Technology is and always will be one of the prime aspects to focus on in order to enable growth for your credit union (CU). It helps simplify operations, reduce costs, increase efficiency, and so much more. All it takes is one look at the benefits gained from empowering technology to understand why a well-executed plan for digital transformation is a step to take with your own organization. 

Superior Efficiency 

By far, one of the most important things to understand about technology is that it is changing everything—including credit unions. Over the next two decades, things will shift dramatically—to the point where a lot of employment roles will be filled that literally do not exist right now. 

For credit unions to prepare for this Brave New World, they need a rock-solid foundation of technology upon which to start building today. For many, that will come down to their credit union core processing system. Moving to a modern system will give access to the new administrative tools, not to mention the innovative analytics, that ensure the most efficiency as possible. 

Unbeatable Flexibility 

In many ways, credit unions rose to success in the first place on the back of innovation. They simply positioned themselves to offer a level of personalized care and attention to detail to members that larger financial institutions could not. That trend must continue; therefore, your credit union should leverage technology to remain as flexible as possible in the wake of change. 

Case in point: digital technology. This is transforming (and has transformed) the way people interact with credit unions and how credit unions operate at a base level all the time. Digital transformation proved to be especially important during the COVID-19 pandemic when most people were working remotely. It allows organizations to remain flexible, pivoting away from potential risks and leaning directly into the opportunities that are unfolding. 

Undeniable Communication 

Make no mistake: credit union success is all about communication. Members need to be able to communicate with a credit union to tell them what digital services they want and need. Employees need to be able to effectively communicate with one another to better serve those members. Organizational leaders need to be able to communicate to show how their organization is always headed in the right direction. The list goes on and on. 

Technology trends like 5G and even virtualized software help with this enormously, streamlining the communication process and bringing everyone together, regardless of where they are. 

According to one recent study, credit union membership growth occurred at a rate of 8.1% in Q1 2021, with a collective net worth increasing by 13.9%. Much of this began due to pent-up demand. For it to continue, credit unions need to act now—and technology like everything outlined above will be one method as to how they do it. 

In the ever-evolving world of financial services, credit unions are faced with a critical decision that can greatly affect their operational efficiency and member services – selecting the perfect core processor. It’s important to take this decision seriously due to the impact it can have on your CU’s growth. So let’s take a deep dive into the core of credit union operations, unraveling the functions, intricacies, and pivotal role played by a credit union core processor. 

Understanding the Importance of a Credit Union Core Processor 

A credit union core processor is a crucial component of your credit union's operations. It serves as the backbone that supports various functions, including member account management, transaction processing, and data storage.  

What does a core processor do for my credit union? 

• Transaction processing 
• Account management 
• Customer information management 
• Loan processing 
• Financial reporting 
• Compliance management 
• Risk management 
• Online banking support 
• Mobile banking integration 

Without an efficient and reliable core processor, credit unions may face challenges in delivering high-quality services to their members. 

Understanding the Importance of a Credit Union Core Processor

A credit union core processor is a crucial component of your credit union's operations. It serves as the backbone that supports various functions, including member account management, transaction processing, and data storage. 

What does a core processor do for my credit union?

• Transaction processing
• Account management
• Customer information management
• Loan processing
• Financial reporting
• Compliance management
• Risk management
• Online banking support
• Mobile banking integration

Without an efficient and reliable core processor, credit unions may face challenges in delivering high-quality services to their members.

Key Factors to Consider When Choosing a Credit Union Core Processor

When selecting a credit union core processor, several key factors should be considered to ensure the right choice. These factors include:

Functionality

It is essential to assess the core processor's features and capabilities to meet the specific needs of your credit union. This includes evaluating its ability to handle member account management, transaction processing, data storage, and integration with other systems.

Scalability

Your credit union should consider whether the core processor can accommodate your future growth and expansion. It is crucial to choose a scalable solution that can adapt to changing requirements and expectations.

Reliability and Security

The core processor should have robust security measures in place to protect member data and prevent unauthorized access. It is also important to consider the reliability of the system, ensuring minimal downtime and disruptions to operations. 

Integration Capabilities

Credit unions often rely on multiple systems for various functions, such as online banking, loan origination, and accounting. Therefore, it is important to select a core processor that can seamlessly integrate with these systems to streamline operations and enhance efficiency.

Interested in our integrations? Download your free eGuide here!

Cost

Consideration should be given to the upfront and ongoing costs associated with the core processor. Your credit union should evaluate the pricing structure, including licensing fees, maintenance fees, and any additional charges for upgrades or support.

By carefully considering these key factors, credit unions can make an informed decision when choosing a credit union core processor that aligns with their specific needs and requirements.

Benefits of Switching Core Processors for Credit Unions

Switching core processors can offer several benefits for credit unions, including:

Enhanced Functionality

Upgrading to a new core processor can provide credit unions with advanced features and capabilities that improve member services. This may include real-time transaction processing, mobile banking integration, and customizable reporting tools.

Increased Efficiency

A new core processor can streamline credit union operations, automating manual processes and reducing the time and effort required for member transactions. This improves operational efficiency and allows credit union staff to focus on delivering personalized services to members.

Do you know these 7 essential ratios for efficiency? 

Improved Security

Switching to a new core processor can enhance the security measures in place, protecting member data from potential threats and vulnerabilities. This includes robust authentication protocols, encryption technologies, and proactive monitoring for suspicious activities.

Better Integrations

Newer core processors often offer improved integration capabilities, allowing credit unions to seamlessly connect with other systems and third-party applications. This enables a more integrated and holistic approach to member services, resulting in a better overall experience.

While there are potential benefits of switching core processors, credit unions should carefully evaluate the associated costs, implementation process, and potential disruption to operations to ensure a smooth transition.

Drawbacks of Switching Core Processors for Credit Unions

Switching core processors for credit unions is not without its drawbacks. Some potential drawbacks include:

Implementation Challenges

Migrating to a new core processor requires careful planning, testing, and data migration. This process can be complex and time-consuming, potentially causing disruptions to normal operations and member services.

Training and Learning Curve

Introducing a new core processor often requires credit union staff to undergo training to familiarize themselves with the new system. This learning curve can temporarily impact productivity and efficiency until staff become proficient in using the new core processor.

Financial Investment

Switching core processors may involve upfront costs, such as licensing fees, implementation fees, and hardware upgrades. Credit unions should carefully assess the financial implications and ensure that the long-term benefits outweigh the initial investment.

Member Impact

Changing core processors can potentially impact members, especially during the transition period. Credit unions should communicate effectively with their members to manage expectations and minimize any inconvenience or confusion.

Despite these drawbacks, credit unions can mitigate the challenges by thoroughly planning the transition process, providing comprehensive training and support for staff, and effectively communicating with members throughout the process.

Tips for Selecting the Best Credit Union Core Processor

To select the best credit union core processor, consider the following tips:

Conduct a Needs Assessment

Identify the specific needs and requirements of the credit union to determine the functionalities and features required in a core processor.

Research and Compare Options

Explore different core processor options available in the market, considering factors such as functionality, scalability, security, integration capabilities, and cost.

Seek Recommendations and References

Consult with other credit unions or industry experts to gather insights and recommendations on reputable core processor providers.

Evaluate Vendor Support and Reputation

Assess the level of customer support provided by potential core processor vendors. Consider their reputation in the industry and their track record in serving credit unions.

Request Demonstrations and Trials

Request demonstrations and trials from shortlisted core processor vendors to evaluate the user interface, ease of use, and overall functionality.

Consider Future Growth and Expansion

Choose a core processor that can accommodate the credit union's future growth and expansion plans, ensuring scalability and flexibility.

By following these tips, credit unions can make an informed decision and select a credit union core processor that aligns with their specific needs and goals — and help you grow!

Whether it's a credit union, community bank, or national bank, open banking has transformed how people perform financial transactions. Highlighted by innovative and integrated apps, open banking is made possible through application programming interfaces (APIs). In the simplest sense, an API is a software intermediary that allows two different applications—such as your credit union core processing system and a third-party app—to seamlessly communicate.

While open APIs are extremely attractive and represent lucrative opportunities for your credit union, it's important to understand the quickly shifting regulatory environment and landscape. It's even more imperative you have the appropriate infrastructure in place to protect your members in this more complex cybersecurity environment.

A Quick Look at the Regulatory Framework for Open Banking

While U.S. consumers, in general, are open to the notion of open banking, the highest level of interest—as most would assume—is with consumers in the younger generations, specifically millennials and Generation Z. Simultaneously, Deloitte research suggests households with over $250,000 in annual income are most receptive to open banking in general and to sharing their information. Behind the groundswell of support for open banking, the Office of Comptroller of the Currency (OCC) released a bulletin in 2021 that highlighted the security benefits of APIs. The bulletin positioned APIs as a secure and efficient portal where financial institutions can share sensitive information with data aggregators.

