Four Strategies for Credit Unions to Thrive Amid Uncertainty
Guest Editorial by Douglas Brown, President, NCR Voyix Digital Banking
Ongoing economic uncertainty, inflation, and overall market volatility have presented significant challenges to credit unions. They are under mounting pressure to optimize margins while simultaneously innovating and delivering hyper-personalized experiences to their members.
To remain relevant to their communities and succeed even in turbulent times, there are several key strategies credit unions should consider.
Data-Driven Decision Making
Strategically harnessing data helps uncover revenue-generating opportunities, streamline operations, and gain valuable insights that can enhance profitability. Plus, data can shed light on crucial member behaviors, preferred transaction channels, and lifecycle events, all of which serve as building blocks for hyper-personalized member interactions and strengthened relationships.
However, data is only impactful if collected and analyzed properly. Credit unions must invest in the necessary systems and resources to leverage data effectively, establish baseline metrics, spot trends, and track growth through profitability studies. This is how data is made actionable. When done correctly, the strategic analysis of data can strengthen member service and inform critical business decisions.
The Role of AI
Artificial intelligence (AI) is changing the way credit unions interact and collaborate with their members in an increasingly digital-first world. Leveraging AI can help with process automation, risk management, and fraud detection. It can also provide a more holistic view of members, resulting in better service across channels, increased member satisfaction, and a higher return on investment.
While there is much speculation about the future of AI capabilities, credit unions should focus on the benefits and use cases AI can provide today. Keep in mind that an effective AI plan must be flexible, able to adapt to evolving technology and align with the credit union's broader data strategy.
Digital-First Financial Education and Support
Providing proactive, digital-first financial education and support to members reinforces a credit union’s relevance and trust. This includes offering financial literacy programs, easily accessible content, and one-on-one consultations with financial advisors. However, it's equally important to deliver these resources through a digital-first experience, regardless of the channel.
Integrating financial fitness tools and education contextually within the digital journey offers the convenience and flexibility that members crave. Personalized advice to help members better manage their finances will continue to be a key theme as the market remains uncertain.
Credit unions should be thinking of how to offer deeper budgeting assistance, automatic budgeting tools, advice on savings goals and debt reduction, and proactive identification of potentially problematic behaviors, such as excessive use of Buy Now, Pay Later (BNPL) services or cryptocurrency investing. Those that are able to proactively communicate with members about interest rates, inflation, student loan repayment options, and other economic factors affecting their finances within the digital-first experience will gain a competitive advantage.
Small Business Focus
As credit unions seek to retain and grow deposits, small businesses have emerged as a significant opportunity. However, many institutions lack the tools and technology to seamlessly address common pain points for small businesses, such as invoicing and frictionless payments. Credit unions that embrace digital-first software and services to support small businesses, within the context of their digital-first banking journeys, will be well-positioned to strengthen these relationships. Personalization and data analysis will once again play a pivotal role here, as small businesses will gravitate toward those institutions that understand their unique needs.
In a year filled with both challenges and opportunities for financial services, it has become critical for credit unions to have modern architecture in place to more nimbly offer new capabilities and leverage strategic partnerships more easily. Those who embrace a digital-first approach and execute a strong data-based strategy will be well-positioned to personalize experiences, win wallet share and strengthen member loyalty throughout the rest of the year and beyond.