A stroll through a consumer electronics store can turn even the strongest of wills into a slobbering technology hound. Just the other day, I dropped by the local Best Buy to buy a new digital camera. The options seemed endless. Just as I had settled on an 8 megapixel model with 10x optical zoom, "Squirrel!", I saw another model with face recognition technology. Then, "Squirrel!", I saw a model with a "Sweep Panorama" function.
Turns out that heading into a technology buy with little more guidance from my wife than "don't spend too much," is unwise. The more options I considered, the more confused I became about the proper choice. Without a shopping strategy or set criteria that would meet my family's photography needs, decisions like these are needless wastes of time, money and sanity.
Many credit unions put themselves in the same situation with their IT budgets. How can credit unions make sure that budget dollars are being allocated appropriately? With half of credit unions' technology budgets spent on member-facing technology, how can we be sure that we are optimizing member value and return on investment? Even more important, how can we be sure that these expenditures are helping credit unions meet strategic goals?
The Filene Research Institute's newest study, "The Future of Member-Facing Technology in Credit Unions" by Aite Group's Ron Shevlin, suggests that finding these answers relies on your credit union's strategy. Credit unions, Shevlin argues, should prioritize technology depending on which of the following strategies closest describes their own:
- Operational excellence (a focus on efficiency and hassle-free service);
- Product leadership (invention, product or service development, and market exploitation);
- Customer intimacy (obsession with the core processes of solution and relationship management.)
Each of these strategies involves a completely different mindset when evaluating member-facing technology. A credit union that aims for operational excellence, for example, would be much less interested in social media as a way to connect members with one another than its ability to help them painlessly, and affordably, help themselves. It would look to things like online support centers, personal financial management (PFM) tools, live chat, and mobile technology much differently than credit unions that are more focused on product leadership or customer intimacy.
While 98% of the study's respondents report that 2011 IT expenditures will be higher than those in 2010, only 18% consider their senior management to be "very committed" to IT. And only 17% report "excellent" coordination between business and IT. These results paint a gloomy picture for an industry increasingly dependent on technology to remain competitive in the marketplace, and viable as businesses.
How can credit unions compete with the Bank of Americas, PayPals and ING Directs of this world without more commitment to IT? How can we take advantage of the efficiencies and power of new technology if our priorities lie elsewhere? How can IT departments make the right investment decisions if they aren't aligning them with the strategies and business objectives of the credit union?
To succeed in today's financial services landscape, credit unions need to make sure they understand their value proposition, which technology options are out there that can help fortify that position, and which ones to avoid. Without that discipline, credit union decision-makers are senselessly guided by only one directive: "don't spend too much." That mindset is ill-advised.
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