NEW YORK–How far along are credit unions as a community in moving from being analog operations to digital operations?
A survey of credit union executives offers some answers to that questions, as well as other questions around roadblocks, budget and more.
David Rogers of Columbia Business School partnered with CO-OP Financial Services on a survey of 221 credit union executives (63% were C-suite and VP, 19% were managers) around how they see themselves as part of the “digital transformation.”
The research also uncovered what Rogers said are “five takeaways” from which every credit union should learn from.
Below is a look at some of the questions posed to credit union execs, and how they responded:
How important is digital transformation?
- Extremely important 41%
- Quite important: 47%
- Somewhat important: 10%
- A little important: 1%
Who is pushing for digital transformation
- Senior management: 71%
- President/CEO: 67%
- Our members: 55%
- IT dept. 39%
- Managers: 33%
- Member-facing employees: 32%
What new technologies is your digital team focused on?
- Mobile apps: 90%
- Social media: 61%
- Big data analytics: 52%
- Cloud computing 29%
- AI: 13%
- Blockchain: 11%
How is your CU’s budget spent on digital initiatives expected to change?
- A little more: 39%
- Much more: 34%
- About the same: 15%
How do credit unions measure up to other market players, and where do they stand in the lives of the members?
When those surveyed were asked about the pure digital brands they believe set the expectations for a great digital experience among your members, they responded Amazon, Google, Facebook and Apple in that order as top of mind. Others mentioned included Venmo, Rocket Mortgage, SoFi, Q2, in the CU space.
Thinking about these companies, CUs were asked, what do you think your members enjoy most and expect from the digital experience with these brands?
“Ease, speed and convenience were heard over and over, said Rogers. That was followed by access, simplicity and intuitiveness. And two others that “broke in,” he said, were reliability and security.
- “If you can focus on those eight attributes as you develop for your members, it will be a great set of attributes to be a guide and to test against.”
- Other Survey Questions/Responses
- How does your CU’s digital experience measure up to this experience and world class brands?
- Good, but not quite as good: 44%
- Inferior experience: 37%
- Far inferior experience: 9%
- What potential benefits of digital innovation to you think matter most to your members?
- Manage finances through self-serve apps and tools: 84%
- Rapid member service for questions or concerns: 83%
- Better privacy, fraud protection and cyber-security: 68%
- More personalized messages and interactions: 61%
- Feel more relevant to younger members: 52%
- Tools and advice for decision making: 49%
- Which of these benefits to you think you currently under-deliver to members?
- More personalized messages: 60%
- More relevant to younger members: 60%
- Rapid member service for questions or concerns: 56%
- What is the business case for investing in digital innovation in your CU?
- Acquire/attract new members: 92%
- Retain our current members: 86%
- Sell more service to our members: 60%
- Expand into new markets: 36%
- What is your business case for investing in digital innovation?
- Reduce our operating costs: 59%
- Develop new business models: 36%
- Reduce our operation risks: 31%
- Help recruit and retain the best employees: 27%
What are the biggest obstacles to digital innovation at your CU?
- Lack of budget/resources: 59%
- Inability to innovate quickly and effectively: 53%
- Tied to a legacy IT infrastructure: 39%
- Lack of tech capabilities among our staff and outside partners: 39%
- “Inability to innovate quickly and effectively isn’t about budget, it’s about organizational process, and that’s a very interesting one,” said Rogers.
What are some of the other obstacles?
- No business case for how digital investments will pay for themselves: 32%
- Too many directions/lack of focus: 33%
- Resistance to change/traditional thinking: 28%
- Regulatory constraints: 24%
Where do thou think you stand vs. traditional retail banks on digital?
- Middle of the pack: 42%
- Lagging: 32%
- Fast followers or innovators: 22%
- Leading edge: 3%
- Completely missing the boat: 2%
Who is your greatest competitor?
- Traditional retail banks: 43%
- Other credit unions: 20%
- Online credit services, payments platforms: 18%
- Purely online banks: 7%
- New fintech apps and startups: 7%
- Mobile wallets: 5%
Who do you see as your greatest competitor in next 5-10 years?
- New fintech apps and startup: 29%
- Online credit services/payment platforms: 22%
- Traditional retail banks: 14%
What lines of business do you think are at major risk to due digital trends:
- Checking/debit: 71%
- Credit cards: 62%
- Mortgage: 49%
- Savings: 16%
Where are you focused?
- We view our competition as broader than just credit unions and traditional banks: 65%
- We are focused on our members’ changing digital habits and meeting their needs in evolving channels: 56%
- We are rethinking our marketing to attract, engage and collaborate with our members and inspire their advocacy: 55%
- We look to create value through external networks and partnering with other firms: 52%
In managing data, Rogers called one finding a “red light” or big area of concern, and that was the CUs that said, “Our data is organized to be accessible across the organization and provide a complete view of each member.”
A few takeaways for leaders based on where CUs stand now, according to Rogers, are these:
- Focus on raising the bar on your member experience. “Think about why can’t we be like a Venmo or an Apple within our space? Why can’t we demonstrate core traits of simplicity and ease of use?
- Partner with your members. “They should be part of helping you define the agenda and giving you feedback. Get them involved.”
- Make data accessible across the organization. “It’s absolutely critical that you put together a roadmap in your organization for bringing that data together and accessible for anyone in marketing, the CFO, anyone can get a full picture of what’s happening.”
- It’s very important to lean to seed fund new ventures. “We don’t invest in new ideas in the same ways we invest in traditional lines of business. You need to move from your old ways of budgeting to learning to think like a venture capital.”
- Fail smart to innovate fast. “We have to rethink the way we think about failure. The question is you tried something and it didn’t work, and the test is, did you learn from that failure? Or did you hide it? Did we apply that learning to our strategy? Do you share that learning? You want to fail as quickly and cheaply as possible. This is how you innovate faster.”