According to the OCC, credit unions and financial institutions that establish agreements with data aggregators can utilize APIs to limit the utilization of less-effective methods, such as screen scraping. At the same time, APIs can empower members to better manage and define the data they would like to share, and APIs do not require your members to provide their account log-in credentials to third parties. This infuses an extra level of comfort for members who enjoy the convenience of apps like Venmo—but would prefer not to share passwords and usernames beyond core banking.

However, open banking and APIs have been largely unregulated. The non-profit organization, the U.S.-based Financial Data Exchange (FDX), created an API standard to help facilitate safe and secure sharing of data. And this standard has been implemented and adopted by members of the American Banking Association. With so much increasing focus on open banking and APIs, major financial institutions in the US, such as the U.S. Treasury Department and the National Automated Clearing House Association (NACHA) are making major moves toward standardizing protocols and codes that empower APIs to deliver secure and fast exchange of information. Although the area lacks a clear financial regulatory framework for banks and credit unions in the U.S., fintech firms and financial institutions are surging fast ahead.

How Can Credit Unions Leverage Open Banking

Credit union member expectations are often driven by culture, which is greatly influenced by financial technology. And to keep up with this trend, credit unions are virtually forced to embrace open banking and partner with third-party providers (TPPs). Doing so can offer members more control, choice, and convenience when sharing their data with TPPs.

Some credit unions are much better positioned to enter the world of open banking. Specifically, credit unions that adopted a cloud-based core were notably more prepared to successfully navigate the pandemic's all-but-mandatory shift to digital banking channels. And these same institutions with a cloud-based core are best suited to take advantage of the benefits of TPP and open-banking offerings. While a cloud-based core isn't a requirement, it simplifies and streamlines the process of connecting to the innovative world of financial service offerings.

In either case, credit unions remain primarily responsible for protecting their member's information and integrity. As such, security must be embedded within the most fundamental framework. More so, the importance of employing fraud detection tools, multi-factor authentication, and protection against cyberattacks has become more important than ever.

Open Banking with a Security-First Approach

When credit unions adopt open banking, it's imperative they have the experienced personnel and tools in place to secure their environments. The most recent data and research from F5 Labs show the number of API security incidents continues to increase year over year. And the majority of API incidents over the last two years were the result of a low level of security maturity.

Even though open banking and APIs open the door to a vast range of benefits—including a more comprehensive view of the needs and life stage of credit union members—these advantages will never outweigh the costs without API-centric security. Fortunately, there are several different technologies that utilize machine learning and artificial intelligence to help sure your member data.

For starters, credit unions that are looking to foray into this arena should look for low-latency, high-performance API management solutions as well as a secure API gateway. This allows credit unions to utilize modern security protocols to support microservice-based apps. Another key solution is adaptive authentication. Adaptive authentication actively uses real-time inputs and adjusts verification methods based on risk levels to provide dynamic protection. These solutions can be implemented whether on-premises or as a service in the cloud. And adaptive authentication solutions are compatible with a vast array of authentication methods to deliver an unencumbered member journey. When paired with fraud mitigation and risk management solutions, zero-day malware and phishing cyberattacks can be prevented well before they ever occur.

Chart the Best Path Forward

One thing is for certain, open banking is the path forward for credit unions and all financial institutions. And FLEX makes it easy with FLEXBridge. This dynamic open API interface allows third-party solution providers and your credit union to access FLEX core data and business rules. As a single API with a customized developer portal, FLEXBridge offers credit unions the best of both worlds. It connects all internal credit union systems while only exposing data to developers in a compliant and secure way.

Because FLEXBridge operates in real time, it actively facilitates the secure passage and updating of data between any connected external source and the FLEX core. This world-class technology unleashes the power of the ever-expanding financial technology marketplace in a safe and efficient manner while providing an array of service opportunities for your credit union and members. Best of all, several third-party integration options already exist within the FLEX framework and FLEXBridge API.

Learn more about some of the existing integrations available through FLEX and FLEXBridge API in our Core Integrations eGuide.

According to a recent study, credit union fraud rates increased by more than 70% in 2022 alone. If you needed a single statistic to illustrate why it's so important to be proactive about mitigating risk and protecting your members, let it be that one.

While you're certainly not without your options in terms of preventing fraud during account openings, many approaches sound similar to the point of confusion. Case in point: identity verification vs. authentication. They sound similar—aren’t they the same basic thing? Can your credit union get by with one over the other? Read on to find out. 

What is Identity Authentication?

Identity authentication is a process that allows your credit union to determine if someone should have access to a specific action or service in the first place. A password, for example, is used to make sure only someone who should have access to an account does. Two-factor authentication (2FA) would also be an example of this. Members need a username, a password, and a 2FA code before they are given access to that which they want.

What is Identity Verification?

On the other hand, identity verification is an attempt to confirm that someone is who they say they are. Your credit union members may be asked to provide essential information like their social security number, birthday, address, and more when opening a new account or applying for a loan.

Behavioral signals are also a form of identity verification that are used on an ongoing basis. If you know the way one of your members traditionally uses a checking account, for example, you have a fairly stable definition of what "normal" activity looks like. You can then compare and flag anything that falls outside that definition based on things like suspicious purchases, transaction dates, and more—all of which would signal that someone might be using the account who shouldn't be.

Which is Most Important?

Both. 

The level of security that your credit union is able to offer its members will always increase as more layers are added. Verifying someone's identity at the point that they open a new account, for example, is a great opportunity to prevent a fraudulent account from being opened. Then, continuing to use identity authentication on an ongoing basis would be an efficient way to keep that account protected, making sure that nobody with malicious intentions gains access to it.

Both would be an excellent way to balance the need to minimize risk with the demand to offer members an excellent experience they won't find elsewhere.

If a chain is only as strong as its weakest link, for most credit unions and smaller financial institutions, that vulnerability rests in the same place: their data.

Members flock to credit unions because of the personal experience they crave. They want that level of care and attention to detail they can't get from a bigger bank. The easiest way to shatter that impression—likely forever—is to allow their data to be compromised in the form of a breach. 

Why Data Security Matters

• According to one recent study, credit unions and other smaller community banks have the second-highest fraud levels right now.
• The average loss of fraud has reached over $500,000 for most victims, which unfortunately shows no signs of slowing anytime soon.

Educate Your Members & Employees

Ensuring the security of your credit union's data begins with making ongoing education a priority for both employees and members. It's essential for individuals to be able to recognize and avoid phishing attempts, backdoor attacks, and other cyber threats. Surprisingly, this knowledge is not common among everyone.

Therefore, it is crucial to educate your employees and provide helpful content for credit union members to raise awareness about data protection and cybersecurity.

Employ ID Verification Tools

Another effective way to enhance the security of your credit union's data is through using identity verification services. With ID verification, you can verify that a member is who they say they are by leveraging various signals that help "prove" their identity.

This can involve requesting personal information such as social security numbers that only the member should know, as well as analyzing certain behavioral data. Employing these measures can effectively prevent fraud during the onboarding process, especially when individuals attempt to apply for a loan or access new services.

Establish a Cybersecurity Policy

Establish a cybersecurity policy to safeguard your credit union's data and ensure the highest level of security.  Include clear consequences for policy violations.

This will help credit union employees understand their personal responsibility, not only in terms of keeping data safe but in terms of how they engage with emails, what sites they can and cannot visit, and how to safely use computers and mobile devices. This helps promote procedures and best practices for credit union employees to follow.

Safeguarding Success: FLEX's Ongoing Mission to Protect Your Credit Union from Fraud

The team at FLEX understands that combating fraud in all its forms and securing your data is forever a top priority. That's why we partner with Alloy—an identity verification platform—to enhance the experience for your credit union members while maintaining security.

If you wish to speak to us more about securing your data, contact our team of experts today. Otherwise, click the button below to learn more.

Financial services are fraught with risk. Any service built around the exchange of money is going to get the attention of all sorts of ne'er-do-wells, from your average scammer to extremely advanced cybercriminal operations that are adept at hiding their tracks. A credit union must protect its members and their assets, and failure to do so will discredit your viability as a trusted institution.

Fortunately, credit unions have the benefit of a network of advisory organizations to help educate and assist in the identification of threats. The right credit union technology can also provide advanced tools to detect fraud. Used in combination, these resources will help ensure you provide your members with the security they need and expect.

Here are some ways a credit union can enhance their compliance and security:

Member Due Diligence

It is fundamental to risk assessment to know who your members are. Have a 360-degree view of the member’s account to show transaction history, alerts, trending reports, case notes, and specific due diligence information about the member. Have a place to record all compliance and risk related information needed about your member. Maintaining visibility on transaction and transfer volume is a good practice to keep aware of suspicious activity. If there are a lot of unanswered questions, you need to ask yourself if this is worth the risk. 

