New technology means credit unions have to work hard on enhancing their digital offer – and a breakout session at the World Credit Union Conference in Vienna saw experts outline their efforts in collaborative innovation.
Simon Vincent, chief commercial officer of Celero, a credit union service organisation which hosts and supports applications and operating systems for around 100 credit unions, highlighted the main challenges faced by the sector – notably a declining market share and an ageing membership population.
“The idea was to standardise core banking platforms of credit unions in order to offer economies of scale to smaller credit unions,” he said.
Celero’s approach is to work with disruptors – “making competitors partners” – rather than be scared of them, he added. And he said it was vital for smaller credit unions to have an investment pool or an innovation pool.
Bill Maurin, chief executive of Meridian Credit Union, talked about his organisation’s digital transformation. Under his leadership Meridian’s assets under management have increased from CAD $10bn to $15.5bn, and it has expanded its digital banking offering and increased its branch footprint by more than 10%, becoming the fourth-largest credit union in Canada.
While shifting to digital channels, a key focus for Meridian is making sure it remains easy to do business with. “We need to make the experience painless and efficient,” said Mr Maurin.
Now, Meridian is working on a new member interface to enable customers to digitally benefit from any services they might use in their branch. These include applying for mortgages, secured and unsecured loans.
The credit union is also looking at improving back-office platforms. Employees have been involved in developing, testing and providing feedback on a new interface where branch staff can communicate with back-office staff.
Colleagues are also encouraged to solve business challenges through an internal social media platform where they can present their solutions.
Mr Maurin’s key tip for other credit unions is to be grounded in a growth strategy before they take any technical initiatives.
In terms of young engagement, he highlighted that “loyalty is not just about technology but thinking about the service offer”.
He said: “We recently launched a new credit card programme. The aim is to accumulate points on credit card and then use it for a deposit, for example.”
In Brazil, SICOOB, the country’s largest federation of credit co-ops, offers similar services to traditional banks. It has more than seven million members, representing 1,200 credit co-ops with 41,000 staff members.
“It was necessary to collaborate to invest in new technologies to achieve the goal to become the main financial option for our members and associates,” said IT executive Edson Rodrigues Lisboa Júnior.
The federation’s old model allowed all credit union members to have their own technical solutions. This led to high costs, with the development and maintenance of different offers, and a lack of interconnectivity.
“The strategic response was to collaborate and develop a banking automation system – the current model all financial co-ops access,” said Mr Rodrigues.
This has given SICOOB members a multi-channel strategy, with the federation undergoing a digital transformation between 2009 and 2016.
“We are trying to offer a good experience, that is the key to receiving the next generation,” said Mr Rodrigues.
It is now possible to join SICOOB using a smartphone and downloading its official app. Customers can also access their accounts using social media and arrange bank transfers through WhatsApp. They can also use the app to find best routes to find ATMs or branches and withdraw money digitally without using cards at ATMs.
Currently over 72% of the transactions performed by members of the credit co-ops within SICOOB are through digital channels. In exchange for using the centralised digital solutions system, each branch pays a fee every month to SICOOB.
“Collaboration is key to innovation but it is necessary to do it in a planned way with strategy roadmap. The collaboration will support the growth,” said Mr Rodrigues.
Asked whether credit unions should prepare for a cashless future, the three panellists agreed the sector should seek to develop capabilities for every form of transaction.
“Governments are pushing away from cash transactions, the need for traditional cash transactions will be redundant. Our job is to prepare,” said Mr Vincent.
Mr Rodrigues agreed that while it was difficult to predict the future, most transactions would likely be performed via digital channels.”
“We will be cashless in 10 years,” added Mr Maurin.