By John San Filippo
Finopotamus has assembled a panel of experts in a new recurring series, The Industry Leaders Forum (ILF). Each month, we’ll ask the panel a broad technology question and share their informative responses. Due to tremendous response, we’ve divided the first ILF installment into three parts. Respondents are presented in alphabetical order by company.
Part 2 includes responses from:
Kevin Polinsky, Senior Director, Fintech Solutions, CUNA Mutual Group
Baron Conway, Senior Vice President & Head of Client Relations, CuneXus
Michelle Wilkinson, Senior Advisor of Retail Banking, equipifi
Shanon McLachlan, President of Credit Union Services, Jack Henry
Rafael DeLeon, Senior Vice President of Industry Engagement, Ncontracts
Hannah Johnson, SVP & Chief Operating Officer, Origence Lending Services
For February 2023, Finopotamus asked our panel:
Digital transformation is a tough topic because every credit union has a different starting line and there is seemingly no finish line. What’s your most essential advice for credit unions regardless of where they are on their digital transformation journey?
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Kevin Polinsky, Senior Director, Fintech Solutions, CUNA Mutual Group
Know where you're going and how to get there. A critical component to any credit union digital transformation is a roadmap that takes into account your unique circumstances and is aligned with your strategic goals. Key to this is understanding members' needs and preferences and tailoring services and products accordingly, it should never be just about implementing new technologies to check a box; rather it needs to address how that technology delivers on a business objective, improves a member's experience, or creates operational efficiency.
For instance, a well-defined roadmap to might enhance the member experience by making it easier, faster, and more convenient to access and use credit union services. This may involve creating an end-to-end experience that allows members to interact with the credit union across multiple touch points and channels seamlessly throughout the entire purchasing and borrowing journey.
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Baron Conway, Senior Vice President & Head of Client Relations, CuneXus
At the Apple Worldwide Developer Conference in 1997, in a now famous response, Steve Jobs said. "... you've got to start with the customer experience and work backwards for the technology … What incredible benefits can we give to the customer? Where can we take the customer?" This is even more relevant today with the way we are all surrounded by technology that touches every aspect of our lives.
Steve Jobs said it best. The most critical piece of advice I can give to any credit union on their digital transformation journey would be to start with the member and then expand. And this does not merely refer to the front-end experience on a mobile device or a website. It touches all aspects of user engagement. From the design of a branch, to how a chatbot needs to interact with a human; the ease of accepting a pre-approval for a loan, how that loan is processed, getting funds into the hands of the member quickly; and all the way through to the ease and simplicity of the experience for employees.
A user centric approach to your digital transformation ensures you start with the needs and interests of members, which allows credit unions to offer differentiated, relevant, and engaging personalized financial services that are designed to help them achieve their financial goals.
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Nick Evens, CEO, Curql Collective
Pay attention to the research coming from all of the think tanks, digital and mobile platforms, and players in the financial services industry and do something (anything) that is high on all the lists. If you have not addressed digital account opening or quicker, easier loan applications, you must do it. If you are ignoring the fact that Gen Z is not going to talk to a person and come into your branches, what are you doing about it? All credit unions are on a digital journey of some sort and all say they have limited bandwidth and just can’t do everything. I would challenge each to make sure their priorities are addressing the member needs and not what they think they need.
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Joseph Akintolayo, CEO, Deposits
In today's digital age, credit unions face unique challenges in their journey towards digital transformation. However, one piece of advice stands out above all: Prioritize the needs of members throughout the process. As members increasingly use mobile apps, credit unions must offer accessible and innovative fintech solutions that meet their evolving expectations.
Embedded finance provides an excellent opportunity for credit unions to delight customers by making it easier for customers to access digital wallets, cashless payments, and loan and savings products, among others. This not only improves the customer experience, but also creates new revenue streams for credit unions.
Credit unions must invest in technology that enables them to keep up with the ever-changing needs and expectations of their members and they should look to partner with embedded fintech platforms with easier paths to digital transformation such as those with no-code, low-code, and open banking solutions which can help them quickly adopt and integrate new technologies without replacing their legacy infrastructure.