Risk Rating

A custom risk rating matrix for your members enables you to set risk thresholds, values, and criteria by creating rule sets in a risk-rating model. Create as many risk models as needed for different account types, member types, geographies or services. Each risk criteria rule within the model assigns a score and the total score will determine if the member is above or below the threshold for review. Having on-demand access to the latest risk rating results from a dashboard report can help your credit union make better decisions.

Cybersecurity Risks

Online banking, electronic document transfer, and eSignatures can all add risk to your current operations if not managed properly. However, these technologies are tremendously beneficial to both member and CU when thorough security measures are in place, so it's worth incorporating them. Security is critical to success, and this is especially true when it comes to online transactions.

The Bank Secrecy Act

The Bank Secrecy Act (BSA) was established in 1970 by Congress as the first laws that required banks and credit unions to assist the government in detecting and preventing money laundering. Stringent rules and requirements are placed on financial institutions to keep and provide detailed reports on member activity. Large financial fines or even losing your charter are at risk if you are not in compliance with this regulation. Your credit union technology partners should provide tools to ease the burden of staying compliant with BSA.

AML (anti-money laundering)

AML's are the set of procedures, laws, and regulations that comprise the BSA. They are designed to help banks detect and report suspicious activity when it comes to money laundering and terrorist financing, such as securities fraud and market manipulation. Core software initiates transaction processing, any decent credit union core software package will provide, at a minimum, base AML tracking.

Transaction Monitoring

In tandem with AML, transaction monitoring technology is critical in assessing risk. It uses a type of artificial intelligence to read through all transactions as they occur and flag any activity that deviates from the "norm." Alerts can be triggered by all manner of transactions from cash deposits, to withdrawals, to foreign currency exchange. The key to this software's effectiveness lies in the rules each credit union sets to help it determine what is considered a deviation. This will vary by location, geography, type of credit union, etc.

Watch list or OFAC

With the ever-changing world of politics, terror threats, and international crime, keeping up with the dynamic watch list of the Office of Foreign Assets Control can seem overwhelming. Yet, as a financial institution, it is crucial to not only the safety of your credit union, but to the safety of the world. That is a big responsibility for anyone's shoulders. Core systems should provide regulatory compliance for things such as OFAC, otherwise software costs can get out of hand.

Your core processor should provide you with right tools that will help your credit union monitor for risks and maintain compliance.

Your credit union's success hinges on a reliable core processor that facilitates seamless operations, ensuring accurate transactions, supporting member services, and maintaining regulatory compliance. However, recognizing when it's time to transition to a new core processor is not always a straightforward decision.

Beyond the challenges of change lie compelling benefits—technological advancement, heightened efficiency, and enriched member services—that make the transition worth considering. To guide you through this pivotal decision, here is a checklist for your credit union to assess its unique needs, goals, and potential advantages, emphasizing meticulous planning and execution to mitigate risks and ensure a successful migration. Should you look for a new core?

Does your current core processor provide scalability to accommodate the growth of your credit union?

Scalability is crucial for credit unions because it directly influences their ability to adapt to changing member needs and accommodate growth. A lack of scalability could mean that as your credit union expands, your current core processor may struggle to handle the increased transaction volumes, member accounts, and additional services. 

Without scalability, your credit union may find it challenging to introduce new products, services, or even expand into new markets.

Impact

From increased data loads to the ability to seize opportunities, the impact of a non-scalable core processor can be profound. Here are some other effects:

• Performance issues
• Delayed transactions
• Decreased member satisfaction
• Operational costs

As you struggle to maintain an outdated system, your credit union could be missing out on growth. 

Does your core processor have a good ROI?

The operational costs of your core processor directly impact your credit union's financial health. If operational costs are disproportionately high, it could strain your credit union's budget, affecting profitability and hindering your ability to invest in member services and technology.

This could manifest as increased fees for members, reduced ability to offer competitive interest rates, or limitations on implementing new technologies. The actual impact may include financial strain, reduced competitiveness, and a decline in member satisfaction if the value derived from the core processor does not justify the costs. 

Day-to-Day Impact of Your ROI

Excessive operational costs relative to the value provided by your core processor can lead to a range of negative impacts.

• Your credit union might struggle to allocate resources for essential services, hampering innovation and member experience enhancements.
• High operational costs could result in reduced profitability, limiting your ability to invest in growth initiatives or offer competitive financial products.
• Additionally, if the core processor's ROI is not favorable, it may hinder your credit union's overall financial sustainability, making it challenging to stay competitive in the market.

Is your current core processor affecting member satisfaction and retention?

The average member retention rate in the financial industry is 75%. If your current core processor is causing member experience issues—such as complaints about online banking or mobile app functionality—it can lead to frustrated members, reduced loyalty, and, ultimately, attrition. 

Impact

Affecting member satisfaction and retention has far-reaching consequences. Not only does it impact your credit union's growth potential, but it also adds operational challenges as you try to recover from member losses. The cost of acquiring new members can be significantly higher than retaining existing ones, making member satisfaction a crucial factor in your credit union's financial success.

Does your current core processor help you easily adapt to changing regulatory requirements?

Adapting to changing regulatory requirements is critical for your credit union's compliance and overall stability. Without a core processor that facilitates seamless adaptation to evolving regulations, your credit union may face compliance gaps.

For instance, changes in data protection laws or financial regulations may require swift adjustments to your operations, and if your core processor lags in these updates, your credit union is exposed to significant risks. 

Impact

The impact of an inability to adapt to changing regulatory requirements can be severe.

• Financial penalties
• Legal repercussions
• Increased operational costs

Moreover, members may lose trust in an institution that struggles to comply with regulations, leading to potential member attrition and image harm that can take years to overcome.

Are you falling behind in the industry due to your current core processor's limitations?

Staying competitive in the financial industry is paramount for the success of your credit union. If your current core processor has limitations that prevent you from adopting new technologies, offering innovative services, or keeping pace with industry trends, your credit union risks falling behind.  

Impact

The impact of falling behind in the industry due to core processor limitations is multifaceted. Your credit union might experience:

• Decreased member engagement
• Lower adoption rates of digital services
• Reduced appeal to a younger demographic

Moreover, your credit union's reputation may suffer, and potential members could be hesitant to join an institution perceived as outdated. This, in turn, may lead to slower growth, reduced profitability, and diminished overall competitiveness.

Embarking on a core conversion is a strategic move to enhance efficiency, improve member experience, and align operations with evolving industry needs. In this comprehensive blog, we'll navigate through the crucial pre-, during, and post-conversion phases, providing essential checklists to ensure a smooth transition. Let's delve into the key steps and considerations, setting the stage for your credit union's successful transformation. 

Pre-conversion Checklist

Before starting the core processor conversion for your credit union, it's crucial to create a comprehensive pre-conversion checklist. This checklist should include tasks such as:

1. Assess your Current System

Assessing your current system is the crucial first step in a successful credit union core processor conversion. Take the time to thoroughly evaluate your current core processor system to understand its strengths and weaknesses. Look for any pain points or areas that need improvement, such as slow processing times, limited functionality, or outdated technology.

By identifying these areas, you can ensure that the new core processor system addresses these issues and provides the necessary improvements for your credit union.

2. Defining Your Goals

Defining your goals is essential to ensure a smooth and successful core processor conversion. Take the time to clearly define your objectives and determine what you want to achieve with the new core processor system. Are you looking to improve efficiency, enhance member experience, or expand your service offerings?

By clearly defining your goals, you can align the conversion process with your credit union's strategic objectives and ensure that the new core processor system meets your specific needs.

3. Conducting Thorough Research

Thorough research is key to finding the right core processor system for your credit union. Take the time to explore different options available in the market and consider factors such as:

• Cost: Look for a core processor system that aligns with your credit union's size, budget, and long-term goals.
• Features: Consider the features and functionalities that are essential for your operations and ensure that the system can scale as your credit union grows.
• Customer reviews: Read customer reviews and testimonials to gain insights into the reliability and customer satisfaction of each core processor option.

4. Creating a Project Plan

Ensure a smooth and organized core processor conversion with a solid plan.

• Develop a comprehensive plan that outlines each step of the conversion process, from data migration to system configuration and testing.
• Assign responsibilities to team members based on their expertise and provide them with clear guidelines and expectations.
• Set realistic timelines for each task to ensure that the conversion stays on schedule.
• Regularly review and update the project plan as needed to accommodate any changes or challenges that may arise during the conversion process.

5. Communicating with Stakeholders

Effective communication is essential to keep all stakeholders informed and engaged throughout the core processor conversion. Inform your employees, members, and vendors about the upcoming conversion and the reasons behind it. Clearly communicate the benefits and improvements that the new core processor system will bring to the credit union and address any concerns or questions they may have.

Throughout the conversion process, provide regular updates to keep stakeholders informed of the progress and any changes or challenges that may arise. Open and transparent communication will help build trust and ensure a smooth transition to the new core processor system.

