Why It’s Time for Credit Unions to ‘Double Down’ on Innovation

Two heads are frequently better than one, and good things often come in pairs.

That could be why, when Brian Scott, chief growth officer at credit union service organization PSCU, was asked as a part of PYMNTS new executive series “The One Thing” about what people always ask him, he came back to us with two.

“It is always ‘what’s next?’ — that’s what people want to know, it’s the bygone. And then, it’s ‘how do we compete with what’s coming next?’” Scott said.

After all, the financial services and payments industries are rapidly undergoing significant developments that require financial institutions to adapt and innovate.

“There are a lot of things that are coming next. Some of them we’re aware of because we can look around the rest of the world and see them coming, like open banking… and faster and instant payments with the new FedNow® Service,” Scott said.

“I wouldn’t even say that those are what’s next — they are happening now,” he added.

Evolving in concert with industry innovations are the ever-shifting expectations of consumers.

As many financial players know, understanding the changing needs of consumers is crucial in providing them with the best service.

“A lot of financial institutions have pulled back a little bit on innovation, kind of taking that wait-and-see approach,” Scott said. “And I’d say just the opposite. Now is a great time to double down on the innovation.”

Meeting Consumers Where They Are

Staying ahead of the curve is a great way for financial organizations to delight their current customers, while at the same time differentiating themselves in the marketplace to acquire new consumers.

“Financial education and financial wellness are two important areas for financial institutions to focus on right now — as is capitalizing on the emergent idea around delivering personalized and connected experiences,” Scott said.

Still, these advancements require financial institutions to adapt their systems and processes to meet consumers’ changing demands.

One example Scott gave of how financial institutions can innovate around the connected experience journey is “being able to pick up a loan application in the call center when I’ve dropped it digitally and pick it up right where it was, not starting all over.”

“Those kinds of things are super important for financial institutions to focus on right now,” he said.

After all, ensuring that account holders can seamlessly transition between digital and offline channels without losing progress or having to start over may very well become table stakes in the future, at least as it relates to the ways in which financial institutions can deliver personalized and connected experiences to their members and customers.

Among the other changes that financial institutions need to keep up with in order to remain competitive include how people use and interact with data, which can help serve as a foundational layer underlying increased personalization.

Activating Financial Institutions’ Own Assets

By providing account holders with the knowledge and tools to make informed financial decisions, financial institutions can better serve their clients and build trust.

But Scott said there’s more that financial institutions can do for themselves, as well.

“Financial institutions, like insurance companies, they’re sitting on a lot of dollars. And they may not feel like they’ve got dollars to spend, but they have a significant amount of capital, and that capital can be a war chest, and it can be used to help them compete in the marketplace,” he said.

“I think a lot of it’s always viewed as, ‘we have to push things through our operating expense budget’ instead of looking at this from a capital investment perspective,” Scott said.

The payments industry is currently undergoing a transformative phase, and financial institutions must navigate these changes to thrive in the digital era. With technology disrupting the traditional banking model, financial institutions also need to double down on protecting their data and account holder information with robust cyber security programs.

“While [technology] can be transformative in how you service and support the end consumer, it also opens up the gates a little bit from a data protection, cybersecurity protection perspective … and cybersecurity needs to be a big area of focus,” Scott said.

As for what the PSCU executive sees coming around the corner?

“The U.S. is really just scratching the surface on this idea of open banking,” he said. “So that’s really a big one, but it is coming sooner — more in the 18-month timeline. Looking further forward, I think immersive technologies like AR, MR, VR (augmented reality, mixed reality, virtual reality) will play a role, and financial institutions need to start thinking about how to embed that experience in their financial institution’s app.”