Piecing Together the Digital Transformation and Optimization Puzzle

hands technology looking puzzle pieces
By Charlie Peterson

5 minutes

Use these four tactics to move beyond digital transformation to digital optimization.

Fintechs came onto the scene over a decade ago. Ever since, digital transformation and optimization have been buzzwords in the banking industry. The emphasis on digital transformation picked up speed after the financial crisis of 2008, and continued through and beyond the pandemic, where digital optimization gained traction—and prioritization.  

You might be asking, what’s the difference between digital transformation and optimization?

Glad you asked. 

Digital Transformation Versus Digital Optimization

Digital transformation is the first step on the digitization journey and a necessary catalyst. Technology is the driving force of digital transformation. Digital transformation is literally transforming the way traditional banking has been done. It is the digital evolution of traditional banking services.

The next phase is digital optimization. Digital optimization isn’t about being the best and the biggest. It’s about strategically serving your members with digital tools, anticipating their financial needs and gaining the big picture of your institution to make better decisions. Digital optimization is about taking calculated risks out of comfort zones to enhance your digital tools. 

So, what does digital optimization look like?

Digital transformation is fairly black and white—adopt digital tools to complement traditional banking services. Optimizing these tools and the member journey has more layers and many pieces to the puzzle. How your credit union fits the pieces together will be unique to your membership and budget. (Speaking of budget, many credit unions are taking advantage of the given yield curve and making room in their budget for digital optimization.)

Four key pieces of the digital optimization puzzle are needed to stay competitive, maintain liquidity and grow membership.

Puzzle Piece No. 1: Optimize Mobile Banking

There’s a reason that smartphone addiction exists and it’s because we’re all using our phones constantly. Mobile banking is meeting members where they spend most of their time. Digital transformation aims to have mobile banking. But simply being online is not enough. As top brands offer a sleek, seamless service, there is a growing consumer expectation for highly engaging mobile options from their banking institution. 

Digital optimization aims to make mobile banking so intuitive and user-friendly, that it’s one of your members’ favorite apps on their phones. Credit unions are doing this by including enhanced features in their mobile banking. Features like gamification for personal finance management, quick balance checks and account transfers, robust deposit capture, digital loan application, free financial literacy, fraud prevention resources, and not as flashy, but the most crucial of all – strong authentication measures. But, at the end of the day, if you are not making the task of opening an account smooth and frictionless, the rest will simply not matter. 

Puzzle Piece No. 2: Personalization Powered by AI

Artificial intelligence, the deployment of data to replace and redirect human capital, continues to entrench itself in the credit union industry. AI is enhancing members’ experiences primarily outside of the branch through delightful and personalized mobile banking, interactive call centers, and personalized payment processing. Without AI, digital banking is transactional. With artificial intelligence, it can become a highly interactive and engaging experience for your members.  Artificial intelligence can lighten staff load and create efficiencies, and even generate revenue. With some AI machines, revenue can increase by 30% per member. Implementing artificial intelligence is part of a digital-first strategy for credit unions. 

Puzzle Piece No. 3: Leverage Big Data

Digital optimization isn’t just about what your members see. It’s also about what goes on behind the scenes to enable a personalized, seamless experience. One of the most powerful tools a credit union can leverage in a changing economy is stress testing and forecasting. This is accomplished by feeding the data you already have into a single data engine. When data is integrated from all your channels, this provides scenarios and modeling to develop data-driven strategies. These types of analytics are a guide for what digital optimization will look like at your specific credit union.  

Puzzle Piece No. 4: Employee Communication

Rounding out the puzzle piece quadrant is employee communication. In this market, employee retention is a top concern for employers. Retention isn’t just about offering competitive compensation anymore. The culture, specifically a digitally advanced culture, is going to attract and retain workers. With a vast majority of credit unions embracing the hybrid working model (or fully remote model), employee communication must evolve beyond branch bulletin board memos. With video communication accounting for more of how people learn, it should play a pivotal part in a credit union’s strategy. Credit union leaders need to have the ability to digitally onboard, create internal communication, and highlight key cultural moments for internal teams. 

How to Achieve Digital Optimization

As one of my colleagues pointed out on our recent podcast, “being digital is being relevant.” 

At the end of the day, there truly is nothing new under the sun. Digital optimization is about what the credit union model has always been about: serving members, connecting them to financial resources and support, and generating revenue to continue the mission. Digital optimization is accomplishing this mission with relevancy.

Digital evolution is no small feat, but it can (and must) be done. If you’re feeling stuck when it comes to digital optimization, find the right partners who can brainstorm solutions and point you in the right direction.  

Charlie Peterson is SVP of CUES Supplier member Allied Solutions. With over three decades of diverse experience in the financial services industry, Peterson has supported over 1000 clients in 19 states providing best-in-class insurance, income, loss mitigation and technology efficiencies to the credit union marketplace. His passion and drive for lending growth, loan participation, client consultation and digital channel development have been his hallmarks. In his current role with Allied Solutions, Peterseon is helping credit unions nationwide successfully execute their visions and plans for growth. Download this free checklist to make sure you’re not missing any steps on your digital optimization journey.

Allied Solutions is one of the largest providers of insurance, lending, risk management and data-driven solutions to financial institutions in the U.S. Allied Solutions uses technology-based solutions customized to meet the needs of 4,000 banks and credit unions, along with a portfolio of innovative products and services from a wide variety of providers. Allied Solutions is headquartered in Carmel, Indiana, and maintains several offices across the country. Allied Solutions is a wholly owned and independently operated subsidiary of Securian Financial Group.

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