Wow. What a year! The credit union and FinTech worlds are frothy and lots of change is underway. This year, some of the walls came down and credit unions saw more of the real world. Digital Credit Union has an incubator fostering FinTech Startups and the Boston FinTech Community. NACUSO’s Next Big Idea Competition brought in new concepts and innovative ideas to solve age-old credit union problems. A great example of this is LenderClose, a digital lending platform, which allows community lenders to streamline the lending cycle. Everywhere I looked this year, credit unions were actively looking to do things differently. It was great! Now, let’s keep the momentum going. To continue last years methodology, I thought we should compare last year to this year in terms of comparing each trend in the “Real World” versus its presence in “Credit Unionville.”
Credit Unions continue to lag behind the Real World in Cloud adoption. However, we did see some major progress here this year. Ongoing Operations now has 40+ credit unions ”All-In” on the cloud and even has its first $1 Billion+ credit union client that no longer owns a server, storage, or its own network. The credit union has fully embraced the cloud, and it is awesome.
We continue to come across credit unions that have adopted “Cloud First” strategies. This is an improvement but it isn’t far enough. Adopting a Cloud First strategy at this stage is like going from a horse and carriage to a car when airplanes exist. We must rip the Band-Aid off and go faster. If we don’t, all we are doing is widening the gap between credit unions and the Real World. Credit Unions will miss out on the next major trends like Machine Learning and Artificial Intelligence. Cloud stays in the #1 trend to watch spot because in my mind itis the #1 impediment to credit unions moving faster and being competitive in today’s environment.
Like last year, this term is still way overused. Trust me, I know. In fact, I wrote a book on it. The good news here is that I think credit unions understand the urgency. No longer do I see tons of non-responsive websites. Credit unions are working hard to modernize their service delivery and make it more digital.
In fact, the good news continues with this trend. Digital transformation is a major issue for all legacy businesses, not just credit unions. So, we aren’t alone here. Furthermore, the tools, technology and collective experience necessary to be a digital ninja are becoming cheaper, improving quickly, and are more accessible than ever. I continue to believe this is a top issue and priority that every credit union marketing and technology team should be addressing in their 2019 plans.
First off, let me just say wow. The number of FinTechs in my database has nearly doubled (approximately 400). The number was high when I first started tracking the trend, but there are roughly twice as many now than when I wrote the book Credit Union 2.0 in 2017. I monitor this landscape closely, and every week I come across at least five additional FinTechs that interest me. It is increasingly difficult simply to keep track of what is out there, let alone figure out who to partner with.
As long as capital is cheap (although getting more expensive), this trend will continue. The average entrepreneur sees the pain and challenges with modern banking and is working to close the gap. The best news here is that more and more often FinTechs intend to go to market by partnering with banks and credit unions.
If we look back over the past 20 years, we went from having one mainframe to having one server and business application for every 2.5 credit union employees. Sadly, I think we will see something similar happen with FinTechs. The ability for a FinTech to profitably serve a key group of members or a single business function will be huge. Four out of every five presenters at NACUSO’s Next Big Idea Competition were FinTechs. Furthermore, itis the gateway tools are being built. Cloud Platforms, Middleware companies, i.e. Alphapack, Constellation, and OnApproach, are creating entirely new ecosystems that will speed up creation and adoption. This will lead to financial success.
Personalization in marketing is key. In our 2018 work, Credit Union 2.0 partnered with a handful of credit unions to implement and transform things such as the attrition process and 2nd chance checking members. I won’t lie, this was really challenging at first. It took almost nine months and 1,000+ man hours to figure out the right formula. I’ll share that formula with you today. In order to pull marketing automation off, a credit union needs to unwind the 20+ platforms it uses. Next, you need to document key business processes and transform your entire way of thinking. We have found that you can’t simply start by fixing one platform or one tool. The answer is to pick one product or service and then build and test all the components on a new platform that is as integrated as possible to the old.
Get good at that one thing, optimize it, and then perfect it. An example of this is 2ndchance checking. This product requires 100-200 blogs and twenty different nurturing campaigns to take a prospective member from finding you on google to signing up for the product. To transform all of your credit union’s products and services, the average credit union will need 200-300 nurture campaigns, 50 landing pages, and about 3000-4000 blogs, videos & content pieces. I know that sounds daunting and perhaps as difficult as climbing Mt. Everest, but you had better get started. If you don’t take these steps, you just won’t exist in twenty years. In 2019, plan to ditch your dated email marketing platform and switch to a true marketing automation platform that can leverage web, social, and other delivery channel components.
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 analytics. A terrific example is CU Rise, which was built on the OnApproach platform. CU Rise took data pools, ran them through machine learning and watched as their initial attrition model went from a 6x better prediction to 9x within a few weeks. This is the future.
However, analytics go hand in hand with Marketing Automation. If you don’t know how to leverage and use the analytics or you aren’t prepared to invest in both sides, analytics alone won’t do you much good!
This trend is hot and it is only getting hotter. Every single FinTech I saw at the latest event I attended was using Machine Learning in their product. All of them…
When thinking about AI/Machine Learning, I want to provide a key perspective here. In March, Bank of America launched Erica, a natural language/AI based chatbot. Within six months, approximately 45% of BofA’s customers were using it. It took 25 years for ATM’s to get that same adoption rate. It took Amazon’s Alexa two years to get that adoption rate. This trend is speeding up and getting hotter. Be on the lookout in 2019 for my book on this very topic. AI and Machine Learning is the future.
This topic is still cyber hot, and credit unions continue to be well aligned at the forefront of key cyber trends. The main thing I noticed this year is that the hot labor market that I predicted for 2018 has gotten even hotter. This tight labor market is making 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.
So, as we approach 2019, sit down with this list, your executive team, and your Board. Start talking (out loud) about each of these trends and how each trend may impact your Credit Union. How might each trend change your members’ perceptions and/or expectations? What should your Credit Union be investing in? Now is the time to set yourself up for a successful 2019 because tomorrow is too late.
If you’d like to talk to discuss how any one or more of these trends specifically affect your Credit Union, please reach out to me directly at email@example.com. I love to talk about technology trends.
Caveat emptor. Let the buyer beware.
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