During-conversion Checklist

During the core processor conversion, it's important to stay organized and follow a checklist to avoid any disruptions or issues. Here are some tasks to include in your during-conversion checklist:

1. Data Migration

Transfer all necessary data from the old system to the new core processor. Ensure data integrity and accuracy throughout the migration process. This includes ensuring that all member information, transaction histories, and account details are successfully transferred to the new system.

It's important to carefully map out the data migration process to ensure that no information is lost or corrupted during the transition.

2. System Configuration

Configure the new core processor system according to your credit union's specific requirements. Customize settings, workflows, and user permissions to align with your credit union's unique processes and needs.

This may involve setting up different user roles and permissions, establishing workflows for various tasks, and integrating any third-party software or applications that are necessary for your credit union's operations.

3. Testing and Validation

Perform extensive testing to verify the functionality and performance of the new system. This involves conducting various tests to ensure that all features and functionalities are working as intended. Identify and resolve any issues or bugs that may arise by testing different scenarios, such as:

• Opening new accounts
• Processing transactions
• Generating reports

It's important to involve a cross-functional team in the testing process to get a comprehensive understanding of the system's performance.

4. Communication and Support

Maintain open lines of communication with your core processor provider. Throughout the conversion process, it's important to keep them informed about any challenges or concerns that may arise.

Regularly communicate with your provider to address any technical issues, clarify any ambiguities, or seek guidance on best practices. This will help ensure a smooth conversion and minimize any potential disruptions.

5. Member Communication

Keep your credit union members informed about the conversion progress. It's essential to provide regular updates, answer their questions, and address any concerns they may have.

• Communicate the benefits and improvements that the new core processor system will bring to their banking experience.
• Provide clear instructions on any changes they may need to make, such as updating login credentials or accessing new features. 

Open and transparent communication with your members will help build trust and ensure a smooth transition.

6. Continuity of Operations

Ensure that critical business operations continue without interruption during the conversion process. Implement backup plans and contingency measures to minimize any potential disruptions. This may involve temporarily adjusting work processes or utilizing alternative systems or resources to ensure that essential services, such as transaction processing and member support, can still be provided.

It's important to have a detailed plan in place to address any unexpected challenges that may arise and to ensure that your credit union's operations continue seamlessly.

Post-conversion Checklist

Once the core processor conversion is complete, there are still several important tasks to address. Here's a post-conversion checklist to guide you:

1. System Validation

After the core conversion, it is crucial to validate the system to ensure a seamless transition. This involves carefully checking that all data from the old system has been accurately transferred to the new core processor. 

During the system validation process, perform various tests to ensure that member information, transaction histories, and account details are successfully migrated and accessible in the new system. This includes testing the accuracy of:

• Account balances
• Transaction records
• Member profiles

Additionally, check that all integrations are functioning properly so you can identify any issues or discrepancies that may have arisen during the conversion process.

2. Member Support

During the post-conversion phase, it is crucial to provide continuous support to your credit union members as they familiarize themselves with the new core processor system. Transitioning to a new system can be challenging for members, so it is important to offer resources like these:

• Training resources
• FAQs
• Support team

By offering ongoing support and resources, you can help members feel confident and comfortable using the new core processor system, ultimately enhancing their banking experience.

3. Performance Monitoring

Once the core processor conversion is complete, it is important to consistently monitor the performance of the new system. This allows you to identify any areas of improvement or potential issues that may arise. Do this by regularly assessing:

• Key performance indicators: check system response time, transaction processing speed, and overall system stability. Compare these metrics to the performance benchmarks established during the planning phase of the conversion.
• Feedback: gather feedback from employees and members regarding their experience with the new system. This can be done through surveys or interviews to gain valuable insights into their satisfaction and identify any pain points or areas for improvement. 

Actively monitoring the performance of the new core processor system will ensure that it is operating optimally and meeting the needs of your credit union and its members.

A successful credit union is one that steadily grows based on good member acquisition and retention practices. Not only will achieving this help your credit union expand it will also help weather economic downturns by having a strongly-developed membership base that supports your services.

Maneuvering into such a robust position does however require a flexible strategy roadmap that doesn't bog your organization down into rigid details. Here are three strategies for growth that focus on exactly that.

1. Advertise Aggressively

2024 can be a good year for credit union growth. As the Federal Reserve continues to push interest rates upward in the middle of an ongoing recession, many small businesses and financially conservative individuals will be more inclined to invest their money with credit unions. CUs are likely to be perceived as a safe, relatively local, and accessible alternative to large banking institutions and distant Fintech providers.

However, to take advantage of this, your credit union will need to be aggressive about advertising itself as a haven for members' assets. During recessions, this can be a winning strategy:

Analysts at McCraw-Hill Research looked deep into recession advertising data for numerous industries during the recession of 1981-1982 and later the Great Recession of 2008. What they found was that in both cases, businesses across multiple industries including banking and credit actually increased their sales enormously compared to those that didn't advertise during these same recessionary periods.

In the case of companies advertising during the recession of the 1980's, their sales of products and services rose by a whopping average of 256% over those that had curtailed advertising spending. Similar differences applied during the 2008 recession.

In other words, while you should advertise your credit union's services during strong economic times, you must advertise them during downturns. This is especially important for showing potential and existing members that you are a safe, accessible option for their assets.

2. Embrace Fintech

It's easy for potential members to perceive credit unions as banking and credit organizations that lag behind the wider, newer Fintech landscape emerging today. Change this perception by making sure members know about the new services being offered. Numerous tools for tech transformation in your credit union are already available.

What's more, numerous studies have shown, members love and prefer to conduct as much of their banking as possible remotely. Studies have shown that as many as 89% of all banking users conduct as many of their transactions as they can via mobile bank apps. Furthermore, they tend to be less than impressed with the quality of many mobile banking services offered by major banks.

You can let these factors work to your advantage by enabling more and better mobile banking for your members. You need to then also ensure that it delivers on best practices and high usability in ways that make them take notice.

Another potential aspect of the above is to build relationships with other Fintech providers and platforms that your members might already know. You can use these to further streamline the quality of the services you yourself offer.

3. Incentivize Your Employees

No growth strategy will work well if the employees managing it at all levels aren't also motivated. Your advertising and Fintech efforts, or any other growth strategy will depend on you leveraging staff to build a brand name that members can trust for quality and reliable service. This means ensuring that your employees handle member services well and that they enjoy doing so with minimal stress.

Essentially, you want both credit union members and employees to feel as if they belong to something valuable that they can both benefit from and trust in specific, quantifiable ways.

According to one recent study, credit union membership growth occurred at a rate of 8.1% in Q1 2021, with a collective net worth increasing by 13.9%. Much of this began due to pent-up demand. For it to continue, credit unions need to act now—and technology like everything outlined above will be one method as to how they do it. 

Bringing These Strategies to Your Credit Union

The strategies outlined will have a great impact on your credit union, helping to expand and bring the services your members desire so they continue coming back for more.

Your credit union has worked hard over the years to earn a reputation as an easier, faster, and more convenient alternative to cold, impersonal alternatives. But these days, your members don't just want a straightforward experience; they want a fully frictionless one. They're looking for a way to handle their finances when they want, where they want, however they want, and they're looking for you to give it to them without even a hint of an obstacle in sight.

Thankfully, this isn't necessarily as difficult as it may sound. As you work towards creating the frictionless experience that your credit union members crave, there are a few key technologies that can help make your members happy and grow your membership.

Smart eForms

Rather than making a member come into a credit union branch to sign reams of paperwork every time they want a new product or service, smart eForms can accomplish the same thing in an easier, faster way. Here, smart fields, autofill capabilities, and even predictive typing all come together to allow members to securely sign any document they need right from their mobile device. It's a member experience dream and if your credit union doesn't already offer it, now would be the time to start.

Remote Deposit

This has practically become a given with financial institutions, but providing members a way to quickly and easily deposit a check from their mobile device is a great step towards reducing friction. Going to the local branch can feel like a hassle. Cut out the trip and make it simple to deposit and pay from anywhere. Depending on your processor, you may even get the benefit of advanced image detection technology, which can cross-check against other deposited items to ensure you’re not accepting the same check twice.

In-App Bill Payments

When it comes to paying monthly bills, members typically have to visit the website of each service provider to make their payments. It requires different logins and passwords for each, as well. This is friction! With the right integrations to major bill pay providers, your members can have access to all accounts using a single mobile app. 

Automatic Billing Updates

Another great feature tied to bill pay and reducing friction are automatic billing updates. If a member has a stolen or lost card, this service updates card-on-file data with merchants in real time, automatically. No need to sign in to each account and update payment. Your CU can handle that instantly. Not only does this save time and effort for the member, but it also prevents a missed payment and late fees. 