In essence, by prioritizing members and investing in embedded finance solutions, such as those provided by companies like Deposits, Backbase, and Q2, credit unions can successfully navigate their digital transformation journey and improve the customer experience.
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Michelle Wilkinson, Senior Advisor of Retail Banking, equipifi
Digital transformation will always be about the members and their experience. Credit unions get pitched all the time on innovative technology and transformative services that promise a better way to do business. Unless the credit union’s members want or need the product or service, it doesn’t matter how cool and innovative it is. If you are a credit union and discussions on digital transformation don’t begin with an assessment of what the member values, and quantifiable benefits to their banking experience, it’s time to start.
Once you gain an understanding of core member needs, you can then evaluate your existing banking suite to perform a gap analysis. However, digital transformation doesn’t just mean bringing in something never seen before. In fact, some of the most impactful transformations take the path of least resistance. In my experience, the most successful products implemented are those that make banking easier for the member without requiring them to change how they interact with their credit union and their existing digital app.
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Parker Graham, CEO of Finotta
As interest rates increase, attracting and retaining deposits will be a significant focus for credit unions in 2023. One way to effectively do so is to strengthen existing digital banking platforms. Traditional PFMs (personal financial management tools) have historically been relied upon to deepen relationships and generate revenue, but they offer little opportunity for credit unions and do nothing more than provide fancy pie charts that show a member’s spending. Ultimately, they fail to provide true guidance.
No matter where a credit union is in their digital transformation journey, a new approach to traditional PFMs should be considered: personalized financial guidance (PFG). PFGs offers guidance on what members can or should do with their money to meet their specific goals – from paying off debt, starting an emergency fund or building wealth. The credit union can then pinpoint exactly where that member is on that journey and provide products and services that meet their specific needs at exactly the right moment.
One community financial institution to recently integrate a PFG into its existing digital banking platform saw dramatic results, including 120 new savings account opportunities within the first 24 hours, averaging five savings accounts per hour. By the end of the first week, a total of 257 account opportunities were discovered. That number rose to 400 after 30 days and then 1,000 after 60 days. This is clearly a winning strategy to not only increase digital engagement, but also increase deposits.
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Rick DeLisi, Lead Research Analyst, Glia
The most essential advice for credit unions is to make sure their members have an easy, effortless way to communicate and collaborate with the credit union when a question or issue arises—whether they choose to initiate a contact online (as 84% of customers do) or by phone. Nothing causes member abandonment or erodes loyalty quite like an unnecessarily high-effort interaction.
To this end, the most progressive credit unions are now marrying the digital and phone experiences for a single, unified experience. This allows members to seamlessly communicate with a live representative via chat, OnScreen voice and/or video within the digital domain simply by clicking a button on their screen; or via a traditional phone call enhanced by digital collaboration tools when on or near a screen. This greatly reduces member effort, and also makes the rep’s job easier by providing them with more visibility into the member’s journey.
Merging traditional phone support and digital communications into an integrated interaction platform will enable credit unions to provide a loyalty-building member experience while also reducing costs. Any time you can be accomplishing both of those things simultaneously, you know you’re doing the right thing.
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Shanon McLachlan, President of Credit Union Services, Jack Henry
Every credit union defines digital transformation differently and all are at a different stage in their process. Regardless of the definition, this transformation should be focused on ways the credit union can better serve their communities. Embarking on this journey requires a credit union to identify their strategy, then find relevant tools to support it. Part of this strategy may include considerations around pursuing a specific market opportunity in their member community. Some credit unions may want to support most of their members in ways that are differentiated by service, price, speed, and convenience. Other credit unions choose to differentiate themselves by focusing on a subset of their membership, offering specific products to address their needs.
