In the financial sector, the pace of change is accelerating year on year, and compared to large banking conglomerates owned by investors, Credit Unions could be forgiven for feeling under pressure to keep up with the latest in fintech innovation. The sensation of falling behind can be paralysing, especially if you feel you don’t have the resources and knowledge to press ahead into this brave new world.  

As daunting as it may seem, it’s important that Credit Unions give digital transformation the attention it deserves, taking advantage of the huge opportunity to better serve your members and become a viable contender to traditional banks.

If Credit Unions want to maintain their position as a valuable partner to the communities you serve, they need to be online.

In this guide we’ll talk about what the engagement economy is and how it defines what your members expect from you. We’ll also detail the whys and hows of digital enhancement in your Credit Union, and how you can meet your biggest challenges head on.

What is the engagement economy?

‘Today’s buyers, be they businesses or consumers, are more informed, more savvy and more selective about the brands they choose than ever before. Consumers crave brands that share their values and demonstrate that they understand ‘me’ at a personal level. This includes listening to them across every channel to understand their preferences and desires, then creating experiences based on this understanding.’  Chandar Pattabhiram, CMO, Marketo

The engagement economy is the era we’re living in - where everything and everyone is connected, meaning a shift in power between buyers and sellers. When you’re selling a service, you must engage your market on an authentic level, genuinely listening to their feedback and and learning how to meet their needs. Brands now need to offer experiences instead of sales pitches - Credit Unions included.

Luckily for Credit Unions, your already-approachable brand and ethos of being socially responsible with a local community spirit means you’re already one step ahead of your corporate competition when it comes to engaging socially-conscious millennials. There’s no reason why this should change in the drive to go digital. However, the fact remains that unless you’re currently working from a strategic digital plan, chances are your business model and procedures will be in need of a 21st century facelift.

Traditional, branch-only services are now insufficient for a majority of Credit Union members, and even employees. Your members expect Credit Union services to be online and will be disappointed if that’s not the case. Disappointment is the beginning of members disengagement, which leads your members to look for other organisations who will provide them with the tools they need to organise their finances in their own time and at their own convenience via their computer or mobile device.

The only sustainable way of delivering on member retention objectives and growth targets is by catering to member expectations. The drive towards customer-centricity is characterised as the Engagement Economy, coinciding with the digital revolution. It’s not just applicable to the banking and financial sector. It’s a worldwide phenomenon that crosses, and has disrupted, all industries.

Disconnect: the giant killer

In the engagement economy, failure to hold the attention of - and crucially listen to the needs of - consumers has meant the undoing of formerly formidable B2C brands. Remember Xtra-vision? Atari? Toys R Us?

There’s a valuable lesson here for Credit Unions.

In order to remain relevant, you must make the right investments in a constantly evolving and increasingly technology-focused environment. Your members are looking for new ways to engage with your Credit Union, and digital transformation allows for new relationships to be formed and maintained in ways that weren’t possible even just a few years ago. In the engagement economy, Credit Union members are looking for reassurance and validation that their membership, not just their money, is valued, so meeting members on the channels where they expect to be met is critical.

According to studies of social media activity conducted from 2008 through 2015, only 9% of comments mentioning the Credit Union on average were negative. The report also noted that in 2011 a spike in mentions coincided with a dramatic increase in deposits into the Credit Union. In other years, however, online advocacy did not directly translate into an correlative increase in deposits - the report suggests this is down to failure to capitalise on consumer interest.

Providing members with complete financial services that they can avail of at their convenience will inevitably help your Credit Union attain its key growth strategies, which includes member engagement and retainment, re-engagement, and new member onboarding.  

What’s slowing Credit Unions’ move online?

Credit Unions can face many challenges in transforming their organisation to meet the demands of members in the engagement economy. Let’s talk about what those challenges are and how you can begin to overcome them.

Speed

The need for Credit Union CEOs to advance their organisation’s digital maturity is strong. According to the International Data Corporation (IDC), 59% of companies across all geographies and industries have stalled in their digital maturity plans and are now in a ‘digital impasse.’ The IDC also reports that 85 percent of decision makers say they have no more than two years to make significant digital transformation inroads before they lose the opportunity to truly compete in the market.

