Let’s Talk Credit Unions: The Basic Need for Digital Transformation Initiatives?

In the recent article on credit unions, we defined the type of organizations, the way they operate as well as the overall industry landscape. The latest reports analyzed in the article indicated the upcoming decline of credit unions as traditional financial institutions. Increasing competition is coming from FinTech startups that are being extraordinarily imaginative with new experiences they offer. In order for credit unions to sustain as financial institutions and stay competitive, they have to evolve and overcome the traditional ways of operating.

In 2015, it is hard to imagine a financial organization that does not have an online presence and mobile options for users. Nevertheless, the experience surely varies. Credit unions were traditionally client-oriented, having the advantage of intimate relationships with members thus building positive experiences in the branch. However, over time with the smartphone revolution, the in-branch experience is no longer a priority. The customers’ preference is for the digital space according to the results published by The Financial Brand.

Credit unions, due to their community nature, had no necessity to actively hunt for their clients. They were built by people belonging to certain trades or territories, which enriched the member base instantly and automatically. With the new fierce competition, the traditional way of operating is no longer relevant and sustainable. In order to stay in the game, credit unions have to go through a complex omni-channel and digital transformation journey, which includes addressing five key problem areas.

First: A 360-degree View of the Member

Today the vast majority of organizations within credit unions are running on an independent basis. There is a lack of coordination between the various departments of a single credit union. Information about members is kept separately within departments, which do not share the data. Various business units, such as the call center, consumer lending, mortgage, investments, insurance, etc. seem to be doing well separately, but they are not bringing cross-departmental value through leads for each other. Whenever a member is reaching out to the credit union either by walking-in to the branch or calling a call-center, there is no single 360-degree view of the member and the various ways in which he is engaged with the credit union.

This lack of data communication creates a gap and loss of opportunities for a better service and experience for both members and employees. It is crucial to have clear visibility into their member profile, what are the risk and relationship indicators, what financial products the member own, what service requests they submitted, where they are in the process of applying for a new product and what is their financial status. Nowadays, the credit unions have come to a realization that they need one common system to get that complete 360-degree view, which will connect all those disparate data points and provide a clear picture of the member. Having a complete 360 degree view of a member will not only help credit unions to better serve their members but also prevent fraud related activities across all channels. That is one of the primary reason that’s leading to the necessity of a digital transformation initiative at credit unions.

Second: Omni-Channel Data Processing

Historically, credit unions have not streamlined cross-channel processes. There are three major channels commonly used to serve their members:

  • Online/Mobile
  • Call center
  • Branch

This major issue of disintegrated channels becomes more vivid with a couple of examples such as online application origination and service ticket origination. In the first case, when a member started an application process online, but due to any reason abandoned it, with disintegrated channels, the abandoned application will stay dormant without appropriate attention. There is a lack of coordination and visibility for various channels to pick up an abandoned request and complete it. There are credit unions that have lost opportunities worth Millions of dollars that could have been captured. This channel discoordination results in the loss of data, potential revenue, and negatively impacts member experience that might lead to lower NPS (Net Promoter Score). That is the reason credit unions have come to realize the necessity of bringing all channels together and building an omni-channel data capturing capability on a single platform. With the omni-channel in place, a member has the flexibility to decide when and where to start a sales or service request and even if they decide to abandoned the request midway, a branch employee or a call center employee will most likely pick-up the request during the next interaction with the member.

There is also another significant part of this problem as illustrated in the member experience with compliance handling. Hence, the omni-channel platform for data capturing and processing needs to be broken down to the sales and service aspects. In cases when members have issues or questions, they are able to file a ticket or send a question through an online form. The omni-channel comes in handy when the same member walks into the branch. In that case the employee is able to pull out the ticket and see right away the nature of the issue. It is an opportunity for the organization to be proactive and help a member even before they ask.

The main business question in both cases is: how can the company streamline all three channels together to build an omni-channel platform and be proactive with the member service?

Third: Cross-Department Lead Generation

The third major issue is the business value that credit unions are losing by not collaborating and communicating between cross-functional departments, this can be an opportunities to generate additional revenue. Traditionally all credit union departments run as an independent organizations, the responsibility of success or failure is owned by each department. For example: The person that is already qualified for a mortgage can be also easily qualified for a credit card, deposit product, insurance product, etc. Based on our research the cost of cross-selling a financial product to existing members is much lower when compared to acquiring a new member. It is the commonly known practice of cross selling or cross-departmental lead generation. However, disintegrated business units become an obstacle for that most logical sales activity. The lead generation from one organization to another is not happening. The main business question to answer here is how all departments can be brought together under one common platform to add value to each other? Can mortgage bring leads to insurance and vice versa? What is the best way to organize it?

Fourth: Operational Efficiency

Today most credit union member facing employees use 7 to 9 systems to look-up member information, authenticate the member and service the member. They spend majority of their time tracking the member activities and follow-up reminders in multiple systems including Excel sheets and sticky notes. Most of the internal processes are not automated and organized, which means they are most likely outdated and require lot of manual interventions like making an internal phone call or sending an email to employees of other departments to check status of a service or a sales request. The organization probably has a certain onboarding step-by-step process for each product it offers. When the process of onboarding is not automated, it significantly lowers the efficiency. Instead of spending time with the member in attempts to cross-sell or strengthen the relationship, the employee are spending most of their time in operational activities to manually route the requests and capture the next steps. By implementing an automated system as part of the digital transformation credit unions can save time and also eliminate errors that can lead to member dissatisfaction. By streamlining the processes across all channels and across all departments the member and employee experience will be seamless and positive.

Fifth: Think One Step Ahead

The last but not the least important area that credit unions have to focus on is being one step ahead of the member by knowing the next best product and the next best action for the member. The bottom line here is a deep knowledge of who the members are. An understanding of the life situation of a member can provide insights into the potential needs of that member. Analytics and Marketing tools are potent tools to capture personalized information on the rising needs and life changes that can lead to the identification of a new financial need. By offering a product just a little before there is an urgent need for it can significantly affect the financial life of the members and give them an opportunity to make a better informed financial decision. Identifying what products the members own and how they are using them, is a part of the business intelligence that plays an immense role for forecasting a future need of the members. The main question here is: how can the credit union be more proactive and understand the needs of the members well before they understand it themselves? Collecting all possible information from every transaction that the members are making is an important part of success. Identifying all that information and organizing it in a dashboard for the credit union can provide a clear understanding of how to serve the members better and also help the management team to build their future product roadmap.


Each area mentioned above has its particular effect. The first issue affects the member experience. The second results in member and employee experience. The third issue combines incremental sales and experience. The fourth is related to the internal process optimization, employee productivity, and organizational efficiency. The last one is an opportunity to remain competitive, engage and build trust with members by being proactive and knowledgeable about the products they will need tomorrow. The overall goal of solving all that is mentioned above is to make the credit unions’ more efficient, so that there is time to nurture the members and strengthen the relationship so they can refer their family or friends to the credit union. Needless to say, all five reasons are critical to focus on. They will lead credit unions towards digital transformation that will help them to streamline the process and improve efficiency. In further articles, we will focus on each of the five main areas on a tactical level to provide actionable insights.