Financial service providers want to be digital, but they’re having trouble getting there, or even getting started.  They are focusing heavily on conventional IT and surface-level components of digital strategy. 

Both are vital. However, we are seeing a lot less work put into relationship models; thinking about how to truly embrace and incorporate dynamism and dynamic road planning in processes and organizational culture. 

According to the FIS PACE Bank Executive Study, just 38% of credit unions said digital transformation was highly essential. Surprisingly, 28% reported overpaying on digital projects. The lowest number across bank types is among the credit unions, according to the study. 

Beyond financial services, we are witnessing a fundamental transformation, which is true for all organizations of all sizes and all industries. We are witnessing top businesses go from ‘Customer Aware‘ to ‘Customer Led,’ from ‘Data-Rich‘ to ‘Insights-Driven,’ from ‘Perfect’ to ‘Fast,’ and from ‘Siloed’ to ‘Connected. 

Firms must transition from a siloed structure to a linked, far more flexible, often cross-functional, and collaborative structure that allows for dynamism. Dynamism in this context refers to a company’s ability to adapt at a rapid pace and with a high degree of consistency. 

Leading financial institutions, payment providers, and banking providers are reconsidering their brand connections. It is imperative to be extremely clear, and to have a clear vision of the function you would like play in your customers’ life in the future. 

Macro trends shaping the future of Financial Services 

  • Accelerating Consolidation and the Drive for Scale – Scale economics are favored in the financial services business, and industry consolidation is accelerating. Instead of aiming to be unique in approach, there are opportunities to encourage more collaboration. 
  • Unprecedented Advances in Technology Adoption and Innovation – Technology and its improvements are affecting not only the corporate world, but also how consumers perceive and use financial services. 
  • Changes in Consumer Behavior, Attitudes, and Expectations – The key differentiator in the industry is member experience, which incorporates all aspects of how consumers conduct their financial life. Customers desire greater convenience, simplicity, instant gratification, empathy, and personalization. 
  • New Waves of Competition from Large Scale Incumbents and New Entrants – Many of the new entrants follow a straightforward pattern. They are only concerned with reducing the friction that often arises in how customers obtain financial services. New entrants are pushing the delivery of Digital First Experiences, while incumbents have embraced ‘High Tech’ and ‘High Touch’. 
  • Demographic Shifts and the Rise of Digital Natives – Unprecedented global demographic transitions will have far-reaching consequences for member retention and acquisition, as well as talent management. Younger consumers entering the financial services business for the first time almost always expect a digital-first experience. 

 Stepping up to the plate with Digital Transformation 

Digital Transformation is a chance to reinvent how you bring together your people, technology, data, and business processes to generate value for the members you are attempting to serve and achieve a competitive edge. 

Culture and Mindset – Creating a member first culture which not only puts the customer at the heart of everything but also embraces and enables innovation and technological changes. 

Financial Strength and Scale – Scale economics have ever-increasing importance in the financial industry. Scale which implies the ability to finance strategic investments will be a vital factor in being able to compete and be relevant. 

Efficiency and Effectiveness – Credit Unions need to be able to scale their technology capabilities to allow members increasing levels of self-service and to improve internal operations and efficiencies. 

Organization and Talent – Credit Unions must develop a new type of workforce focused on creating exceptional customer experiences enabled by new work practices and capabilities (Analytics, AI etc.). 

Data & Analytics – Serving the customers begins with data, and how it is stored and managed will be a pivotal success factor. New technologies such as analytics and Machine learning will provide much deeper understanding of member needs, behaviors, and preferences. 

Digitization of Credit Union Systems and Lending Institutions 

The fundamental level of digitization is providing key services via internet and mobile channels. It must be clear, easy to comprehend, and intuitive, with a minimum of clicks required to obtain what the user needs. 

Many small credit unions struggle to afford digitalization. As a result, they’ve created shared platforms so that individual credit unions don’t have to invest in redundant hardware and software to provide these digital channels. 

Financial institutions create more digital portals for their activities because of digitalization, which introduces increased risk. They oversee safeguarding the members’ identities and data, as well as providing cybersecurity. 

Credit Unions in many countries are employing shared platforms to manage cyber security solutions as well as regulatory compliance. The system of cooperative institutions maintains a large amount of data, which provides information about its members’ activity, transaction history, and preferences. Analysis of this data can help them improve their products, respond to member service criticism, and recommend better financial health choices to members. 

For instance, for our customer, a well-known credit union bank in Canada, serving over 120,000 customers in the province of Ontario, we proposed digital deployment of their retail banking platform and customer onboarding process.  This resulted in a 288x reduction in processing time. 

It should be emphasized that online loan processing and approval, as well as mobile deposit service and mobile loan processing, are significant membership growth drivers for credit unions. 

Reimagining Credit Unions and Lending Institutions in the Digital Age 

Credit Unions and Lending Institutions should use technology as an enabler to strengthen their strategies. The “Bank in a Digital Box” addresses the needs of each customer segment with an MVP & Add-on approach, allowing you to seamlessly start the business and gradually transform it based on priorities. 

It enables Credit Unions and lending institutions to concentrate on their vision and strategy, viewing digital transformation as an opportunity rather than a necessity.   

Lending institutions and Credit Unions confront challenges as expenses continue to rise, regulatory burdens increase, and as uncertain economic climate continues to erode profitability.  

For these institutions, to capitalize on the growing demand for commercial lending, they must transform their lending processes by streamlining processes and leveraging technology, particularly advanced digital solutions, to focus attention on dark data to reduce risk, accelerate decision-making, reimagine customer experiences, and improve compliance for real business impact.