John San Filippo
Four Forces Shaping the Digital Landscape
Onsite Coverage From the CUNA Lending Council Annual Conference
By John San Filippo
The CUNA Lending Council’s annual conference was held in San Diego, Nov. 2-5, 2022. Among the many informative breakout sessions was one titled “Four Formidable Forces Shaping the Digital Landscape for Credit Unions.” This session, sponsored by QCash Financial, was presented by CUNA Mutual Group’s Senior Director of Fintech Solutions Kevin Polinsky. The four “forces” addressed by Polinsky were:
· Buying and borrowing are converging.
· Digital means always on.
· Velocity drives success.
· Think like a member, solve like a fintech.
Buying and Borrowing
Polinsky began by noting that financing decisions are increasingly influenced merchants. “I always try to remind folks that your members are consumers, and those consumers want to buy things out in the marketplace,” he told the audience. “Your members are operating in this digital ecosystem and they want to get those things that they want as quickly as possible.”
He pointed to the all-too-common example of a member who applies for and is approved for a credit union auto loan, only to be persuaded to opt for dealer financing at the point of sale. “What we're seeing is the folks that sell things are having more and more control of where consumers are getting their financing from,” he noted. “They know that they have a captive consumer who's there to buy something. And they also know that it's an opportunity for them to push additional financial capabilities.”
According to Polinsky, the remedy is employing modern technology to create a more simplified, end-to-end financing experience for the member. “How do you start to connect those dots? How do you ensure that from the starting point to the end point, you've provided a clear and easy path to that end?”
The Always-On Era
“The hours of availability between 9 a.m. and 5 p.m. don't coincide with the hours people are transacting based upon what's important in their lives, what they're doing,” said Polinsky. “One of our partners, (auto lending fintech) Clutch, has done some analysis that shows transactions are occurring late at night. What happens is, you put the kids to bed, start focusing on the finances and then you realize, hey, I need this, or I need to get a loan, or I want to refinance my car. What time is it? It’s like 10 o'clock at night.”
Polinsky said that, while most credit union technology infrastructure is designed to drive internal efficiency, equal emphasis must be given to creating a cohesive, frictionless member experience. “How do you deliver more with fewer humans having to touch the process to move it forward? And then how do you align with your members as consumers, when they want to interact, how they want to interact, those types of things.”
The Need for Speed
“As a society, we've grown more impatient,” said Polinsky. “If you're doing something on your phone and it doesn't work, you immediately ask why it’s not working. The whole concept of velocity moves you quickly from starting to end. How can you start to build and enable capabilities that allow you to do that?”
He said that although many credit unions aspire to an “Amazonification” of their member experience, existing technology often limits this effort. “These limiters could be legacy technology, technology that requires folks to push buttons, to advance things forward. We want to transform and change, but then you've got those limiters, whatever they may be for your credit union, that really inhibit it to go forward.”
Polinsky added that this leads to “slowness in the velocity. You realize that ultimately someone's got to do something, press a button and help move that process forward versus allowing you to go end to end as a member, as a consumer.” He encouraged attendees to self-evaluate the member experience for their credit union, comparing, for example, applying for a credit card with Apple to applying for a credit card at the credit union. “Figure out yourself what those challenges are. What do you not like about it? Because if you observe it and don't like it as a credit union leader, undoubtedly your members are saying those same things.”
Connecting With Fintechs and Beyond
“There's a lot of strengths that we as a system have,” noted Polinsky. “We have the branch presence, we have the trust, we have all these different capabilities and how do we deliver those with digital innovation. We recognize the Amazonification, we recognize the transformation that people are experiencing as they're buying, as they're shopping.” He said that because credit unions are so willing to collaborate, they’re in a unique position compared to other financial service providers.
“One of the most important things is to remember that we're all consumers,” Polinsky continued. “We're all experiencing those same types of things that members are experiencing and can recognize how that works, how that impacts us. If I see a good user experience somewhere else, how do I then translate that into the credit union?”
He called for credit unions to think beyond their own institutions to strengthening the entire credit union system. “It’s this whole concept of not just empowering an individual credit union, but thinking through how you start empowering the system as a whole,” he said. “We've been doing a lot of that kind of thinking within CUNA Mutual and looking at all these members that are out there, how do you start to think about, can you democratize the credit union system? Can you build out capabilities that start tying the system together as a whole?”