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Leveraging technology in these areas streamlines the member experience while freeing up staff time to focus on improving relationships and strategic initiatives.
Members today are looking for technology, speed and convenience, challenging their credit unions to find ways to operate more efficiently. This goes beyond a credit union providing basic answers, completing transactions and delivering service—members expect better digital experiences in their financial lives like they have with Amazon and Facebook. As such, credit unions are reevaluating the way they do business to meet and exceed these expectations. Jack Henry’s annual Strategic Priorities Benchmark Study found 44% of financial institution CEOs are focused on boosting operational efficiencies.
Below are four ways in which leveraging technology can help your credit union improve efficiency, leading to better banking experiences and increased member satisfaction.
1. Streamline Back-Office Processes With Automation
Historically, credit unions have operated with siloed information from multiple, disparate systems and/or relied on manual, burdensome processes. This has led to inaccurate and inconsistent reporting, which impacts the ability to deliver higher quality, more effective service. By digitizing and automating back-office operations, credit unions can expect better efficiency rates and quick response times, helping to solidify members’ loyalty and trust.
$990 million Kirtland Credit Union, Albuquerque, New Mexico, is an example of how improving back-office processes has led to better member experiences. Having an enterprise-level view of its data and content management has helped the credit union improve productivity and effectiveness, streamline operations and support informed and timelier decisions. Loading documents, checks and statements is much easier and time-effective now, allowing staff and leadership more time to focus on such core competencies as providing better member service or spending time evaluating and investing in products and services that may improve or remove any barriers to financial health.
2. Reimagine the Member Experience
Members are faced with financial fragmentation, which adds barriers to their financial health and creates inefficiencies. A recent Javelin report shows that non-banks now provide 65% of financial relationships for millennials and 69% for Gen Z. In fact, it’s not uncommon today for a consumer to do business with 30 to 40 financial providers. However, credit unions are uniquely positioned to leverage their personal relationships with members, offering more relevant products and services while reducing the need to have multiple financial relationships.
To combat this fragmentation, credit unions need to embrace open banking strategies, enabling them to become “first app” for all financial needs. Members that have complete access to their data and financial relationships via their digital or mobile banking experience will gain greater visibility into their finances, enabling them to make better decisions and prepare for their future. Plus, members that are financially healthy are three times more likely to recommend their financial institution to family and friends and two times more likely to continue their relationship over the next five years.
3. Improve the Lending Process
Historically, lending has been manual and paper-based, leading to a slow approval process. By investing in a digital loan life cycle management solution, credit unions can provide a more efficient lending process that allows them to serve any member, regardless of the loan type. The potential gains in operational efficiency are significant—credit unions can save between 30-70% on key back-office workflows when leveraging lending technology. Now, loan officers can spend more time supporting borrowers throughout the life cycle of the loan, taking on more of a trusted advisor role.
Increased competition from fintechs has also made the need to invest in modern lending technology much greater than before. Accountholders are as much as 60% or more likely to abandon the account opening process if they’re unable to complete a new loan application in less than five minutes at their financial institution. Credit unions that fail to prioritize a simplified experience risk losing more than 75% of their loan business as accountholders choose alternative providers for an easier lending experience.
$6.8 billion Michigan State University Federal Credit Union, East Lansing, Michigan, recognized the need for an end-to-end lending platform to manage its growing consumer and commercial loan portfolios more efficiently and remain competitive. Having a single platform made it easier for MSUFCU to track, underwrite and manage loans more consistently and efficiently. Rather than spending hours manually entering data or creating a report, lenders could focus on servicing the portfolios and delivering better member service. Members also appreciate the online application, which can be accessed anytime, anywhere; enhanced self-service options; and a seamless experience from loan application to close.
4. Stay Top-of-Wallet
The pandemic increased the digitization of payments, as members expect easier ways to pay online and shop in-store. Members want faster payments and fully integrated P2P solutions, electronic bill payments and more. Members need to be able to quickly pay family, friends and businesses, as well as set alerts and limits, manage bills, etc. And if these members own businesses, they also need tools to send invoices and get paid faster, preferably all within their existing digital banking experience.
By offering modern payment options, credit unions can remain competitive in the fight for deposits and increase revenue. Credit unions embracing a Payments-as-a-Service platform can easily integrate payment capabilities, develop proprietary solutions and enable fintechs to embed their offerings. As a result, these institutions can offer members and businesses flexible and digitally accessible payments in one place, at their moment of need, while eliminating fragmentation.
Inefficiency continues to be costly and present major business challenges for credit unions. By leveraging technology to create efficiencies and investing in modern and competitive products and services, credit unions can improve experiences and the financial health of their members, ultimately strengthening connections with the communities they serve.
Shanon McLachlan is the president of credit union solutions at CUES Supplier member Jack Henry, Monett, Missouri, a well-rounded financial technology company that strengthens connections between financial institutions and the people and businesses they serve. Today, the company empowers approximately 8,000 clients with people-inspired innovation, personal service and insight-driven solutions that help reduce barriers to financial health.