Credit unions have been built on successfully serving these focused communities, which can continue to be a viable growth strategy. Once a credit union identifies their market opportunity and pain points, they will have a better understanding of which services will best serve this segment. Credit unions can then leverage open infrastructure to embed these fintech services into their digital banking experience, helping to create seamless and differentiated financial experiences unique to their targeted strategy. Digital can also be a way to extend a credit union’s specific offerings beyond their geographical footprint, making these tools more accessible and affordable to members of a specific segment.
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Rafael DeLeon, Senior Vice President of Industry Engagement, Ncontracts
Risk and compliance must be at the center of every initiative, especially digital transformation efforts.
Digital transformation isn’t just a matter of choosing technology. It’s understanding and justifying the reasons to make the change, and identifying the challenges that stand between a credit union and success. It’s a risk-versus-reward calculation.
Compliance is one of those risks. Many credit unions assume they aren’t at risk of compliance violations because they are member focused. Yet the NCUA found nearly 15% of federal credit unions it examined had consumer compliance violations. When embarking on new initiatives, it’s important to have a strong compliance function that can identify pertinent regulations and ensure ongoing compliance.
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Doug Brown, President, NCR Digital Banking
When it comes to digital strategy, buy-in is incredibly important; credit unions need to prioritize securing buy-in and creating champions across the entire organization, but especially from the executive team. If there isn’t alignment and a shared vision from the C-suite, it will be nearly impossible to be successful.
Institutions must strive to have every employee, from the CEO to the call center and branch staff, support the project and feel a sense of ownership. If employees are excited about the direction of the project and the new tools they’ll be armed with, it will come through in their work. Credit unions should educate employees that digital isn’t a threat to their jobs but rather an instrument to help them succeed.
Creating content like training videos and communications can also be a valuable way to educate employees on the new platforms or solutions and what exactly will change and when. There will likely be a need for adjustments around team structures, how resources are used and/or how budgeting is allocated. To help ensure the digital transformation project goes smoothly, agility and transparency are key.
Credit unions should also ensure their technology partners have similar roadmaps and perspectives when it comes to innovation. If the credit union and digital banking partner don’t see eye to eye, the project isn’t set up for optimal success.
Finally, it’s critical to outline how success will be defined from the onset; this is key to any effective project. By setting parameters, credit unions will be able to keep a better pulse on how the project is playing out and what improvements or adjustments they might need to make.
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Hannah Johnson, SVP & Chief Operating Officer, Origence Lending Services
My best advice to credit unions on a digital transformation journey is to break it up into manageable chunks. There’s no need to try and tackle the process all in one go. One of the main reasons that credit unions have traditionally delayed or poorly implemented a digital transformation project is because the process itself can be daunting and complex if not carefully planned. Thus it can be difficult to work through basic planning challenges while simultaneously trying to implement large organizational changes.
When looking to begin digital transformation, there are two focus areas where I recommend that every credit union begin: member experience and internal buy-in.
The guiding north star of any credit union’s digital transformation process should remain their members’ experience. Learn specifically what your members want and need for a smooth experience and build your digital decisions around that. For example, the pandemic rapidly accelerated the adoption of digital tools like app-based mobile banking, and as a result, many people now expect that their credit union will offer an excellent mobile app experience comparable to any national bank. Many credit union members also enjoy being able to go into their local branch and talk to another human face-to-face, in addition to the digital experience, so the challenge is in giving your differing members the omnichannel experience they’re asking for.
To execute any digital transformation project, there must also be leadership and stakeholder buy-in. True commitment and genuine enthusiasm from stakeholders are critical to success because without it, there won’t be enough steam to keep the process moving during the most challenging parts. While few credit unions today are truly starting from square one with digital transformation, and there are many that may have gone mostly paperless, some still have people doing manual work that could be automated. As a result, credit union members could find themselves waiting weeks for approval of an online loan application that could have been completed in less than an hour if automated.
The bottom line is that any credit union can benefit from digital transformation if the project is approached with care. Those that don’t embrace technology to drive member engagement and increased satisfaction will be at a competitive disadvantage. Members are the driving force behind the business, and a focus on what they want and need is critical to ensuring the long-term success of any credit union.
your credit union’s digital transformation strategy.