The first stimulus bill at the start of the pandemic highlighted major vulnerabilities in the banking industry, mainly due to the fact that many banks and credit unions (CUs) still operated on legacy infrastructure. That said, credit unions rose to the occasion and proved their true value. In a study conducted by VSoft during the summer of 2020, 70% of small businesses said they believed smaller banks and credit unions better supported SMB customers through the PPP process than larger banks. Over the past year, credit unions have experienced an influx of new customers, including businesses and individuals alike.
As a result, more and more credit unions have undergone digital transformation efforts to modernize their core banking systems to support their growing customer bases. And the shift to modernized digital banking solutions has enabled many CUs to shift from survival mode to thrive mode. In fact, many have already begun to prioritize other initiatives, including building customer portfolios and expanding revenue streams. As credit unions expand on this success, and finalize digital transformation initiatives, below are three tips to keep in mind.
The payments industry has seen rapid innovation over the past year — from merchant solutions to peer-to-peer payment solutions. According to VSoft’s research, 62% of small businesses agreed that payment processing times are a big priority. What’s more, 94% of small businesses say they are more likely to switch to a smaller bank or credit union if offered faster payment and check processing times. Being that this is an increasing priority for customers, credit unions should ensure they have technology in place that supports multiple payment channels – and automatically leverages the best routing option – without requiring the end-user to understand the inner workings of the system. Solutions that utilize a series of available payment rails to ensure payments are routed at the optimal speed and cost for both businesses and individuals alikearehugely important. These products provide more choice for credit unions and their members, ultimately saving them and their customer’s money in the long run.
Utilize Data Modernized core banking systems not only offer valuable customer insights, but also in-depth security, monitoring and reporting features. On the customer side, one size doesn’t fit all. It’s important to leverage insights unique to each customer to ensure your organization is best serving individual account holders according to their specific needs. With regard to reporting, organizations such as the Treasury Department and the Federal Reserve System are exploring ways to enable faster reporting on the heels of recent attacks. With systems like this in place, credit unions can provide faster reporting and stay compliant in real-time as regulations change.
The banking industry was built on personal relationships, and this is something that is now very much unique to credit unions. While finance management comes easy for some, it can become overwhelming for others. There’s aspects of technology that have been integrated into our daily lives. While chatbots, for example, can be incredibly useful if done right, the movement and management of an individuals’ monetary assets should always be taken very seriously. The economic shifts experienced as a result of the pandemic forced people of all asset classes to re-evaluate their financial situations — many of which leaned on personnel at banks and credit unions for advice. As small and medium-sized credit unions execute on digital transformation projects, it’s important that the finance and banking industry keep customer relationships at its core.
Credit unions are at the core of the financial wellness of communities everywhere — especially as payment and money management innovations continue to roll out. As these financial institutions come out on the other side of their digital transformation, it is imperative that they keep these three tips in mind to not only keep up with outside competition, but also increase customer loyalty as their customer bases expand.
Kevin Olsen is the Senior Vice President of Payments Solutions at VSoft Corporation. His previous experience includes previous roles at ePayResources, EastPay Inc., and Jack Henry & Associates. Kevin received a BS in Technical Studies from Valdosta State University.
The Payments Professor Kevin Olsen has been working in the payments industry since the late 1990’s. Throughout his time, Kevin has obtained many certifications such as Accredited ACH Professional (AAP), National Check Professional (NCP), and Accredited Payments Risk Professional (APRP). The Payments Professor offers a variety of content that will enhance your understanding of payments as he brings industry experts in to share their knowledge.