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Strategies for the Digital Banking Evolution

In this blog, Brian Day, Sales Solution Consultant for Velera, discusses strategies for navigating the digital landscape, from leveraging member feedback to striking the perfect balance between cutting-edge technology and user-friendly design.

The digital world has progressed rapidly over the last 30 years. With every new advancement in technology, our digital journey evolves, changing how we interact with the world. Take mobile phones, for example. From the bulky “bag phone” of the early ‘90s to the addictive Blackberry, and of course, the game-changing iPhone of 2007, the evolution of the mobile phone is a microcosm of how technology has changed all aspects of our lives, including how we approach banking.

Consumer interest in innovative digital banking is growing as the financial services industry is influenced by large banks boasting their multi-million-dollar (and sometimes multi-billion-dollar) technology budgets and subsequent digital experiences. As an example from recent history, Wells Fargo heavily invested in its card offerings in 2022 – particularly its digital experience – resulting in a reported customer satisfaction increase of 3%. And new fintech players are further redefining the banking space, leading consumers to expect their digital banking experience to be seamless, efficient and robust.

This shift is clear among credit union members, 81% of whom said they value innovation when deciding which financial services provider to bank with. And while credit union members are generally more loyal than bank customers, members of more innovative credit unions reported an even higher level of member loyalty than credit unions that are perceived to be less innovative, according to the 2024 Credit Union Innovation Readiness Index.

When considering if (or how much) to invest in innovation and improving digital banking capabilities, many credit unions cite costs and lack of resources as significant factors, especially when benchmarked against larger national banks that have access to more capital and resources. However, credit unions can strive to level the playing field by being purposeful and deliberate in planning for the future. By being strategic in how they invest their resources and approach the development of digital banking tools and technologies, credit unions can keep up with ever-evolving member expectations and demand.

Here are a few ways credit unions can elevate and enhance their digital experience plans:

  • Find your starting point. When determining what your credit union can do to create an industry-leading digital member experience, it is important to first establish where you need to begin. You can’t get directions to your destination if you don’t enter a starting point into your GPS. First, assess the effectiveness of your digital channels today. Ask yourself, “Is what I’m doing today sufficient? Am I meeting the needs of my membership? Are my products and services competitive?” Look at what is already in the market and use that intelligence to help create a roadmap for improvement – whether that means adding new features or optimizing the member experience. 
     
  • Gather member feedback. It’s essential to listen to feedback from your members. Feedback can help identify what should be a priority moving forward. However, it’s not necessarily the feedback itself, but how you interpret that feedback. There are also many facets of digital experiences – focusing on everything at once can be overwhelming. Understanding what has the most significant impact on your members is critical when deciding where to invest your limited resources. 
     
  • Find the right balance. While 30% of consumers currently use digital channels for account opening, according to Curinos (a global data intelligence business serving financial institutions across lending, deposits and digital banking solutions), around 70% of consumers said that they would prefer to use digital channels to open an account if given the choice. This disparity shows consumers are being constrained by the limitations of their financial institution’s digital channels – or at least their perception of those channels. 

    A common struggle for credit unions is how to find the right balance between complex technology and simple, user-friendly tools. But innovative technology doesn’t have to be overly complex. Chatbots, for example, have become increasingly important for credit unions looking to efficiently serve their members without putting a burden on internal resources. Additionally, features like digital issuance and allowing users to view their account balance before logging into the app put seamless member convenience within reach for many credit unions.  
     
  • Drive engagement through digital. With so much of our banking model rooted in face-to-face interaction, building engagement within digital-only channels can be challenging. But data shows the traditional banking model is shifting to a more digital one. According to Forbes, nearly 80% of adults in the U.S. would rather do their banking online or in a mobile app than in person. To maintain credit unions’ people-based service model without leaning solely on the traditional in-person model, credit unions must prioritize digital engagement. 

    Once an account has been opened, whether in-branch or digitally, and the card has been delivered, credit unions need to focus on building a digital relationship with their members. Think of a digital relationship holistically: Driving engagement includes making sure members are utilizing their credit union-issued card, confirming everything is working properly and ensuring that members have somewhere to turn to if issues arise – both in traditional and digital channels. 

Member preferences are shifting toward digital, so credit unions must be prepared to shift with them. Remain attuned to what your members want and do everything you can to prioritize, plan and innovate to meet those expectations, which are only going to increase. It will be crucial for your credit union to be strategic about digital capability development to stay competitive.

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