No Cookie Cutters in Digital Transformation

gingerbread man cutter making cookies
Contributing Writer
member of Bellco Credit Union

4 minutes

Credit unions must continue to engage members by being different from their competitors even as delivery emphasizes online and mobile.

Is digital transformation homogenizing financial services and undermining what sets credit unions apart? It’s an important question.  

A digital transformation does make it harder to differentiate a financial institution, concedes Jim Burson, managing director of CUES Supplier member and strategic partner for technology services and strategic planning Cornerstone Advisors, Scottsdale, Arizona. Realistically, the technology largely comes from a catalog of vendor products.

“Few credit unions have the resources to build their own technology,” he points out. And the financial services being digitized are pretty generic. “A remote check deposit app is a remote check deposit app.”

But that doesn’t mean CUs can’t still differentiate in a digital environment.  

“Engagement is still possible—still critical—but it has to be a different kind of engagement in the digital world,” Burson explains. “The credit union still has to engage the member in a personal, timely, relevant dialog, but do it more with the thoughtful use of data analytics and proactive outreach. Without that outreach, a digital-first strategy tends to differentiate based on price, and that is hard to sustain.”

The big challenge is to keep the personal contact within a digital transformation, notes Bryan Boynar, financial services solution marketing manager for CUESolutions Bronze provider Hyland Software, Westlake, Ohio. It’s possible, and credit unions are doing it, sometimes with live but remote real-time conversations using video.

“Many people in today’s world don’t think of things like FaceTime as impersonal,” he observes. Credit unions sometimes link members by video to particular staff members they know, keeping contact within a two- to three-person rotation like they would have with tellers in a branch, he explains.

$840 million Gulf Winds Credit Union in Pensacola, Florida, with 13 branches, is trying not to transform itself away from its high-touch roots.

“Our members still see us as a friendly, small-town credit union, even though we’ve grown,” reports CUES member Haley M. Murph, VP/e-services and payments. “More of the transactions will be nameless and faceless as we expand our digital footprint, but we need to keep it personal. That’s our brand—what differentiates us—and we need to hold on to that. We’re aware of the challenges and looking for ways to meet them.”

Part of the solution may lie in data, Murph suggests. Gulf Winds CU is flexing the muscle of a new data warehouse and data analysis tools to get to know its members by the statistics. That’s particularly useful in the current economy with its low interest rates and high unemployment.

“We’re paying attention to where our borrowers’ money is coming from,” she notes. “We’re monitoring how many are collecting unemployment and when their enhanced benefits could expire. We’re aware of their paychecks or lack of paychecks. We may see their faces less, but we see more of their circumstances and behavior.”

“Originally, data was the output of the member digital experience,” observes Keith Riddle, president/CEO of Sherpa Technologies, a wholly owned credit union service organization of $3.8 billion Corporate One Federal Credit Union, headquartered in Columbus, Ohio. “In the new generation of contextual digital experiences, data is the input, something credit unions use to drive the member experience, not record it. It should be the way you engage the member and provide personalized service in a digital world.”

Data-driven digital also supports proactive service like alerts when parameters around an account are exceeded, Boynar points out, which is arguably better service than waiting for a member to call the CU or come into a branch about a problem, he adds. But there is a danger that digital could replace personal service if you put too much emphasis on the technology, he warns.

With all of this, can CUs still be different and competitive? They do not have the same digital transformation budgets as a top-tier financial institution, Riddle acknowledges.

“They will compete successfully if they protect their reputations as trusted stewards of member data and member security and continue to focus on the overall member experience with differentiated digital services,” he says.

Riddle enables digital solutions for credit unions, and also is an active consumer of various digital experiences. Among the financial institutions he uses, his credit union “is on par for a digital experience but is not leveraging transactional data to create contextual offers,” he says. “I would suspect the credit union will be refining its use of data analytics and transforming the digital experience to create a more personalized interaction in the future.”

Are credit unions considering transformation that goes beyond the delivery of traditional financial services? “I don’t see that,” Burson reports, “beyond expanding a bit into the area of financial wellness and even general wellness linked to finances. They’re sticking pretty close to their financial services roots.”

Smaller CUs aren’t doomed to fail in a commercial world of high-volume, low-margin, cutthroat competition, Burson insists. “Bank of America can take that approach more successfully than a $600 million credit union, but that’s just one business model. The $600 million credit union can still win by delivering a personalized experience, physically or digitally.”  

Richard H. Gamble writes from Boulder Junction, Colorado.

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