Account for Four CU Opportunities Budgeting for 2023

Michael Carter

August 18, 2022

If you didn’t budget for change, now is your chance.  

In a previous blog post, we discussed three challenges and insights that credit unions are up against this budget planning cycle. This time, there is good news – four opportunities and actionable directions that can help to point the way through a hazy economic future. 

  1. Member-Centricity 
  2. Heighten Member Obsession 
  3. Strategic Planning to Broaden Horizons 
  4. Perks in Partnerships & Open Banking 

Even in uncertain times, the team at Finalytics.ai believes that with proper planning and the necessary resource commitment, our credit union customers can account for these four opportunities in 2023: 

1. Member-Centricity Remains a Strong Hook 

The key to digital transformation isn’t technology. It’s about Member Centricity – putting the member at the very center of your strategy works. 

“The fact that credit unions are member-owned provides them a natural mandate and rationale to establish the member as the true north star.” 

— Pari Bose, PenFed Credit Union 

There is a marked difference between the member-centricity of credit unions versus the customer satisfaction ethos of most banks. Of course, there are exceptions on both sides, but the quantifiable cornerstone for leading credit unions is an obsession with serving members.  

“Credit unions that are mission-driven, open to taking calculated risks, and prioritize growth can unleash the power of digital transformation.”

— Tom Novak, Chief Digital Officer at Visions FCU

Novak asserts that credit unions’ advantages are based on the industry mantra of people helping people. 

Takeaway: There are some who will continue to put the cart before the horse, but if digital transformation is to succeed, it must be member-centric, not technology-centric.

Action: As you consider your budget items for 2023, review every line item with the question, how does this deliver value to the member? Will you need to invest in tech for 2023?

Probably, yes. But not a dime should be spent if it does not deliver obvious and direct value to the members.

2. Heighten the Obsession for Elevating Member Experience 

Are you obsessed with member experience when they’re not at a branch? Although the focus has traditionally been on in-person member experiences, more and more credit union executives are taking it one step further, differently. These are moving their focus from digitizing physical processes to improving member journeys, increasing member engagement, and orchestrating omnichannel strategies. 

This type of shift means leadership is not fixated just on their institution’s “Net Promoter Score” and more traditional measures of member loyalty. Humanizing digital experiences facilitated by data and machine learning has become the rallying point. Serving credit union members can best be done through deeply understanding member behaviors and offering engaging experiences.? 

“When we deploy digital banking experiences crafted from the consumers’ perspectives, there is proof that we will improve satisfaction, increase sales, expand the depth of relationships, increase retention, and positively impact our organizations,” says PenFed’s Bose. 

The good news is that there are tools available that allow credit unions to gain this type of understanding in real-time in digital channels.?? 

Takeaway: Member-centricity is the special sauce for credit unions. Lean into it through digital capabilities. 

Action: Your 2023 budget must contain investments in the tools and technologies that can deliver the special sauce of credit unions to members each time they engage digitally.

3. Strategic Planning Gains When the Horizon Lengthens 

Kuhn Phillips notes that “credit unions have a longer-term financial perspective.” This perspective allows credit unions to build out long-term digital transformation roadmaps.?? 

Surprisingly, many credit unions are leaving this advantage untapped, and even the largest credit unions can end up thinking like a bank. Looking at 2023, what will uniquely set credit unions apart from other financial institutions? 

Earlier this year, Finalytics.ai conducted a survey to establish a DMI (Digital Maturity Index) for the credit union industry. While 84% of credit unions agreed that their competitive strategy depended on the quality of their digital experience, less than half were ready to use digital as a competitive differentiator.

And yet, 16% (according to our DMI study) of credit unions still believe digital is not critical to their competitive strategy. While that is a small number, the view that digital is unimportant – or, more likely, difficult and expensive to fix – is present in far too many minds of leadership. 

Takeaway: With more than 50% of banking services delivered digitally, the branch largely lives online. For members, they are now the same thing. To treat digital as irrelevant to competitive strategy is like saying it doesn’t matter how members are being treated in the branch.

Action: While assembling your budget numbers for 2023, at whatever level you serve, ensure every team member in your credit union is focused on digital differentiation. It doesn’t matter what area, function, or role someone plays; everyone must be committed to a future where digital decides the future of a credit union. 

4. CU Perks in Partnerships & Open Banking

Once, I was dumbfounded when an executive at a credit union told me that he had just received the code for a system developed by another credit union in a different part of the country. They were planning to use the very same code for a new system. I relayed that story to a credit union friend, and he was surprised that I was surprised. 

I knew that credit unions were different from banks, but I didn’t know it extended to how openly leadership shared information with one another. Yet many who are in the know would say that the difference in how banks and credit union leaders interact with one another is related to the make-up of their stakeholders. 

“The difference is between whom they serve — shareholders (members) or stockholders. The expectations differ between those who invest in a credit union collective and those who invest in a bank.” – Lisa Kuhn Phillips, VP at Allied Payment Network and former COO at 3Rivers FCU 

She adds that “credit unions are a community.” This predisposition helps them facilitate partnerships, including credit union service organizations (CUSOs). Using partnerships to achieve their goals has allowed unions to leverage relationships with companies that provide much of the innovative technology used in the banking industries.? ? 

Takeaway: Partnerships are key to extending your organization’s capabilities, even in areas that are thought to be beyond reach. 

Action: For 2023, consider where you can partner with companies that can provide innovations and capabilities that would cost you millions to create from scratch. Consider finding a senior executive who can focus on how to use such partnerships to build on the value you deliver to your members.

Decide Where You’re Steering Before You Start

In our time working with forward-thinking customer experience professionals, we have appreciated a rising tide of credit union execs who recognize the need for digital transformation and are pursuing it with all their might. 

We also believe that a customer-focused strategy will win out. Only those organizations that understand it, whether they are banks or CUs, will persevere. 

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