by Doug Williams
Digital technology has been reshaping the financial sector at an amazing speed. To remain competitive, credit unions face the challenge of embracing digital transformation while retaining the personal touch of their member-first business model. Fortunately, digital technology can actually be used to help credit unions form a deeper understanding of their members and serve them in a way that is more relevant, personalized, and efficient.
Digital transformation encompasses a vast and diverse landscape, offering numerous opportunities for credit unions to elevate their offerings and build stronger member relationships. It’s a world of possibilities worth exploring.
- Enhanced member experiences:
- Relevant services for better engagement: Digital technology enables credit unions to access a great deal of data about their members behavior and preferences. Using tools like artificial intelligence (AI), credit unions can easily analyze large quantities of data to gain more robust insights. These can help credit unions offer highly personalized financial advice and programs, tailored product recommendations, and proactive support. Data insights and automatic tools can also be utilized to maintain the community connection associated with credit unions, such as through card engagement programs that allow cardholders to round up purchases and donate to local charities of their choice while shopping.
- Seamless convenient banking: While the human touch remains an indispensable part of a credit union’s service, there are times when members want the convenience of performing banking functions from anywhere at any time. Mobile apps and online portals empower members to manage their current funds, apply for loans, better tackle card debt, reach financial goals, and receive alerts about fraudulent use of a compromised card.
- Operational and cost efficiency:
- Automation: Using digital technology, including AI, to automate routine tasks like outbound calling can significantly increase efficiency and help credit unions expand their member service, find more cross-selling opportunities, and encourage engagement in a cost-effective way.
- Cloud-based storage: These platforms provide consistent functionality among branches, easier file sharing/access, advanced security measures that meet compliance standards, and other convenient benefits. Cloud storage is also more cost-effective than maintaining in-house equipment and allows the flexibility to easily upgrade as needed.
- Marketing: Software as a service (SaaS) platforms offer opportunities to streamline marketing and compliance. By providing customizable and relevant graphics and marketing templates all in one place, they help credit unions easily maintain a consistent brand image and voice.
Challenges to consider
The benefits and challenges of digital transformation go hand in hand. A few challenges to consider include:
- Security challenges: The more credit unions embrace digital technology, the more opportunity there is for cyberattacks. While staff and member education are important to fighting fraud, digital technology itself can help. AI fraud monitoring, biometric and multi-factor authentication, blockchain technology, tokenization, and other digital tools can provide protection for sensitive member data.
- Privacy and compliance: Transparency and the safe handling of data is vital to member trust. Data privacy regulations like GDPR (EU) and CCPA (CA) provide strong models for responsible data handling even outside their jurisdictions.
- Knowledge gaps: New digital systems can be costly and credit union teams may not have the knowledge or bandwidth to implement them. Consider carefully what tools you want to introduce and the training and roles needed to support them. Partnering with a CUSO or fintech can also be a cost-effective solution.
- Member acceptance: Oftentimes people take a while to become aware of new tools and how to use them. Regularly reach out to members via multiple communication channels with updates on new digital offerings and helpful resources like how-to videos or FAQs. It’s also important to provide easy access to support for members who have questions.
Conclusion
By exploring and implementing digital transformation, credit unions can build stronger member relationships in a profitable, sustainable way. From enhancing the human touch, to more efficient operations, technology can help credit unions reinforce member trust and remain competitive in an increasingly digital environment.
Originally Published on CUInsight.
