Credit unions run their business as “not-for-profit” – by the people, for the people – with serving their members as their core value. To accomplish this, credit unions originally served their members in their physical branches. The more advanced credit unions have added different digital offerings to supplement the physical one. In recent years, however, credit unions face formidable competition from fintech startups that are being very creative in the way they engage with customers and the digital experiences they offer. For credit unions to stay competitive and continue to put their members first, they must adapt new approaches, change their mode of operation and compete for customer acquisition.
In order to successfully transform their business and adapt it to modern approaches, credit unions should pursue the following:
Having been in existence since the 1850s, credit unions are no strangers to business transformation. While business transformation is essential for survival, it’s also fundamentally risky, and digital transformation is no different. Digital transformations impact every aspect of the organization – systems, processes and people. These resources need to be introduced to these digital changes in ways that bring positive momentum and additional opportunities.
While you can wield the systems to operate in any way you choose, it is important to understand what the organization wants to achieve first, and what are the expectations and constraints. It then requires working with the organization’s customers, providers and employees to develop a proper strategy to meet the current and future needs of the organization.
Credit unions use a variety of systems to service their many members and onboard other financial services providers. Many of these are legacy systems that are not governed by any application, so they require a lot of time to input and retrieve information out of. Without automation, many business processes, such as processing and request and response routing, are a manual and time-intensive effort.
Implementing an external data exchange system and an internal interconnected data integration platform that serves all applications allows the credit unions to store data in a centralized environment, automate many of its processes, shorten timelines, reduce errors and increase efficiencies. Systems, infrastructure and architecture modernization is the most basic and essential step to start the digital transformation.
There are two challenges that connecting platforms and centralizing data don’t solve. First, credit unions will still have conflicting views of the same member. Second, they will find it difficult to gain a holistic understanding of all its interactions and transactions with their business.
To solve these problems, organizations must “master the data” and then create a “360 view” of the member. Once all the siloed systems have been connected, information is cleaned, de-duped and mastered to create a golden, single view of the member across all systems. Next, all interaction and transaction data points are connected to build an all-encompassing, 360 degree view of any given member. Mastering the data and creating a 360 degree view of the customer is the most critical step to begin tracking and understanding the business’s customers.
Marketing and Sales Insights
Credit unions have multiple departments offering different types of services to its members. However, without information sharing across these departments, it’s as if each one is operating as its own autonomous organization. This can cause the member to become frustrated and lose trust as they realize that the various department don’t fully understand their broader relationship with the credit union or their needs. The credit union’s departments further suffer from the inability to capitalize on member knowledge gained by their fellow employees and departments, which effectively limits the ability to leverage such insights for upselling and cross-selling.
Once information is stored in a centralized place and data can be relied upon, business intelligence can be applied for what is called “prescriptive analysis” and visualization – an in-depth view and understanding of the activities and state of a member or even provider. Moreover, with enough data points and historical information collected, prescriptive analysis can be applied to promote offers of probable value, better control members behavior and enhance member experience and loyalty.
As credit unions continue to extend their outreach from brick and mortar physical branches to online banking, offering multiple services, they must future-proof their business in such a way that it can viably compete in the marketplace with much smaller, nimbler companies that are tailoring their offering to modern customer needs. Every transformation will look somewhat different for a given organization, but they will all follow the same steps: build a strategy, modernize systems, connect the organization together to better understand the customer, and gain insights into customers and the best ways to engage with them.
For further interest: