“Fast Followers” of CUs on the road to innovation

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Pre-pandemic credit unions (CU) members were unlikely to think of their financial institutions (FIs) as digital innovators, instead rewarding them for their in-person experience specifically in the branch. The physical branch was an important element in building trust and sustaining member loyalty.

But now everything is different. The pandemic has spurred a major digital transformation for CUs, which find themselves in the midst of a rapidly changing competitive landscape. On the one hand, there are the tech-savvy and digital-only FinTechs, where valuations of some of the new banks reach tens of billions of dollars.

On the other side are the big banks, the big five, as they might be called (JP Morgan Chase, Bank of America and the like) that have invested $ 11 billion in the last few months alone to improve their operations.

Yet, a wide-ranging discussion with CU and PYMNTS executives Karen Webster revealed that CUs are achieving success by embracing technology in a way that enables them to deliver personalized omnichannel service while reinventing the branch experience in the connected economy. .

Speakers included PSCU President and CEO Chuck Fagan; Mike Upton, Chief Digital and Technology Officer of the First Tech Federal Credit Union; BECU Senior Vice President of Digital Mike Zell; Brad Patterson, vice president of digital transformation of the PenFed Credit Union; and Yana Melnichuk, vice president of digital banking for Coast Capital Savings.

Here are the fast followers

UC may not be cutting edge, they said, nor cutting edge, but they have found a successful spot as fast followers. This success, linked to investments that were already in place, is evident in the PYMNTS data showing that 80% of CU members are now very satisfied with their CU innovations and 11% fewer CU members would change their FI compared to innovation than they would have a year ago.

Read more: Credit unions’ innovation priorities reflect the pressures of FinTech competition

Those high levels of satisfaction, said Zell, whose CU is present in Washington State and South Carolina, are remarkable as we’ve seen more competition from FinTechs and challenger banks over the past year. As the speakers noted, CUs did a good job of helping less tech-savvy users connect with ease as they navigated their daily financial life and daily banking.

In this context, PenFeds Patterson said, seeking the digital and frictionless channel defined by mobile, web and even telephone devices (such as call centers), combined with branch offices, remains a key goal. The change was nimble, as Upton recalled, as CUs (including his own) have seen most of their historic business (80% for First Tech Federal Credit Union) come from branches.

But as Upton said, almost overnight, 80% of our new account openings happened through digital channels.

At Melnichuks FI, which operates in Canada, several digital tools were launched for members of retail and small business in just a few weeks as the pandemic hit homes and government support and payments had to be delivered (electronically) to people .

As Upton noted, we are very comfortable declaring that we are a quick follower. We don’t want to be on the cutting edge or on the cutting edge. We don’t think our membership serves in the best way.

He said cutting-edge or cutting-edge technology goals outweigh other priorities and that fast followers are able to more judiciously target their offerings to unmet needs.

Fast followers, he explained, don’t tackle innovation for the sake of innovation. It must show value to our membership and our employees.

The role of the branch

Part of the big change is to reinvent the branch experience, said Fagan, who added that CUs have gone a long way to reconfigure the physical footprint and services available within the branch. In fact, 57 percent of respondents surveyed in a PYMNTS report said branch setting remains important, but they rarely visit.

It might look smaller in terms of square footage, he said. It might seem smaller in terms of the number of people who are recruiting it, but the brand still has a very important goal. It will be an evolution.

Patterson said branch offices will have an advisory approach, where bringing transactions from the digital to the physical world will be key to keeping consumers engaged.

According to Upton, the branches remind us of human connection and the warmth people can feel doesn’t exist in digital.

The role of partnerships

The panel noted that there is leverage to be gained (and a hefty technological lift and massive capital investment to be avoided) in surprising partnerships with FinTechs that could be considered cutting edge. As Melnichuk noted, partnerships can help UC lead their way in offering members new loyalty, personalization and anti-fraud services with self-service as a guiding principle.

We have a cooperation strategy that allows us to partner with many of the early stage FinTechs, Upton said. We have released our developer [application programming interface (API)] portal through our open banking platform, recognizing that we will not build everything and we will not be everything for everyone.

Looking to the future, according to respondents, CUs will continue to invest in digital tools such as interactive counters and artificial intelligence (AI) and financial well-being. Meanwhile, there will be fewer paper checks (although they are stubborn advocates of financial services) and less foot traffic in branches.

According to Fagan, omnichannel strategies will dominate in the months and years to come.

Building through each of these channels to ensure that the consumer can enjoy a wide range of personalized experiences, I think will be the sweet spot for credit unions, he said.

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