Although we’re not quite halfway through the year yet, January this year feels like a lifetime ago. With the Covid-19 pandemic, everything changed. So, given that credit unions have been closing branches, digital channels reign supreme, and members have dealt with threats to their lives and livelihoods…
Now’s a great time to look at our predictions at the beginning of the year to see what changed.
Read on to see seven technology trends that credit unions should keep a close eye on (especially in the face of the coronavirus).
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 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.
Coronavirus update: Operating on the cloud drastically simplifies remote work. And, while Covid-19 revealed the necessity of work from home capability, it also suggests a real possibility: that remote work will remain a large part of the future.
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.
Coronavirus update: Digital transformation in this era makes way more sense if it also saves money. Making the change from copper telecom to VoIP gets credit unions cloud-ready while saving big on their phone bills.
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.)
Coronavirus update: In theory, working with new technology vendors doesn’t seem that important during Covid-19. But when it comes to automating personal lending and small business lending (and the documentation), fintechs take on renewed significance.
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!
Coronavirus update: Doing more with less is always a plus. However, even as a company that offers marketing automation, we understand that marketing in this time has changed. If this wasn’t already on your credit union’s radar, it probably doesn’t need to be until this pandemic passes.
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!
Coronavirus update: There are still many brilliant uses of analytics during the pandemic, but not all of those uses are pressing at the moment. Analytics should be on your post-pandemic road map, though.
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!)
Coronavirus update: Once again, Covid-19 puts a damper on things. Working with AI-enabled fintechs and lenders is still promising, but if you start your own AI project at this time, make sure it’s for the post-pandemic future.
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.
Coronavirus update: Fraud is on the rise during Covid-19. Increased security is more important than ever. We expect this trend to continue.
So, halfway through 2020, it’s time to revisit this list. Executive teams and boards in particular must start talking (out loud) about each of these technology trends and how they may impact your credit union.
- How has Covid-19 affected your credit union’s needs?
- How has it affected your members needs?
- 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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