. This means there will be a tradeoff. There will always be things on the margin you would love to have, but keep the 80/20 rule in mind. Most good platforms have a strong ecosystem of partners, who can help add functionality while maining cost effectiveness.
2. How many releases per year does the company do?
There’s a saying: You want to skate to where the puck is going. Look for a partner who is continuously investing to improve the platform. Are they active in acquisitions? If you don’t have a certain feature today, you might have it tomorrow.
3. Can they enable your strategic agility?
Your focus should be on getting a feature to market as quickly as possible. Then you can get feedback on how the feature is being adopted, and use that information to adapt and improve the feature. Who will help you get things out to market in days or weeks, not weeks or months? Low-code and no-code platforms can really help facilitate agility.
4. Will the partnership enable your success during a crisis?
When COVID-19 hit, many companies struggled to transition to remote work and services. At PenFed, we were able to extend our service center capabilities to take calls from home. We also built an add-on to our secure document-upload that could scan mailed documents and route them to the appropriate remote workers. We were able to do this within weeks.
5. Are vendors’ values aligned with your values?
Does their purpose align with your purpose? Especially for credit unions, community focus is an important consideration in any partnership. A strategic partner should value corporate social responsibility and participate in initiatives that give back to their community.
Technology partnerships are becoming more and more common as digital offerings evolve from a nice-to-have to a must-have for companies of every industry. A good chat agent, for example, can reasonably do three separate chat sessions for every one phone call, leading to a massive productivity lift. By the end of the year, we estimate that over one-third of all PenFed’s IT service contacts will be handled by a chatbot; by the end of next year, that number will jump to 50%.
It’s important to ask the right questions before partnering with any new software provider. The right decision can grow your membership significantly and efficiently.