Is the shift to digital creating a new layer of complexity in credit unions?

Complexity – in the form of legacy architectures, system silos and un-orchestrated applications – was one of the biggest challenges that the banking sector had to address en route to a digital future. Now it seems that we might inadvertently be cloning digital versions of some of those very same complications into our digital ecosystems. What got me thinking was our recent study, jointly with Cornerstone Consulting, about digital capabilities in credit unions. Without exception, every participating credit union was offering both online and mobile banking services to its retail members. But a very large number were also actively looking for a unified platform to manage their online and mobile offerings.
The piecemeal addition of technologies, processes and applications to the IT landscape was one of the biggest contributors to complexity in the previous banking model. So, approaching digital banking as an aggregation of channels has the potential to recreate the same challenges that banks and credit unions once faced. More importantly, digital does not end with online and mobile. As emerging concepts like wearables and IoT mature, applying a discrete development strategy to those opportunities will only result in another fragmented under-performing technology ecosystem.
For credit unions, the concern is not merely about the seamless integration and orchestration of new digital opportunities. Consider member business services, an as yet underleveraged growth opportunity. Will online and mobile banking services for business members also be structured in architectural silos?
A brand new banking experience is the fundamental promise of the digitally empowered credit union. In order to fulfill that, credit unions need to adopt a simplified application and technology strategy that allows them to effortlessly add new digital capabilities without compromising the cross-channel experience of their members. The focus should therefore shift from deploying channel-specific technologies and processes to creating an enterprise-centric digital banking platform.
The aforementioned study says that a lack of fully functional solutions in the marketplace might explain the slow pace of adoption of unified digital platforms among credit unions. But today there are platforms available that can deliver a great digital experience without complicating the IT ecosystem. A unified architecture delivers the agility required to quickly launch additional channels and offer new products across all. It also enables a unified real-time view of customer relationships, which is essential for creating personalized services and solutions. Most importantly, end-to-end solutions help credit unions accelerate the ROI on technology investments by ensuring they are aligned with their strategic business objectives.

Innovating to serve

Digital banking opens up pathways for traditional banks to pursue new opportunities within new ecosystems, markets and communities. Access can now be taken for granted. Rising mobile penetration, and freedom from the limitations, or need, for a physical presence, means that banks can now expand into areas that previously did not meet the cost-benefit cutoff. And it is not merely about access. Given the innate flexibility and versatility of the digital model, banks can even purpose-design and deliver products and services to fit the needs and circumstances of even the smallest of communities.
The Innovation in Societal and Community Impact category at the BAI – Infosys Finacle Global Banking Innovation Awards serves as a perfect microcosm of the enormous potential in this area. Take for example, last year’s nominations in this category. Of the four overall finalists, two (BAC|CREDOMATIC and CaixaBank) focused on innovating products and services for people with disabilities, another (Fifth Third Bank) created a new service to help people affected by the turmoil in the housing market and the final nominee (CaixaBank again) created a digital service that made it easier for customers to manage their charitable donations.
This year’s finalists prove that there can be any number of variations on that particular theme.
JSC TBC Bank essentially transformed their Universal Sales Agents into mobile branches by empowering them with technology. Mobile applications are helping these agents deliver a host of on-site services, with customers never having to actually visit a branch. Nusenda Credit Union created a collaborative financial product called Co-op Capital to improve access to capital for low-income entrepreneurs. Member organizations like co-ops, unions and associations not only sponsor loans on behalf of their member affiliates but also provide the required collateral. Kumsal from DenizBank is a similar program targeted at small enterprises and entrepreneurs. It is essentially a cloud-based multitasking platform that provides digital business management tools such as contact storefront, group email & SMS marketing, social media integration and publishing. Caixabank is taking the community route to enhance engagement with existing customers as well as to attract new ones. The bank has created the EnFamilia multiEstrella Community, a private social network where customers can create and interact securely with their ‘family’. Customers are allowed to invite even non-customers to their ‘family’ space.
Digital banking helps create access to at least basic financial services to the thousands of communities that are still unbanked or underbanked. Additionally, as our nominees have demonstrated, it is not merely about providing access, but also about creating products and services that are designed for specific need groups. There again the digital model can help by cutting out the costs and complexity of creating and delivering these services. As our banking pioneers innovate their way into new and until now underserved markets, we hope you will join us in celebrating their motivations and achievements at the award ceremony.
Winners and finalists will be recognized by Infosys Finacle and BAI during an awards ceremony at the BAI Retail Delivery Conference & Expo, on Oct. 13th at 3 PM, in Las Vegas, NV, USA.