Empowering credit unions: Navigating 2024 with data and technology

Credit unions continuously face unique challenges in today’s ever-evolving financial landscape. They run the gamut from regulatory changes and economic uncertainty to technological advancements and evolving member expectations. With so many factors to consider, credit unions must embrace and implement data-driven decision-making and leverage technology to cultivate their own and members’ success.

With data-driven insights, credit unions can enhance member experiences, scale operations more efficiently, and help mitigate potential risks. It also empowers more creativity, freeing up employees to focus on what matters most: directly interacting with and supporting members. With that in mind, let’s unpack how data and technology can help credit unions navigate the next year with confidence.

The state of credit unions in 2024

Member expectations are evolving at an accelerated rate, driven by technological innovation and economic uncertainty, among other things. The desire for a seamless, personalized, and efficient financial services provider continues to grow, and with that comes the need for advanced technology. One of the reasons credit unions have excelled in the past is due to their exceptional member service and the desire to offer seamless, personalized experiences both in-person and via digital service offerings. Ahead of the new year, MeridianLink conducted a customer survey of 100 financial institutions on their priorities, concerns, and goals for 2024, which found that adopting technology and meeting members where they are were top of mind. Specifically, institutions reported being most focused on providing a seamless, omnichannel experience, enhanced mobile banking apps, and personalized financial services.

Credit unions that fail to adapt to changing technology trends may struggle to provide the convenience and digital services that members increasingly expect. Even as smaller credit unions try to stay on top of the latest technological innovations, they likely lack the resources to make as many significant investments in new tools and services (as well as relying on data from members) as their established counterparts in the traditional banking industry. For many individuals, that is reason enough to leave a credit union and begin banking with a more traditional financial institution that offers greater convenience baked into their everyday offerings.

Priorities for credit unions

To help credit unions be more strategic with their investments in 2024 and more competitive when it comes to attracting and retaining members, I recommend focusing on the following areas throughout the remainder of this year.

Credit risk is a real concern. Inflation, high interest rates, and elevated borrowing costs can impact a member’s ability to repay debts. As member-owned, not-for-profit institutions, credit unions can set their own rates rather than rely on the Federal Reserve’s guidance. Reviewing account data and regularly surveying members about their financial situation can provide excellent insight to where credit unions can direct their support, whether it be financial literacy programs or otherwise. Credit unions should also rely on data and automated workflows to match members to the best products and rates for their ideal financial experience.

Fraud mitigation will continue to grow in importance as the adoption of new technologies creates immense opportunities for better, more convenient service, but also introduces potential vulnerabilities into the institution’s infrastructure. In another recent MeridianLink survey of 1,000+ consumers, 48% of respondents said they would like to see their financial institution place increased importance on protecting customer information from fraud this year.

Addressing anticipated payment challenges should be a priority for credit unions. Our data shows that 40% of Americans anticipate financial hardship this year. Our customers also predicted credit card debt (34%) and housing costs (25%), i.e. mortgage, refinancing, and rent, would be two of the greatest challenges consumers will need help with this year. Credit unions with the foresight to proactively assist members with these concerns will likely endear themselves to their members and increase consumer loyalty.

Investing in superior customer service will go a long way in attracting and retaining members. More than a quarter of consumers said they would switch financial institutions if they received slow or fragmented service (26% and 27%, respectively). Ensuring enough technological and human capital resources to provide outstanding customer service is an excellent way for credit unions to meet member needs every step of the way.

Preparing Members for the Future

As the adoption of digital services increases, so does the need for digital literacy. Much like the importance of financial literacy, credit unions should help their members adapt to digital banking by teaching them how to navigate online services safely and effectively. Investing in robust solutions to protect member data and sensitive information from being leaked goes hand-in-hand with enhancing digital services. Cybersecurity education cannot be an afterthought, but rather a priority for members and institution staff alike.

Leveraging technology for superior member experiences

One thing is clear, technology is the steppingstone to enhancing member experiences. It bridges the gap between traditional service models and modern member expectations. In using technology, not only can credit unions offer members seamless digital experiences, but they can zero in on and provide tailored solutions for individual members, strengthening consumer loyalty.

Knowing that the two biggest concerns members have this year are managing credit card debt and housing costs, one way to support some of the challenges members anticipate is to implement end-to-end loan origination systems that allow for customization in the mortgage process, while maintaining regulatory compliance. Credit unions can also prepare members for potential default by streamlining the collections process to effectively manage delinquencies. Credit unions must go beyond basic demographics of age, gender, wealth, and location by understanding member lifestyles, life events, and unique financial situations, all with the end goal of providing better advice and being the strongest possible financial partner.