MADISON, Wis.—A trio of market realities is putting pressure on CUs to deliver an exceptional digital experience to members in 2019, says one expert.
“Several new market realities are driving this, but three in particular are pressuring credit unions to adapt for the increasingly digital member,” said Shazia Manus, chief strategy and business development officer, CUNA Mutual AdvantEdge Analytics.
First, consumers are more “emboldened” to act when triggered by a negative experience, said Manus.
“They have more banking and payments options available to them than ever before. The fact is, switching providers is not the burden it used to be,” she said.
Second, the barrier to entry for financial services providers has been dramatically lowered as the connective tissue of the industry becomes healthier.
“Simply put, you don’t need to be a financial institution to provide financial services to consumers,” Manus said.
Third, legacy companies across verticals are succeeding in the digital transformation of analog products, experiences and mindsets, Manus said.
“Disney has completely transformed its guest experience using smartphones and Magic Bands to make every element of a visit to its parks seamless,” noted Manus. “Hospitals and clinics are integrating telemedicine to provide on-demand care via Skype and other VoIP technologies. Even pizza chain Domino’s is transforming, opening up digital ordering to emerging channels like smart TVs and virtual assistants.”
As members engage with these brands they see the fruits of digital transformation, Manus told CUToday.info.
“They largely benefit from it, so they expect their credit union to keep up,” she said.
Many credit union leaders understand digital and data are two sides of the same coin, so they are investing in becoming much more data-centric, said Manus, who added that investment breaks down into five “P’s”: problem, platform, people, process and practice.
Problem
“It’s important to start by identifying problems credit unions believe digital transformation and data analytics can help solve, both for members and operations,” Manus said. “Without consistently pointing themselves toward those ‘True North’ use cases, credit unions can easily slip into a mindset of ‘digital for digital’s sake. If digitizing a product or gathering new data sets does not ultimately solve a problem, the effort and resources are wasted. Worse, similar efforts are met with skepticism in the future, significantly slowing the credit union’s transformation.”
Platform
Manus said technology plays an obvious role in the pursuit of both digital transformation and data-centricity.
“As such, credit unions are making significant investments in strong and agile data analytics platforms. Flexibility is the critical element to these systems,” Manus said. “The platform must be agile enough to grow as credit union’s needs and its members’ expectations evolve. And they will.”
As the industry ramps up use of digital tools, massive amounts of data will be generated—and consumed—at unprecedented speeds, Manus said.
“Iterative systems that can absorb the data deluge and play in the same sandbox with exponential technologies will be critically important,” she said. “Many of the credit unions we talk to are finding those systems in the cloud. There isn’t a server room on this planet capable of handling where the financial services industry is headed from a data standpoint.”
People
Investment in people is especially critical for credit unions that want to become data-centric organizations, emphasized Manus.
“A data-centric credit union understands the critical value of culture, buy-in and talent to drive the strategy forward,” she said. “Investment in people doesn’t only mean hiring data scientists, it can also mean training existing leaders to think differently, act quickly and use data to pivot to meet the evolving needs of the member and the business.”
Process
Any data-centric organization must have a formal way to manage the data flowing in and out of its systems, said Manus.
“A credit union’s data is becoming one of its most valuable assets and needs to be managed like loans—defined, prioritized, audited and maintained,” Manus said. “That’s why we see more credit unions investing in data governance in 2019. Because of the nuance and complexity the credit union industry presents, most will partner with consultants or vendors that have navigated this road with other incumbent organizations and understand the changes of legacy infrastructure.”
Practice
A data-centric credit union goes into its data strategy with a nimble heart and an “experiment-to-learn philosophy,” said Manus.
“Leaders apply the rules they learn consistently, and in alignment with an established process. At the same time, they are open to evolution and committed to continuous iteration,” she said. “As credit unions invest in initiatives that will bring about that critical data-centric mindset, they will have to support it through constant and enterprise-wide communication of the data ‘wins.’ Letting the whole cooperative participate in these micro-celebrations will go a long way toward generating the best returns on their investment.”