These are challenging economic times. To survive and thrive, credit unions have to work smarter, expand their member base and relationships, and implement strategies that position them for the eventual economic upturn. Now is the time to create new strategies and support those initiatives with the right technology and training.
When growth isn't on the horizon, credit unions can still achieve profitability by reducing costs finding new ways to accomplish more with less. By streamlining workflows and pumping up self-service offerings, credit unions can create a leaner, more productive operation to offset shrinking margins. Effectively applying technology can both increase productivity and add consistency to processes by following the same step-by-step methodology every time.
The best automation tools have intelligent workflow baked into the solution. By automating processes and workflows, credit unions can improve efficiency by as much as 75 percent, increase service levels, and redirect resources to more strategic areas. Just as important, by initiating these changes now, these institutions are also positioning themselves for growth when the economy rebounds. Some institutions are turning to outsourced IT solutions to reduce capital expenditures and the need for additional personnel. Reducing costs now while improving efficiencies prepares credit unions to respond even more quickly when the economy does turn around.
Increasing membership and expanding member relationships often means bringing to market a broader set of products and services. Many credit unions are ramping up efforts to attract small business members, adding loans and services to their product portfolio, as well as remote deposit capture. According to Aite Group, remote deposit capture is generating a level of excitement that rivals the introduction of the ATM. Nearly 25 percent of U.S. small businesses are expected to use the service by year-end 2009, up from 16 percent in January 2008. These businesses, competing in a down economy themselves, appreciate the quicker availability of funds along with the cost savings offered by this solution. If a credit union wants to readily compete in the small business arena, remote deposit capture is a "must offer."
There was a time when personal service meant personal contact. Today, in this 24/7 world, service oftentimes means convenience: the ability to pay bills on line, check balances via mobile phone and open a new account—quickly—without visiting a branch. According to Tower Group, by 2010, the use of online banking will grow to 50 million users a year, with retail members alone conducting nearly 60 billion self-serve transactions annually.
From a cost perspective, that's good news for credit unions and their member-shareholders. Increasing the adoption of Internet banking and mobile banking decreases costs. Fewer people through the branch or on the phone means the credit union can grow without adding staff. A robust online offering also has a green halo around it. The more people who choose to view their statements electronically, the fewer paper statements there are to print and mail.
To drive member growth within more traditional markets, credit unions looking beyond the geographic boundaries of its branches will likely be the winners. Locating kiosks in colleges, malls or other well-researched locations, combined with a robust online offering, enables credit unions to attract and serve new members without building and staffing a physical location. Also, this channel can be used to let members know about new products, services and rates, and for online launch of referral programs.
Make it a staff-wide goal to deliver the same level of personal service at kiosks and online that a member receives at a branch—any time, day or night. It's all about giving members a choice. This strategy also works to build the next generation of credit union members, who are predisposed to using electronic channels. This is an ideal time for credit unions to examine their online presence and make enhancements to improve the user experience and breadth of service.
To be successful, any online channel has to be fast and easy to use. That's where automation and systems integration come into play. When a member applies for an account on line, that application should be verified, account opened and member notified within a matter of minutes—ideally with a personalized cross-sell offer. Using customer relationship management tools to segment the market and predict member behavior, credit unions can use these online channels to present members with offers and information tailored to their individual needs. This strategy delivers a significant ROI, as well as the opportunity to reduce costs while increasing profitability and, potentially, sales.
In challenging economic times like these, credit unions that survive and prosper are those that are able to increase productivity, drive innovation and stay focused on member service.
David McConney is executive vice president and general manager of the credit union core systems business unit of Harland Financial Solutions. He has more than 25 years experience in the financial services industry and has led the launch and implementation of new core systems and emerging technology solutions. He has held chief executive and board of director positions in the financial services industry.