Is It Too Late to Innovate?

man in yellow hoodie jogging down road marked 2023 with bright sun peaking through the trees ahead
By Allied Solutions

5 minutes

With the right mindset, credit union leaders can take advantage of the growth opportunities the current economic landscape presents.

Sponsored by Allied Solutions

The economy is struggling due to labor shortages; interest rates are soaring as the Federal Reserve hiked its key interest rate to the highest in 22 years; the Consumer Financial Protection Bureau and attorneys general are paying close attention and exposing potential borrower sensitivity concerns, all the while credit unions are striving to embrace a mindset of innovation amid an economic crisis. Allied Solutions’ CEO Pete Hilger recently addressed a room of credit union executives on the importance of being innovative to successfully grow. 

Against the recession-like backdrop sits the credit union movement, positioned to innovate and grow like never before. During the financial crisis of 2008-2009, many credit unions missed the mark. Consider this a second chance, not something that many leaders have during their careers. With the right mindset, credit union leaders can take advantage of the growth opportunities the current economic landscape presents.  

Embracing an Innovation Mindset 

It’s no surprise that technology and artificial intelligence are the driving forces of banking innovation. Digital innovation isn’t a myth or a fleeting trend. It is here to stay.  

Consider this: What digital moves can you make so that your credit union is less dependent on the human factor?

When you start to go digital and embrace artificial intelligence, things will go wrong—no matter how much you prepare or plan. This is no different than the human factor. The difference is technology can be fixed, and it stays fixed. So how can credit unions leverage technology for enterprise-wide innovation and growth?

There are three main areas of growth for credit unions: share of market, wallet and voice. 

Share of Market

Credit unions overall have not succeeded in capturing the younger generation’s interest or business. Only 4% of Gen Z and 5% of Millennials are members of credit unions. As the older generations become obsolete, credit unions must welcome the younger generations with personalized, digital experiences—or they too will become obsolete.

To do this, credit unions need more than digital tools. They need to elevate their brand image. 

A credit union’s name alone can suffocate market share, sending an (unintentional) message that a particular demographic doesn’t qualify for membership.

For example, after the University of Iowa Community Credit Union changed its name to Green State Credit Union, its membership and asset size doubled, and it’s not alone! However, while renaming the institution was vital in the new messaging to increase the perception of accessibility and inclusivity, it was not the sole reason for the CU’s growth. The right mix of digital solutions and relevant brand image is critical to expanding market share.

Share of Wallet

Market share is an important metric of growth but not the only one. Wallet share shows how much banking business each existing member provides to your credit union. How many products and services are your members leveraging? This is a helpful metric and reminder that other credit unions are not competitors.  

Credit unions may not have the largest market share in the banking world, but wallet share is where credit unions excel. “Once a member, always a member” goes a long way toward loyalty. Stacked next to big banks, credit unions offer superior rates paired with highly personal service despite a tough interest rate environment. It’s not too surprising that 36% of consumers would switch to a credit union if offered better loan terms. 

Brand trust is the greatest asset credit unions have. Your brand is invaluable. Leverage it every day because trust among banks is not favorable these days. According to a Gallup study, in 1979, 60% of Americans trusted their financial institution, compared to 27% today. 

It’s time to engage existing members with seamless digital and mobile banking because 78% of consumers prefer handling finances via mobile. Prioritize and strategize growing your share of wallet. This will help you understand who you are, who you are not and the advantage that is to be had here. 

Share of Voice  

Credit unions have two of the greatest attributes for success: trust and personal service. Unfortunately, these values are coupled with tight budgets. By nature, credit unions are small players and will continue to struggle to compete with the big banks if they don’t have the advantage of AI and data analytics. 

Allied Solutions, along with other tech credit union service organizations, will invest $50 million to $75 million a year in technology. Of course, this is marginal compared to what fintechs and big banks are spending, but the good news is that credit unions have an advantage: Key credit union partners invest, design, and offer tools to the industry that are too expensive for credit unions to purchase or build individually

The goal of strategic partnerships is to aggregate the buying power of credit unions, strengthen your position and offerings and amplify the voice of the CU movement.

The question isn’t “What can we innovate?” it’s, “With whom can we innovate?”

We believe in the collective power of the credit union movement. Together, we can go farther, faster. Partner with the experts that have already invested in building the technology your credit union needs to innovate at the next level.

As Hilger says in his presentation, stay focused on your next steps toward innovation. Strategize for them. Stay committed. If you don’t start today, you can’t catch up tomorrow. 

Allied Solutions is one of the largest providers of insurance, lending, risk management, and data-driven solutions to financial institutions in the U.S. A CUES Supplier member, Allied Solutions uses technology-based solutions customized to meet the needs of 4,000 banks and credit unions, along with a portfolio of innovative products and services from a wide variety of providers. Allied Solutions is headquartered in Carmel, Indian,a and maintains several offices strategically located across the country. Allied Solutions is a wholly owned and independently operated subsidiary of Securian Financial Group.

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