- In a digital-first economy, credit unions must adopt a digital mindset to meet the ever-changing needs of their members.
- Credit unions face significant hurdles in their digital transformation journey, including legacy systems, unwillingness to change, and lack of digital expertise.
- Third-party partnerships can help fill in expertise gaps to create digital-first, member-first experiences that match the personalized in-branch experience of credit unions.
The Rise of a Digital-First Economy
The digital economy has rapidly changed over the last five years, particularly in the financial space. The pandemic accelerated this digital transformation and while customers were quick to adapt, many financial services companies were not.
A 2021 Forrester survey revealed that while 59% of respondents said they’d keep using their financial institution’s digital tools, less than 29% were actually satisfied with them. Meanwhile, digital-only “neobanks” have risen in popularity. According to a 2022 J.D. Power survey, 27% of banking customers in America currently use an online-only bank.
Another survey conducted by Galileo showed that 61% of consumers said they are very or somewhat interested in using a digital-only bank in the next year. By offering niche services to fit the specific needs of digital-first customers, these neobanks are challenging the status quo of traditional banking methods and introducing stiff competition to the credit union ecosystem.
“To me the greatest threat to credit unions is being stagnant,” says Chris Conway, VP of Digital Products at Members 1st Federal Credit Union. “In my experience, if you’re not keeping up with what other financial institutions are doing, what the market is doing, and what members are being offered elsewhere, you are falling behind.”
The Challenges Credit Unions Face
In a survey of 152 bank and credit union executives conducted last year by Alkami Technology, legacy systems (68%), organizational resistance to change (51%), and lack of digital literacy (41%) were all listed as top pain points for digital transformation.
Tapping into existing member data to provide services and advice that anticipate individual member’s needs and behaviors is another challenge credit unions face. An Aux survey of 30 credit union leaders revealed that most (97%) believed that better data analytics is critical, but having another system to learn and incorporate remains a top barrier. Inability to harness data prevents credit unions from acting on powerful opportunities to engage members in relevant ways: whether that’s recommending the right products, offers and rewards, to foreseeing risks of member disengagement or churn.
This, in addition to some of the more common hurdles that credit unions contend with, such as low staffing or limited budgets, all conflict with the continuous evolution of customer needs.
Bringing the In-Branch Experience to the Digital Space
Despite obstacles credit unions face, they do have unique advantages that can set them up for success. Primarily: the personal connections they forge with members.
“Credit unions, at their core, are community-based organizations,” says Conway. “We have a great experience for the members at the branch level. We know who they are, they give us hugs, and it’s a wonderful thing. So, when we were looking to create an app to deliver timely and relevant experiences for our members, we asked ‘how do we create that same kind of in-branch experience digitally?’”
For Members 1st, the answer was in partnering with Flybits. In just under 7 weeks, Members 1st implemented MyConcierge™ using Flybits technology, an embedded layer that sits within their existing mobile app.
This involved a one-time API integration with their existing data and the creation of personas based on priority use cases.
To extract actionable insights from their internal and external data sets, Members 1st collaborated with Flybits to ingest data and begin building experiences relevant to members’ context, needs and interests
“You can be paralyzed by the amount of data that you can get,” Conway says. “Especially if you’re analyzing 500,000 survey results. But there’s a wealth of opportunities out there if you know how to use it.”
Once launched, the Members 1st marketing team was able to directly engage with their members through an on-demand feed of predictive and customer-centric recommendations, offers, and financial education.
And now, the success speaks for itself. Members 1st’s partnership with Flybits has led to over 315,000 members onboarded and more than $500K in new loans per month.
“The people at Flybits are very hands-on,” says Conway. “They visit us on a quarterly basis to align and understand our needs and figure out how their tools can truly work with us. For us they are more than just a vendor partnership. Flybits is a real partner to Members 1st.”
What to learn more? Dive deeper with our ‘Member Centric Banking’ webinar.