Why Mobile Banking at Credit Unions Demands More Than an App Refresh

For credit unions, the move toward becoming “smarter” digital financial service providers entails embracing several strategic and technological shifts.

David Durovy, senior vice president of transformation at i2c, told PYMNTS that many financial services firms, credit unions included, have historically relied on basic alerts, member prompts and generic digital coupons, some delivered via mobile apps or SMS text.

But that’s not enough, and members want their credit unions (CUs) to know a lot more about them, and to have an engagement that boils down to a conversation. Credit union members don’t want to be talked to by their banks, said Durovy — they want to talk with their CUs.

Getting there is no easy feat and means doing a lot more than simply updating and refreshing banking apps.

As he noted, “it’s easy to throw around the word digital,” and “digital experiences, digital first, they are buzzwords we hear every day across the industry, across a variety of use cases, but specifically for the credit union audience.” But these smaller financial institutions (FIs) have challenges in the mix as they seek to modernize operations and their members’ banking experiences.

Compared to national banks, said Durovy, credit unions face budgetary constraints, and their staffing resources are far outpaced by their larger brethren. In order to forge ahead with new product and service innovations, credit unions have outsourced or utilized third-party aggregators to deliver a number of services that are critical for their member base.

Those third parties can include a broad range of providers, spanning core platforms to card issuing services. But in some cases, those same providers might not have the capabilities on hand to serve a credit union’s specific product roadmap or the services its individual and corporate clients are demanding.

Most credit unions’ members want an enhanced mobile experience, where, as Durovy said, many digitally savvy individuals, especially younger generations, have never had to write a paper check.

Adjusting to a Mobile-First World

“We’re in a mobile-first and mobile-native world,” he told PYMNTS, “and we have to be transacting there. But that’s one of the key areas where even today, a large number of credit unions still haven’t been provided the capabilities from their existing partners to be able to get there.”

And because of those limitations, said Durovy, CUs cannot capitalize as fully as they might on the fact that their competitive differentiation rests with an intimate knowledge of the markets they serve — the personal relationships that informs everything from setting up accounts to underwriting credit.

To fully digitize, he said, it’s important that the CUs providers — no matter if they offer a full suite of services or particular point solutions that plug into legacy infrastructure and their architecture — provide new capabilities, new services and new ways of interacting. Key questions that must be asked and answered, Durovy said, include:

“How do we create that credit union interaction with them through a mobile channel? What are the capabilities that we can pull through the mobile channel that are relevant today, but don’t necessarily require us to go into a credit union branch? How do we extend service through chat channels, and not just with chatbots?’” In short: “How do we add that layer of intelligence that truly differentiates the credit union?”

It will take a while, said Durovy, but there’s potential to be realized from embedded finance, underpinned by member-specific data that crafts personalized offers and cash-back rewards tied to local businesses. That contextual effort will be sharpened by the use of artificial intelligence (AI), he said, as CUs partner with firms such as i2c to build those services — especially around card issuing and small- to medium-sized business (SMB)-facing offerings.

“Card issuance is top of mind for a lot of credit union leaders today because historically they just haven’t had that product control and they haven’t had insight into a lot of the data,” he said. Now, “fast forward to today’s world. Companies like i2c can provide configurable, turnkey type solutions that allow [credit unions] to have the balance sheet … and allow them to take as much control of the operating environment as they want or are comfortable with.”

As credit unions use digital and mobile channels to grow loyalty with existing members and gain new members, he told PYMNTS, “the whole premise here is that the credit union is local, that it does have a different knowledge base, a different understanding of the market, and it does provide service in a different way.”