Credit Unions

How A Digital Makeover Could Be Key To CUs’ Member Acquisition Plans

Digital overhauls can help boost credit unions’ online presences, but member data must be fiercely guarded during this transformation. In this month’s Credit Union Tracker, PYMNTS speaks with Timothy Anderson, CEO of United States Senate Federal Credit Union, about how the firm works to keep the data of U.S. senators and their families secure while enabling access to digital banking services.

Competition for customers — especially millennials — from larger banks and FIs has long required credit unions to keep pace with their more innovative counterparts. This often means providing digital solutions and convenient banking options despite smaller technology and innovation budgets, however. Security is an ongoing concern as well, with countless fraudsters set on hacking CUs to obtain customers’ data.

A digital infrastructure overhaul that boosts CUs’ online presences, accelerates new product and service introductions and improves staff productivity can help CUs expand their customer bases and operations, according to Timothy Anderson, CEO of United States Senate Federal Credit Union (USSFCU). The CU recently revamped its infrastructure to compete against banks and attract more members.

“One of the things that we often say is that we always have to be mindful of protection and security,” Anderson said. “The No. 1 goal is serving our members, obviously, and making sure that we’re secure and safe — especially with all the delivery channels that we offer.”

Serving members means more than releasing products that align with the latest trends. Credit unions must discover where and how their members want to transact and then ensure their in-house growth and innovation strategies match up with those preferences. USSFCU is now working to balance its online and physical presences to better engage with current and potential customers.

Attracting Customers With Unique Brand, Financial Stability

USSFCU was chartered in 1935 by nine U.S. Senate employees and now has more than 40,000 members, mostly politicians, their families and staff. The CU also attracts members from across the country, Anderson said, most of whom are interested in USSFCU because of its status as the official credit union of the U.S. Senate.

“That [fact] brings a lot of stability that most other financial institutions don’t enjoy,” he noted. “However, that is the floor where our stability starts, and we have built on that for almost a century. Making measured decisions [on] growth and expansion that ensure we grow at a healthy rate while incurring as little risk as possible has been a longstanding strategy for [us].”

Fraud perpetrated against customers’ personal and financial data is a major challenge for all FIs, and the industry’s digital push into mobile banking is opening up new channels for both customer interactions and cybercriminals. CUs need to ensure that their operations are secured if they want to maintain member loyalty.

Credit unions have deep senses of community among their members, meaning that breaches could do incalculable damage to that trust — and to CUs’ bottom lines. USSFCU has taken steps to mitigate such issues, however, sometimes going as far as avoiding sharing data with third-party providers to keep members secure.

“In terms of security, we are pretty much averse to sharing member data,” Anderson explained. “I believe [that] things have kind of really evolved. … We take extra precautions, and … [that] oftentimes means that perhaps we won’t [share data]. ”

That trust has been documented as crucial to success, too. Recent PYMNTS research found that 65 percent of surveyed CU members cite the feeling as the main factor for picking a primary credit union. USSFCU’s high-profile member base has made security even more important, with management often operating under the assumption that USSFCU is constantly under attack to prevent major problems.

“Because of who we serve, it goes without saying that member security and protection of member data is of the utmost importance,” Anderson said. “We go to extreme measures to ensure that our data security meets the highest levels and undergoes rigorous testing to ensure what we have in place is impermeable.”

Security issues are always changing, though, and USSFCU must continually evolve its protections to match those shifts. This includes upgrading its infrastructure to ensure its IT team has the best chance of preventing data-related catastrophes.

Digital Makeover Pushes Security, New Services 

USSFCU knew it needed a technological makeover to keep up with fraud’s sophisticated nature and permanently provide the necessary levels of security. It partnered with a cloud infrastructure and digital workspace technology provider to drive its digital transformation and scale its operations, shifting to a “software-defined infrastructure.” Its partner’s solution includes a converged storage framework that allows USSFCU’s relatively small IT team to securely and rapidly deliver applications and services to customers as well as efficiently manage remote branches.

One significant benefit has been that the CU can now expand its online capabilities and innovate more quickly. Smaller resource pools may make small operations feel constrained, but Anderson believes many fail at innovation because they lack organizational IT strategies that prioritize solutions appropriate to the CU and its customers.

“There’s [probably] not a bank or credit union that … doesn’t have mobile banking, so we have the typical mo- bile banking products,” he said. “We’re not looking to have the best products out there, but we’re looking to have products that our members want.”

USSFCU serves more younger customers than one might think, Anderson added. Young pages and interns staff the Senate, and many of them are members of Generation Z. These members are more comfortable with mobile banking — meaning credit unions need to offer such options — but they also value branches for informational opportunities.

“Traditional branches are transitioning more to relationship centers,” Anderson explained. “They are quickly becoming less of a place to make transactions and more of a place to engage, inform and educate. … We [plan to] balance these centers with robust online banking and mobile app technologies that will allow members to perform almost any function they would need from their device.”

USSFCU and its CU counterparts will be around for a while, especially if they continue to evolve and deliver on their members’ preferences. Digital transformations will help them remain safe and scalable banking destinations for their members, regardless of their members’ ages or workplaces.

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