The Top Five Ways for Credit Union Tech Teams to Drive Digitization

This article was originally published in CUbroadcast.

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The banking industry is in the middle of a rapid digital transformation – customers increasingly want to do their banking via apps or online, which has reduced the need for physical branches and placed a premium on effective digital tools. Credit unions are no exception to this trend, and their historic commitment to member-first banking is all the more reason to ensure that their digital platforms are reliable and user-friendly.

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There are several principles credit union tech teams should prioritize as they scale up their digital operations: don’t try to do everything in-house, build teams with strong change management skills, focus on cybersecurity, define what a successful digital transformation looks like, and use data analytics to generate insights on customer behavior and preferences. By observing these principles, credit unions will strengthen their relationships with existing members and expand their customer base. Let’s take a closer look at each one.

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Forge relationships with fintech companies.

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Many credit unions are community institutions that don’t have large R&D teams or sprawling IT departments. This is why it’s no surprise that credit unions are partnering with fintech companies to offer powerful digital tools while keeping costs under control – or even reducing them.

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The proportion of banks that describe fintech partnerships as important jumped from 49 percent in 2019 to 89 percent in 2021. However, while just a quarter of banks see these partnerships as a strong driver of growth over the next few years, 44 percent of credit unions do. This is a reflection of the fact that relationships with fintechs can reduce costs and expertise requirements, get solutions implemented more quickly, and ease maintenance burdens. Reinventing the wheel isn’t always the best way to leverage technology.

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Build teams capable of driving and managing change.

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It has never been more critical for credit union employees to be adaptable and willing to learn. According to a PwC survey, 77 percent of employees say they’re ready to “learn new skills or completely retrain” – a healthy attitude at a time when automation and globalization are increasing the demand for skilled work, and an encouraging sign for HR teams in rapidly digitizing industries like banking.

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When credit union leaders build teams with change management in mind, they’ll be able to deploy technology more quickly and productively. They’ll also be capable of adjusting to evolving member needs in real time, addressing problems as they arise, and saving money by leaving cumbersome and error-prone manual processes behind.

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Make cybersecurity a core priority.

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Trust is at the heart of any credit union’s business model. As the digital transformation picks up momentum, it’s essential for members to know that their sensitive data is safe. A Pew survey found that 79 percent of Americans are concerned about how companies use the data they collect, and credit unions should be particularly attuned to this concern considering the amount of personal financial information they possess and their responsibility for securing account numbers, credentials, and so on.

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There are many ways credit unions can build cybersecurity into their digital operations: by deploying tools such as multi-factor authentication, password managers, and VPNs; consistently updating all apps and software; and providing employees with cybersecurity training. Verizon’s 2022 Data Breach Investigations Report found that 82 percent of breaches involve a human element, which is yet another reminder that digital literacy and training are vital – especially as credit unions continue to oversee a sweeping digital transformation.

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Use data analytics to provide better member experiences.

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One reason cybersecurity is indispensable for credit unions is the need for robust data analytics. When credit unions collect member data, they need to be transparent about how this is done, what cybersecurity measures are in place, and how members will ultimately benefit.

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For example, 72 percent of banking customers say personalization is “highly important.” Data collection is integral to providing personalized services and experiences, as it allows credit unions to address individual pain points, learn about member preferences, and determine how digital services are being used. Credit union leaders can use this information to offer the specific features members want, customized engagement, positive experiences across touchpoints, and to ensure they’re focusing on the best digital transformation to meet their goals for member experience.

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Explore cloud-based services.

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It would be far too expensive and laborious for most credit unions to develop technology in-house, which is why the interest in working with fintech companies is surging. Cloud computing provides scalability, cost-effectiveness, and flexibility – all critical elements of a successful digital transformation.

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Cloud platforms can facilitate communication and collaboration, standardize processes across the organization (which reduces the likelihood of costly errors), and enable more efficient workflows. Cloud SaaS partnerships lower operational costs, while allowing credit unions to provide members with the digital resources they increasingly expect.

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There has already been a digital revolution in banking: 78 percent of American adults prefer to do their banking on an institution’s website or app, and they want more and more digital features (peer-to-peer transfers, mobile check deposit, etc.). This is why it’s no surprise that “digital transformation” has become a buzzword in the industry. But it should be more than a buzzword – it should be accompanied by a member-first strategy that will provide value through innovation, efficiency, and most importantly, the customer experience.