The events of 2020 and the ensuing pandemic shifted the world economy in unprecedented ways. Enforced global lockdowns suddenly changed consumer habits, causing all sorts of businesses to adapt and reevaluate how they can best serve customer and member needs. For many, this meant relying on digital solutions to perform financial transactions that were traditionally conducted in person—amplifying the importance of a sound digital ecosystem.
For credit unions particularly, the trend towards digital solutions implied reevaluating their business model and making some tough decisions. Moving forward, it will be important for CUs to take an honest look at the competition and make the right choices about what technologies to implement to improve their digital infrastructures. But doing so while upholding the key tenets of what makes any good credit union—personal service, compassion, and attention to members—is pivotal.
The changing digital ecosystem
Let’s face it, we’re living in a digital age and “digital first” is no longer a catchy phrase but the new reality. The pandemic brought a boom in e-commerce, online and mobile banking, and the use of digital wallets and other digital account services. The bottom line is members now want user-friendly, seamless digital solutions for their financial needs. This has broad implications for credit unions of all sizes.
Below are a few important things for credit unions to remember:
- The rise of the competition. Fintech companies have been encroaching on the financial space since the Global Financial Crisis of 2008, filling gaps in customer needs and providing people with innovative app-based financial services from their mobile phones. The use of digital wallets like Apple Pay, GooglePay, Paypal, and Venmo have increased significantly since the pandemic started, and even Starbucks has a huge piece of the pie.
- The importance of mobile and digital banking. E-commerce increased by over 40% in the US in 2020 due largely to the enforced lockdowns. Unsurprisingly, contactless payments at credit unions are up significantly since 2020 as well. CUs must ensure their mobile and digital banking services allow members to shop safely and conveniently online.
- The use of third-party vendors. Many credit unions have opted to use third-party fintech companies to fill holes in their digital account services and enhance services like remote deposits and remote credit card processing. However, the problem arises when they use too many different vendors and the user experience becomes fragmented. Members are becoming accustomed to frictionless solutions in digital environments. Choosing the right core that delivers digital products and services directly from within the core, without the need of third-party solutions, will deliver the most seamless member experience.
- Convenience. Consider the popularity of Amazon’s One-click purchasing, and Uber and Lyft’s One-click ride share services. Consumer habits are pointing in one direction towards seamless digital interactions and convenience. Members want to transact quickly, seamlessly, and digitally. And it’s unlikely these wants are going to change any time soon, if ever. In fact, states that have re-opened have not seen numbers return anywhere near to “normal.”
For credit unions, it will be vital to keep their commitment to members while transitioning to more efficient digital account services. A decline in face-to-face interactions does not have to replace quality personal service, a hallmark of the credit union experience. If CUs embrace the communities they serve and choose the right technologies, they should be able to remain competitive while staying true to their core beliefs.
Using the right core system technology at your CU
Many credit unions have seen success by using a credit union core processing system that seamlessly delivers natively built products and services members want and need, cutting out the need for numerous third-party vendors, allowing for a highly user-friendly experience for members. The right core processing solution will serve as as a strong foundation and backbone to your CU and will help improve overall sustainability.
Below are a few features a core processing solution should provide to help defragment the digital ecosystem:
- Digital lending services and eSignatures
- Mobile and online banking services
- Member behavioral insights
- Built-in support
- Cross-selling and marketing to members
Core data processing technology like FLEX have been proven to increase credit union assets and efficiency, while also enhancing their member relationships. In this volatile and unpredictable financial climate, choosing the right core system is one of the best ways your CU can remain healthy, competitive and sustainable. Read our case study below to learn how this has worked for one credit union.