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  • Writer's pictureJohn San Filippo

Industry Leaders Forum: Budgeting Tactics and Strategies, Part 3

By John San Filippo

Finopotamus has assembled a panel of experts in a recurring series, The Industry Leaders Forum (ILF). Each month, we’ll ask the panel a broad technology question and share their informative responses. Respondents are presented in alphabetical order by last name.

Presented in three parts, part 3 includes responses from:

For June 2023, Finopotamus asked the ILF panel:

Budget season will be here before we know it. What tactics and strategies should credit union technologists consider to ensure they get the most bang for their tech buck in 2024?

GeoComply’s Simon Marchand

Simon Marchand

In today's business landscape, organizations face immense pressure to streamline operations, enhance customer acquisition and retention, all while minimizing risk. This delicate balancing act often hinges on technological solutions, necessitating a strategic approach to investment prioritization.

To credit union technologists, I advise taking a step back from their exhaustive list of potential solutions. While executive leadership may have identified several pressing priorities that warrant technological interventions, the true challenge lies in finding holistic solutions that minimize the reliance on numerous vendors to address diverse challenges.

A significant trend we observe is the reduction in reliance on point-solution vendors. Over time, managing and maintaining multiple solutions becomes burdensome, warranting the identification of multi-purpose technologies that deliver the most value for your investment.

Consider the example of customer friction reduction and fraud prevention solutions. Instead of acquiring separate solutions that partially overlap in functionality, technologists should comprehend how a single technology can simultaneously alleviate friction for legitimate users, ensure compliance adherence, and combat fraud. This comprehensive understanding is crucial. Engaging vendors who serve as partners and industry experts, rather than mere technology providers, yields substantial benefits.

Such collaborative relationships enable organizations to navigate challenges effectively, overcome issues, and devise solutions that require fewer integrations. An effective combination of device fingerprinting and geolocation information, for instance, offers enhanced accuracy in identifying legitimate users while reducing barriers for their access. Concurrently, this approach addresses anti-money laundering compliance risks by detecting individuals attempting transactions from OFAC-restricted jurisdictions and identifying fraudulent behaviors, devices, or locations.

Technologists must strive for a single technology solution with multiple applications—an investment strategy poised to yield optimal returns in 2024.

Jack Henry’s Shanon McLachlan

Shanon McLachlan

Stable, modern, progressive infrastructure that is built to last is the epitome of getting the most bang for your buck. Credit unions should prioritize technology providers that are invested in the near, mid, and long-term future, which includes building with the financial health of the institution and its members top of mind. Technology spend is increasing over the next two years, making it even more pivotal that investments made today can pay dividends for years to come.

This starts with modernizing, securing, and extending technology stacks. Infrastructure should be capable of processing transactions in real time, integrating with fintechs quickly, enable your digital strategy, releasing new features, scaling, and efficiently executing mergers and acquisitions (M&A). Then credit unions can focus on solving key business challenges and continually improving member service. Modern infrastructure gives credit unions the ability to deliver their offerings and help more members within their community achieve their financial goals.

Sontiq ‘s Al Pascual

Al Pascual

To get the most from their technology budgets, credit unions should consider a four-pronged approach:

  1. Maximize ROI potential: Credit unions have undoubtedly paid for solutions that are currently sitting on the shelf, incurring additional expenses in the form of actual and opportunity costs. When budgeting for 2024, consider how you can maximize the ROI of existing investments. One way to achieve this is to establish an annual audit of technology investments. Such an exercise identifies solutions that are underperforming their ROI potential. Following identification of these opportunities, credit unions can engage their vendors and colleagues in a brainstormer on ways to increase utility and value. The answer to achieving better ROI could be as simple as increasing marketing support for the tech solutions so more members take advantage of their availability.

  2. Engage members better: Of the many problems credit unions are attempting to solve, some will be helped along with better member engagement. In those cases, there may be an opportunity to work with members to offset costs by getting them involved on a more tactical basis. For example, credit unions working to better protect member accounts from identity fraud can provide access to high-quality, member-paid identity protection. Credit unions can also drive members to use third-party mobile authentication solutions, which reduces the credit union’s reliance on less effective solutions.

  3. Perform an annual RFP: Undertaking an annual RFI/RFP process for existing technology investments keeps vendors on their toes. Credit unions should be bold, encouraging vendor partners to provide favorable terms and pricing and to continually offer meaningful support toward achieving promised ROI.

  4. Avoid technology lock-in: Wherever possible, credit unions should bias future investments on solutions that allow their tech stacks and tech strategies to evolve. Things are moving too fast for technology that is too difficult or costly to change. Credit unions should avoid partnering with vendors that are notoriously slow to change. When making new partnerships, they should thoroughly investigate the solution’s adaptability and extensibility.

FairPlay AI’s Kareem Saleh

Kareem Saleh

To maximize returns, inclusion, and compliance in 2024, credit unions should use fairness-as-a-service and second look technologies to double check their decisions, particularly those related to underwriting, pricing, line assignment and loss mitigation. Fairness-as-a-Service service solutions which automate fair lending testing and include analytical tools that review initial decisions with a view to enhancing the accuracy of assessments and capturing missed opportunities can be implemented as a last-step at the end of a decisioning process as a final check to increase marketing reach, approval rates, take rates, and promote equitable recoveries. By offering a rigorous review of decisions, fairness-as-a-service and second look technologies have a high return on investment, turning compliance into an engine for growth and goodwill.

