By W.B. King
For this year’s annual Finopotamus “Holiday Tech Wish List,” we sat down with forward-looking fintech executives who shared respective tech hopes as well as forecasted market realities for 2023. Due to a significant number of intriguing responses, the Wish List will be presented in three installments. Here goes Part 3.
Wishing That Credit Unions Optimize Their Website Experience
While many credit unions have embraced digital transformation, which has allowed for the optimization of critical member experiences and services, Praxent’s Director of Marketing and Business Development Kristiane Mandraki said one important piece of the puzzle is often overlooked: website development.
“My top IT wish for 2023 is for credit unions to prioritize optimizing their website experience, which has been proven to result in higher account opening and loan origination conversion rates and stronger member relationships,” Mandraki told Finopotamus, adding that credit unions have “essentially constructed a beautiful, digital home but have forgotten to repaint their digital front doors.”
The Austin, Texas-based fintech, which counts five credit unions as clients, has delivered countless software transformations and helped hundreds of businesses provide a modern, intuitive digital experience to its customers.
“The main challenge with enhancing the website, as well as undergoing other important digitization and innovation initiatives, is resource restraints,” Mandraki said. “This is why more credit unions will look into organizing a flexible digital team next year.”
Noting that budgets have tightened in 2022, she added that many credit unions in the coming year may only be able to afford a website engineer on a part-time basis, which, in certain cases, might not be enough to remain competitive.
“Most [credit unions] don’t have the bandwidth, budget, or need to hire a full-time employee with this skill set,” she continued. “However, having access to a flexible bench of engineers, user experience [UX] designers, or digital project managers with experience in website design, fintech implementations, financial services, or development operations can be extremely valuable, helping to complete the work that needs to be done.”
When it comes to tech platforms, Mandraki said there are many situations where “off-the-shelf” solutions are appropriate,” including for internal, back-end operations. The member-facing experience, she implores, should align with the institution’s brand and core values.
“Credit unions have relied on experiences that are system-centric, rather than human-centric for far too long. Instead, my hope is for human empathy to be placed at the center, guiding the member journey from beginning to end,” she continued. “The credit unions that do so will be able to better attract and retain members, build trust and loyalty that lasts, and create more personalized and seamless member experiences.”
Wishing for the Integration and Interoperability of Technology Systems and Solutions
Appropriately telling Finopotamus the following statement may indeed be “wishful thinking,” Strategic Resource Management (SRM)’s Chief Strategist, Credit Unions, Mark Sievewright said he hopes for “substantial progress with the integration and interoperability of various technology systems and solutions” used by credit unions.
“This cannot happen without the commitment and technology support of the many third-party partners that credit unions work with,” he noted. “One of the greatest drawbacks in the technology ecosystems of credit unions is an inability to drive efficiencies and improvements in member service because of the ‘clunkiness’ – and related friction points – created by a lack of systems integration.”
In September 2022, the Memphis, Tenn.-based SRM, an independent advisory firm serving financial institutions and other industries across North America and Europe, acquired Sievewright & Associates. Sievewright continues to lead the Boston-based Sievewright & Associates, a firm that has directly worked with numerous credit unions in the successful formulation and execution of their strategic, business and technology plans.
“I’m hopeful that we will continue to see progress being made. In some cases, technology providers will need to change their business philosophies and policies to enable this,” Sievewright said. “Also, there are emerging technology solutions that can help overcome the integration/interoperability challenges credit unions face, including those offered by certain fintechs.”
SRM’s Director, Fintech Advisory Services, Jeff Ostheimer’s wish is for “progress in open banking with modern application programming interface (API) managers and ecosystems.” If his wish came true, he said that “it would provide credit unions with embedded finance opportunities focusing on real-time payments.”
For certain organizations, this aspiration is not only possible, but probable, explained Ostheimer.
“Early adopters have already engaged with vendors and started reviewing their tech stacks. Others will rely on large fintechs to help them start the process. Legacy technology will hold some back,” he continued. “Many credit unions will either start to acquire fintechs in 2023. Others will look to more modern core systems for ‘sidecar’ core opportunities for end-to-end experiences, moving data between modern and legacy cores for reporting.”
As Sievewright looks to 2023, he hopes that the credit union industry continues to make solid progress on digital transformation, which he added, is a “prerequisite” to remaining relevant with members, while being “competitive” with both traditional and non-traditional players.