While some organisations have embraced change, Credit Unions who are battling with the cost vs benefits of investing in digital may just need to take a step back. This means you can evaluate, and see the bigger picture planning the future life stages of your organisation. Since the drive towards digitisation is here and growing, adoption is inevitable - it is simply a matter of when. You may feel like you’re starting from behind, but it won't take long to catch up.

Cost

The scale of investment required to move online can sometimes feel beyond the realms of possibility, with many Credit Unions feeling caught in a Catch-22 of needing to grow their membership numbers and loan books, but feeling unable to make the substantial (but necessary) investment in ‘new’ channels.

With the engagement economy in full swing, the opportunity exists for Credit Unions to become more agile through digitisation by reducing fixed asset costs. The natural increase in digital engagement that follows these investments means an increase in membership and loan enquiries. In the long term, going digital could help smaller organisations compete, survive and grow.

Credit Union CEOs and boards need to give serious thought to the future life stages of their organisation, and the Credit Union they want future leaders to inherit when their tenure is over.

Skills shortage

It’s natural that Credit Union staff will have varying degrees of tech knowledge, and you may see pushback from staff who are intimidated by new systems or who feel they’re not fluent enough with new technology to pick it up at the required speed.

Staff training is central to any organisation’s change management programme. Developing a set of competencies for staff to be measured on can help alleviate stress for employees and help them feel more prepared to meet future challenges. In addition to this, software, developed specifically for the industry with all the knowledge, insights and empathy for how things have to be done is key. Streamlining training in order to minimise disruption through the creation of super users mean that you have in-house experts who can answer questions with confidence, as well as the backing of your strategic software partner’s customer care team.  

Staff need to understand that technology can - and will - relieve the administrative burden they face. Think of the mountains of paperwork involved in member sign-up and loan requests, or the lost hours compiling reports to satisfy regulatory requirements. Then, imagine a clear desk with a laptop, notebook and coffee cup. Which one would staff feel more prepared and productive sitting down to face?

Pushback to change

Your Credit Union, its culture and its people are unique - and that’s a good thing. However, they still have to think competitively to stay relevant.

According to the Global Consumer Banking Survey 2014, the overwhelming majority of people check into their banking app at least once per week, compared to just 24% of global financial services users who visit their branch with the same frequency. A bricks-and-mortar institution in the local community is a reassuring physical presence - but that’s no reason not to diversify into digital. While people like to know their branch is there, and they can pop in from 9am - 5pm, typically they reserve such visits for occasions where they require face-to-face interactions and in-person assurance. For everything else - checking their balance, making transfers, or paying bills - online or mobile app works just as well, and in many cases is the preferred option.

Digital transformation suggests change - but that change doesn’t have to extend to your Credit Union’s core values. If anything, if should help reach more members, enabling them to administer their financial affairs on their own terms. Communicating the fact that core values are perennial, regardless of what changes occur within the organisation, its processes or business model, should form an important part of your Credit Union’s change management strategy.

Imagining the Credit Union of the future

Embracing digital transformation in the engagement economy means providing full Credit Union services at your members’ convenience.

Digital transformation in the engagement economy is more than making information available digitally; it’s about how you leverage that information to better serve members. Ease of access, modern interfaces, and responsive design through online and mobile portals can be wrapped up and utilised to create an excellent member experience.

Providing members with a flexible way to organise and administer their financial affairs, in their own time, and at their own pace, became a major driver in delivering on key strategies. Products such as online & mobile banking, Touch ID login and a visual savings card allow your Credit Union to position yourself as a real alternative to traditional banks and enable you to better compete with disruptive fintech startups.

Digital services are no longer new. They have already proved they are here to stay and are proving their worth to consumers. Both engaged and unengaged members are online, as are non-members (and not just Millennials!)

Increased competition from banks has always been a threat, but fintech companies now crowd the competitive landscape too. Credit Unions don’t have to become banks in order to compete, but they must be stronger and more secure in the knowledge that what they are offering has unique value to their members and potential members.

Without investment in technology, member engagement and retainment strategies will struggle to be effective and Credit Unions won’t achieve their growth goals. The Credit Union of the future is one that champions user experience, accessibility and speed.

Where to now?

Imagine a Credit Union that’s always open, always accessible, and always ready to help. That’s the future for Credit Unions who have enhanced digital provisions. The opportunity to shape the future of your Credit Union is there for the taking, and how you choose to act will have a significant impact on your organisation - now, and in the years to come.