For many mid-size credit unions, the shift to technology has been slow. While the COVID-19 pandemic forced the hands of many smaller financial institutions, there is a mindset of resistance when it comes to implementing financial technology practices. By the end of 2021, 15% of credit unions will still have not committed to a digital strategy, a number that is still far too high according to this study.
While there’s always a reason to delay digital implementations – like a global pandemic – the business benefits far outweigh these distractions. Learning new methods to do something you’ve done your entire career can be daunting, but the results for your members and your institution are worth tackling the learning curve.
If you’re already considering a digital transformation, you might be tempted to run out and overhaul your entire system right away. In order to get the most out of your investment, one recent study shows that monitoring, scaling, and distributing more dedicated resources to fintech partnerships will be the key to success long term.
Another key to making the transition easier on both employees and executives is selecting an industry specific partner with a single, unified platform. By selecting one partner to facilitate the entire process, the financial institution will gain superior interoperability and significantly easier data flow through the digitized process.
A Silo Of Different Processes Will Never Be As Efficient.
When it comes to implementing technology into branches, many choose to try to piece meal different products and systems together. While you might think you’re saving money by only buying certain products from certain vendors, you’re most likely losing key integrations that come from having a single solution. What’s more, trying to do some pieces manually and other pieces through a software is often clunky at best, leading to missed opportunities or wasted resources. This often hinders the results that the technology can provide, since credit unions often try to make the tech fit their processes rather than the other way around.
While it might look different than what you’re used to, it’s more important to focus on what it’s doing for you rather than how it looks. One of the best ways to see the most return on your investment in digital is to start with the areas that drive revenue to the credit union. Your back office and credit department will benefit the most from technology that allows them to operate more efficiently and make decisions faster, so that’s a logical starting point.
Too often, financial institutions want to focus on their current processes remaining intact rather than looking to see how digital solutions can make processes easier and more efficient. Keep what will work in today’s (and tomorrow’s) environment and find ways to adapt the rest. If your current lending situation is complex, trying to match the tech to fit that will almost never work. Find where you can streamline, replace, or update to reap the biggest benefits.
Trusting Your Technology Partner To Be Your Guide Gives You The Best Chance For Success.
Financial tech companies are at their best when they have former bankers on their team. By finding a partner that understands what it means to work in a credit union and do these processes will ensure that you’re getting support from folks that understand what you’re trying to do. The key here is to trust them. Too often, credit unions are resistant to the ideas that their technology partners might be able to teach them a more efficient way. Rather than looking at how you can adopt the tech to your processes, consider leveraging your technology partners to find out how you can make your processes easier through technology. When you purchase a solution from a financial technology provider, you’re also paying for their expertise. Don’t throw your money away.
The most crucial point to consider is that the right technology solution helps your credit union reduce risk, reduce expenses, and generate revenue. In addition to the dollar amount metrics, one of the biggest benefits will also come in the form of an enhanced user experience. This will be vital when it comes to remaining competitive as credit unions are looking to move into areas traditionally held by community banks, such as commercial and small business lending.
Recent results show that by prioritizing the wrong things to their fintech partnerships, credit unions and banks both are missing new revenue opportunities;17% of credit unions said their fintech partnerships have yielded a better than 5% gain in loan productivity and 15% said deposit account opening productivity improved by more than 5%.
“We’ve Always Done It This Way” No Longer Works
Tech in the financial services industry has made giant leaps in the past five years, let alone in the decades prior to that. If your mindset when it comes to implementing technology into your processes is that certain things can’t be changed because it’s always been done this way, you’re setting yourself up to achieve fewer desirable results. A common example of a place where financial institutions get stalled is in the credit memorandum or loan authorization document process. By forcing the method to stay the same, most of the time these institutions end up spending extra money than they would by simply adapting the procedure to be tech friendly.
When COVID-19 sent everyone to their homes for months in 2020, many credit unions were forced to recognize that an online portal or a mobile app wasn’t going to cut it anymore. If a member could apply for loans online but they still needed to fill out physical documents that had to then be passed around to different departments within the building, that created a big issue when you couldn’t just walk the documents down the hall. Adapting to a fully automated process become necessary, not optional. Now is the time to learn from this and to take control of your technology. Don’t wait for the next issue that forces you to adapt when you can be ahead of the game.
Creating, implementing, and continuously improving a digital lending strategy can be an overwhelming task, but Baker Hill can help put you in the driver's seat. We have more than 35 years of experience helping financial institutions transform their lending business with our award-winning loan origination software.
Are you ready to take the next steps toward making the most of technology at your credit union? Take this short assessment to see how digitally mature your financial institution's lending strategy is and learn how Baker Hill can help you reduce friction throughout your lending workflow with modern digital lending solutions.
Author Bio: As President and CEO of Baker Hill, John Deignan oversees all aspects of the leading financial technology that delivers a single unified platform with modern solutions to streamline loan origination and portfolio monitoring for commercial, small business, and consumer lending. John is a dynamic senior executive with broad and diverse experience in global business management for large public, private, and private equity owned companies, generating millions of dollars in profitable growth.