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Advice from a retired CU CEO turned Tech Consultant: #SpeedUp!

Make no mistake a digital revolution is upon us and credit unions need to react and change in order to serve their members.

A new paradigm, the fourth industrial revolution, big data, artificial intelligence, deep learning, robotics, self-driving cars, the Internet of Things, retail disruption – and so much more are upon us! It is all about data and digital, and it is happening right now.

Most credit unions (80%) have self-identified as two or more years behind banks, fintechs, and big tech, according to BIG Consulting’s research. Gartner projects that 80% of financial institutions will be out of business by 2030, just 11 years from now! Will you join the revolution or be swept away in merger mania?

Most recognize that everything in the retail business model has been disrupted. The die has been cast. Old line major retailers fall each month and so soon will financial services providers if we don’t learn from their demise – brick and mortar is now a support system to digital delivery, not the other way around.

Credit Unions are no different than our retail brethren. We have to adapt to the new world by significantly changing our strategy and technology platforms in 2019 or we will lose our member’s business. Without these changes, we will not grow in younger developing segments (those that borrow) and soon Cus will lose market share across all age groups and income brackets. Who doesn’t want a better online experience that is both easy and fast? Who isn’t use to Amazon or Apple ease of use? I can now pay my utility bills through Alexa while I’m driving for goodness sake! That’s how pervasive digital is.

Two major challenges hinder our eventual success: the credit union culture, which is deeply engrained in member service, non-analytic decisions and lacking urgency, and the technology platforms on which we operate.

Digital transformation powered by the omnipresent and ubiquitous web, Wi-Fi (soon 5G), mobile apps and data – the exploding fuel of digital transformation – is now the dominate retail model and member service channel. Nothing else compares. Growth, service, lending and everything we do now must be digital first and digital efficient in order to win market share. There is nothing left to discuss on this matter. It is time to strategize, adjust and change!

What’s a credit union to do? Revamp your credit union’s entire strategy to be digital/mobile first, data holistic and omnichannel experiences. Recognize that the culture has to substantially evolve to be analytic and digitally focused. Two major challenges hinder our eventual success: the credit union culture, which is deeply engrained in member service, non-analytic decisions and lacking urgency, and the technology platforms on which we operate.

Everything is digital, from marketing to onboarding to ALM. Strategy and decisions start and end with a digital interaction powered by data. To support this new world a complete rethinking of the technology architecture must take place. Yesterday’s core-centric, in-house model will not support the digital world that connects everything with best of breed services fueled by data that doubles in size very two years.

#SpeedUp decision making from credit unions and their business partners. This is a key topic of the Underground Community in 2019. Please join us.

To compete today, win market share, serve our members and create an omnichannel digital experience (the new definition of member service), the core is no longer the essential technology. It is very important, but it is not the center of the modern technology universe. An integrated data warehouse that connects all systems (core, lending, marketing, risk, fraud, payments, etc.) must be front and center. Accepting that access to data will power your credit union’s ability to digitally serve and the unending appetite for data, your credit union can no longer prioritize a computer room and server-based platforms. The answer is in the cloud. Cloud can take many forms – private, segregated, shared services, etc., but accepting that you cannot keep an ever-expanding amount of data in a computer room is a first step toward digital transformation.

Credit unions can no longer go to one core – and haven’t been able to do so for a decade – for all of their tech needs. No one firm provides the best deposit, commercial loan, online banking, consumer loan, mortgage loan, business services, marketing, payment system options that your members require. It doesn’t exist. A best of breed strategy is necessary to compete. No if, and's or buts.

If you want to win at digital – and you really have no choice if you want to be of value to your members – you must change your credit union’s technology architecture to be data-centric, cloud-based, mobile first and omnichannel. The scary thing is that you need to change today in order to

Brick and mortar is now a support system to digital delivery, not the other way around.

To win in this new digital world, each credit union also has to change how they think about business. Make the shift to analytic first and fewer gut decisions. Member service is digital first, decisions are fact-based, fast and part of a learning process. This is what every competitor is doing. Credit unions cannot choose to be different if that difference makes them less effective. Poor decisions are not member service.

Credit unions can and should win in this new world. The winning proposition starts with a strategy that recognizes that digital is the primary service channel and all channels are deeply connected. Data is the key. It not only fuels all things digital but also must be at the center of every decision.

The right way to enact digital transformation is to redesign the tech architecture and rebalance the skill sets to put digital and data first. Best of breed, analytics, data warehouse, API services, analytic tools, and omnichannel services require new tech skills. Running the technology should be left to the cloud. Integration, data tools, data governance, Robotic Process Automation (RPAs) and machine learning are the essential ingredients of a financial institution’s tech skills.

It is a new world where credit unions are absolutely set to win but only if they change strategy, technology platforms and their culture. Yes, just about everything. These opportunities only come around once in a generation. If we change our strategy, we will win the market share; if we do not change, we lose our members business and the market share we have gained during the last decade.

About the Author


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