While some credit unions are working with fintechs to improve their digital offer – Clockwise Credit Union has decided to build its own solutions with an in-house IT team.
It’s major but crucial change for the Leicester-based credit union – set up in 1992 at a time when all member applications were paper based; now 90% of all new business membership and loans originates online.
With13,000 members, £4.5m in loans and £4.8m in savings to manage, the board decided in 2016 to design their own systems and self-fund.
Why in house? Sharing its journey at the annual conference of the Association of British Credit Unions in Manchester last week, chief executive Teresa Manning said previous external projects had brought limited success, with high maintenance costs and increasing obsolescence.
Seeking to retain control and intellectual property, Clockwise created a team of three IT staff with expertise in software development and testing. It was keen for team members to know how to fill in for one another, to avoid dependence on one worker.
“There was a question as well around losing the personal touch,” added Ms Manning. “For us, it’s about choice; going digital is about every single interaction you have with a member, not just about having a website you can use.”
Clockwise is also looking to grow membership and lending without opening new bricks-and-mortar sites, after a bad experience developing a new branch.
The decision to expand digital services was followed by a detailed IT audit in 2016. The board also appointed an IT committee to set policy and challenge the IT team.
A year later, the board adopted a three-year IT strategy focused on security integration, member digital offer and people-focused software. This was devised by consulting members, who said they wanted to be able to access services on a 24/7 basis.
There were several core elements to the development process: a secure-by-design approach; avoiding a ‘big bang’ change in favour of small changes over time; and a risk assessment before each step.
IT manager Simon Foreman said his team has developed a real time member portal, migrated to the cloud to remove the infrastructure burden, and launched a mobile app. They used application programming interfaces (APIs) to build new applications and services. Clockwise embraced the use of APIs to link with third parties, he said. It currently has 10 third party integrations in place.
The credit union chose to take advantage of Open Banking, a series of reforms led by the Competition and Markets Authority to improve competition within the financial sector. As part of this, the big banks have to let their customers share their financial data with authorised providers, if they choose to do so, and access better offers.
Around 60% of all loan applicants at Clockwise Credit Union consent to open banking.
The credit union also provides Engage accounts and cards, allowing users to set direct debits and standing orders and use ATMs. Members can now apply for loans online and get loans paid to bank accounts within minutes.
The credit union has 11,400 registered members on the member portal while 40% of transactions happen outside office hours.
Looking ahead, Clockwise wants to continue to grow membership. This year it is developing a customer relationship management system, which will be launched in April.
It is also looking at agency banking, which would involve contracting third party retail networks as banking agents, authorised to offer selected products and services on its behalf.