No Time To Be A Tortoise: Credit Unions Are Running Out Of Time To Catch Up

“We are not moving fast enough. We need to move 2x or 4x faster,” says John Janclaes, CEO of the $1 billion Partners Federal Credit Union headquartered in Burbank, CA. “Some might say faster is in order”.

What is Janclaes so worked up about? He’s talking about the urgency of implementing credit union data analytics into an organization’s overall strategy and how, sadly, traditional mindsets are getting in the way.

The Credit Union Mentality

Credit unions have historically been slow to change. Because they see themselves as community-based service organizations, they haven’t felt the drive to make operational decisions as aggressively or urgently as bigger banks. It’s no surprise, then, that most of the credit unions we talked to exhibit a continued culture and mindset of being multiple years away from a finished digital strategy.

A recent collaborative study done by Best Innovation Group and OnApproach, backs up the assertion that credit unions must pick up the pace. While most of the organizations we surveyed have data analytic strategies, more than half of them say investments are scheduled to kick in over the next 3 to 5 years. A little more than a third say funding will occur during the next 1 to 2 years. None of these estimates are encouraging, as this is a far slower speed than the companies they are competing with.

This is costly and credit unions must move now if they want to compete, let alone catch up.

Form Strategic Partnerships

If credit unions don’t want to do the risky things required, they may want to consider partnering with others who have the expertise needed to help them along. We’re seeing new models develop that could help credit unions more effectively compete going forward. For example, established FinTechs are actively looking to partner with credit unions looking for assistance in applying a digital strategy to their institution.

The key to this adjustment is understanding an important truth: digital transformation is not about updating technology. Digital transformation requires changing the cultural mindset to include the digital strategy across the board. Credit unions must move beyond building websites and apps and learn to transform their business processes, using data to make informed data-driven decisions that put them ahead of members’ ever-fluid expectations.

“Digital transformation is an iterative process. Credit unions must be willing to dive in, start the process and then learn as they go. Try and test. Next stage followed by next stage. That is the way to ultimately build into a mindset of how to do it. You can’t afford to wait around until you get it right.”

Digital disruption is not slowing down or going anywhere. If credit unions fail to offer superior service compared to their larger competitors, they will get left behind.

This is not intended to be a gloom and doom post. In fact, we believe digital transformation represents an incredible opportunity for credit unions to use data analytics to provide exceptional service to their members, because they have more centralized systems, the ability to cooperate for scale and their members’ best interests at heart. They just need to change how they think about them.