Samaha & Associates’ Sabeh Samaha

Sabeh Samaha

Credit Unions need to follow their three-to-five-year revolving technology plans. These technology plans should have a revolving list of projects to which new items may be added along with their budgetary impact. These adjustments (many times a result of surprises) still need careful oversight and approval. While I don’t like to engage in the hype, I can state that many are looking into the fintech world as well as customer relationship management (CRM) and artificial intelligence (AI), which at a minimum should have some exploratory budgeting (e.g., conferences, educational events). Obviously, security and fraud management-related budget increases are absolutely necessary.

Equipifi’s Pat Scherz

Pat Scherz

When considering 2024, I suggest credit union technologists answer the following questions when evaluating investments:

  • How have my members’ financial and digital needs evolved?

  • Will this need grow in the coming years?

  • What is lost if members have to seek this product elsewhere?

  • What impact does that have on the credit union?

The technology investments a credit union makes commits the time and budget of its staff, as well as the experience of its members. It is also a strategic opportunity to get ahead of digital market trends and consumer behavior shifts. For example, studies have shown that since 2021, at least 43% of the U.S. consumers use mobile banking. Meanwhile, 79% use mobile for purchases and 75% used mobile wallets. This is a key growing shift across demographics but driven by next gen consumers. A recent study projected that there will be around 6.5 million new mobile wallet users per year from 2021 to 2025 – more than 61% being Gen Z. However, in each of these actions they are engaging with a different business.

Consumer technology eventually trends toward platform unification, and credit unions need to stay ahead of this curve. Key strategic partnerships will help credit unions become this comprehensive platform for its members instead of waiting for someone else to do so.

True Digital Group’s Patrick Sells

Patrick Sells

To ensure credit union technologists get the most value from their tech investments in 2024, there are several tactics and strategies they should consider.

First, it is essential to reconstruct the fundamental orientation and understanding of vendors available to credit unions today. This means taking a step back and reassessing the current vendor landscape. By doing so, technologists can gain a fresh perspective and identify new vendors that align with their future needs and goals. Pushing innovation forward requires a proactive approach to vendor selection, focusing on those that can offer cutting-edge solutions all while ensuring compliance and risk management needs are also met.

Vendor optimization should be a key focus. Technologists should evaluate the technology being used across different areas of the credit union to identify any redundancies. By streamlining and consolidating technology solutions, they can eliminate unnecessary expenses and improve operational efficiency. Additionally, technologists should proactively work on enhancing relationships with current vendors and partners. This can involve renegotiating contracts, exploring additional services or features and ensuring alignment with long-term objectives.

Innovation should be a driving force throughout the budgeting process. Technologists should explore emerging technologies and trends that have the potential to bring new efficiencies, cost-savings, customers, and products to the bank. By allocating resources to these innovative solutions, credit unions can stay ahead of the curve and deliver superior member experiences.

Credit union technologists can maximize the value of their tech investments in 2024 by reconceptualizing their approach to vendors, optimizing vendor relationships and prioritizing innovation. By implementing these tactics and strategies, credit unions can make the most of their tech budget, drive efficiency and remain competitive in the rapidly evolving financial landscape.

PSCU’s Denise Stevens

Denise Stevens

Credit unions face an uncertain economic landscape, further complicated by emerging technologies, regulatory changes and evolving member expectations while planning for 2024. To keep up with the pace of change and remain competitive, credit unions must make deliberate technology investments in 2024 and beyond.

As a payments CUSO and integrated financial technology solutions provider, PSCU recognizes the importance of strategic investments in innovative technologies. The following tactics can support credit union technologists in making informed decisions and getting more “bang for their tech buck” in 2024 and beyond:

  • Focus on enterprise strategy: To maximize value, credit unions should prioritize technologies that advance the organization's overall business objectives. Depending on the credit union's specific needs and goals in a given year, resources may be devoted to enhancing digital experiences, improving the end-to-end lending process, creating contact center efficiencies or addressing regulatory requirements, among other initiatives. The most valuable technology investments are those that are carefully aligned with the enterprise strategy.

  • Manage product lifecycles: Credit union technologists should continuously evaluate and manage the lifecycles of existing products to sustain the long-term value of technology investments. It is crucial to reserve funds year over year for ongoing maintenance and enhancements that keep products effective, competitive and aligned with member needs.

  • Avoid technical debt: To proactively manage "technical debt" – the tradeoff costs of falling behind industry innovations – credit unions should make investments to address underlying inefficiencies and legacy systems. By gradually allocating resources to reduce technical debt, credit unions can avoid accumulating expensive maintenance costs or compromising security and performance due to outdated technologies.

  • Embrace innovation: Digital transformation will only continue to accelerate in 2024. In addition to investing in existing products, credit unions should allocate budget dollars to explore and leverage new and emerging technologies to their advantage. These investments can contribute to enhanced digital experiences that meet members' evolving expectations, while improving operational efficiencies and staying competitive in the changing digital landscape.


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