By Craig McLaughlin, CEO, Finalytics.ai

Five years ago, it was common for credit unions to receive up to 15% of their product applications though digital channels; the branch was still the primary channel of engagement. Two years later, in 2018, digital product applications grew to around 25%. The trend was clear, but no one predicted the rapid evolution that was brought on by the pandemic. Almost instantly, branches took a secondary role, with more than half of product applications now routed through digital channels. In 2022, some predict that digital product applications will reach 75%.

Like Newton’s laws of motion, the digital channel is moving momentum that will not be easily deterred. Innovative credit unions have positioned themselves to take advantage of this sudden change, securing the technological infrastructure needed to meet member demand and expectations. These pioneers have set a standard for seamless digital experiences that fully substitute the branch, and the use cases are paying dividends.

This year, we will see more credit unions deploy journey orchestration strategies that present each member with a unique digital experience.

Those who do not adapt, risk losing members and their central role in communities. Data from Finalytics.ai’s Harris Poll shows that 40% of Americans are likely to leave their primary financial institution for digital banking that compares to an online shopping experience with e-tailers like Amazon.

What steps will credit unions take to transform their digital sales cycle in such a way that can retain current members and attract new ones?

Many credit unions will build comprehensive technology strategies as part of their long-term business plans, rather than looking at technology as separate disconnected components. As a result of these strategies, we will see an increase in partnerships with third-party technology vendors that will help credit unions continue to serve their communities while increasing their wallet share. More specifically, we can expect a growth in cloud delivery models that enhance flexibility and increase resilience against cyber threats and natural disasters. A natural extension of these strategies will be an uptick in credit unions employing open API infrastructures that facilitate the free flow of data and improve efficiencies.

Digital channels will offer segment-of-one experiences that can fill in the gaps for in-person meetings. Traditionally, bankers recommended relevant products and services to their members mostly based on the information they gathered during branch walk-ins and in-person meetings. Today, a member’s digital identity can be realized with the use of machine learning technologies that analyze real-time insights based on multi-faceted data about the consumer’s demographic profile, online activity, and other relevant behavior. Credit unions will increasingly leverage these technologies to deliver dynamic, relevant, and effective content to their customers that go well beyond personalization.

The journey starts before sign-in. Much like an in-branch visit, credit unions must begin to learn about their prospective members before they are committed to a financial institution. The only way to achieve this in today’s digital environment is by leveraging the power of data. Emerging technologies will arm credit unions with more information than they’ve ever had, enabling them to provide products and services that anticipate the needs of their members from the first time they visit the bank or web page as a prospect.

However, credit unions will need to overcome three potential obstacles to successfully move with the market forces shaping their business.

Recognize that before the digital transformation can succeed, there must be a cultural transformation that leads to redefining how value is delivered to members. The rapid rise of digital services has driven a change in what consumers expect in every area of their lives, including in their relationship with their primary financial institution. The level of accessibility and personalization that e-commerce platforms and social media apps present are now the benchmarks. Long gone are the days when members looked for checking and savings accounts and good, personable service when they walked into the branch. Members now expect much more, including a digital experience that speaks directly to their needs, be it a product or advice. In addition, they now expect all the table stakes that are part of banking, namely low fees, low friction security and fraud protection, and mobile and online tools with 24/7 access. Meeting these expectations requires more than a new digital banking platform or website. Credit unions need to shift internal mindsets and reevaluate the way they deliver value to each member.

Understand that digital channels can be relational and not solely transactional. This is why upgrading or innovating a digital banking platform – typically optimized for transactional activity – is not the path to success. In the “digital-first” environment, members expect technology that is simple and intuitive. They also want technology that makes them feel “known”, the same way a physical handshake from a friendly face does. Relational rather than transactional digital experiences will require a level of relevance that is not delivered in typical personalization models where members often feel like one of many, not one of one.

 

Embrace a technological reality that may seem counterintuitive, namely that machines made intelligent by leveraging data are the best bet for leveling the competitive landscape. The only way to deliver effective content that goes well beyond personalization and speaks specifically to the needs of a consumer at a particular moment in time is by applying real-time data analyzed with the help of machine learning technologies. Instead of seeing machines as a replacement for humans, credit unions should see them as tools that increase response time, productivity, and accuracy and help deliver services to members that would otherwise not be possible.

 

Credit unions are uniquely positioned to gain a head start over banks in the digital movement, due to their history and ethos. These institutions are, by their charter, positioned in a fashion that allows them to become centerpieces of their communities, which is ideal for the demands of today. By shifting mindsets, building comprehensive technology frameworks, and leveraging emerging technologies to provide uniquely tailored advice and direction for their existing and prospective members, credit unions will continue to play a central role in strengthening communities across the United States and providing experiences which most mainstream banks cannot compete with.

About Author:

Craig McLaughlin is Chief Executive Officer at Finalytics.ai, a platform that powers segment-of-one digital experiences for credit unions or other community financial institutions to build and strengthen relationships. Please visit www.Finalytics.ai for more information.