Will Credit Union Technology Growth Continue?

Facing continued financial pressures, how do credit unions decide which technology investments to keep and which to cut?

 
 

As credit unions retool their budgets in the wake of ongoing financial crisis and the NCUSIF assessment, how big a hit will technology budgets take?  Despite lower ROA, the majority of credit union respondents in Callahan's 2008 Technology Survey reported that their 2008 technology budgets were increasing (68%) or at least holding steady (17%).  As credit unions face continuing financial pressures in 2009, is this trend likely to continue? 

Which Technology Investments to Keep?

Cutting technology enhancements may ease short-term budgetary pressures but may have a long term impact on credit union growth and productivity. Carefully considering costs along with potential efficiencies and member service goals can help identify critical investments. Even among credit unions reporting budget decreases in 2008, planned new technology investments included email account alerts (54%), new member funding via internet (46%), online loan decisioning (45%-50%), and A2A transfer capabilities (30%).  There are a number of reasons why credit unions need to keep moving forward with new technology:

  1. Consumer expectations and the competition:  Ongoing widespread consumer focus on controlling expenses has fueled the growth of personal financial management sites.  Credit unions have an opportunity to increase "stickiness" and value by offering budget management tools on their websites.  Increased mobile banking advertising by other financial providers and use of iPhones/PDAs may lead more members to expect this service at their credit union.
  2. Targeting/retaining member segments:  Investing in online tools and enhancing the credit union website has the dual benefit of increasing member self-service (saving the credit union money) as well as deepening loyalty among members who rely on the online channel. 
  3. Enhanced self service:   New channels such as online member enrollment or online account opening can help the credit union more effectively reach Gen Y segments and encourage online members to expand their relationships with the credit union. 
  4. Expanding access through new channels:  New ATMs or Kiosks can help credit unions expand their reach without the sizeable expense of a new branch.
  5. Greater efficiency and volume:  Online loan applications and processing systems can help the credit union reach more members and more efficiently process loans.  Shorter loan processing times can help the credit union increase volume and enhance member satisfaction.

Compare Your CU Budget to Your Peers:

Callahan's recently launched 2009 Technology Survey  includes data on credit union IT budgeting priorities, IT headcount, and technology implementations with the greatest impact on both operating efficiency and member service.  By taking the 2009 Technology Survey, you'll receive a complimentary copy of the Credit Union Technology Guide to help you better understand key priorities and opportunities.  The survey takes less than 15 minutes to complete, and in return you’ll get essential information that will help you map out your technology budget for the entire year. 
Please complete the survey by Friday, April 10th .

Consider Vendor Options


New technology does not need to be costly.  The increased consolidation and cooperation among technology providers and growth of CUSO options means that credit unions have a wide range of alternatives.  Credit unions  today have a broader range of options due to vendor partnerships that enhance compatibility and streamline implementation.  Callahan's online tools, the Buyer's Guide and Press Center , are designed to help credit unions conveniently research technology providers.  Networks & Niches, Callahan’s guide to CUSOs, offers insight on industry owned and operated solutions.

 

 

 

April 6, 2009


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