By Greg Michlig
The future of banking.
It’s a phrase we see used in news articles and in financial marketing campaigns. The phrase implies many things, but the primary takeaway is that financial institutions are finding new ways to shift to a digital-first business model.
Many banks, particularly the big ones, invest a significant amount of time and resources in digital and marketing the resulting deliverables. This may be because they thrive on delivering for their investors who can provide the capital to be aggressive in these endeavors. Most credit unions, on the other hand, can only rely on retained earnings, reinvesting with a focus on members first. Our commitment to our members sets us apart from the competition. But, in some ways, I fear our competitive advantage is being eroded due to scale and funding challenges relative to digital offerings.
Work to be Done
According to the 2021 American Consumer Satisfaction Index, credit unions trail banks when it comes to customer, or member, satisfaction. This is not new news, but it is a relatively new phenomenon, as credit unions held the advantage in this index for many years prior to the rise of digital delivery. Banks received high marks from consumers for the quality and reliability of their mobile apps, website satisfaction, and helpfulness of tellers and staff. While I’m confident we don’t lag in customer service, I know that there is work to do when it comes to digital offerings.
I believe we can pair our tried-and-true member service approaches with digital solutions. The two can comfortably coexist and could prove to be a dynamic duo for our system. The pandemic showed us that while there is a global demand for better technology, people still value in-person experiences and human connection.
There is not a one-size-fits-all approach to digital transformation. That’s why Credit Union National Association’s Credit Union System Digitization Working Group is committed to developing a maturity model roadmap, digital journey assessment tool, and a credit union digitization score. These three things will help identify key strengths and weaknesses and provide guidance for credit unions, depending on their individual resources and strategies.
Assessing Where You Stand
These tools will allow leaders to consider how far along their credit union is on the road to digitization. They will provide direction relative to opportunities to expand digital features and to close clear technology gaps. And, for those offerings that are placed in-market, credit unions will be able to run benchmarking analyses, assessing where they stand against institutions of a similar asset size.
One thing the Digitization Working Group noticed is that there is a disconnect between internal technology capabilities and external digital strategies. Many credit unions, particularly those with less manpower, face issues with fragmentation due to inefficiencies or lack of resources in technology infrastructure. If credit unions want to provide members with sophisticated products and services, they need systems that facilitate their strategies to drive forward with innovative technology.
Starting From Within
Digital transformation starts from within. Whether it is upgrading technologies or optimizing talent acquisition, credit unions must prioritize internal digitization capabilities before shifting to external efforts.
And let’s face it, fintech companies are setting a high bar for consumer expectations. While fintechs may hold a competitive advantage due to their structure, credit unions need to find ways to compete on an unlevel playing field.
But that’s not the only solution. Many credit unions have found ways to work with them, as opposed to against them. As part of a comprehensive digital strategy, credit unions can explore partnership and investment opportunities with fintech companies to elevate innovation with their product offerings.
Our credit union system is stronger together. Collectively, we make up a small and slowly growing portion of the financial services market share. Digital solutions not only help us to maintain that share but can also accelerate it while maintaining relevance and increasing member satisfaction in an ever-changing environment.
Helping Each Other
Let’s help each other the same way we help our members, leaving no stone unturned. Whether large or small, credit unions and supportive system organizations can all learn from one another and provide collective value for our movement. If we think about our opportunities on a system level and purposefully assemble a caravan of support, we can bring along any credit union willing to travel with us down the road toward digitization.
Credit unions must deliver on digital. The future of our movement depends on it.
Greg Michlig is the executive vice president and chief engagement officer of the Credit Union National Association. Michlig leads the Credit Union System Digitization Working Group.