The transformation of digital transformation
Digital transformation for credit unions was well underway prior to the pandemic. Social distancing, stay-at-home orders, and remote work simply accelerated digital transformation. Previously, digital transformation meant offering digital tools to members, such as online and mobile banking and remote deposit capture. These are no longer extra features, but the essentials. Digital transformation is now morphing into something entirely more contemporary and is focusing on the overall member experience.
It’s Time for Digital Transformation to Be Transformed
Member service must shift as consumer expectations shift. These trends highlight how digital transformation must take on a new meaning to serve members well and match their expectations.
- Out-of-the-branch experiences matter
The pandemic brought digital transformation in inevitable ways, one of which is the decreased foot traffic in branches and the heavier reliance on digital banking. According to the Financial Brand, out-of-branch transactions have risen 121% in the last few years. More than ever before, credit unions must balance the in-person and digital experience for members. While the use case of the branch may never die out, credit unions should prepare now for a predominately digital future and focus on the overall member experience, inside and outside of the branch.
- Call centers are transforming into contact centers
It’s vital to be available for member inquiries beyond taking phone calls and beyond branch hours. Converting a call center to a contact center can include adding chatbots and interactive voice functionality (fueled by artificial intelligence) to the phone system. Very few credit unions can afford to staff their call centers with 24-hour support, so many are implementing advanced artificial intelligence to gain efficiencies and serve members, regardless of the time of day. Advanced, interactive AI can intelligently respond to over 60% of member inquiries, answer 800 specific questions, and is capable of learning multiple languages.
- Members are used to Amazon-like service
Large e-commerce retailers like Amazon have raised the standard of service, and members come to expect this type of service from their financial institution. This means that credit unions must shift and adapt to match member expectations and needs for fast service. For example, credit application and approvals have long been an arduous and sluggish process for the member, yet are essential for business operations. One of the primary areas for accelerated digital transformation is the ease and speed of credit approvals.
- Video content is king
Paper communications may never go away completely but as e-commerce elevates customer experience, social media platforms like TikTok, Pinterest, and Instagram emphasize the value of video as a form of communication. In the attention economy, video carries the highest currency. As video is becoming the preferred channel to receive information, credit unions should consider how to strategically use video for member communication, and investigate in-house video production options (versus outsourcing) to reduce costs, create relevant content, and streamline production.
Even in a heavily regulated industry, digital tools are available for credit unions to digitally transform. Following these trends will not simply check a box short-term, they have the potential to increase the breadth and depth of membership now and in the future.
A note about Gen Z and Generation Alpha
As the financial institution industry finally begins to understand Millennials, a new generation has already taken center stage. Generation Z is the first generation that grew up immersed in a fully digital world with access to the internet, cell phones, social media, digital wallets, and cryptocurrency. The oldest of the Generation Z are 25 years old, and the youngest are 12. Gen Zers are aspiring activists and value supporting brands and banking institutions that focus on eco-friendly sustainability and racial and ethnic diversity. Thanks to TikTok and Instagram, Gen Z thrives on video content. This generation is savvy with researching brands (and financial institutions) they support. They want self-service, safety, transparency, and a seamless, digital, and personalized experience from their financial institutions.
Fintechs are poised to serve this generation. To not only remain competitive, but to offer this generation full access to financial tools, so it’s imperative for credit unions to learn to serve this demographic. If credit unions can serve Gen Z well, they will be more prepared for Generation Alpha (also called mini Millennials, as they are and will be the children of Millennials.) Credit unions must adapt to engage Gen Z as they soon will be the largest demographic, with Generation Alpha (born 2011 and beyond) not far behind.
The Cost of (Not) Digitally Transforming
For many credit unions, there isn’t a “Digital Transformation” line item in the budget. Loss of revenue, increased labor costs, and other budget constraints can be a concern and even deciding factor for credit unions when considering how to digitally transform. However, what is the cost to not digitally transform? The answer will be different for each credit union, but generally, the cost of not digitally transforming will mean that membership will shift towards financial institutions that are digitally outpacing yours.
Small steps in the right direction will add up. For example: when implemented, just one advanced AI tool can digitally transform credit unions at an entirely new level and have the potential to increase revenue by up to 30% per member. Plus, when credit unions collectively embrace digital transformation tools, the cost of these tools will decrease.
If the pandemic has taught credit unions anything, it’s that the digital transformation of financial institutions is already here.
How is your credit union digitally advancing to serve your members?
