CUs and digital readiness: Offering online banking services is no longer enough

Faced with the reality that 40% of Americans aren’t visiting bank and credit union branches in favor of online and mobile banking, financial institutions today understand that they must be “digitally ready,” with an online presence that meets the expectations of today’s consumers. 

Like other FIs, credit unions are expanding their digital presence by moving traditional banking services online. But, the competitive landscape is also changing. Technology companies are making their way into financial services, and it’s predicted that in 10 years, a technology firm could be world’s largest bank. In a survey by Bain & Company, 73% of millennials said they would consider banking with a tech firm. 

Changing member expectations and growing competition means credit unions that want to grow must think about digital strategy as much more than their website. But when it comes to digital readiness in 2019, the data shows credit unions still have work to do. 

Credit Unions Are Falling Behind in Digital Adoption

Using NCUA data, CU Rise mapped the changes in adoption of 23 electronic services by credit unions from 2014-2018. Based on the presence or absence of the 23 electronic services, a digital adoption score (DAS) was calculated for each credit union. A credit union offering all 23 electronic services has a DAS score of 100. 

The growth in DAS scores between 2014 and 2018 was calculated for all 5,397 credit unions with NCUA data. Alarmingly, 3,000 credit unions – more than half – had no or negative growth in their DAS score. Only about 5% of credit unions made substantial progress in their digitization efforts, with DAS score growth of more than 15%. 

For credit unions lagging in their digital adoption, the opportunity to reap the benefits is huge. All credit unions with positive growth in their digital adoption score also had higher increases in both assets and members in 2018 vs. 2014.

It’s What Comes After Online Banking That Matters Now

Offering online banking services is just scratching the surface of how credit unions can embrace digital strategy for growth. What a credit union does after implementing digital banking service truly makes the difference today.  

Your members’ online actions form a digital footprint – and it’s a treasure trove of information previously unavailable. Advanced algorithms can build a member’s digital profile by synthesizing data from mobile phone apps, online shopping, social media, and search engine visits to assess characteristics such as the likelihood to make timely payments, or default on a loan. 

Analyzing the digital footprint has so many interesting and strategic applications. A study by the National Bureau of Economic Research found that iPhone users are more likely to pay their bills than Android users. They also found that people who use their actual name in their email address are more likely to make timely payments than someone using a mix of nouns and numbers.

These new windows give credit unions important insights into members’ needs, preferences, and likely future behaviors. Data analytics is the key to forming a more accurate picture of your members, and developing more effective strategies to spur growth.                                                                 

Here’s a simple, but effective application from a mid-size credit union using predictive data analytics. Advanced predictive models are able to synthesize a multitude of variables and predict the propensity for future behavior, allowing this credit union to identify who would be more likely to respond to a new checking account incentive. When a member on this targeted list logged into their online account, it automatically triggered a pop-up message with the checking account offer. Not only did the credit union have better response rates, but the digital delivery was much more cost-effective than their traditional mailers.              

This is just one small tip of the analytics iceberg. For credit unions wondering the best strategies to compete and grow in the rapidly changing financial services landscape, here is the answer: 

Digitize, analyze, and let your data show you the way.

Suchit Shah

Suchit Shah

Suchit Shah is the Vice President of Professional Services at Trellance. He founded CU Rise in 2018, which would later be acquired by Trellance and become their Talent business line. Web: Details