MUSKEGO, Wis.–One organization says if a credit union finds itself with extra budget money this year, it should invest in digital banking, as the service is quickly impacting consumers’ decisions around who is their primary financial institution.
“Like most organizations, credit unions seldom find themselves with extra money for unplanned operational investments,” said Jesse Kohl, president of InterLutions, who emphasized that while digital banking is a key area to watch, two other areas of investment can also deliver big returns—debit card portfolio enhancements and vendor contract automation.
The insights are being shared as part of a CUToday.info series on what to do with unexpected budget surpluses, such as the payment from the NCUSIF many credit unions will receive this year.
The most dynamic and competitive service area within the financial industry today is digital banking—online and mobile, said Kohl.
What One Survey Found
“A recent survey conducted by Harris Poll showed that of all respondents who used online or mobile banking in the last 12 months, 32% would change from their current financial institution to another if they could get a better digital experience,” he explained. “That’s a lot of people who would switch for easier online access, less clicking and remote deposit capture.”
If the credit union already offers digital banking services, it should make sure to invest enough money to keep up with constantly changing digital platforms, Kohl advised.
“Pay attention to the latest digital service enhancements and vital security updates,” he said. “If your credit union does not offer digital banking services, it should be a top priority. Member expectations regarding digital delivery of a credit union’s products and services will only continue to grow.”
Kohl said delaying investments in digital banking will reduce a credit union’s competitiveness and stifle future growth.
Jesse Kohl
“This is a non-optional investment area for any credit union wanting to remain relevant to its members,” he said.
‘Fast-Realized Revenue Gains’
Another area worthy of investment dollars is the credit union’s debit card program, said Kohl. Funding programs that increase card penetration among members, boost card activation levels and generate more frequent card use will serve the portfolio well, he added.
“Investing in building, promoting and servicing your debit card program will result in fast-realized revenue gains—especially if the cards come with valued perks like cash-back rewards, entertainment discounts and travel miles,” Kohl said. “Perks not only attract more users, they build long-lasting goodwill with the cardholder.”
Automating the management, tracking, auditing and benchmarking of vendor contracts can also provide immediate return in terms of re-allocation of resources currently involved in the manual application of these tedious processes, Kohl explained.
“Automated vendor management systems ensure better accuracy in detecting invoicing anomalies,” he said. “They can also red flag contracts that might need renegotiating when benchmarks indicate your credit union is paying more than market price for the service provided.”
Investing in technology that streamlines vendor operations is a “sure bet” in terms of return on investment, said Kohl.
“Don’t forget that investing time in building vendor relationships can give that ROI an extra boost. Optimized vendor relationships help ensure that a credit union is getting fair market pricing from critical vendors,” he said.