KOLOA, Kauai–It’s extremely unlikely you’ve given a thought to the operating system underlying the technology that makes reading this article possible. And yet you count on it. Similarly, credit unions need to build out a Personal Financial Operating System for consumers that is ubiquitous yet invisible, but that is also fundamental and trusted, according to one person.
Credit unions have no choice but to get building such an OS, according to Nikhil Lele, leader in EY’s Americas Financial Services Office.
Consumer expectations are racing ahead to a “Digital 3.0” world even though most financial institutions are still trying to get their arms around Digital 2.0, according to Lele. But there is a way to leap ahead, he said during remarks at Co-op Solutions’ CEO Conference.
Step one requires a credit union to shift its internal thinking and to do so much more quickly, according to Lele. It's all about getting into the mindset of connecting to the core proposition of serving the financial needs of the individual consumer and that means addressing a fast-moving evolution, he added.
“You can do many, many, many things, but the inevitable is that no matter what, whether you do it or not, someone else is going to do it faster than you and attack the space in which you operate,” said Lele.
EY and Co-op Solutions have partnered on three years’ worth of extensive consumer research that has found any number of insights, some of which make credit unions uncomfortable and are even confounding, such as consumers indicating they have higher levels of trust in fintechs and that they don’t trust their credit unions to meet their digital needs (see separate reporting).
What You’re Not Thinking About
“The future consumers’ Personal Financial Operating System will center around relationship primacy experiences,” according to Lele. “When you log into your computer, do you think about the OS? Absolutely not. But is it functioning in every moment in time? Yes.”
The credit union OS, he suggested, needs to be about curating content and value for consumers and keeping it all connected together.
“The whole premise is that being a primary financial relationship really matters and it’s going to matter significantly more in the near future,” he said. “This is about serving the individual member at the right moment in time.”
Doing that, according to Lele, requires a comprehensive, immersive, interactive and connected digital ecosystem using all available data about consumers’ financial lives, goals, social styles and personal preferences to produce insight and promote daily decisions that lead to improved financial being.
Boldness, Intention, Commitment
“The biggest aspect is the commitment to filling that role. No matter what, there is a challenge of boldness intention and commitment to (saying) no more incremental change,” Lele said “Leading banks and financial institutions are taking no-regrets actions to drive data-driven growth across banking and lending, payments and wealth management. Time and speed are the reasons for whether you win or whether you don’t. What you’re thinking about someone else is already putting into action. They are worrying about getting to market, making a splash and grabbing share.”
The blueprint going forward, he said, can be seen in the graphic below.
One point Lele stressed several times can be summed up in an observation he heard someone else make about how a leader cannot push an organization into the future. Instead, leaders have to be in the future and pull everyone forward to join them.
A Budget Dilemma
There is another ongoing issue every credit union must confront, as well, according to Lele, who noted CUs are very willing to spend huge sums on required investments, but very little on that which will make the most difference.
“Pathways to long-term growth are not linear,” he said. “Credit unions can drive nonlinear growth by pursuing a primary financial relationship strategy focused on extending relationships across high-propensity channels.”
He added it’s all about what he called the “big journeys” that members are on at any point in their lives, and that includes ensuring members know the credit union is there, too.
A Question for CEOs
Lele asked the CEOs in the audience how connected their leadership teams are across the enterprise, including the entire expanse of sales distribution, front line staff, all the support staff and other functions.
“Can you actually measure a member at every interaction they are having with you in a positive way that allows you to intercept at those right moments?” he asked. “The interaction could be happening with you or with someone else. The leadership needed to stitch this across a financial institution is significant. Very few leadership teams I’ve every observed can execute this with any efficiency.”
If there’s good news in all that, Lele said, it’s that credit unions can likely do that faster than most large bank competitors and even as fast as a fintech. As a guide, he shared, “You can now use the channels and products available to you as input and outputs for a growth strategy.”
An Uphill Road
Lele made clear the road to becoming that financial operating system is uphill, and will require credit unions to be significantly more efficient in capturing the data needed.
“Use every channel to drive a systematic interaction into a journey, not into a product campaign,” he recommended, cautioning that often at institutions by the time data is acted upon in a marketing campaign of any sort it is too late and is very inefficient at driving top of funnel growth.
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