Digital Transformation and the Old Fashioned Con

 

By Robert McGarvey

 

For CU.20

 

Suddenly there is a stampede of self-professed experts who want to guide your credit union through its digital transformation.

Just one problem: quite a few of the experts may be bluffing.  Or full of wishful thinking. Or maybe they are just plain con artists.

It puts me in mind of Odysseus and his voyage past the Sirens in the early part of Homer’s classic poem.  They sing enticing songs but sailors who heard them and sought to get nearer were lured into shipwrecks.  

What did Odysseus do? He plugged the ears of his crew so they wouldn’t hear and he had them tie him to the mast so that even when he heard, he couldn’t act.

Some credit union CEOs really should think about having themselves tied to the vault to prevent them inking a digital transformation deal, and plugging the ears of other executives might not be out of line.

Not when so many tempting, sweet songs are getting sung.

Face this reality: just about every credit union needs to be plunging into a digital transformation because how and where and when we bank has been undergoing massive change in the past quarter century and the changes will continue.  Almost certainly, for instance, the main banking touchpoint for most consumers will become a smartphone. For many it already is. Many of us no longer write checks. Many haven’t been inside a branch in a year or more. The changes keep on coming.

Credit unions need to react, to respond, to plot a path through the digital tomorrow.

Many credit unions won’t survive.  They won’t transform fast or thoroughly enough.

But credit unions actually are well positioned to digitally transform – once they decide they want and need to.

The typical credit union can be more fleet footed than most banks.  Banks have vast legacy branch systems that increasingly seem like so much deadweight. But many bankers, by virtue of their personal pasts and their institutions’ balance sheet, are wed to their branches.  They will pay a price for that.

How should a credit union digitally transform?

It starts by knowing yourself. What does the institution stand for? What does it want to be in 10 years. Who are your members? What do they want from a financial institution?

The next step: look at the institution’s digital contact points and ask how they can be better? How can they better serve members? Most credit unions have blah online banking, their mobile banking is equally blah, and, sure, there are plenty of excuses about this – but it’s probably not going to be good enough.

Today’s comparison isn’t with the community bank down the street. It’s with Chase and, even scarier, with Amazon, Netflix, and the other big online players. Can you digitally compete with them?

What’s your busiest branch?  Your online banking site. And the mobile app is the next busiest.  How much time do you spend optimizing those channels?

You also need a digital marketing strategy, probably built around Facebook, definitely also a lively website.

A small sign in front of a branch is not 21st century marketing.

Most of us will start, and end, our search for financial institutions online. You need a plan for gaining visibility there.

You can’t do all this alone? Just about all credit unions will need to bring in fintech partners – but know that last year’s technology partners may not be right for helping chart your digital transformation,

Many credit union technology vendors reap profits from the status quo which, frankly, as far as technology goes is primitive in the credit union world. But the profits say it’s not in their interest to rock this boat and so they don’t.

Understand this: it’s simply crazy that you can’t use the mobile banking platform you want because it doesn’t easily or cheaply interface with your core  And so a system that may be 20 years old, or is it 40, is dictating the technology landscape?

But so it goes at many credit unions.

What vendors can help you?  Search for partners with rich fintech cred.  Worry less about credit union bona fides and, for many credit unions, their first question always is, what credit unions have you worked with?

That may not be good enough.

What you want are guides who can lead you into and through the digital wilderness.  

Pick wisely.  But pick boldly.

Some years ago the CTO of one of the world’s biggest banks told me what he did when his CEO tasked him with getting a mobile app for the bank.  He downloaded many of the most popular apps at the time, spent a weekend absorbed in them, went to the office on Monday with a list of the 10 or so he liked the best.  None of those apps were at banks. Not a one. He put HR on finding out the names of the key developers, they called in people for interviews, and within a week or so he had assembled a project team to get his bank on the phone.

Was he concerned that none of the developers had banking experience? Not in the slightest. His bank, he said, had hundreds of executives who could add in banker smarts.  What he needed was people with digital smarts and he knew he wouldn’t find them at banks.

Do likewise is my advice.

Want inspiration for a credit union transformation? Read the story of Partners FCU.  

Credit unions are doing this.  

You can too.

 

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