Peer-to-Peer (P2P) Payments

If you really want to reduce friction, you need to enable your members to pay from wherever they are—physically and digitally. And peer-to-peer payments do that. One study estimates P2P mobile transactions will grow 27.9% over 2019, to hit $396.48 billion in 2020. That's a lot of payments. Using a core provider that can build your CU a mobile app with open API architecture to work together with merchants will help show your members that you care about their experience and making it as frictionless as possible.

Live Assistance

This one may seem straightforward, but it actually offers a number of distinct advantages for your credit unions. First, when your members want help, they want it now—they don't care if it's at 3:00 am or 3:00 pm. Offering live assistance through a mobile app or via your website provides someone with the personalized services they need no matter when they need it.

But going deeper than that, this can also be a great way to better map your member's ongoing journey. Over time, you'll have the data you need to learn about common issues people are having or identify some of the touchpoints people have with your credit union that you may not have even known about. All this helps you understand what members expect, so you can improve the experience in a meaningful way.

Digital Card Loading

Finally, we arrive at the concept of digital card loading—something that has become the cornerstone of instant issuance programs for many credit unions of all sizes.

With digital card loading, your credit union can instantly provision digital payment credentials directly to your members, right from any mobile application or other platform that you're already using. That digital card gets added directly to the member's digital wallet, and they can begin using it right away.

Your credit union can get solutions out to members faster, and they don't have to wait to take advantage of the services they're already excited about. Everybody wins and with that, a true frictionless experience is born.

As a credit union, you want to offer your members the highest level of financial services, including seamless onboarding. Although you might already have an efficient digital banking system, it won't matter unless you attract and retain new members. To help your credit union grow its membership, let's explore several ways your credit union can go from average to excellent through smooth member onboarding.

The Need for Onboarding Improvement in Credit Unions

Only 21% of U.S. credit union members said opening an account was difficult. Still, if your CU wants to remain competitive, you'll need to make further improvements. A quicker, simpler onboarding process will prevent prospects from deserting their applications and make a great first impression on new members. So what exactly can you do to streamline member onboarding and boost your ROI? Take a look at the following tips.

Compile Documents Using Automation

New member onboarding requires due diligence, which usually ends in credit unions asking for additional documents as prospective members open an account. This can be a timely task that can be streamlined with an efficient automated digital workflow. These workflows can examine a member's profile and alert CU employees when there is a need for a specific document.

Provide Valuable Human Interaction

Don't allow automation technology to replace service from a friendly representative. Although AI and machine learning surely help make lives easier, members will still appreciate one-on-one assistance over the phone. Also, ensure that your software lets your CU staff and members see their applications and work on them together simultaneously to problem-solve more effectively. And after people become members, your staff will actually have the time to talk to them about special discounts and other sought-after services to nurture the relationship.

Utilize the Latest Technology

Contrary to popular belief, technology isn't the enemy of a customized CU member experience. In fact, the most successful credit unions adapt to the evolving digital world and invest in software that makes opening an account faster and easier for their members. Dedicating a single platform to onboarding will simplify application submission and the collection of eSignatures, and result in better member satisfaction.

Allow for Immediate Identity Authentication

Make sure that your members can easily use their phones to verify their identity when needed, no matter where they are located. An easy way to do this is to send a text message to the member with a link that uses photo-matching software. Once they click the link, they will enter a virtual session where they will upload a picture of themselves and their ID. This verification process can stop fraud while also offering a convenient experience for the member.

Implement Conditional Logic

Every CU has specific requirements for approving new members, such as location and other affiliations. That being said, credit unions should ensure that their initial member form incorporates automated triggers that cause specific fields to appear or disappear. Applying conditional logic to new member applications can help you decide applicant eligibility quicker, saving time for both credit union staff and applicants.

According to one recent study, the number of credit union members in the United States has grown steadily since 2013—hitting an incredible 135.3 million people by the end of 2022. But while that may be true, it can also feel difficult for your own credit union to grow—especially with a Field of Membership (FOM).

It is crucial to have a clear understanding of your credit union's field of membership type as it will require specialized technology to effectively cater to your members. There are 3:

1. Occupational: This is when all members work for the same employeror are in the same line of work.
2. Associational: This describes a situation where members belong to a particular group—in this case, a credit union.
3. Community: This is when all members live, work, or generally operate in the same geographic area.

Why an FOM is Actually an Advantage

One of the key advantages of having an FOM is the ability to be highly relevant and tailored to your members' needs. An FOM can help you identify who you serve well, what those members need, and how to best use your credit union's resources to build trust, loyalty, and value. An FOM also allows you to be extremely efficient in doing all of the above.

10 Ideas for Membership Growth Within the FOM

1) Community Engagement

Participate in local events and take advantage of sponsorship opportunities to get your credit union's name out there. This is an efficient marketing effort, because it markets to your FOM without marketing to people who don't qualify for membership. 

2) Target Social Media Ads

Specifically target the people who are most likely to become your ideal member in the first place based on geography, income bracket, etc.

3) Referral Programs

Create a referral program to reward satisfied members when they turn their friends and family members onto your credit union.

4) Personalization

Personalization is important to help potential members find exactly what they need. Offering irrelevant products and services will not show prospects the value your credit union can offer to them. 

Use personalization in email marketing and cross-selling to attract new members in your FOM. Take your marketing to the next level with FLEX's marketing integration. 

5) Customized Financial Solutions

Begin by identifying your target audience and tailor your solutions to address their specific and distinctive needs and challenges. Taking their past, present, and future into consideration, build a customized financial solution that works best for them. 

Take advantage of our relationship pricing eGuide to attract new members and expand your credit union's reach.

6) Strategic Alliances

Make a list of other organizations that your target market likes and work to create a mutually beneficial relationship for all involved. 

7) Mobile Banking App

Over 75% of Americans prefer mobile banking over in-person visits. Not only is mobile banking convenient, but this is one of those services that many assume "small" credit unions don't have the ability to offer.

Check out our mobile banking app to attract new members. 

8) Online Account Opening

If you want people to join your credit union, you have to make it as easy as possible for them to do so. Online account opening can reduce friction and application abandonment.

Read more about our member onboarding software. 

 9) Member Feedback

Soliciting member feedback through things like surveys is a great way to learn about what people like, what they don't, and what they want to see more of.

10) Chatbot

A chatbot can be a convenient way to offer members support 24/7/365. It can live on your website or in your mobile app and will always be available to answer questions, perform account functions and more.

When people become members of their local credit union, they often find a level of care and attention to detail that they can't get anywhere else. But part of the reason why prospective members sometimes don't think to join your credit union in the first place is not because they don't want this level of care—it's because they don't fully understand credit unions.

For someone totally unfamiliar with the credit union difference, it can be easy to look at your credit union as "the same thing as a big bank, only smaller." Because of that, there are many myths that stop potential members from taking that next step. By focusing your marketing on these myths and addressing them in the right way, you can remove one of those major barriers and welcome new members into your credit union.

Here are the myths that should guide your marketing messages:

Myth #1: Credit Unions are Inconvenient

Many prospective members incorrectly assume that your credit union is only "useful" if you're only planning on staying within a precise geographic area. The theory goes that if you travel outside of the city or state, for example, you're cut off from your finances and out of luck.

Make sure to highlight your 24/7/365 access to digital services from anywhere, at any time, no exceptions.

Myth #2: Credit Unions Just Aren't Regulated Like Major Banks

Here, the thinking is that because credit unions are smaller and community driven, they're somehow "less regulated" than their major counterparts. This couldn't be more false. In fact, they're held to all the same standards as those big banks.

Make sure to advertise that your credit union is just as professional as an established bank. This will help prospects feel more comfortable exploring your credit union. 

Myth #3: It's Too Hard to Switch From a Big Bank to a Credit Union

Not that changing financial institutions is the most enjoyable process under any circumstance, but this is another myth that unfortunately prevails. It's particularly common among people who have only been with big banks for their entire lives.

Because most credit unions offer all the same services as those big banks, from direct deposit to FedNow and more, switching to a credit union is a very straightforward process.

Show potential members that switching to your credit union would be a breeze.

Myth #4: You Can't Participate in a Reward Programs Like You Can With a Bank

Many people are used to reward programs that are tied with their credit cards, checking accounts, and savings accounts at big banks. The good news is that most credit unions not only offer all the same perks for being a loyal member, but you also save a lot of money on fees at the same time.

One of the most important features when looking for a financial institution is rewards and low fees. Show potential members that you can deliver even more on their most desired features. 

Myth #5: Credit Unions Don't Have Good Technology

In fact, credit unions are regularly on the cutting edge of tech-based innovations and digital services, with digital wallet integrations being a chief example. So not only do members get the benefit of modern technology, but they still get that personalized experience the big banks can't offer.

In order to better market to potential members, advertise your cutting-edge features like early pay, instant payments, and same-day ACH. 

With the emergence of financial services industry disrupters — FinTechs— the battle for the hearts, minds, and wallets of credit union members is fiercer than ever. Unlike these firms, however, your credit union's core value statement isn't necessarily centered around trendy technology. But you can leverage state-of-the-art solutions to drive membership growth, and do so in a way aligned with your core value proposition. Here are three ways you can do just that.

