What Credit Unions Need to Build Modern Customer Experiences

With the annual meeting of the of the Credit Union National Association (CUNA) Technology Council now in the rearview mirror, it’s a good moment to consider the major challenges the industry’s tech leaders will confront in the months to come. Here’s what speakers and others attending the conference were talking about most throughout the event:

Credit Unions Are in a Fiercely Competitive Environment

Never before have credit unions confronted a more challenging competitive landscape. On one hand, consolidation in the banking industry has left a number of deep-pocketed national banks that are spending heavily on digital experience and artificial intelligence, leaving nonprofit and mostly local credit unions scrambling to keep pace.

At the same time, a large array of online-only financial technology companies, or fintechs, have emerged in recent years to compete with both banks and credit unions on everything from mortgages and investments to small-business lending. Globally, some 64 percent of consumers have adopted a fintech application, a rate that’s doubled every two years since 2015, according to accounting firm EY. Moreover, the U.S. adoption rate is still only 46 percent, meaning there’s a lot more room for domestic growth in the years ahead.

“With such growing adoption comes growing influence,” argued Gary Hwa, EY’s global financial services markets executive chair. “Maturing fintech challengers are now not only winning business of their own, but actively driving legacy and nonfinancial organizations to develop their own fintech products and services.”

For credit unions, the shift places greater urgency on the need to focus on customer experience, according to Lauralee Hites of management consulting firm Stratavize. She told conference attendees that they should look to a fintech application’s ease of use and elegant design as they consider building and redesigning digital experiences for their own customers.

Credit Unions Need Sophisticated Data Governance and Analytics

Competing in this new landscape requires deep knowledge of consumers’ actions and preferences. Where once this knowledge came from the personal relationships that credit unions forged with members in person, today it must come from data.

“We now want to give people the same experience in digital channels” that credit unions were long known for in branches, said Raj Rathi, director of data management with AdvantEdge Analytics.

But to get there, credit unions need a sophisticated model for data management and analytics. They must build a multiyear data roadmap that answers straightforward questions the business has today while also leading to the kind of predictive and prescriptive analytics that will allow them to identify and respond to trends. Rathi recommended the deployment of data lakes, in conjunction with credit unions’ existing data warehouses, in order to manage both structured and unstructured data.

“The idea is to free the data from the rigid data model that exists inside the data warehouse,” Rathi said.

MORE FROM BIZTECH: Hackers are increasing their attacks on financial institutions.

With Cyberthreats Mounting, Credit Unions Need Risk Assessments

Financial services organizations are among threat actors’ favorite targets, for obvious reasons, and the kinds of threats hackers are launching against credit unions and banks are evolving, according to Accenture Security.

Among the growing threats are credential and identity theft; data alteration and manipulation; so-called wiperware that erases data, including logs used to monitor for attacks; and even attacks targeting blockchain transactions.

“One of the biggest challenges is that we’re kind of in the middle,” said Bill Podborny, CISO of Alliant Credit Union in Chicago “We’re trying to determine what the risks are we have to be concerned with, what the appropriate controls are that have to be put in place and what level of control is appropriate.”

Podborny and others at the conference argued for careful risk assessment as a key tool to help guide decisions about security controls. One part of assessment, for many institutions, is a cyberthreat assessment by a reputable provider to uncover areas of organizational vulnerability.

“If you’re a technically in-the-weeds person, the risk assessment process can seem like a burden, but I would do it and use it to your advantage,” said Podborny.

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