Trying to boil the ocean? There’s a better path to digital transformation

Your credit union and our clients have a lot in common. They’re financial institutions and other high-risk companies that know future success is tied to new technologies; yet, implementing a full digital strategy can seem overwhelming. They have talented, energetic people who work hard. And, in common with your credit union, our clients face challenges like:

• Satisfying members/customers who want – no, demand – to do banking on their own terms while also expecting a consistent, easy and low-stress experience every single time

• Weighing the drawbacks of legacy systems and inefficient workflows against the high cost in time and money to embrace the digital age

• Keeping data safe, in light of growing cyberattacks that are pervasive and becoming more sophisticated

• Overcoming traditional bank-operation mindsets where, let’s face it, customers were hardly considered, versus adopting new business models that streamline processes and put them first

• Surviving in an industry unaccustomed to innovative disruption and out-of-the ordinary competition

Arguably, the last point is the nexus of the other four. Early on, everyone saw the financial industry as an unlikely candidate for disruption. Heavy regulation from a fistful of government agencies; big, costly systems with long depreciation schedules; and customers’ pain in trying to switch accounts were all key entry barriers, or so we thought. Now we know better. Tech startups untethered by infrastructure and “legacy thinking” have staked their ground. And while changing direction quickly is hard for big banks, they’re digging into their war chests to become digital-ready.

To stay relevant, credit unions need to embrace digital transformation as a strategic imperative and company “lifestyle.” But given tight resources, we need to be smart about it.

We’re not in Houston, so why do we have a problem?

In discussions with Virtual StrongBox’s clients, my team and I have learned a great deal about their critical issues. We’ve helped them struggle with outdated systems, cumbersome procedures that frustrate tech-smart members/customers, and growing security threats. Clients also have told us about key pain points in areas like digital onboarding, compliance, loan-processing, and exchanging information outside their firewalls with businesses and consumers.

Maybe your credit union recognizes some of these problems:

• “Onboarding should be welcoming, but ours is awkward. New members must enter some data multiple times because we can’t auto-populate fields that use the same information. Also, our process doesn’t adapt well to those in special situations, like closed accounts or credit issues.”  

• “It’s hard for us to meet CFPB’s three-day mortgage disclosures rule, so we often have to pay overnight delivery fees or incur regulatory penalties. And missed deadlines that delay the closing date mean ticked-off members. We need an easy, secure way to send out compliance and loan docs.” 

• “When new customers want mobile banking, they’re often surprised to learn they can’t access for 24 hours because it takes that long to activate their checking accounts.”

• “We see lots of abandoned loans because our loan app is a mess. It’s an PDF you fill out online but then must print to add a signature. Next, you have to scan and email or fax it in, which isn’t secure. Borrowers also have to send copies of their driver’s license or other ID, or find a branch.”

Whose company are you keeping?

These and other pain points subtract from positive customer experiences and drive up costs. But instead of trying to fix them piecemeal, many of our clients are taking an intentional approach to systems and workflows through companywide digital transformation.

They’re in good company. In a 2016 global survey of 573 C-level executives, Forbes Insights and Hitachi asked what tops their list of strategic priorities for the next two of years. “Digital transformation” ranked highest by all respondents. Similarly, “new technologies to enable digitization” and “increasing data and analytics capabilities” were tied at 51% as the greatest investment priorities. And, when asked what was driving the need for digital transformation, the executives echoed what our own clients told us:

• New business models (41%)
• New technologies (40%)
• Competitors from our industry (36%)
• Customer expectations (35%)
• Disruptive competition from other industries (23%

With Cisco, Forbes also surveyed of more than 300 IT global executives. Forbes and Cisco wanted these leaders’ perspective because, while digital transformation isn’t simply about technology, technology is the means to drive it forward. The IT executives said their responsibilities have expanded, given that they now manage cloud computing or cloud relationships in addition to traditional internal systems. Further, they see the importance of being both agile and secure, maintaining security on both private and public clouds while keeping up the needs of internal users, as well as customers. “As IT shifts to an as-a-Service model, cloud computing becomes the critical catalyst,” Forbes reported. “Cloud opens up new worlds to enterprises, enabling applications and functionality to be drawn from multiple sources.”

Still trying to boil the ocean?

Like our clients, you and your team know it’s time to transform your digital strategy, infrastructure and back-office functions. But it also takes a shift from legacy thinking to transformative thinking. Instead of investing millions of dollars and years of deployment time, consider the value of what Virtual StrongBox calls “Digital Transformation as a Service.” Rather than trying to change an entire, complicated system all at once, we help clients solve their digital needs a problem at a time.

Start by developing a staged approach. Setting priorities allows for rapid development of a prototype for a specific business line or functional area using API integrations to automate manual consumer interactions. This offers the benefit of a customer-friendly experience out of the box. And it’s low-risk; problems can be resolved rapidly (“fail fast and learn quick”) because the prototype can be quickly adapted. Think long range, but undertake digital transformation one chunk at a time. That way, you can look for better ways to solve internal problems, as well as those facing members.

Today’s banking landscape includes eager technology startups hungry to challenge traditional banks for their clients, as well as larger institutions with the bucks to invest. But with the right technology and strategy partner, your bank can meet these challenges and thrive.