“The credit union websites that we analyze, you would think there would be just a tremendous amount of work every year to go and look at 50 of them based on any different criteria. The reality is when you look at those websites, maybe 20% have changed year over year.” -Craig McLaughlin
Earlier this year, Finalytics published its annual Credit Union Digital Maturity Index Report and revealed a staggering statistic. A whopping 86% of credit unions are still ill-prepared to leverage digital opportunities. So why are they struggling so much to go digital?
A State of Readiness for the Digital-First World
Finalytics is a company that lives at the cutting edge of the financial world. This revolutionary financial brand has made a name for itself in the industry by becoming the first credit union platform to apply real-time machine learning and big data to its services.
Finalytics has a famously keen eye for seeing what’s happening in the marketplace, then nimbly leveraging this information to accomplish transformative growth.
When Finalytics releases its annual Digital Maturity Index Report, the industry takes notice. This report is bursting with digital trends and information about being in a “state of readiness for the digital-first world.”
Spoiler alert: Most credit unions aren’t in a state of readiness.
The vast majority of financial brands are bogged down with old-fashioned thinking and timid approaches to digital transformation. Finalytics’ latest data shows that 86% of credit union executives agree that their competitive strategy is reliant on digital, yet also agree that their company remains ill-prepared to leverage digital opportunities.
How can there be such a gap between awareness of the problem and an inability to address it?
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Craig says the COVID-19 pandemic forced credit union leaders to acknowledge how unprepared their organizations were for rapid digital transformation. This brought them into a stage of awareness, yet they’re still unsure how to move forward with resolving this key issue.
Almost across the board, credit union employees say they love being part of their institutions, enjoy being a part of their communities, and deliver excellent customer service. The disconnect comes from not knowing how to find the “secret sauce” that takes customer service to the next level in the digital world.
Customer Expectations are Sky-High
In the past few years, new fintech brands have exploded into the marketplace and changed it forever. While experiencing astronomical growth in their customer bases, these upstarts didn’t have to contend with legacy infrastructures, took risks established businesses wouldn’t take, and built profitability around running on a shoestring.
Meanwhile, they carved out niches in the digital financial marketplace. They wooed away customers from traditional banks and credit unions. And by providing extremely fast and helpful service, they’ve sent customer expectations into the stratosphere.
It’s no longer good enough for old-fashioned credit unions to return their customers’ messages within a few business days. Fintech brands provide immediate answers and instant services. That’s an exceptionally challenging, competitive environment.
Culture Eats Strategy for Breakfast
Culture almost always comes up in conversations about organizational transformation. When Craig interacts with brands struggling to accomplish transformation, he often sees problems with CEOs, upper management, and/or the overall culture.
There’s a saying that “culture eats strategy for breakfast,” and Craig says it’s absolutely true. A company can create the strongest strategy in the world, but a negative culture will chew it up and spit it out.
CEOs and executive teams must be the ambassadors of transformation for a company’s vision, values, and appetite for change. They must be able to say to their people, “You’re good at your job and you’ve done it well for many years, but it’s time to change.”
Change is uncomfortable. Sometimes, it’s even painful. Financial leaders need to support their teams and reassure them that they’ll all get through this challenging period together. Ease everyone into the idea of “being comfortable with being uncomfortable.”
Building Buy-in for Digital Transformation
Genuine transformation requires buy-in from both your employees and your customers. Your employees need clarity, structure, and the freedom to take calculated risks. They need to be empowered to embrace change.
Your customers are the eventual beneficiaries of all this transformation, but along the way, they deserve empathy. Who are they? What do they need? What makes them tick and helps them get through their daily lives? What challenges do they face?
At most credit unions, the front-line workers in the physical branches hold an enormous amount of valuable information about members. Together, tellers and members are experiencing certain frustrations day in and day out, so they can provide helpful insights about what’s limiting transformational change. Start listening - really listening - to these valuable people.
Ask your customers what they need from you and what you aren’t currently delivering. Don’t expect exact answers like, “I want X service.” Allow them to provide feedback about their daily pain points and what makes it frustrating or enjoyable to deal with your organization.
Take all of this feedback and use it to optimize your internal and public-facing processes. Simplify the complexity. If your branch workers use 12 systems to accomplish their daily routines, pare it down to just a few. If your members need to wait 24 to 48 hours for loan applications, shorten it to a few hours.
Do whatever you can to simplify and optimize.
Little Revelations From Big Data
When people aren’t familiar with the term “big data,” they worry that it’s a scary concept. But it boils down to this question: Is your organization using data to drive its decision making?
One of the classic definitions of big data is that it has variety, volume, and velocity. It comes from many sources and is challenging to gather and analyze. Still, it’s well worth your time.
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Big objectives can be accomplished by examining small bits of data. For example, you can start with the data gathered right from your own website, which might be languishing without much attention. What’s attracting people to your website? What are they clicking on? How long are they staying?
From there, go deeper into how consumers behave in the marketplace. Read industry reports like the one mentioned earlier from Finalytics, which analyzes a core group of 50 representative credit unions year over year. Make it your mission to gain as much insight as possible from multiple sources of data, then synthesize it and create action plans based on your new knowledge.
Today’s Top Trends for Credit Unions
Craig advises credit union leaders to keep an eye on emerging trends that are impacting the industry. Here are a few trends to watch.
- Streamlined online account setup and origination funnels
- Risk management for online account opening (OAO) flows
- Positive reinforcement in digital user experiences
- Delivering delight in credit union digital customer service
- Top leadership as ambassadors of digital transformation
- Existential challenges, like the accelerating age of credit union members and the accelerating pace of digital competition
Craig notes that for almost 15 years, he’s seen some of the same trends and challenges remain unresolved. When he goes to conferences and meets with credit union CEOs, he sees the same issues arise again and again: “We’re struggling online.” “We’re not transforming fast enough.”
For many of them, the “aha” moment is that they don’t have to do it all alone. They can bring in external partners, forge new fintech partnerships, and even seek exciting new wisdom from outside the industry. There’s nothing wrong with following in the footsteps of other organizations that have successfully navigated transformations.
By partnering with fintech companies and other innovators, it’s much easier to accelerate the pace of digital change. Plus, it’s likely to deliver a better customer experience that keeps people loyal to your brand.
Here’s the bottom line: There’s no silver bullet for digital transformation. It takes an array of savvy strategies, plus a desire to go beyond the bubble of traditional thinking. As Craig says, “It’s the collective of it - of an organization working together, being passionate, and then driving forward.”
This article was originally published on August 8, 2022. All content © 2022 by Digital Growth Institute and may not be reproduced by any means without permission.