Robust Cybersecurity Can Help Grow Membership Across All Generations

The COVID-19 pandemic created the perfect storm for increased fraud, with the Consumer Financial Protection Bureau reporting a 54% increase in complaints in 2020 compared to 2019. While it's still focus COVID-related fraud today, the cause may be entirely different tomorrow. No matter the case, you can differentiate your credit union with a proactive approach to fraud prevention and cybersecurity.

In fact, implementing a robust cybersecurity program can be one of the keys that unlock member growth across all generations. Although each generation has unique banking concerns, security ranked as the number one concern across all cohorts according to an Adobe Analytics study:

1. 32% of Generation Z ranked security as number 1
2. 30% of Millennials ranked security as number 1
3. 36% of Generation X ranked security as number 1
4. 30% of Baby Boomers ranked security as number 1

Leveraging a cybersecurity-first approach can be one of the keys to unlocking membership growth in 2022 and beyond.

Taking a Data-Driven Approach to Membership Growth

Arguably, your most valuable asset is the treasure trove of member insights and data you house. However, large volumes of this data are never put to use in the credit union industry. Based on 2018 research by Best Innovation Group and OnApproach, 45% of credit unions lacked a data strategy. And credit unions with a strategy reported it would take anywhere from three to five years to activate.

Fortunately, there is room to grow. Starting out with clean data can empower your institution with insights to alter this narrative. It's more important than ever for credit unions to leverage internal and external data to inform strategic decisions while driving loyalty and growth. Simultaneously, credit unions must leverage this data to create unique, highly-personalized experiences.

Taking a Personalized Approach to Membership Growth

Once you leverage the digital assets at your disposal with the right systems, you can begin to create targeted, personalized member journeys. How important are personalized journeys? According to a report from Hubspot, 44% of consumers skip search engines entirely. Instead, they enter their needs on Amazon for highly-personalized, relevant, and speedy results—made possible by demographic segmentation and machine learning.

Following suit, credit unions must capture the needs of existing members through personalized member journeys. Utilizing them can open the door to more opportunities for upselling and cross-selling members at inflection points. Inflection points are when your members are looking to purchase a new vehicle, move into a new home, or engage in another life event. During these inflection points, your members will be on the lookout for institutions that will offer them the right services and products at the right time. Will your credit union be up to the task?

Unlock Membership Growth

Simply put, FinTechs have transformed the financial services landscape. And for credit unions to thrive in this environment, technology must be successfully integrated into your core value positioning.

Credit unions have the incredible opportunity to transform their lending practices by embracing the innovative strategies of lending 2.0. This next-generation approach to lending goes beyond traditional methods, incorporating cutting-edge technologies and data-driven decision-making to streamline processes, assess risks more accurately, and ultimately enhance the overall borrower experience.

By adopting lending 2.0 strategies, credit unions can not only stay ahead in the ever-evolving financial landscape but also better cater to the changing needs of their borrowers.

What is Lending 2.0?

Lending 2.0 refers to the next generation of lending practices and technologies that have evolved beyond traditional lending models. It encompasses innovative approaches to lending that leverage advanced technology, data analytics, and member-centric strategies to streamline the lending process, improve risk assessment, and enhance member experience.

By adopting lending 2.0 strategies, your credit union can stay competitive in the evolving financial landscape and meet the changing needs of borrowers.

Key Aspects of Lending 2.0

Data-driven Decision Making

Data-driven decision-making is a key aspect of lending 2.0. Credit unions can harness the power of data to make informed lending decisions and mitigate risks.

Through the analysis of historical loan data and borrower information, your credit union can identify patterns and trends that help in assessing creditworthiness and predicting repayment capabilities. This allows for more accurate loan pricing and personalized loan offers.

Data-driven decision-making also enables your credit union to continuously improve its lending practices by identifying areas for optimization and reducing manual processes.

Automation and Digitization

Automation and digitization are crucial components of lending 2.0. By automating various stages of the lending process, credit unions can reduce manual errors, improve efficiency, and enhance the overall borrower experience.

With automation, tasks such as loan application processing, document verification, and compliance checks can be streamlined. This not only saves time but also reduces the risk of errors and ensures regulatory compliance.

Furthermore, digitization enables credit unions to offer convenient self-service options to borrowers, such as online loan applications, electronic document signing, and real-time loan status updates. This enhances the speed and convenience of the lending process.

Personalization

Personalization is a key focus of lending 2.0. Credit unions can leverage data and technology to offer personalized loan products and services tailored to the specific needs and preferences of individual borrowers.

By analyzing borrower data, credit unions can understand their financial goals, income levels, and risk tolerance. This allows for the creation of customized loan offers with flexible terms, competitive interest rates, and suitable repayment options.

Personalization not only improves the borrower experience but also increases the likelihood of loan approval and member satisfaction.

Risk Mitigation

Risk mitigation is an essential aspect of lending 2.0. Credit unions can utilize advanced risk assessment techniques and predictive models to minimize the risk of loan defaults and delinquencies.

By analyzing borrower data, credit unions can identify potential risks and assess the creditworthiness of applicants more accurately. This helps in setting appropriate loan terms, interest rates, and loan amounts.

Additionally, credit unions can implement proactive monitoring systems to identify early warning signs of financial distress and take necessary actions to mitigate risks.

By effectively managing risks, credit unions can maintain a healthy loan portfolio and ensure the long-term sustainability of their lending operations.

Enhanced Member Experience

Enhancing the member experience is a primary goal of lending 2.0. Credit unions can leverage technology to offer a seamless and user-friendly lending process that meets the expectations of modern borrowers.

By providing online loan applications, instant loan approvals, and 24/7 access to loan information, credit unions can offer convenience and transparency to borrowers. Moreover, personalized loan offers and quick disbursements contribute to a positive member experience.

Additionally, credit unions can leverage digital channels and communication tools to provide proactive member support, address queries, and offer financial guidance throughout the loan journey. By prioritizing member experience, credit unions can build trust, loyalty, and long-term relationships with borrowers.

As loan balances continue to rise, credit unions are searching for strategies to increase direct lending that will grow their credit union by boosting profits and setting the stage for cross-sales.

Organic Loan Success is Hard to Achieve

The consumer loan market is a dog-eat-dog arena, where credit unions are in a constant battle for the upper hand. The main obstacle is the fact that many credit unions are targeting the same people with identical product offerings, pricing models, advertising approaches, criteria, procedures, and delivery methods.

There are also many elements that influence organic loan growth, including:

• The economy's current condition
• Demographics of members (how many members are old enough to borrow, financial standing, attitudes about debt and loans, and ability to handle debt)
• How much risk a credit union chooses to handle
• How easily a CU can earn market share (through successful marketing techniques, the evolution of products and sales practices, and multiple distribution outlets)

To increase your organic loans in such an aggressively competitive space, you have to stand out from the crowd. Let's take a look at how you can increase direct lending.

Dive Deeper Into Data

Every credit union must study its target audience, and the best way to predict borrowing behavior is to examine data. Data analytics can help CUs proactively cut costs, view economic trends, generate new revenue, and manage risk, all while learning valuable information about members. For example, data can show you when one of your members suddenly withdrawals cash from their retirement or savings account. From here, you can take the necessary steps to find out why this happened.

Find a Niche Need

Look into the community you serve for opportunities. And don't underestimate the value of serving the underserved (undocumented immigrants, self-employed, etc.). Some examples include offering a small loan for immigrants applying for citizenship or a loan tailored to gig workers paired with expense management tools. In this age, credit unions must offer more than just a seamless, convenient digital platform; they need to offer empathy and services/products that improve members' financial standing. Ask yourself who you are serving and the reason why, and then design your loan strategy around that.

Make It Personal

Loan growth depends on your ability to recognize and meet your members' needs. After learning more about your members through data analytics, you can create personalized experiences. This personalization will build trust and result in more opportunities to cross-sell at different inflection points. Are they a first-time homebuyer? Or maybe they're looking to purchase a new vehicle. No matter the situation, you need to be prepared to be a one-stop-shop for all the products and services they need.

Dare to Be Different

Today's CUs should utilize audience data to the fullest, find uncharted market space, and personalize member experiences to stay competitive. Leveraging technology and data can help you find your niche and design unique products or services that make an impact on your community and beyond. Efficient core software may be the technology that stands between you and an influx in organic loans.

In a general sense, automated loan decisioning is a process that allows credit unions to leverage innovative technology to speed up the loan origination process. But to truly understand why automated loan decisioning is something that so many are embracing, you must understand both the short- and long-term benefits that this technology creates.

