Digital as a Strategy Instead of “Just” a Channel
Shanon McLachlan, President of Credit Union Solutions, Jack Henry
Jack Henry
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In a 2023 survey of credit union CEOs, three strategic priorities garnered top billing: Growing deposits, improving the accountholder experience, and leveraging data for strategic insights. Though unrelated at first glance, the successful accomplishment of all three priorities can lie with your credit union’s digital strategy. Consider the following keys to your success.
Growing Deposits
Consider Pursuing a Business Banking Niche Strategy 62% of credit unions plan to pursue a niche strategy focused on businesses, and 42% plan to offer business payroll services within next two years. This makes sense given the small- to medium-sized business (SMB) market is a $370 billion revenue opportunity.
On average, the median balance in business accounts is more than twice that of a retail account ($12,100 vs. $5,300), making business account acquisition especially attractive when you’re seeking to build low-cost deposits.
When pursuing SMB deposits, it’s essential to keep the digital experience comfortable for newer business owners. Build your SMB digital strategy on top of your retail digital function by enabling a scalable digital experience that empowers your employees to turn on access to invoicing, ACH, wires, and more advanced features as the business grows.
Open Your Digital Front Door 48% of Gen Zers and millennials have opened an account with a new financial provider after a frustrating digital banking experience. It’s another indicator that the digital experience increasingly outweighs branch locations for today’s highly digital consumers.
With convenience increasingly defined by the ease of digital account opening and the ability to act and transact on any device, it’s essential to ensure your digital account opening process is refined and ready for business.
Improving the Member Experience
Remove Friction and Increase Security It’s uncommon to institute a process that improves security while simultaneously removing friction for your members, but that’s exactly what you can do when you replace screen scraping with API connections to all five major data exchange platforms, like Jack Henry recently pioneered in the financial services industry.
In addition to being a slow and unreliable way to extract data, screen scraping makes it difficult for you to distinguish legitimate login attempts from fraudulent ones, leaving systems vulnerable to credential-stuffing attacks and other cyber threats. Replacing it gives your members more control of their financial data and protects your credit union from a wide range of fraud and security risks that arise from passwords shared with third parties.
Build Relationships Over the Digital Channel The digital channel provides an opportunity to surprise your members with personal, human service in a world where chatbots and digital self-service are the norm. Seek core-connected, embedded solutions providing chat that is fully authenticated and encrypted end to end, video chat, and screen sharing options for maximum benefit. You’ll quickly discover higher engagement rates, happier members, and more efficient support teams.
Make Friends with Fintech Credit union CEOs identified fintech companies as their biggest competitive threat for the third year in a row – and yet, 90% of financial institution respondents indicated their plans to embed fintech into their digital banking experience in the next two years.
The most common integrations planned include payments (67% of credit unions), digital marketing (69%), and consumer financial health solutions (57%).
To avoid expensive and bumpy integration processes, seek a digital banking platform with public integration documentation, open APIs, a self-serve developer portal, and a proven integration process.
Empower Your Members’ Financial Health Americans are increasingly focused on pursuing financial resilience, and yet only 14% feel like they get the help they need from their primary financial institution. As a result, it’s a prime time to embed financial health-focused fintechs into the digital banking experience.
Not sure where to start? Check your digital banking provider’s integration list, or determine if tools like credit reports, identity protection, or online privacy tools are available automatically through the digital platform. The Banno Digital Platform™, for instance, offers financial health solutions automatically for every registered user through a partnership with Array.
Leverage Data for Strategic Insights
Tackle Financial Fragmentation and Gain Insights The average consumer uses 15 to 20 different financial service providers and 14 financial apps. Gen Y and Gen Z couples use upwards of 30 to 40 financial service providers. The result of this fragmentation is that consumers are unsure of where they stand with their money, and credit unions struggle with a limited window into their members’ financial lives.
To address this challenge, it’s essential to offer your members a full, 360-degree view of their finances in one place. This can be accomplished through external account aggregation (the way Jack Henry collaborated with Finicity) to give your members the ability to link all of their financial accounts – from both inside and outside your credit union – into your digital banking solution. This reduces their barrier to financial health and provides you with deep data and insights into your members’ financial relationships.
Utilize Advanced Analytics to Drive Revenue and Improve Experience It’s rare to find a credit union that doesn’t pride itself on providing an excellent member service. Yet many credit unions struggle to provide more personalized experiences based on behavioral data and how each member interacts with your digital platform.
These interactions provide rich data for analysis – if your digital banking provider has granted you access to the data. Whether your institution prefers Cognos, PowerBI, Tableau, BigQuery, SQL, Adobe Analytics, Google Looker Studio, or something else, the power lies in having access to the raw, event-based data. Once you’re able to unlock those insights, you’ll have the power to improve the member experience, increase engagement, and drive revenue-generating behaviors within the digital platform.
Digital Is More Than a Channel
It’s clear that digital has moved beyond a simple channel for your members. It’s now an essential element in your credit union’s overall strategy. Whether your focus in the coming years is on deposits, member experience, data and analytics, or other initiatives, having the right technology for your digital front door can make all the difference.
