Credit unions are known for the quality of their service. However, they sometimes think about their service as one thing and their technology as another. That mindset is changing among forward-thinking credit unions who understand that the technology that is never seen by their members is the engine for the high-touch personalization that account holders expect today.
We see the need for core providers to become more open to help credit unions remain relevant by providing innovative solutions that meets consumer needs.
Touchpoints And Technology
Credit unions take pride in the personal, relevant relationships they build with their members. However, branch traffic is down year-over-year and digital transformation is changing the way consumers expect to be served.
Digital channels have become the most important touchpoints. To provide account holder service excellence, digital channels need a core platform which is open, flexible, and easy to integrate with, and most importantly, can grow with the ever-evolving world of technology.
The Cloud And Emerging Technology Adaptation
Moving to a new core is commonly viewed as an intimidating and extensive project. However, the move is inevitable for credit unions that want to be able to adapt to emerging technologies quickly and efficiently.
In a few years, all financial institutions will be operating their primary solutions in the cloud, and those that start now are setting themselves up for a better total cost of ownership (TCO).
From a strategic point of view, a cloud-based core enables agility in a practical manner: adding an innovative product or service, enabling digital payments, or even implementing debt finance origination can be accomplished rapidly, at low cost, and relatively easily.
No one can predict the future, but cloud-based operations make it possible to pivot as the future unfolds.
The Core And Open Banking
Recently there has been greater focus on open banking. Right now, it’s hard to work with third-party providers who are not in the core system, but exiting the core system is punitive.
Yet members don’t care about that — they just want to use Mint and Venmo.
From a credit union’s point of view, open banking doesn’t just please members, it also strengthens anti-fraud measures, streamlines lending, and automates back office tasks. The push toward open banking reinforces the need to move to the cloud, because the cloud is the fundamental technology of open banking.
Focus on investing in core transformation. The banking core is still central to a financial institution’s operations. This will not change.
It’s the primary system of record and the master customer file, so it’s critical that credit unions, small and large, think long and hard about what they want their core transformation journey to look like. Transforming the core into the cloud makes sense for any credit union that wants to leverage synergistic capabilities and products.
A Place To Start
The biggest question around core transformation isn’t, “Should we?” but instead, “Where should we go?” The options are to stay with the incumbent, switch to a Big 4 provider, or go with a disrupter.
When deciding, think about the tools that are embedded within the core platform, the ability to integrate with third parties and emerging technologies, and the ability to scale up or down with speed and ease. Ask for proof points in overall cost reductions, such as a reduction in the number of vendors needed, faster processing times, and intuitiveness for employees which leads to better member service.
Learn more about the importance of a core transformation. Watch Finastra’s free webinar, “Why Open and Future-Proof Core Banking is the Key to Success.” Click here to watch this webinar on demand now or bookmark for later.