The Short-Term Benefits of Automated Loan Decisioning

Based on how the technology itself is designed to work, it should come as no surprise that the number one short-term benefit of automated loan decisioning can be summed up in a single word:

Speed

For credit union underwriters, they can gain a better understanding of specific members and their financial situation far faster than ever, allowing them to increase approvals while accomplishing more with fewer resources. They can accomplish the same tasks they always have in a fraction.

For members, this also helps to make sure they're getting answers to their important loan-related questions as quickly as possible. They no longer have to wait weeks to find out if they'll get the funds for that important purchase they want to make. They'll know in days, if not in far less time. That increases their satisfaction, which instantly increases their loyalty toward your credit union as well.

Automated loan decisioning also allows credit unions to increase or decrease loan approvals as needed. This allows the organization's various loan-related products to better align with their business strategy and market trends.

A Smoother Application Process

In a more traditional financial environment, applying for a loan would, at the very least, require someone to go into a branch. They would have to spend time filling out the information, collecting relevant paperwork, and more—all before the loan can even begin to get processed.

With automated loan decisioning, on the other hand, everything can be completed right from a member's web browser without even thinking about getting in the car and driving to a branch.

Paperwork That Finally Ends

Speaking of documentation, another reason why members want and need automated loan decisioning has to do with the ease at which essential information can be provided. In a paper-based, manual decisioning process, the amount of required paperwork to even begin applying for a loan can seem endless to most members.

They need to fill out forms, get documents attested, make copies, and more. They have to go through quite a paper-collecting process, and there's still no guarantee that their loan application will even get approved.

Thanks to the power of digital lending, all of this changes. Documents can be provided quickly and easily, allowing the process to speed along far faster than most people are used to.

Massive Time Savings

This segues into the most important benefit of all: the amount of time someone can expect to save as a direct result of automated loan decisioning.

The faster (and easier) it is to submit the application and the required documentation, the sooner the decisioning process can begin. Rather than waiting weeks or even months for someone to manually review everything that has been submitted to make a determination, the whole process can be completed in a matter of hours.

Members get access to the funds they need (or at least the decision they're after) in a fraction of the time it would normally take—creating the best possible experience all the while.

The Long-Term Benefits of Automated Loan Decisioning

Automated loan decisioning offers benefits that will continue to pay dividends for years to come.

• Increased consistency: When everything is still being handled manually, there is always a bit of subjectivity to the process. Yes, everyone should be following the same basic credit union policy—but one underwriter might make a decision that another would not with the same information. Automation levels the playing field by creating objectivity.
• Increased loan closure: More effective underwriting decisions lead to faster loan closures, an increase in the total number of closed loans, and more—all of which help a credit union effectively scale.
• Increased lending upsell: Based on an applicant's credit risk, a credit union can automatically offer them related products that fit both their interest and risk profile. 
• Increased risk analysis: Built-in analytics offer deeper insights into credit union membership than ever before. These insights provide meaningful and relevant data that helps identify which other parts of the lending operation can utilize automation as well.

In the end, these are just a few of the many benefits that automated loan decisioning brings with it to credit unions and their members. Still concerned?

Challenges in Automated Lending

The popularity of automated lending demands innovative solutions to overcome these obstacles. Keep reading to uncover these challenges and how to solve them in your credit union.

Maintaining High Data Quality

Automated lending relies heavily on data, which needs to be high quality. If data does not maintain a high standard, there can be adverse consequences. 

If the quality of data lowers or your lending software does not collect the right type of data, your software could be making decisions based off of the wrong information, leading to increased risk.

In order to maintain quality in your data:

• Data Cleaning and Preprocessing: Implement rigorous data cleaning and preprocessing techniques to address issues such as missing values, outliers, duplicates, and inconsistencies. This may involve techniques such as data validation, normalization, and standardization.
• Data Quality Assessment: Regularly assess the quality of the data using metrics such as accuracy, completeness, consistency, and timeliness. Implement data quality checks and validation procedures to identify and correct errors or discrepancies.

By ensuring the consistent high quality of your data, your credit union's automated lending platform can serve as a trustworthy and secure solution for boosting lending revenue while reducing operational expenses.

Flexibility for Extenuating Circumstances

Automated lending processes often minimize human intervention in decision-making, relying instead on algorithms and data-driven models. While this improves efficiency and reduces bias, it also means there's less opportunity for human judgment to consider individual circumstances or exceptions.

To address these limitations and provide more flexibility for extenuating circumstances, you may need to:

• Incorporate Human Oversight: Utilize manual intervention in the lending process to review cases that fall outside automated decision-making parameters.
• Add Advanced Settings: Develop more sophisticated algorithms that can adapt to a wider range of scenarios and consider contextual factors beyond traditional credit metrics.
• Include Open-Ended Fields: Implement mechanisms for borrowers to provide additional information or explanations for their circumstances, allowing for more nuanced decision-making.

Understanding extenuating circumstances is crucial for your credit union in the lending process as it allows for tailored solutions to accommodate members facing unforeseen challenges, fostering trust and loyalty. Flexibility ensures equitable access to financial resources, supporting members through diverse situations.

Explanation for Borrowers in Automated Lending Processes

In automated lending, borrowers often don't understand the reason behind the decision due to the complex algorithms used in decision-making. Additionally, standardized processes and limited human interaction further contribute to this issue. 

Ensuring borrower comprehension is crucial in the lending process. While automated lending may seem like a black box to members, your credit union can take steps to make them feel supported and informed.

Here are some ways to increase transparency in automated lending:

• Provide Explanations: Provide clear and concise explanations of the factors influencing lending decisions, including the criteria used, the importance of each factor, and how they impact the final decision.
• Improve Communication Channels: Establish channels for borrowers to ask questions, seek clarification, and receive personalized guidance throughout the lending process.
• Simplify Decision-Making Processes: Strive to make lending decisions more understandable and intuitive for borrowers by simplifying algorithms, providing plain-language explanations, and offering educational resources.

Ensuring clarity and simplicity in loan processes offers significant benefits for your credit union. By clearly explaining the criteria and reasons behind lending decisions, you foster trust among your members. This trust leads to improved customer experiences and reinforces accountability within your organization, ensuring compliance with fair and ethical practices.

There are many ways credit unions can choose to operate their lending process, however, not all methods are created equal. A centralized lending strategy can provide a clear and concise plan for lending that eliminates problems associated with other methods. With other lending practices, there are opportunities for error, not to mention the additional cost that stems from inefficiencies and training. Centralized lending helps to diminish these issues while maximizing employee skills as well as their time. 

What is Centralized Lending?

Centralized lending involves borrowing and lending funds through a central authority, typically a bank or financial institution. In this model, borrowers apply for loans directly with the central entity, which assesses creditworthiness, sets interest rates, and manages the lending process.

This traditional approach provides oversight and control but relies on a central intermediary. Centralized lending contrasts with decentralized models, like blockchain-based platforms, where peer-to-peer lending occurs without intermediaries. 

Benefits of Centralized Lending

1. Increased Efficiency

Adopting a centralized lending process can dramatically increase efficiency and productivity in the lending department. It allows employees to specialize in each of their areas of the complete lending process and become extremely knowledgeable at their portion of the work. Think of an assembly line. You don't expect one machine or employee to complete the entire process of constructing a product. It's more efficient to have each employee or machine specialize in one or two specific steps. 

Learn more about increasing efficiency through centralized lending here. 

2. Maximized Employee Skill Sets

Allowing each employee to master their portion of the lending process alleviates many employees from one of the most feared steps... selling. Few are cut out for and properly trained to be effective salespeople. It's important that credit unions identify or train who their best sales individuals are and place them where they can be successful.  

3. Decreased Training Expenses

Focusing employees on only one skill set also leads to decreased training costs for the credit union. Employees will not need to be highly trained on the steps of the lending process they don't perform, which decreases the number of training hours they’ll need to complete and drives down training expenses. This makes it easier to schedule training sessions and allows trainers to provide more one-on-one help as needed.

4. Increased Lending Profits

Less time spent on the lending process and increased efficiency means that profits should increase. Cutting the cost it takes to manage and produce a loan allows your credit union to increase your bottom line. This increases the overall value of a credit union’s lending process because loans are not only more cost-effective, but they’re also funded faster and with fewer errors. Many organizations are looking to cut expenses, but oftentimes there are drawbacks to doing so. With centralized lending, quality is not compromised for efficiency and savings.

5. Diminished Employee Errors

Another benefit of focusing employees on one skill is that the likelihood of errors decreases. As experts in their area, they will be able to do their job more easily, effectively, and at lower risk of making mistakes. In lending especially, errors can be extremely costly. High loan losses are devastating to any credit union and also cause disruptions for the member during the lending process.

6. Streamlined Process

The greatest benefit of centralized lending is being able to streamline the process. Having one senior manager at the helm of the lending department sharpens their control over the process. It allows the senior manager to oversee the day-to-day operations better and keep a close relationship with both employees and members. In centralized lending, focused employee roles—in conjunction with clearly defined steps in the lending process—lead to a repeatable and dependable lending solution.

