The Credit Union Digital Transformation: Why You Can’t Afford to Delay

When your financial institution has enjoyed decades of consistent success, it’s easy to assume what worked in the past will ensure your survival in the future. And that’s one of the leading reasons that credit union digital transformation — committing to integrating tech at every level of your organization — still lags behind other industries.

Of course, managing a digital transformation isn’t cheap or easy. This endeavor generally requires a significant investment of budget, time, and energy, as well as an entire organizational culture shift — which is why so many credit unions continue to postpone it. 

Unfortunately, delaying this critical shift can be lethal to your organization.

To help guide your next steps, here’s some useful background on digital transformation, top reasons you can’t keep avoiding it, and a few tips to help streamline your transition. 

What is Digital Transformation?

Digital transformation is the process of integrating digital technology into every aspect of your business — from your processes and culture to the experiences you deliver. Making this shift helps your institution run more efficiently, better serve your members, meet growing market demands, and lay the foundation for continued innovation.

For example, one element of credit union digital transformation is deploying a modern and intuitive digital banking platform. To create success with your new solution, you not only have to select (or build) the right product, but you also need to ensure you have the processes, skills, and culture to support this tech.

Member Habits are Shifting

Credit unions have the highest customer satisfaction score when compared with global, regional, community, and direct banks, according to data from the 2018 FIS Performance Against Customer Expectations study.

However, credit union members are becoming increasingly tech-savvy, and their demands are evolving. If institutions fail to meet new expectations, it will jeopardize their ability to keep members satisfied. 

While Millennials, Gen-Xers, and Baby Boomers all cited “trust” as the No. 1 item financial institutions should deliver, digital self-service was the second most important attribute for Millennials and Gen X-ers, and third overall, according to data from the same FIS study.

And given that Gen-Z, the first fully digital native generation, has grown up using smartphones and engaging online, the demand for more sophisticated technology will only continue to grow. Credit unions should respond by offering services that rival big banks and online payment apps, such as peer-to-peer (P2P) payments, mobile deposit capabilities, and a personalized digital experience.

By making technology a central part of customer service and experience, credit unions can attract and retain digitally savvy members — a chunk of the market that’s rapidly expanding.

Security Risks are Mounting

Financial institutions have some of the strictest privacy and security regulations in the world — and for a good reason. More than 25 percent of malware attacks target financial institutions, according to 2019 data shared by Forbes.

“Around the globe, banks are seeing more frequent and more aggressive cyber attacks,” said  Hadar Rosenberg, threat intelligence research analyst at IntSights, in the same article for Forbes. “And the severity and sophistication of these attacks are increasing all the time.”

Maintaining compliance is already a challenging endeavor. But, as cybercriminals become more advanced, meeting regulations and keeping members safe will become even more complicated.

That’s why it’s essential you protect your data infrastructure by developing more thorough internal security efforts. From blockchain technology to multi-step authentication, there are plenty of proactive tech-based measures credit unions can take to better protect members from hacking attempts and fraud.

Without adequate technology, though, institutions will struggle in the growing fight against cybercrime.

Disruptors Are Looming

Throughout history, credit unions have contested with only one major competitor: banks. But today, tech giants like Facebook, Apple, Amazon, and Google are threatening to disrupt the market for everyone.

Massive technology organizations have already transformed the way consumers engage with businesses and the experience they expect. For example, according to a survey by Adobe, 42 percent of people become annoyed when content isn’t personalized.

Now, those same tech companies are changing what your members value in a banking environment, too. For example, people expect clean mobile app displays, intuitive UX, and streamlined processes (like when they’re applying for a loan).

In short, committing to a credit union digital transformation can help your institution better compete with Silicon Valley darlings.

How to Succeed in Your Credit Union Digital Transformation

Shifting all processes to rely on digital technology is a significant undertaking, but there are a few things you can do to make sure you survive (and thrive): 

Start with clear objectives.

Investing in technology just for the sake of it can guide you down a path of unnecessary expenses and exhausted budgets. Instead, identify what you want to achieve and use those goals to help drive your decisions.

For example, if you’ve determined that delivering a top-quality customer experience is your primary objective, you can align your technology, strategy, and culture around that goal.

Stay informed on emerging trends.

One of the biggest mistakes you can make is following your competitors. When you’re only doing what everyone else is doing, it’s almost impossible to get ahead.

Instead, stay abreast of leading-edge trends. Rather than looking to other successful credit unions for inspiration on what to do next, keep an eye on the tech giants and emerging consumer behaviors so you can be among the first to debut new solutions.

Prioritize knowledge sharing.

Knowledge is power — especially when it comes to rolling out a massive shift within your organization. You need to make sure your entire workforce is well-prepared and has access to all the guidance and insight they need to work efficiently, effectively, and collaboratively.

Adopting a knowledge sharing platform can ensure everyone across your entire institution is working with the same, up-to-date information. This way, employees will have all the resources they need to appropriately handle customer questions and understand their individual role in meeting organizational objectives.Your credit union digital transformation is not a one-and-done event. Instead, it’s a process that will continue to evolve over time to ensure you’re meeting your members’ ever-changing needs and expectations. The sooner you get started, and the sooner you put the right tools and strategies in place, the more success you’ll create now and in the future.