Wow. 2020 managed to pack a decade of excitement into the span of a single year. Interestingly, it also packed several years worth of digital transformation into a few months at the beginning of the pandemic.
Credit unions began by closing branches, leaning heavily on their digital channels… and continued to lean on digital even after reopening. Now, more members than ever use online and mobile banking. Branch visits are fewer and farther between.
All of this raises the question: How can credit unions continue to be there for members when they can’t physically be there? How can your technology create the same friendly, safe experience that in-branch visits typically provide?
Read on to see eight technology trends that credit unions should keep a close eye on (especially in the face of the coronavirus).
Want the latest developments in technologies and fintechs? We provide free, personal calls to upper management about market trends and innovations. Contact Chris Otey to learn more.
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
When the pandemic first hit, IT departments had to enable dozens or even hundreds of remote users in a matter of weeks. It took them away from valuable digital enhancements, development projects, service technology improvements, and their usual to-do lists.
Cloud credit unions were able to transition to remote work in hours.
Yet 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…
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. CU 2.0, like so many other tech companies on the West Coast, is embracing the work-from-home lifestyle.
So, if you want to stay competitive and open doors to opportunity in the future, cloud computing is where to start.
2. Digital transformation
Before the pandemic hit, the American Bankers Association found that 82% of people preferred digital over in-branch banking. That number has certainly grown since March. Until our industry puts 82% of our service efforts into digital channels, digital transformation should be a top priority.
Credit unions that don’t prioritize rapid digital transformation today may not be here tomorrow. Regular, in-branch banking is hardly a thing anymore. In a way, digital transformation is more like “digital survival.”
Here are a few things that should absolutely be on your checklist for 2021:
- Online banking
- Mobile banking
- Online appointment setting
- Marketing automation
- Online account opening
- Digital vehicle buying services
- Digital identity
- Digital loan closing
- E*Notary services
- AI chat bot
Although it’s a good checklist, it is just a list. You could check off every item and still not have a cohesive or enjoyable member experience. It’s important to keep usability, analytics, SSO, automation, a CRM, and more to ensure a fluid, fresh, and relevant experience in 2021.
The checklist is just tactics—you need strategy. We’d be happy to help you craft and execute that strategy.
3. Fintech partnerships
This year, CU 2.0 began our Credit Union–Fintech Mastermind to foster a community of innovative CU and fintech leaders to focus on collaborative problem solving. It has opened up partnership opportunities, increased adoption speed, and broken through some of the typical industry complacency.
It also revealed that most credit unions are inundated with new fintech solutions daily. They simply don’t have the time or energy to review each new technology or company that comes across their desk. One industry CEO suggested that fintechs must solve multiple problems if they want to truly stand out.
We can’t tell you which fintech partnerships would be most valuable to you, but we have a short list of recommendations:
- List issues you can’t solve internally. Ascribe a monetary value for it and keep an eye out for fintechs that can solve it cost-effectively. (Let us know if you need a suggestion.)
- Join the Credit Union–Fintech Mastermind.
- Join the CU 2.0 Quarterly Fintech Update Call list (customized for each CU).
- Book a fintech strategy workshop with CU 2.0 and move from reactive to proactive—take control of your future.
- Check out ModusBox for information on faster integration of fintechs without relying on your core or online banking vendor!
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.)
If you’re not sure where to look, you might start with our Fintech Friday series. If you want to see even more, check out our database, which is is undergoing an extensive revision at the end of 2020.
4. Digital identity
There are many reasons to pursue digital identity and provide it to your members. For starters, a secure digital ID solution can significantly reduce fraud at your credit union. Instead of demanding complex and changing passwords, PINs, and verification questions, digital ID is a simple, streamlined way to increase member ID security.
The other benefit is that it reduces member authentication time by quite a lot. Especially for remote account verification (such as when reaching the call center), digital ID makes the whole process, faster, easier, safer, and less annoying!
We recommend looking at MemberPass™, which is already gaining broad industry adoption. Plus, they’re working with companies like the Linux Foundation, IBM, and MasterCard to create a global standard for digital ID.
5. 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, what to market to them, and when, then 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!
But where can you find marketing automation for credit unions? Easy. If your credit union wants more support, customizable modules, coaching, omnichannel capabilities, and built-in compliance features, then we cannot recommend Total Expert enough. They’re the closest thing to a plug-and-play marketing automation solution that the credit union industry has.
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.
In 2020, Trellance acquired OnApproach, allowing them to transform with new core and third-party connectors, use cases, and functions. Essentially, they want to ensure that your credit union can actually do something with the analytics.
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. Plus, they’ve been creating predictive analytics models to help credit unions grow during the pandemic.
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!
7. Artificial intelligence & machine learning
AI is such a hot credit union trend that early adopters probably feel that it’s passé by now. 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. Credit unions have stayed connected with members at all hours during the pandemic with chatbots, which provide almost all the same functions as a call center, but with less overhead. Lenders use AI modeling to better determine creditworthiness and help their members out.
Are people ready for AI?
To get a better idea of what kind of AI you might use (and how to use it), here are two easy resources:
- Buy the new FinAncIal book from CU 2.0
- Have an AI strategy session with the CU 2.0 team and make sure you are ready for tomorrow!
8. 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.
Here are some cool cyber technologies we have been investigating:
- Breach Clarity (our choice for the coolest and most useful ID and fraud protection technology)
- CISO as a Service (from Ongoing Operations)
- Remote Worker Security Assessment (also from Ongoing Operation)
- FlexPay (card-based machine learning fraud detection and decline salvage)
- Text phishing detection and remediation
As the world operates increasingly digitally, the risk of cyber attacks grows. Advanced strategies, governance, and tech platforms are necessary to combat risks and comply with regulations.
For better or for worse, IT security will probably never drop from our list of credit union tech trends.
So, as we move into 2021, it’s time to spot trends early so that we don’t get behind in the future. Executive teams and boards in particular must begin discussing these technology trends and their impact.
- 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…
Oh, and if you haven’t already, subscribe to our blog! We write about all of these topics. Often.