6 Strategic Imperatives for Credit Unions in a Digital-First World

Credit unions have long been important pillars of their communities, serving as local civic anchors and benefitting members through a high-touch support and engagement model. As members increasingly shift from in-person to digital engagement, it is imperative for credit unions to evaluate their digital presence to understand its impact on the member experience.

Following are six strategic imperatives for credit unions as they transform and optimize for today’s digital world.

1. Choose a Cloud-Based Infrastructure

The benefits of a cloud-based infrastructure are well established. A public cloud environment like Amazon Web Services (AWS), for example, offers a lower cost of operation, increased scalability, improved speed to market and greater availability compared to on-premises environments.

A growing number of credit unions are shifting their software solutions to the public cloud, not only for their core banking technology, but also for supporting systems like email, accounting, enterprise resource planning and digital banking solutions. In fact, 41% of credit unions have shifted solutions to the cloud, and the number continues to rise, according to CloudFirst. Credit unions should look for providers with established cloud-based solutions to take advantage of these benefits.

2. Enable Members to Open Accounts Digitally

Having the ability to reach potential members online through a digital account opening option rather than exclusively by visiting a branch is essential in an increasingly digital world. If a potential member can find an institution online but is asked to go offline or to a different channel to establish an account, the relationship may be lost.

The largest U.S. financial institutions are encroaching on credit unions’ geographic territory by offering this capability. They can find a potential customer in any town in the U.S. and can onboard them exclusively online. For credit unions to compete, they must offer the same capabilities, enabling potential members not only to find them but solidify the relationship digitally.

Credit unions should look for a digital account opening solution that can seamlessly integrate with their digital banking solution and that offers the flexibility to tailor the process based on their unique strategy and risk tolerance.

3. Leverage Data

Financial institutions of all sizes have more information about their account holders than almost any other business in the world — and this data can provide invaluable insights to help attract and retain account holders. This is particularly true for digital banking, which captures a multitude of member data, such as ACH transactions, bill payment transactions, debit and credit card swipes, other demand deposit account transactions, transaction spend and purchase data.

Leveraging this information through data-driven marketing solutions is instrumental to a credit union’s growth in a digital-first era. For example, using bill payment transactions to identify accounts held with other institutions, such as credit card, mortgage or loan relationships, provides an opportunity to cross-sell other in-house products and services or simply to better understand and market against the competition.

Credit unions should seek a digital banking partner with data tools and expertise to help them optimize member acquisition, cross-sell, and overall loyalty and engagement.

4. Offer Unified Consumer and Business Banking

A growing number of credit unions are offering both retail and business banking services to their members. These credit unions should seek a digital banking platform offering retail and business solutions on a single platform. With this approach, members with both types of accounts will benefit from a single login and experience, allowing them to manage their personal accounts and conduct business from one mobile application or one online login.

Other benefits include the ability for credit union employees to administer all account holders through a single console and to access all account holder data in one system, providing the opportunity to better know your members, understand their needs as they grow, and even cross-sell other banking and payment products.

5. Optimize the Omnichannel Experience

Though some members want to interact with their credit union exclusively through online and mobile channels today, many opt for a balanced approach, taking advantage of digital options in conjunction with in-person service. Credit unions should consider how to seamlessly combine digital capabilities with existing relationship management and personalized service capabilities to create an even better experience for their members.

A digital banking experience, for example, that takes members seamlessly from an online chat to a live service agent via video when warranted can be a strong differentiator. Having a partner with the technology that allows the credit union to offer this type of seamless transition – and one who can easily enhance or upgrade the digital experience as member needs evolve – is essential for credit unions as they digitally transform.

6. Close the Innovation Gap With Third Parties

The largest U.S. banks are investing in technologies that aren’t yet on the radar of many smaller banks and credit unions, according to Cornerstone Advisors. JPMorgan Chase announced, for example, that it has increased its annual technology budget to $12 billion, 26% more than it spent in 2020. In the absence of budgets of this scale, smaller financial institutions risk losing account holders to those with more advanced offerings.

There are a multitude of fintechs providing innovative capabilities that can help to level the playing field for credit unions competing with larger national bank brands. Digital banking solution providers that integrate with leading-edge third-party technologies can provide a way to take advantage of this innovation. Credit unions should look for a digital banking solution built to support today’s modern, evolving market — one with an API-first design that supports ease of integration — to ensure that third-party fintech partnerships support a seamless member experience.

Credit unions’ ability to differentiate through strong in-person engagement and service will continue to be an important differentiator in today’s competitive environment — but complementing this with a robust digital banking strategy has never been more important. Choosing partners that offer modern, cloud-based solutions with the flexibility to meet evolving member demands is crucial for credit unions to succeed as the ecosystem evolves.

Jennifer Dimenna is the SVP of Product at Apiture, a digital banking provider based in Wilmington, N.C.