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Digital Transformation Challenges: For Your CU & Members

Originally published on CUInsight.

Did someone say “digital transformation”? Ok, that was everyone shouting it at the same time. Got it. I’m glad we made that transition. It’s all done by now, I presume? You’ve had, what, 4 months? How hard could it be?

According to a survey from Cornerstone Advisors, 70% of respondents claimed their existing systems were barriers to change. As Ron Shevlin, in his Forbes analysis, so appropriately quipped, “the other 30% must have misunderstood the question.”

Thanks, I truly LOLed. I hope you did, too.

“Search your feelings; you know it to be true!” Ok, that was Luke Skywalker. And he was talking about some Force stuff. It’s not important. Fate of the galaxy and all. But not our galaxy, probably.

If addressing your challenges to true digital transformation, right Skywalker was.

We’ll discuss two factors that make your work harder. One is internal. The other, like the truth, is out there.

The Truth is Out There - X-Files
Credit: X-Files (Fox)

Your Systems Can Be Better

It’s an important discussion to have with your team, core provider, technology partners, and product support companies. (Disclosure: That’s people like me.)

Case in point: One credit union’s lending person told me about a challenge with data matching. In arriving from two separate sources, they couldn’t compare easily. Their process was laborious and got, at best, 70% accuracy. Ok, but not good enough.

With a seemingly-small update to their core, they were now able to use another piece of data for matching. Now, it was easy, automated, and 100% accurate. I asked what they did to make it happen. “Nothing, just getting our system to let us filter by that variable was all.”

In their case, the credit union did not have to transition their core, change LOS providers, or undergo a multi-year planning phase. They just needed an update. Am I saying your challenges can be overcome that easily? Probably not. But some might.

Your Members Need Guidance

Compass Sitting on Map

A lot of your members embrace digital solutions. The moment they activated their new phone, your app got installed. Check deposit? Scan and go. Fund management? Easy.

This is what you want to see. Consider adding some nonintrusive and short surveys into the app experience to make sure you’re serving their needs. And never be afraid to glance at what other CUs and banks add to their mobile platforms.

Of course, I’m not suggesting to get into an app arms race. What works for Capital One customers may not be ideal (or feasible) for your credit union. But knowing is essential.

And, of course, building your credit union mission into your app/digital platforms. What’s that mean? Make sure all features encourage responsible saving, a deeper relationship, and educate where able. Above all, make it all easy. Burying options in menus is not the way.

Are Members Using Your Digital Functionality?

iPhone in Hand Black and White

Which brings us to ensuring your tech-savvy members know your app’s features. Look at usage metrics. Do all features see activity? I wouldn’t be surprised some members wish you had a certain capability, only to not know where it is (and thus assume it’s not there).

Trust me, as the go-to “tech fix it” person in my social circle (yes, even remotely, it’s still my role), this is way more common than you think. I get this kind of thing all the time:

“If only I could print straight from my phone! Emailing it to myself to open on the computer is such a pain.” “Um, you can print from your phone. Just hit the share icon, then Print.” “What? That’s amazing! How would I ever have found this?”

Yes, I’m a genius. I tapped the button.

That’s not your only member challenge.

Do Members Trust Your Digital?

Three Black Handsets
“There’s my high-tech!” – Someone you know

For some people, there’s a “digital trust gap”. Before even diving in, let me say, I get it. For my own devices and services, I take major steps to ensuring my security and privacy. It’s way more than the average person. So for someone to want to avoid it all to stay safe? Sensible.

What are some of the specific challenges? I’ll share a few I’ve heard:

  • A paper check is more secure (not to mention convenient and privacy-protecting) than an online bill payment
  • Mobile (contactless) payments are less secure than using a physical card
  • Online banking services just gather up your personal information to sell it to others (or get hacked); it’s safer to just stay “offline” to protect against bad actors and corporations

We could fact-check each of these points together, but why? You know much of it isn’t just false, it’s actually more risk in the opposite direction. Yet it’s also clear that providing facts doesn’t change minds; it can cause further “digging in” to incorrect beliefs.

So how can you work with people who fervently believe your digital solutions are a danger? You acknowledge their concerns (because though wrong in conclusion, they are right in principle), then explain how your approach addresses each.

Honesty & Transparency Always

Moon Jellyfish
Be transparent like these moon jellies.

Will you get everyone to jump onboard? Unlikely. But even for those who reluctantly use your online banking or manage to keep paper versions, they’ll recognize your commitment to honesty. And that’s how you build loyalty.

In our time of forced digital acceleration, I’ve seen some successes. Someone I know who aggressively rejected online banking now has to use it. And you know what? He’s fine with it. They managed to address his concerns well enough.

Systems Are Just Part of the Challenge

You’ll read and hear from a lot of people in our industry talking about digital transformation. I’ve been one of them for as long as I can remember. Everyone has good intentions; to shift credit unions into a digital future to remain effective and competitive.

