5 Trends Your Credit Union Needs to Know for Strategic Planning

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By Jennifer Geis

4 minutes

How prepared is your CU for open banking, AI, cybersecurity threats and these two other trends?

Sponsored by CUES Supplier member Jack Henry™.

The financial services sector is no stranger to change. In today’s market, competition is fierce, technology is rapidly evolving and member expectations are changing daily. You must now do more and be more just to keep up.

That’s why your credit union’s strategic plans are too important to be left to chance. But with so much information coming from so many different sources, it’s sometimes difficult to sift through everything that’s out there and pinpoint what’s most important and relevant—and why.

Here’s a good place to start: When creating or refining your strategic plan, make sure you consider how your organization will address five key trends we’re seeing in the financial services industry right now.

Trend #1: Use of API-based open banking rails is increasing. The CFPB’s proposed Personal Financial Data Rights Rule will drive the expansion and adoption of API-based open banking rails to give consumers more transparency and control over when and how their financial data is used by other parties—and eliminate inbound screen scraping, credential sharing and related fraud and security threats. More importantly, open banking will help solve systemic financial fragmentation.

By using secure, standardized open banking APIs, you can build a comprehensive picture of your members’ finances across their many financial service providers and apps and put it all in one place—your digital banking app—to mitigate fragmentation and help members improve their financial health and security. Additionally, using open banking rails to gather the full complement of financial data available will help you maximize the quality of insights and recommendations you offer your members, vastly improving member service.

Trend #2: Serving small businesses is good for business. Credit unions seeking to regain lost share of the U.S. small business market must reestablish themselves as the primary banking relationship for SMB owners. Cash flow is the biggest challenge small businesses face, so you must use embedded third parties, cash flow management tools and faster, real-time payment and invoicing solutions to help your SMB members expedite receivables, optimize payables and gain more accurate real-time insights and forecasts on cash flow. By serving small businesses effectively, you’ll help ensure your success for years to come.

Trend #3: Managed services are helping to combat fraud and cybersecurity threats. Fraud and cybersecurity threats are becoming more sophisticated, and many credit unions are being driven toward seeking managed services to combat increasing intrusion attempts and zero-day threats amplified by AI and conflicts abroad. Traditional security methods (username and password, one-time password) are becoming ineffective against the latest threats, resulting in the increased adoption of biometrics and behavioral metrics. Determine whether you have the resources to manage the growing fraud epidemic on your own, or if you’ll need to consider managed services to keep your credit union—and your members—protected.

Trend #4: Deposits continue to be a top priority. The battle to acquire and retain deposits is driving financial institutions to incorporate proactive and ongoing consumer engagement with financial wellness tools, automated savings/investments and real-time data insights. For credit unions, this means using AI-assisted technology to create stickier deposit relationships and address the totality of every member’s needs with personalized products and services.

There’s also the connection between deposits and payments to consider: to receive deposits, you need to be able to receive all types of payments from multiple sources and rails. It’s more important than ever to integrate the rails that equip your credit union with the flexibility and features to meet your members’ needs.

Trend #5: AI-assisted lending will become a key driver for success. Economic uncertainty and global instability have credit unions focused on proactive portfolio monitoring to manage loan exposures. Lenders are finding that AI can help. Using generative AI in the lending process to synthesize financial data, provide recommendations and identify cross-sell opportunities can drive success for your credit union.

As you plan, refine and implement your strategy, keep these five key industry trends in mind. Additionally, you can get insight into what credit union CEOs across the country are prioritizing over the next two years from the Jack Henry™ 2024 Strategy Benchmark. Knowing what’s coming and how other leaders are preparing can give you an edge in planning and executing your strategy for the near term and beyond.

Jennifer Geis is senior analyst/payments at CUES Supplier member Jack Henry™. Geis spearheads primary research for the Corporate Strategy team at Jack Henry, bringing her expertise in the payments and analytics space to our payments team as the liaison between product and executive members. She also recommends product enhancements and vendor relationships and forecasts payment trends.

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