By Ray Birch
SCOTTSDALE, Ariz.—While credit unions may once have had the technology edge over banks, that lead has eroded and it has done so at a very bad time, says one expert, who is recommending CU leaders take several steps.
Chris Miller, director of digital channel solutions practice at Cornerstone Advisors, spoke with CUToday.info about the struggles credit unions have increasingly faced in recent years in attempting to keep pace with big investments in digital services by banks (and fintechs) at a time when consumers want their financial institution to be in their pockets.
Miller’s insights are being shared here as part of a series in CUToday.info launched in response to research showing credit unions have, for the third year in a row, finished behind banks in a national survey of American consumers when it comes to “satisfaction.” As CUToday.info was first to report, in the most recent American Customer Satisfaction Index (ACSI), credit unions even hit a “historic low” when it comes to consumer “satisfaction” with their financial institutions.
The objective of this CUToday.info series is to deliver more actionable strategies to credit unions so they may more effectively respond.
Legacy Can’t Be Your Legacy
Miller said what is limiting many credit unions in the current market are older legacy core systems and too many manual processes that are backing up e-delivery, particularly digital account opening.
Moreover, Miller stressed too many credit unions are creating too much “friction” for consumers at a time when they want things to be seamless and easy, something the mega-banks have done a much better job of.
“With COVID you had banks scrambling to focus their attention on digital tools and closing the technology gap,” said Miller. “Credit unions historically have always outpaced banks in terms of technology. But a lot of banks have caught up…”
Miller is concerned the big banks have moved off their legacy core systems while many credit unions have not.
Chris Miller
“Credit unions are still utilizing some of the older, outdated, non-best-of-breed technology, which has played a huge role in terms of them onboarding new solutions and new members,” said Miller, emphasizing those legacy systems make both efforts more difficult. “Ultimately it has become about how do we get a new member in the door digitally, and it’s not going to be through the drive-thru.”
Another Big Concern
What concerns Miller as much as credit unions hanging onto legacy core systems that don’t permit the addition and integration of new digital solutions—thereby diluting the effects of important new e-services--is credit unions operating digital solutions that aren’t truly digital.
“It’s a big problem when you have roadblocks in place for digital--steps in the digital process that require manual reviews,” said Miller. “I see credit unions doing this and not utilizing the vendor technology to its full extent. You are not going to get a good member experience if you do this. If you buy a brand new Cadillac digital solution and you’re still using processes and procedures from the 1990s, you're sitting dead in the water with a shiny new boat. You are creating member friction.”
Miller urged credit unions that have not already eliminated their manual processes to start looking closely at internal procedures.
“Anything that is manual ultimately creates some member friction and needs to be reviewed and revamped,” he said. “I know we're all assessing risk and making sure we're taking on the right amount of risk. But, ultimately, legacy processes and procedures are hampering the member experience by creating that friction. And it’s not just your digital account opening or digital lending. Look at some simple services, such as mobile deposit—how are we creating member friction with manual review of the back-end deposit application? What about deposit reviews, where you're not allowing members to have instant access for availability of funds?”
About Mobile Apps
Turning to mobile apps, Miller said each step a member takes in using the credit union’s digital solution should be evaluated.
“Something as simple as changing an address. A lot of people have moved around due to COVID. So, are we allowing our members to change their address seamlessly in the application? Or, are we creating friction by having them either call in or visit a branch location?” Miller asked.
There’s another step credit union leaders also need to take, he advised.
Get Shorter
What is also needed is a shorter term view of digital solutions, core and otherwise, Miller added.
“We need to continuously look at our offerings,” he said. “Gone are the days where you have five-to-ten year contracts. I am not saying changing every three years, but set up a roadmap and then every year make sure you are keeping things up to date with the latest trends and making sure we're making those changes as needed. Make sure you are not becoming stagnant.”