How Credit Unions Can Win The FinServ Innovation Game

In addressing the innovation gap that exists between credit unions and their larger financial institution (FI) brethren, credit unions (CUs) may be perceived to be at a disadvantage, at least when it comes to dollars.

At first glance, that gap may seem insurmountable in the age of mobile banking, where technology is a vital component of financial services.

The bigger the IT budget, it would seem, the more can be spent on bringing innovation to market that grabs consumers’ minds and wallets.

But in an interview with PYMNTS, Jeremiah Lotz, managing vice president of digital experience and payment products at PSCU, said CUs can leverage a number of advantages (not attached to how much money is in the till) to cement long-lasting relationships with members.

“Credit unions have realized that in addition to being keenly focused on providing value to members at every level of interaction, they have to meet members where they want, technology-wise,” he said.

That’s especially true as millennials come up through the ranks, and are both comfortable and confident in using technology.

Increasingly, technology itself promotes a personalized experience. As Lotz noted, such personalization can occur at the most minute level – for example, someone can arrange and reconfigure an icon’s display on their mobile device, or can buy a car from a seven-story vending machine.

Personalization has always been part of the CU’s mission, Lotz maintained. In order to grow revenue, they must frequently interact with members in a way that traditional FIs may not, he told PYMNTS.  The CU does this by cementing a mindset where members feel they can rely on the organization to help guide them through significant milestones in their financial lives.

Fortunately, technology in general has become simpler to integrate and cheaper to buy. Partnering with firms that have scale (such as PSCU), said Lotz, allows for new product offerings, which means individual CUs don’t have to “boil the ocean” to create meaningful experiences or build new tech platforms. Bringing new technologies into the fold, such as artificial intelligence (AI) at the back end of a CU’s operation, becomes easier. The partnership model can help offer a roadmap for CUs.

Against that cooperative, partnership-driven backdrop, the competitive landscape between CUs and larger, traditional FIs changes a bit.

“The amount of dollars that a large FI can invest, and the number of zeroes that can be added versus the number of zeroes that credit unions can spend – regardless of technology – is always going to be different … but the playing field levels out a bit,” noted Lotz.

With their relatively limited financial resources, but the boons of cheaper, more easily deployed (via API) technology in hand, CUs must have a keen focus on their priorities so they can invest quickly and wisely, counseled Lotz.

“Credit unions have a clear understanding of what types of members they are serving and what their specific needs might be,” he pointed out. That level of understanding can translate into a digital experience that revolves around, and satisfies, the desire for self-service options.

As an example, Lotz cited the fact that a younger CU member may feel entirely comfortable applying for a mortgage online, where such a process was once not technologically feasible (and, previously, consumers might not have been comfortable uploading sensitive documents).

Lotz cautioned that “table stakes” essential to CUs’ self-service offerings include satisfying the expectation that consumers have control over fraud alerts and how their accounts are monitored. A strong, tailored portfolio of self-service offerings can help the CU reframe the dialogue and interactions with individuals once they do opt to make a phone call, visit a branch or engage in a web chat.

“By the time a human is involved [at the CU], you are able to have a more valuable conversation,” Lotz told PYMNTS.  “You are doing far more than simply providing them [with] a balance or helping them make a payment.”