Credit unions are growing in presence and technological capabilities.

Credit Unions Taking a Lead in Tech

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Businesses of all stripes are focused on one word: "growth." For many credit unions these days, that word is getting a lot of play as they take the industry lead on several fronts.

This all begins with a strong member base. According to the Credit Union National Association, more than 120 million Americans now have at least one account with a credit union. That's a healthy number by just about any standard. And diversity and inclusion are fundamental to both the history and mission of credit unions.

It should therefore come as no surprise that credit unions are surging ahead with regard to diversity in leadership. For example, more than half of credit union CEOs are women, CUNA reported. That's 16 times higher than the rate for U.S. banks. Among credit union board members, 1 in 3 are women, a stark contrast to the 1 in 6 for banks.

"Loan portfolios for credit unions surged more than 6.5% between September 2019 and 2020."

Credit unions are also growing in their share of wallet. As CNBC reported this past February, loan portfolios for credit unions surged more than 6.5% between September 2019 and 2020. Over the same stretch, loan portfolios for banks increased 4.9%.

But there is yet another way credit unions are in growth mode. They're investing more in digital technology, largely in an effort to appeal to their member base, expand their servicing options and to enhance operational efficiencies.

'Open Your Eyes'
Credit unions have subsequently made efforts to draw attention to their expanded technological capacities. In 2019, the Credit Union National Association launched "Open Your Eyes to a Credit Union," an initiative aimed at increasing membership by highlighting groundbreaking financial services and products.

Two-and-a-half years later, the campaign is going strong with clear dividends, securing more than 2.4 billion online impressions, 943 million web videos viewed in entirety, and over 5.7 unique visitors to the homepage. And in a survey of non-members, three-quarters said the campaign was convincing enough for them to consider joining a credit union.

In a press release announcing the campaign launch in Montana, Credit Union Awareness Executive Director Chris Lorence said "Open Your Eyes" is a first-of-its-kind digital influencer effort that has successfully dispelled long-held myths that credit unions are behind the times. Many of the technologies and solutions offered by community and major banks are also offered by credit unions.

"While consumers appreciate the human touch, they increasingly prefer the speed, comfort and convenience that AI offers."

It's a good thing, too, because while consumers do appreciate the human touch inherent in the traditional retail banking model, they increasingly prefer the speed, comfort and convenience that AI and other digital solutions offer. Indeed, according to an annual survey conducted by SOTI, nearly 75% of respondents said they preferred the self-service technologies retailers provide versus interacting with an employee. That was a near 11% jump from the poll done the prior year.

From ITMs to websites to online FAQs, most credit unions in the U.S. have some kind of digital and technological presence. Given the positive feedback they've received from members, in addition to reduced wait times and lower operating costs, it likely won't be long before all credit unions adopt not just a digital approach to serving their customers' needs, but a digital-first approach.

Credit unions taking a hard look at online auto lending
The digital/technological transition has been accelerated by the pandemic and subsequent business opportunities. As with many other industries, consumer demand lies at the heart of credit unions' enhanced trek into tech. While mobile and online banking was already a major channel for Americans before COVID-19, it picked up steam when the coronavirus struck, fueled in part by office and lobby closures that were done in compliance with state-mandated lockdowns. At the same time, people surprisingly bought cars in droves throughout 2020, necessitating loan application processes that could be executed entirely online.

Because they were behind the technological curve on this front, credit unions' new-car loans took a hit, falling 3.4% between January and March compared to the same three-month period last year, American Banker reported from National Credit Union Administration data.

Geoff Bacino, a credit union consultant and former board member for the National Credit Union Administration, told American Banker that credit unions can increase their appeal to prospective borrowers by doubling down on digital tech.

"Credit unions wanting to be part of this new paradigm must navigate the online financing model or push prequalifying for members looking for a new car," Bacino advised. "Auto lending can be a good book of business for credit unions, but the model is changing and credit unions will have to adjust."

Matt Selke, CEO of Atlanta-based Pinnacle Credit Union, told American Banker that car loans are his company's "bread and butter." That's why he intends to maintain a watchful eye on online car sales to identify how Pinnacle can take advantage of the online car buying blitz, which has fueled an inventory shortage.

Whether you've already intensified your approach to digital and technology, or remain unsure of how to go about it, BranchServ Convergint has you covered. We specialize in branch transformation and can supply you with the integration equipment and consulting that can help your bank or credit union achieve growth. Contact us today to learn more.