Why Now Is The Time For CUs’ Digital Transformation

For credit unions (CUs), the shift to digital banking is here — and depending on how you look at it, the pivot, by necessity, took only a few months.

In an interview with Karen Webster, Todd Clark, CEO of CO-OP Financial Services, said the past eight weeks have spurred CUs to grapple with significant changes in member activity across every channel, and an economic landscape that has presented members with momentous challenges.

CO-OP saw credit and debit transaction counts fall precipitously in the early weeks of the pandemic, as low as 30 percent.

“It’s slowly picking up just a little bit,” he said. “We’re picking up a little more each day from the previous day.”

There has been some tailwind as states have started to open up, he said. After all, there are only so many groceries and essential items consumers can buy; now, they are increasingly looking to buy other goods and services.

In the meantime, CO-OP’s Contact Center volumes have been through the roof, and the company has seen massive single-day spikes in transaction volume across the Shared Branch network, he said.

Like every business, CO-OP had little time to react to COVID-19, but investing in its own digital transformation over the last three years has paid off significantly, said Clark. CO-OP has been able to quickly adapt, moving 80 percent of its workforce remote in less than a few weeks.

“We’ve had to shift things around a little, but we haven’t really de-prioritized anything,” he said. “This is the path we were on — digital transformation. In large measure, we’re on track with what we were already doing.”

Much of CO-OP’s digital transformation has been focused around digital payments, which has seen significant volume uptick throughout COVID-19 as people use their mobile phones and apps for remote deposit capture, or for a wide variety of services, including real-time money movement.

Asked by Webster whether certain initiatives had been “pulled forward,” Clark said CO-OP is pulling forward digital card issuance.

That comes as a growing number of brick-and-mortar retailers are implementing tap-and-go functionality at the point of checkout, and he said digital issuance has taken on new urgency as branches are closed. Consumers value their CU’s ability to push credentials right into their wallets and make cards available to be used right away.

From CO-OP’s perspective, Clark said the company’s digital transformation proceeds apace, with a focus on building out better and more fluid reporting and adding more API’s to its API portal that allows CUs to offer a variety of services across digital and physical channels.

Looking Ahead

Despite the fact that volumes are rebounding across debit and credit, CUs may be in for a bit of a bumpy ride, at least through the remainder of the year.

That’s due to a mixed picture for auto loans (down) and mortgages (up) and the fact that CUs have had to gird for loan losses. In reference to those loans, Clark said CUs are engaged in “compassionate banking” focused on helping members get access to the funds they need.

“I know of many credit unions that didn’t wait on the government or PPP [Paycheck Protection Program] loans,” he told Webster. “They basically said, ‘Look, if you’re a member in good standing, and you have been for the last six months, come in here. We’re going to give you a signature loan. We’re not going to do underwriting or audits — we’re just going to give you a loan to help you through this difficult time.’ I think in the long run, their members are going to remember that. Those are the types of things that build loyalty and trust.”

On the other side of the pandemic, he said, there will likely be development of new products and solutions geared toward helping micro-businesses and gig workers, which remain categories of businesses largely left out of the PPP program.

There also will be advances in how CUs think about and retool their physical branches to fit the demands of digital-first banking. That will include consideration of just how much physical space these firms really need, especially as on-site staff pivot toward “work from home” setups.

The pandemic, he told Webster, “is going to force some credit unions to get on board with this digital transformation that we’ve been talking about for the last few years.”