ADVISORY: 2022 Sees Majority of Credit Union Product and Service Delivery Go Digital
Finalytics.ai shares insights on how digital moves from transactional to relational
SAN MATEO, Calif. – Nov. 17, 2021 - Finalytics.ai powers segment-of-one digital experiences for credit unions and community financial institutions. The company recently released an industry brief, 2022: The Rise of the Machines in Credit Unions. In the brief, Finalytics.ai predicts that in the coming year, leading credit unions will transform their digital channels from transactional to relational-focused.
Five years ago, credit unions saw about 15% of the business that was previously done in branches conducted through their digital channels. In other words, the branch was still the primary channel for engaging with members and matching their needs with the services and products offered at the credit union. Two years later, in 2018, 25% of members were using digital channels to match their needs with the institution’s offerings. The Covid-19 pandemic accelerated this trend and in 2021 credit unions saw an average of 50% of their business coming through digital channels.
Finalytics.ai believes that 2022 will be a tipping point in the credit union industry. Members of credit unions will default primarily to digital channels when searching for solutions to match their financial needs. This tipping point will bring exponential growth to those credit unions that are embracing the combination of big data and artificial intelligence to orchestrate a unique journey for each member. Credit unions that do not respond to this change will see a hastening of the flight to quality that is already underway. This is why 2022 could bring an exponential growth in the number of consumers leaving their financial institutions to seek digital experiences that are centered on the relational rather than the transactional.
Craig McLaughlin CEO of Finalytics.ai, explains, “Digital will officially overtake the branch in 2022 as the primary channel for meeting the financial needs of members. Some innovative credit unions have already positioned themselves to take advantage of this change, securing the technological infrastructure needed to provide uniquely tailored advice and direction for their existing and prospect members. Next year, we will see many more credit unions following in these footsteps. Otherwise, organizations risk losing members and their central role in communities.”
Data from Finalytics.ai’s Harris Poll shows that 40% of Americans are likely to leave their primary financial institution for digital banking that compares to an online shopping experience with e-tailers like Amazon.
Credit unions that stem this ebbing tide will need to recognize and address three specific challenges:
1. Before digital transformation can succeed, there must be a cultural transformation that leads to redefining how value is delivered to members.
2. Digital channels must be relational and not solely transactional. This is why upgrading or innovating a digital banking platform – typically optimized for transactional activity – is not the path to success.
3. A technological reality that may seem counterintuitive, i.e., that machines made intelligent by leveraging data are going to be essential to delivering value to members and leveling the competitive landscape.
“Credit unions are uniquely positioned, due to their history and ethos, to respond quicker to these tidal forces increasingly pushing consumers into digital-only relationships with their financial institutions,”, continued McLaughlin. “Driven by their laser focus on delivering value to their members, credit unions may be more inclined to consider options outside of their existing comfort zone than other types of financial institutions that focus on returning value to shareholders. By transforming their cultures, adopting a relational rather than transactional only approach to digital and leveraging emerging technologies to provide uniquely tailored advice and direction for their existing and prospect members, credit unions will continue to play a central role in strengthening communities across the United States.”
Silicon Valley-based Finalytics.ai is the first community financial institution platform to apply real-time big data, and machine learning in a way that can address the unique needs of prospective and current members. Its “segment-of-one” experience is based on individuals’ unique identities, orchestrating their financial journeys using dynamic segmentation and content to address their needs. This allows institutions to compete successfully, drive consumer acquisition, and improve retention. Visit https://finalytics.ai/ to learn more.