A recent Best Innovation Group webinar focused on the three things your credit union can do now to prepare for the pace of accelerated change. The insights shared by industry leaders John Best and Kevin Sarber are well worth an hour of your time. Here, however, I’ll drill down on one key point that particularly resonates for me.
It’s increasingly clear that with very few exceptions, credit unions cannot expect to keep pace with consumer expectations with a “go it alone” strategy. The nation’s largest banks are armed with R&D budgets that dwarf the overall IT spending of most credit unions. Yet these behemoths still acquire fintech firms in pursuit of new capabilities, realizing that buying an upstart that’s already proven an innovative concept is a faster (and often cheaper) path to market than launching a “me-too” in-house initiative.
On the surface, this sounds like a depressing state of affairs, but nimble credit unions have a promising counteroffensive at their disposal. It’s time to become experts at partnerships and collaboration, integrating vetted third-party solutions to address CUs’ critical needs.
Such a mindset makes vendor selection more important than ever. A strong set of APIs and a robust SDK become a necessary foundation for enabling such ongoing partnerships. This is easier said than done, however, and can be hindered by the limitations of aging core systems. Better to think through these hurdles in advance rather than to have them arise as barriers at the eleventh hour of a promising initiative.
What are other keys to out-partnering the competition? First, have a strong sense of which of your credit union’s features are in greatest need of an upgrade. Take a thoughtful approach to prioritize the partnerships worthy of fast-tracking- even with the help of partners, there will be bandwidth constraints. Then be prepared with necessary templates for NDAs, internal processes, and other documentation- these administrative tasks can otherwise cause unnecessary and costly delays. Finally, involve your CU’s risk team upfront and determine their requirements. This too often becomes a last-minute “gotcha.” Speed is of the essence, and a 3-6 month risk review that can kill an opportunity is usually avoidable given proper early and frequent communication.
In general, “democratizing IT” can pay big dividends. Turn Agile into an organizational way of life rather than a departmental buzzword. One interesting approach involves issuing laminated cards highlighting five things any CU employee should ask a vendor. Reaching consensus on those five things can be a valuable exercise in itself.
Member-facing enhancements are likely the first upgrades that come to mind and usually generate the most enthusiasm, both internally and externally. Don’t overlook opportunities for internal process improvements, however, leveraging capabilities such as artificial intelligence and robotic process automation. Such programs can improve service levels and/or free up budget dollars for other member-facing initiatives- in both cases delivering on the member satisfaction at the root of the mission.
The pandemic has proven that certain changes once thought impossible- such as work from home models for employees accessing sensitive data) simply require focus and creative thinking. Technology continues to make unimaginable tasks quite achievable. Bear in mind that remote deposit capture was nearly written off as too clunky for the mainstream until iPhone technology caught up with the concept. Kevin Sarber recalls a great story on our webinar of a mail-in deposit solution predating RDC that some CU leaders considered borderline insane- until a team walked through the details.
The next RDC is coming- probably sooner than later. We don’t yet know what form it’ll take, but credit unions have an opportunity to take the lead role in bringing such solutions to their members before the feature appears at a bank down the street and becomes an attrition risk.