It’s no secret that smaller credit unions, like small businesses, simply can’t always compete with larger financial institutions and fintechs. What small credit unions have, however, that larger financial institutions do not, is a lot less red tape and politics, which makes them operationally more nimble.
Because smaller credit unions have less bureaucracy to manage, they are in some ways more agile than larger credit unions, but sadly don’t always have the resources of the big banks.
However, cloud adoption levels the playing field, providing smaller credit unions access to resources not otherwise affordable.
The implementation of new technology-focused innovations, specifically, can be attainable now more than in the past with the adoption of the cloud. And, the cloud increases speed to market thus shifting the competitive balance because smaller credit unions have less barriers and red tape.
Michael Mathews, President of Mississippi-based Mutual Credit Union, shared that prior to their shift to the cloud, if they wanted to upgrade a server or install a new system, it could take up to 6 months to complete. Today, with the cloud their speed to market has been expedited to a week or less.
Cloud adoption is a game-changer, impacting not only IT staff, but all employees and, most importantly, members. Without the burden of monitoring physical infrastructure and planning for a major overhaul every few years, IT teams can help their credit unions become more agile, discovering new applications and solutions to improve the member experience at dramatically increased speed and reduced downtime.
“Our number one driver in the decision to move to the cloud was reducing our hardware burden. We no longer have to manage a full stack of servers and IT equipment. We still have some on-prem infrastructure but the rest is in the cloud. We can go from concept to live in a week – sometimes days – which is exciting for our team,” Mathews stated.
Another driver for shifting to the cloud was disaster recovery.
According to Mathews, “Through the cloud, we have reliable back-ups which allow us to operate regardless of loss of hardware. We are no longer hardware dependent so if we lose power or experience a significant network problem, our entire branch network doesn’t go down.”
While there may be apprehension across the organization about a digital transformation, communication and engagement at all levels will help develop a culture that values technology.
Digital transformation is a process for modernizing legacy technology and building new capabilities to better serve members, but technology actually is not the core focus of digital transformation – the people are. Technology is the easy part – digital transformations are all about culture, buy-in and alignment.
Many organizations approach digital transformation as static projects, however, as with life, transformations are a journey. Organizations that adopt a digital transformation mindset will never stop transforming, changing – adaptation and resiliency are the norm, that require a commitment to a culture shift that values buy-in and alignment.
There is a lot of misunderstanding and apprehension regarding the cloud, which is why Mathews suggests that credit union leaders embarking on a digital transformation journey educate themselves and their board.
The cloud is simply a virtual datacenter. Organizations must design, secure, monitor and manage the cloud, as with any other type of technology. As a result, the regulations are transferable and applicable.
According to a statement from NCUA and FFIEC, “Due diligence and sound risk management practices over cloud service provider relationships help management verify that effective security, operations, and resiliency controls are in place and consistent with the financial institution’s internal standards. Management should not assume that effective security and resilience controls exist simply because the technology systems are operating in a cloud computing environment.”
Unlike a custom datacenter, the cloud provides the ability to adopt technology as needed in the future, on demand. The cloud provides scalable resources for all cutting-edge technology such as AI, ML, blockchain, fraud monitoring, and more. Amazon and Microsoft are continuously building that technology.
Transformative technology is available to organizations at any scale and innovative credit unions are, and have been, adopting cloud strategies and infrastructure for some time. With the adoption of the cloud, credit unions of any size can be a competitive leader in the future of banking, providing members with modern, digital experiences with a focus on data security.
Chris Sachse is CEO of Think|Stack, a managed services CUSO specializing in cybersecurity and cloud solutions. He can be reached at email@example.com. For more information about digital transformation, cloud adoption and cybersecurity practices that improve member experiences while protecting member data, visit www.thinkstack.co or contact us at firstname.lastname@example.org.