The Path to Digitization for CUs to Retain Member-Driven Ethos

Credit unions have long been known for their personalized, member-first approach to service. Whereas traditional banks are motivated by profits, credit unions are member-driven organizations that prioritize community. They emphasize a superior level of service, lower fees and more competitive rates, all while offering a similar breadth of services and protections as traditional banks.

As the financial services industry has embraced technology and digitization, a perception has emerged among consumers that credit unions are lagging behind. As much as credit union members appreciate the personal touch, they also want the services and tools that conform to their digital-first lifestyles, as evidenced by recent research from Forbes suggesting that more than three-quarters of Americans prefer to do their banking digitally.

Credit unions falling behind the technology curve can introduce new digital services and meet the digital demands of members, all without sacrificing their customer service standards, through the following actions and approaches:

Modernizing the Back Office

Organizations with modernized and advanced back-office technology stacks can more easily and speedily develop and introduce new services. Unfortunately, the systems and technological infrastructures of the typical credit union are often outdated. Many continue to use large, traditional, on-premises systems that are inflexible, difficult to upgrade and certainly not agile enough to meet the digital-first expectations of today’s consumers. Credit unions must begin to modernize by embracing cloud computing and API-first architectures that will ultimately enable the speedier development of new digital services.

Taking Small Steps to Overcome Resistance

Credit unions are risk-averse by nature and many lack the resources of larger financial institutions. As banks, neo-banks and fintechs have dove headlong into developing digital-first offerings, many credit unions have been slow or reluctant to commit to even the most basic digital projects. Some are losing ground to online banks when it comes to customer satisfaction, as a result. No matter how far behind, it’s never too late to start. Whether it’s a mobile application, online chat support or simply enhancing the user-friendliness of the website to allow members to navigate and find solutions, there are many smaller steps credit unions can take to begin digitizing without overhauling systems, taking on new risks or making massive financial commitments.

Placing a Renewed Emphasis on Stability and Security

Security is always a pervasive and valid concern for consumers, especially in an environment where bank collapses are not uncommon. Credit unions suffer from the perception that depositors’ funds are not as safe as they might be in a traditional bank. While this is not reality, as credit unions are federally insured, adopting digital technologies will afford credit unions new opportunities to reaffirm the safety and security of their institutions. Cloud providers, like Amazon Web Services, continuously invest billions to ensure solutions are safe. Credit unions that avail themselves of these platforms can reinforce critical messages around safety and security.

Changing Overall Thinking About Tech

Some credit unions believe that digital banking services and maintaining a member-first, community-driven approach to service are incompatible by nature. The opposite is true. Technology can amplify member-centric values by complementing and elevating the quality of human interactions. Credit unions should view technology as a vehicle to enhance lives and financial wellness. Embracing this new point of view will be essential for future survival and viability.

Today, only 14% of people between the ages of 25 and 34 are members of credit unions, despite the benefits offered as compared to traditional banks. By investing in emerging technologies and introducing services that integrate into digital lifestyles, credit unions can begin to speak the language of younger, tech-savvy consumers and remain competitive with large financial institutions, all while retaining the member-centric philosophy.

Anshul Verma is Senior Manager for Strategic Partnerships at the Amsterdam, Netherlands-based SaaS cloud banking platform provider Mambu.