By Amanda Licona-Crocker
Today’s credit unions are under immense pressure to keep up with the latest technology. Artificial intelligence is advancing quickly, payments are becoming faster and increasingly more digital, and members are now expecting the same level of convenience from their financial institution that they get from the other services they use every day.
But keeping pace and delivering doesn’t necessarily mean adopting every new technology or solution that comes along.
The really important question credit union leaders should be asking is whether a given technology actually solves a real problem for the organization or its members. While that may sound simple, in reality, it can be a difficult answer, especially when the pace of innovation is moving faster than traditional planning and budgeting cycles.
The truly successful digital credit unions of the future will be those that excel at deciding where technology can create the most meaningful value.
Start with Member Needs
Digital investments should begin with a problem, not a product. Is there unnecessary friction in a payment process? Are members moving between multiple channels to complete a simple task? Are employees spending time on work that could be automated? Is a new capability actually making the experience easier, faster or more convenient for members?
These are the questions that should come long before deciding on whether to adopt a new piece of tech, introduce a new payment option or invest in another digital tool.
What’s more, member needs aren’t monolithic, nor are they static. What works well for one generation or segment may not work as well for another, and both needs and expectations will continue to change as members and technology evolve.
That means digital strategy cannot be a one-time exercise. Credit unions need to continually listen to their members and evaluate whether their technology investments are addressing the problems members are actually experiencing at that time.
Digital Transformation Isn’t an IT Pproject
Technology may be the foundation of any digital initiative, but the decision to actually pursue it should involve much more than the technology team.
Digital investments can impact everything from operations, risk, security, to member experience, compliance and even the institution’s financial performance. These various teams should all have a voice in the process right from the beginning, rather than only being brought in after a decision has already been made.
The same is true at the leadership and board levels, too. Executives and directors need to understand not only what a technology does, but why the credit union is investing in it, what risks it introduces and how success will be measured.
This becomes particularly important with AI, where capabilities can change quickly and may be embedded in many of the technologies a credit union is already using.
The goal is to establish enough accountability so that both employees and leaders understand where experimentation can happen, where guardrails are needed and who ultimately owns the risk.
Choose Your Partners as Carefully as Your Technology
As credit unions continue to modernize, they must also make decisions about what they should build themselves, what they should buy and where partnering makes more sense.
While there is strong guidance, there is no single right answer. In some cases, building internally may provide the control or flexibility an institution needs. In others, partnering with a technology provider or even another credit union may allow an institution to move faster and make better use of its own resources.
Credit unions must also understand how a potential partner approaches security, data, AI governance and risk. They should have clear insights into how the technology will integrate with their existing environment and, just as importantly, who is accountable if something goes wrong. This is particularly important when it comes to payments.
Payments are a Good Test of Digital Strategy
The payments experience is changing quickly, with members expecting more convenience, flexibility and speed every day. While new capabilities can make it easier for members to pay, they can also introduce new considerations around fraud, security and risk.
As payments become faster, credit unions may have less time to identify and respond to suspicious activity, leaving little room to separate decisions about payment technology from those about fraud prevention and security.
The same principle applies to any digital investment. A new technology can create a better member experience while, at the same time, also changing how the credit union manages its risk and operations. Understanding the tradeoffs is imperative before moving forward with innovation.
Measure what matters
Finally, credit unions need to be able to explain why an investment is worth making. That doesn’t always mean measuring success in revenue alone. A successful digital investment could reduce operational costs, improve employee efficiency, remove friction from a member experience or reduce exposure to fraud.
But the institution should know what it is trying to accomplish before the technology is implemented, as well as a way to determine whether it worked.
The digital credit union of the future will be built by organizations that can identify meaningful member needs and make informed, thoughtful decisions about where technology belongs while remaining accountable for the results.
Rather than trying to create a formalized framework for chasing innovation, credit unions should really focus on developing a solid strategy for deciding where that innovation can make a real difference.
Amanda Licona-Crocker is president of SWIVEL, an SWBC Company and leading fintech specializing in integrated solutions.