We know your existing systems are a huge part of that challenge. Unfortunately, I can’t help you with that, only recommend speaking with the providers for their best guidance. Then, moving forward, work with partners who recognize your current and future needs.

As you aim to grow your membership, wiz-bang tech features are fine, but they must be rooted in achieving your mission. Show how what you provide highlights the “credit union difference”, even in what people thought was a basic banking concept.

What have you done to reach, assist, and empower members during your suddenly-rapid digital transition?

Plaid Among Fintechs You’ve Never Heard Of But Changing Banking

No, I’m not talking about the clothing pattern. Plaid is a Fintech startup which just announced a Series C funding round of $250 million. That gives them a valuation of $2.65B. Yes, billion. Chances are, 25% of your credit union members are using their service without even knowing. And Plaid isn’t alone, either in ubiquity or in valuation.

Powering The New Banking

Plaid powers the backend technologies which connect cool financial apps to your bank (or credit union) account. Little players like Venmo. Which is owned by PayPal (they bought them in 2013). I’m sure these aren’t worth your attention.

It’s not like Plaid does anything which may make your credit union into a “Dumb Bank”, simply a place where your funds sit and nothing else. No, they have no plans to take on other traditional bank services. Like mortgages. Oh, it appears they do. But it’s ok, they want your help.

This appears to be a common theme. PayPal’s new debit card “checking program” links with banks across the country to provide needed services, like deposits, check scanning, and lending. ApplePay partners with Discover and GreenDot Bank, itself a Fintech providing reloadable debit cards.

You’re Still Necessary, But Only For the Boring Bits

Fintechs look to partner with banking institutions because the bank part is hard. There’s lots of regulations, safeguards, and steps you know lots about. Basically, it’s easier to buy space in the safe than to build one yourself. Except they don’t pay you. Your resources get used, your members find great value, and might forget you’re the one holding their money.

“So if Fintechs need us banking institutions, why worry?” It’s a good question. And I’ve answered it before, in reference to lending services. How do you best serve your members? Is it with zero interaction, contact, or even awareness from them that you exist?

Of course not! You’re a part of their lives and they know it.

Well, what if your members never knew who you were? What if you were as recognizable as the brand of tires on your car? (I think I have Dunlop, but I’m not sure, and don’t really care, so long as they do their job) Could you still accomplish your mission?

At Least There Aren’t A Lot Of New Fintechs…

If only. Here’s a short list:

  • GoodMoney – Taking a piece of the credit union playbook, they give shares to all users, making them part owners, then use funds to support charitable works. Mission-focused and mobile-centric.
  • Netspend – Prepaid debit products in lieu of using traditional banking
  • Gotransverse – Backend software to allow complex billing solutions for companies
  • Simple – Banking with an app and debit card
  • Koho – Canadian firm with similar product to Simple. Site makes it clear “We are not a bank”, yet with their card, you don’t really need one.
  • PayPal – Besides powering online payments, making business loans, offering the underbanked a checking solution, they can also replace your banking needs. At least they did for this financial sector journalist.
  • Amazon – Business lending, potential checking, and pretty much anything…they’re Amazon

This list is by no means exhaustive. And, more importantly, the larger firms listed (and many more not included, like big banks and other tech companies) acquire start-ups for millions once they offer a competitive advantage. That’s a competitive advantage over you, to be clear.

What Can Credit Unions Do?

It’s unlikely your team will develop the next billion dollar valuation financial services solution. They’re too busy serving your members and countering the efforts of emerging Fintechs!

For me, the only answer is in partnerships. Some Fintechs seek to replace you. Others, like Kasasa or Econocheck (Disclosure: My company represents this service) focus on adding value to your services, while keeping your name front and center.

Your members will look to make their financial lives easier. Services like Plaid might be part of that answer. However, to remain relevant, you must deliver clarity on your value proposition to members as well. Take a look at some of these Fintechs, understand what they are doing and why they are so popular, and then decide how you can adopt these principles to grow into the future!

New Tech Alert! “Hey Siri, Pay My Electric Bill”

This is a CUbit.  In case you haven’t seen one before, these are my out-of-schedule short posts highlighting breaking news.

Today, Apple released a beta update for iOS (software powering iPhone and iPad).  There were the expected improvements and feature additions (hooray, an easy way to find my AirPods!), but something else snuck in.  Something which can change the entire credit union industry overnight.

Apple added bill pay capabilities to Siri.

Yes, with only your voice, you can pay a bill or check on the status of a payment.  Instead of opening an app, finding Bill Pay, trying to set a new one, finding out you can’t do it on your phone, going to your computer, entering the information…etc., now, just say, “Hey Siri, pay my cell phone bill.”  Or, “Hey Siri, did Dave ever pay me for that dinner?”

This functionality is now in beta as part of SiriKit (the API which powers integrations into Siri services).  If your banking platform service is not diving in to the documentation headfirst, tell them get on it!  And if you manage your own bill payment system, ask your IT to begin looking at what it will take to have your members paying by voice upon its release.

What are you waiting for?  Get to it!

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