For Credit Unions, Transforming The Digital Transformation

Digital. It’s not just for banks and payments at large, but for credit unions too. And it’s certainly top of mind for those establishments. But top of mind may not make the leap from intent to in-place.

In a recent study of 221 credit union employees conducted by CO-OP Financial Services, 88 percent of respondents said that digital transformation remained either “quite” or “extremely” important.

The paradox: Credit unions know they need to keep pace with the digital evolution and revolution, but they are not investing to the extent that is needed to bring about that transformation.

In an interview with PYMNTS’ Karen Webster and Matt Kardell, chief revenue officer of CO-OP, Kardell said that roughly a third of the credit unions surveyed do not have the budget in place to invest in digital initiatives.

Against that backdrop, he said it remains important that credit unions have a “forward-thinking approach in not having to build [digital infrastructure] themselves” and that they seek out partners within the digital ecosystem to either build or buy digital operations on credit unions’ behalf.

In those instances, said Kardell, CO-OP can help forge an able partnership. With its 3,500 credit union clients, wide distribution helps to spread out innovation costs.

Additionally, continued Kardell, it is important that the credit unions survey their own members to uncover what is important to them when it comes to digital activities – and this will help determine how investments, whatever their dollar amount, are allocated.

“Transforming, digitally,” is hard, said Kardell. To achieve that transformation, a digital company must make decisions quickly, fail quickly when necessary and then be willing to move on and not give up.

The conversations CO-OP seeks to have with its members about digital efforts, said Kardell, are a form of continuing education as it relates to new technology or what credit union members expect from their digital interactions. “There has to be this overarching awareness of what’s going on,” the executive told Webster.

In tandem with thinking digitally, Kardell said that credit unions must be cognizant of what their individual members are likely to want from that experience, such as ease of use, speed and security. Consumers have been conditioned by the likes of Amazon and other vendors that offer mobile connectivity and speedy delivery, creating an expectation that items will be delivered to their doorstep in two days. Amazon’s value proposition can serve as a blueprint of sorts for other firms.

Kardell noted a key set of questions for credit unions: Do individuals equate that same seamless tech-enabled process tied to Amazon with, say, their credit union when they want to make P2P payments? Or if they want to access the balance on their checking or savings account? Can they access the information that is important to them without having to navigate through 14 clicks?

Fifty-six percent of respondents to the CO-OP survey said they were focused on changing the digital needs of their members and meeting those needs. That news, said Kardell, indicates that there is market share to gain in competing for members’ loyalty and digital financial lives.

The credit unions fear that certain service offerings might be at higher risk in a digital age, such as depository accounts and debit cards, said Kardell. Inherently, he said, credit unions are always concerned with cultivating their relationships with current members; although those relationships are built on a strong level of consumer trust, they still must be curated.

At the same time, growth hinges on new members.

Credit unions do not want to be considered irrelevant to the point that an existing member gets frustrated and is willing to make a switch. But he also noted that there is relatively greater concern for credit unions to grow digitally, as new members begin seeking for a tech-focused, forward-thinking financial institution.

Effective management is key to spearheading credit unions’ digital transformation, said Kardell. CEOs must set the pace with their credit unions and should be public with their digital goals, he added, reinforced through their budgets and investments earmarked for digital efforts.

Tangible evidence that the credit union and its leadership stand firmly behind digital efforts can make or break digital transformations, he said. Managers “have to come to the table every day with, ‘What are we going to do next to improve our member experience digitally?’” he added. “The digital environment has levelled the playing field for credit unions, and we find that exciting.”