For years, credit unions (CUs) have attracted members through their commitment to personalized customer service. That distinction has increasingly come under attack as banks digitize themselves to meet rising customer expectations, leading a significant 13,500 consumers to report higher satisfaction with banks than with CUs. This new generation of “digital nomads” prioritize fast customer service above other needs. They no longer need a CU to guide them, since they feel comfortable patching together financial solutions from various providers to meet their unique lifestyle.
For CUs to own the primary financial relationship, they need to address two sides of the same coin: Transform internal operations and integrate digital solutions to drive engagement with members whose lifestyles and needs are quickly evolving.
Innovation Challenges and Opportunities in Meeting Customer Expectations 
Since 2020, the payment market has undergone a seismic shift, primarily driven by technological innovations, changing consumer expectations, and regulatory changes. Today, digitalization, automation, data-driven insights, artificial intelligence, and analytics are transforming the payment market to enhance customer experiences, streamline operations, and drive growth. Credit unions have their own unique set of challenges where they need to balance member expectations for digital services with regulatory compliance, cybersecurity threats, and internal operational efficiency. A growing number of CUs turn to consolidation for survival, but as these institutions merge or grow larger, they often struggle to maintain their niche and deliver personalized services.
CUs need to dodge the stagnation effect, where their reliance on outdated customer-facing technology hinders their growth. To support member retention and gain a competitive advantage, successful CUs leverage carefully designed technology that automates operations, reduces errors, and offers enhanced security features to meet regulatory compliance. This same advanced technology also provides enriched member experiences, further improving retention and streamlining internal processes.
Regulatory Environment for Financial Institutions 
Credit unions stand out by actively engaging in legislative and regulatory processes to ensure that the needs of their members are considered and protected. For example, they pioneer in advocating for consumer protection laws and regulations that promote fair lending practices. One CU, Ascentra, recently teamed up with credit unions across the state to push for changes to the Iowa Credit Union Act, enabling the industry to upgrade its service and security for employees and members.
In addition to legislative advocacy, credit unions also actively engage with regulatory bodies to shape regulations that affect their operations and services. By harnessing technology to amplify the voice of their members, credit unions can provide valuable insights and recommendations that reflect their members’ needs and concerns.
Banking Technology Trends and Advancements 
To compete with FinTechs and banks, CUs need to leverage advanced banking technology to offer a full complement of digital, self-service payment products. The importance of mobile banking for modern consumers cannot be overstated, as it provides real-time access and convenience.
Emerging technologies like data analytics, artificial intelligence (AI), and machine learning (ML) can offer members personalized financial investment suggestions based on their transaction histories and customer data. These technologies can also identify members at risk of financial distress and proactively recommend measures to mitigate this risk. As modern consumers seek convenience, CUs should embrace efficient AI-powered chatbots for instant help with routine questions. Additionally, smart fraud detection prevents fraud in real-time, saving members the hassle of canceling cards and addressing fraudulent activity.
Other capabilities include faster loan processing using AI to make the process significantly easier for both CU employees and members, along with omnichannel messaging where members could seamlessly connect with their CU across multiple touchpoints.
Embracing the Future with Credit Union Consulting
Since 2020 there has been a remarkable 67% surge in online banking among financial institutions. Today around 80% of clients favor digital banking platforms over offline channels, while 70% access their banks through mobile devices. For CUs to retain their members as they consolidate and achieve continuous compliance, they need to deliver the full member experience through advanced banking services. Digital technology is a critical part of that puzzle.
Partner with Hartman Executive Advisors and learn how to develop and implement a profitable FinTech strategy that aligns with your organization’s goals. Contact the financial services experts at Hartman for a free consultation today.