“At the heart of this transformation is the ability of credit unions to bring about further improvements in the member experience – regaining ground lost to competitors over the past five years – and driving stronger digital engagement with members,” he said. “To do this, credit unions must leverage member data to improve retention and acquisition as well as product conversion rates.”
Ostheimer has a secondary wish — credit unions keeping an open mind when it comes to partnerships.
“My hope for 2023 is that more credit unions adopt open banking partnerships and start partnering with ecosystems that align with their digital strategies to quickly go to market,” he said. “It is important to define a strategy and maintenance plan.”
Wishing for Greater Adoption of AI and Machine Learning
Believing that artificial intelligence (AI) and machine learning (ML) have the potential to transform the financial services industry, making it more efficient, effective, and customer-centric, DeepTarget’s CEO Preetha Pulusani told Finopotamus her wish is for credit unions to adopt AI and ML in greater numbers.
“When one thinks of AI, one needs to put aside notions of clunky chat bots, which make members long for human interaction,” said Pulusani. “One only needs to look at the recently launched chatGPT, a natural language processing tool driven by AI technology that allows you to have eerily human-like conversations and has taken the internet by storm, in order to see how far AI has come.”
The Huntsville, Ala.-based company, which counts over 200 credit unions as clients, offers AI and ML digital marketing solutions.
“By leveraging AI and machine learning, financial institutions can better understand and serve the needs of their customers, providing more personalized and relevant products and services,” Pulusani said.
Whether or not her wish comes true for credit unions depends, she said, on the “openness and willingness” of executives to invest in and adopt these forward-leaning technologies.
“Challenges of implementing and integrating AI and machine learning solutions into existing systems and processes may exist, but can be overcome with the right vision,” she said. “I believe that the benefits of these technologies are compelling that we will see continued progress in their adoption in 2023.”
Using member engagement as an example, she said that AI and ML provides the ability to customize and personalize digital engagement allowing credit unions to delve into multiple, diverse data sources, resulting in the ability to learn more about individual member’s needs.
“To do this at scale, with the massive amount of data sources and data dimensions available is humanly impossible,” she continued. “AI-powered technology frees credit unions to do this by helping to uncover and invite the right account holders to apply for the right offers at the right time within such digital channels as online and mobile banking, email, text and others.”
Looking toward 2023, Pulusani hopes to see AI and ML continue to grow and evolve — meeting the ever-changing needs of members.
“In my experience, credit unions are more willing and likely to take advantage of new technologies and innovations to improve the services they offer and to better serve their communities,” she said. “In a rapidly transforming digital-first world, this will allow credit unions to remain focused on their mission of providing accessible and affordable financial services to their members, helping to create stronger and more resilient communities.”
Wishing Lenders Become More Aware of Opportunity Costs Associated with Software Platforms
In Vergent LMS Chief Information Officer Brad Tompkins’ view, aging software platforms are currently “forcing” credit union lenders into providing “sub-optimal user experiences” to membership.
“My top IT wish is that lenders become more aware of the opportunity costs associated with their current software platforms,” he told Finopotamus.
“Less-than-adequate solutions,” he added, “ultimately causes lenders to lose members to their more tech-enabled competition. Additionally, the lack of technological innovation places a lender’s internal staff in a difficult situation as they struggle to service their portfolios, hamstrung by their aging technology.”
The Ridgeland, Miss.-based company offers comprehensive loan management software solutions to financial institutions.
Conceding to having an optimistic bent, Tompkins believes the likelihood of this IT wish occurring in 2023 is favorable.
“We have already seen a shift in the market as smaller financial institutions become aware of the threat that large fintechs can pose. It is critical that the incremental movement that we have seen thus far become more urgent in the New Year,” he said. “The main challenge that stands in the way of this wish becoming a reality can be contributed to complacency.”
In his view, the current market is “dominated by past systems,” with lenders becoming “too comfortable with the services” they provide.
“Comfort is the enemy of innovation. The complacency of lenders can ultimately be their downfall, as many borrowers seek elevated opportunities,” he said. “My hope for the credit union industry in 2023 is that they begin to understand and embrace the role that they can play in financial inclusion by taking advantage of available technology.”
When lending technology is effectively leveraged, credit unions can offer members a better, more accessible experience, he said.
“Whether members need language support within their mobile applications or the use of more inclusive data sources when it comes to underwriting decisions, technology can be utilized to further improve a lending experience for credit union members,” he noted.
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