The Evolving Credit Union Landscape: How Institutions Are Modernizing Their Approach to Member Service

By Gary Lee04.20.2020

The competitive makeup within the financial services landscape continues to shift. Nontraditional competitors like Apple and Uber are introducing banking and payments offerings that threaten to disintermediate the relationships credit unions have had with their members for decades. While these nontraditional newcomers lack the years of experience and trust that credit unions have established, they are attempting to counteract this gap with modern technology, seamless interactions and highly personalized experiences. If credit unions fail to update their member service and business models, they risk sacrificing their sacred member relationships and losing market share.

Members today will not settle for anything less than consistently simple and convenient experiences that cater to their specific wants and needs. In addition to these heightening member expectations, credit unions are also facing pressure to operate more efficiently and productively than ever before. To best navigate the evolving financial services ecosystem, there are several main trends credit unions should keep in mind when strategically planning for the future.

1. Cloud adoption is gaining significant traction.

Credit unions are increasingly choosing to outsource their cores and critical IT infrastructure to boost efficiencies, save time and enhance security. By joining forces with a trusted partner to maintain and host hardware and software, resources that were once spent on cumbersome system maintenance and upkeep can be reallocated to more strategic initiatives. Such an approach typically allows for a greater focus on innovation, growth and the overall member experience. While previous generations of CIOs were more likely to insist on maintaining hardware onsite, modern CIOs are more familiar and comfortable with outsourcing and its many benefits. As emerging talent enters the CIO role, this trend is expected to persist.

2. An increasing emphasis on data.

Consumers are enjoying newfound levels of personalization from all types of service providers, including retailers and major technology companies. Whether this is Uber suggesting a frequently visited destination, Dominoes recommending your usual order or Amazon offering relevant purchases, these experiences have raised the bar for what members expect from their credit unions. To remain relevant and successfully compete, it’s crucial that credit unions tap into the wealth of data they have access to and more effectively leverage that information to anticipate members’ wants and needs. Merging data analytics and predictive analytics will enable institutions to strengthen the relationships they have with their members and validate their prominence in members’ financial lives.

3. Openness is becoming more than just a buzz word.

Credit unions aren’t just expected to up their game when it comes to personalization, but across the entire member experience as well, including onboarding, lending and digital banking. Easy integration with providers of choice is critical to offering the best solutions within each channel. Institutions will place a higher priority on APIs, open integration and flexibility to optimize every member interaction.

4. The branch maintains its prevalence.

Despite claims to the contrary, the branch continues to be a critical channel. In fact, research from Market Force Information found that nearly two-thirds (64%) of consumers still go to a branch to conduct a teller transaction at least once a month (reported by The Financial Brand). However, the branch must evolve to become more efficient and digital-forward to better meet contemporary member needs. Many institutions have modernized the branch experience by deploying more technology, such as ITMs and tablets, onsite – and with great success. Branches are also becoming more than merely transactional. An increasing number of credit unions are finding benefit in leveraging branch locations to serve as education centers, community event spaces and even meeting areas to discuss financial health and wellness.

As the industry continues to evolve, institutions must keep up with emerging trends and modernize the ways they interact with members or they risk ultimately falling behind. The increased use of the cloud, data analytics, open integration and branch dynamics are redefining how members want to be served and what operating models make the most sense. By adapting to change and embracing these new technologies and mindsets, credit unions will be well poised to manage the changing business landscape with confidence.

Gary Lee is chief client officer for Member Driven Technologies (MDT), a CUSO that provides technology solutions to credit unions.