It finally happened. We entered a new decade. Will it be filled with glittering new possibilities? Or will it be more of the same old, same old?
Ultimately, that might rest on the industry’s appetite for change and progress. So, if you feel like a following broader market trends—or perhaps making them—then we’ve got a few ideas about where to start.
Read on to see seven technology trends that credit unions should keep a close eye on.
Major Credit Union Technology Trends
Trend adoption—or technology adoption—in the “real world” is a bit faster than with credit unions. If it were a city, Credit Unionville would be downright quaint and wholesome by comparison.
But that’s not to say that credit unions are technology averse. Some things just take a bit longer to get up to speed, and our industry’s gears are just starting to turn faster. In fact, here’s a look at the state of things as of a little over a year ago:
1. Cloud computing
Credit unions continue to lag in cloud adoption. To be frank, this doesn’t exactly make sense. Licensing is easier, business continuity is simplified, and you get easier access to enterprise-level automation.
What’s crucial to understand about the cloud is that it serves as the foundation for most other credit union technology trends. If any of the following are part of your road map going forward, you’ll need to start with the cloud:
- Machine learning and AI
- Digital transformation
- Faster disaster recovery
- Robust security and SIEM
And that’s just the beginning. If you told any younger generations that most credit unions aren’t on the cloud, they would roll their eyes, shrug, and say, “maybe that’s why we choose big banks and fintechs.” Maybe. But they would definitely be surprised. Considering that the oldest Millennials are almost 40, maybe it’s time to pay attention to what kinds of technology they expect to come standard…
So, if you want to stay competitive and open doors to opportunity in the future, cloud computing is where to start.
2. Digital transformation
This term is way overused. Trust me, I know. I wrote a book on it. The good news is that credit unions understand the urgency of digital transformation. Websites are more responsive, mobile apps are getting better, and people are at least talking about AI. Credit unions are working hard to modernize their service delivery. It’s great.
In fact, digital transformation is a major issue for all legacy businesses, not just credit unions. So, we aren’t alone here. Furthermore, the tools, technologies, and collective experience necessary to become digital pros are becoming cheaper, improving quickly, and are more accessible than ever.
But we haven’t quite arrived. Not yet. According to the American Bankers Association, only 18% of people prefer in-branch banking. That means that 82% of people prefer digital interfaces. Until our industry puts 82% of our service efforts into digital channels, digital transformation should continue to be a top priority for every credit union marketing and technology team.
3. Fintech partnerships
The honest truth is that most credit unions don’t have quite the time or money to pursue radical, game-changing development projects. If it weren’t for the prospect of fintech partners and vendors, credit unions could be forgiven for just giving up on harnessing groundbreaking technologies.
But there are hundreds (or possibly thousands) of fintechs out there. Each has a novel new product, interface, or service designed to help credit unions and their members. And at this stage in the game, they’re still cost-effective options. (However, as these companies get more established, they raise their rates. Consequently, it’s a good idea to find partners sooner rather than later.)
4. Marketing automation
What can we say about marketing automation that we haven’t already? That it’s becoming standard in almost every industry? That it’s cheaper than you’d expect? That it’s so easy to use, a single person can manage personalized marketing messages for tens of thousands of contacts?
If you want to know who to market to—and when to market to them—you need marketing automation. However, if you like spending a lot of money on ads, wondering who’s seeing them, and sending special offers to people who don’t want them, then skip marketing automation altogether.
Here’s the short version: marketing automation is simpler and more effective than what you’ve been doing. It absolutely makes the list of 2020 credit union technology trends!
Credit Unions are definitely working hard on this trend. Within the credit union industry, many credit unions have purchased analytics platforms. Other credit unions have hired data scientists. There are even two distinct credit union analytics conferences now that are phenomenal: AXFI and CUAnalytics.
The industry is aware of the power of data and is actively working to leverage it. A terrific example is CU Rise, which was built on the Trellance analytics platform. CU Rise took data pools, ran them through machine learning, and watched as their initial attrition prediction models went from 6x better to 9x better within a few weeks. That’s huge.
However, analytics go hand in hand with marketing automation. If you don’t know how to use the analytics (or you aren’t prepared to invest in the marketing side of things), then analytics alone won’t do you much good!
6. Artificial intelligence & machine learning
This technology trend is hot and getting hotter. As machine learning progresses, more and more financial institutions and fintechs are using it. And because it’s such a flexible technology, they’re all using it for different things.
JP Morgan Chase finished 360,000 hours of legal clerical work in minutes with their COIN AI. WalletFI uses machine learning to provide their subscription management platform (a robust improvement over Wells Fargo’s Control Tower tool). Last March, Bank of America launched Erica, a natural language/AI-based chatbot.
Are people ready for AI?
Within six months, almost half of BofA’s customers were using Erica. It took 25 years for ATMs to get that same adoption rate. It took Amazon’s Alexa two years. Technology adoption rates are getting much, much faster. (Look for Kirk Drake’s 2020 book on this very issue!)
7. IT Security
The current tight labor market makes it difficult for credit unions to find cyber experts. Furthermore, the NCUA’s focus on SIEM (Security Incident Event Management) continues to crank up the pressure.
And, although the cloud offers many security perks, it still has vulnerabilities. So, to avoid becoming the next Equifax or Capital One, it’s critical to continue ramping up IT security efforts in 2020.
So, as we approach 2020, sit down with this list, your executive team, and your board. Start talking (out loud) about each of these technology trends and how they may impact your credit union.
- What problems do you need to solve?
- Can any of them be solved by following one of these trends?
- How might each trend change your members’ perceptions and/or expectations?
- What should your credit union invest in first?
Maybe some of these should go onto our list of credit union strategic planning topics…
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