7. Increased Data Analysis

Centralized lending systems enable credit unions to gather a wide range of data related to lending activities. This includes information about borrower demographics, credit histories, loan types, repayment patterns, and more. The centralized nature of the system ensures that data from various sources is consolidated in one accessible location.

8. Diversified Portfolio

Centralized lending enables credit unions to diversify their loan portfolio, offering a variety of products with different terms and rates. This strategic diversification helps mitigate risk and caters to the diverse financial needs of members, enhancing the credit union's ability to serve a broader range of member demographics effectively.

9. Enhanced Member Experience

An enhanced member experience is cultivated through centralized lending, where swift loan approvals, uniform processes, and efficient customer service converge. This streamlined approach not only reduces wait times but also ensures a seamless lending process. Members reap the benefits of expedited access to financial products, fostering satisfaction and trust. Ultimately, centralized lending plays a pivotal role in optimizing the overall experience for credit union members by prioritizing efficiency and responsiveness in their interactions with lending services.

10. Managed Risks

In the context of risk management, centralized lending empowers your credit unions to establish formidable strategies. By consolidating the evaluation of borrower creditworthiness, credit unions can make well-informed lending decisions. This centralized approach not only enhances the accuracy of risk assessments but also facilitates the implementation of proactive measures to mitigate the risk of loan defaults. Overall, centralized lending serves as a cornerstone for credit unions to strengthen their risk management practices, ensuring a more secure and sustainable lending portfolio.

Get All the Benefits of Centralized Lending

While there are many lending processes that are able to serve the needs of a credit union, centralized lending provides unmatched capabilities. Credit unions should be able to easily adopt centralized lending in their Loan Origination System (LOS). Assigning a new loan officer needs to be simple and notifications that you have been assigned a loan or application should be natively built in. Additionally, security or permission parameters will help appease auditors who question the centralized lending process and want to verify that one employee can’t approve and fund a loan. The bottom line is that technology should enhance, not hinder your adoption of a centralized lending process.

Undoubtedly, major shifts have occurred in the mortgage market over the past couple of years. An increase in competition and the transformation to digital mortgage lending solutions have had a huge effect on how credit unions and other institutions that depend on mortgage lending do business.

In the upcoming months and years, mortgage lending will play a major role in the health and growth of credit unions. Credit unions who want to attract new members and borrowers must be flexible and stay current with trends that are happening in the market. Let’s look at the National Credit Union Association’s best practices for real estate proposals, as well as some tips about mortgage lending solutions for your credit union. 

The National Credit Union Association’s (NCUA) real estate appraisal guidelines

The real estate appraisal process is a huge part of the mortgage lending process and is vital for both credit unions and borrowers. Your CU’s Board of Directors must make sure the credit union has an efficient and fair real estate appraisal evaluation program in place to monitor all lending functions. As outlined by the NCUA, credit unions must:

• Have an independent process separated from other parts of the lending process when valuing collateral.
• Have quality controls in place and regularly review the appraiser’s certifications, licenses and the work completed.
• Expand the “Minimum Appraisal Standards” and add their market value opinion as defined by the Agencies regulations.

These are just a few of the things your CU should consider during the real estate appraisal process. For the NCUA’s complete Appraisal and Evaluation Guidelines, click here.

Strategies to Win More Mortgage Borrowers

Mortgage lending has always played a big role in keeping credit unions healthy, and probably no more so than right now. As the market goes through changes, now is a good time for credit unions to experiment with new strategies to attract member growth. Listed below are a few tips to increase mortgage lending at your credit union:

• Offer local experience and expertise: Though fintech companies are making inroads into the mortgage lending space, most potential members and borrowers prefer a real experience with someone from the community. Online lenders cannot offer the same personal touch as you can at your credit union. Going the extra mile for borrowers to help them have their loans approved can really make the difference for members.
• Use your reputation: Credit unions should communicate what they’re doing in their communities, such as any awards, education programs, or special loans they are offering. You can show off your reputation by sharing articles and links about the CU on a website and linking to pertinent lending information that could be helpful to members of the community.
• Personal relationships: By becoming an expert on the mortgage lending process, your CU employees can build personal relationships with borrowers and help them throughout the process. Employees can counsel members on how to save money, which loan programs are right for them, and how to refinance their mortgage. The more helpful CU employees can be for their members, the more they can distinguish themselves from the crowd as an above-average lender.
• Be proactive: To attract new members, credit unions should consider hosting informative virtual conferences, local seminars, community outreach programs, or YouTube and Facebook live events on a topic like first-time homebuying. 

It’s also critical that credit unions make use of the best technologies to assist with digital mortgage lending.

However, to say that buying a home today is a challenge is an understatement. This is especially true if you're a first-time homebuyer. Thankfully, this is another one of those opportunities for credit unions to step up, be of service, and help support their members through the intricate process of home buying. All credit unions have to do is remember a few key things along the way:

Challenge #1: Many Believe Home Buying is Unaffordable

Many people, especially first-time homebuyers, believe that with current prices being what they are, owning a home is simply off the table for the foreseeable future. They may believe that it is impossible to come up with a down payment, for example.

In reality, credit unions can help educate them about the myriad of different options available. This includes FHA loans, VA loans, USDA loans, and any loans that your organization may offer on its own that could be an appropriate fit given the circumstances.

Challenge #2: People Don't Know Where to Begin the Process

Due to the inherent complexities of buying a home, many people enter into the situation overwhelmed from the start. They're not even sure where to begin their dream of homeownership.

This is another opportunity for credit unions to shine. You can offer access to educational resources like workshops, seminars, and even one-on-one counseling to help people understand buying a home, mortgages, and other complicated topics.

Challenge #3: The Process is Frustrating and Overwhelming

Even if someone does find a home they want, they often see the process itself as equal parts time-consuming and frustrating. Credit unions can help ease that burden by incorporating modern technology and digital services in a way that makes things faster and more efficient. Help homebuyers get their finances in order quickly to avoid potential roadblocks later on.

Based on the fact that you know people are interested in buying a home, you can also use it as an opportunity to cross-sell and up-sell related services that you know they will be able to take advantage of.

As a credit union, one of your goals should be to increase the number of auto loans you acquire each year. And if you've been monitoring the market, you've probably noticed the significant increase in car payments, which has doubled since 2021. As of 2022, auto-related loans account for nearly 10% of all consumer debt in the U.S., which means a wealth of opportunities to boost your credit union's ROI and help people save!

However, many consumers don't look to credit unions for help for a myriad of reasons. Perhaps they get caught up in their emotions when finding that new, shiny car or they think it's more convenient to make the purchase and get their loan with a dealership. Despite these examples, there's still hope for credit unions to boost their lending through an effective auto loan recapture strategy.

First Things First: Focus On Your Members

When your priority is auto loan growth, you should be incorporating a variety of marketing tactics such as sending out emails, making mentions, advertising service promotions on your website, and desktop banking along with sending push notifications through your mobile app. Doing so will keep your brand top of mind. Although getting a direct loan is often an easier and more cost-effective process than refinancing, sometimes you just don't get that luxury. So, the best thing you can do is put the focus on your own members. 

Why Credit Unions Should Use Auto Loan Recapture

Both recapture and refinancing involve the same approach; however, instead of targeting any borrower, auto loan recapture concentrates on a more specific group of your credit union's members. It might seem like a wider net would garner more people and more loans, but one of the keys to effective marketing is having a target audience. Simply sending out generic content to random people who aren't associated with your credit union will cost you much more and lead to poor results.

When you fixate on your members, you'll gain deeper relationships, a better auto loan portfolio, and of course, added profitability for your credit union. First and foremost, these people are your members. You already know and love them, and vice versa. Chances are, they're also connected with other financial institutions. Secondly, your team is bound to feel more of a responsibility to get the loans back because they were initially "stolen" by another lender. This is your chance to rally together and fight for members' savings, becoming the heroes who swoop in and save the day. In the end, your members' ultimate goal is to save money. And your credit union has competitive rates, excellent loan products, and quality service that can help them do exactly that.

Whether you're doing everything in-house, partnering with a vendor, or letting a vendor handle the job, every auto loan recapture program should incorporate the following steps:

1. Connect with Borrowers

Luckily, you won't have to look far for borrowers, as you'll be focusing on existing members who have already given you their information. Find ways to connect with them, whether it's through email, phone calls, or online via your website or mobile banking platform.

2. Deliver a Clear Message

Clarity is key in communication, and your members will appreciate a straightforward message. Tell them how you can help in a concise yet appealing way.

3. Ensure a Seamless Process

Make sure the transition is as quick and easy as possible and you'll be sure to impress your members. Doing so will prove that you understand their time is valuable (and it'll definitely help your staff out too).

It's also important that you highlight the low monthly payments you can offer and show members exactly how much they'll be saving when they finance with you.

According to one recent study, about 43.5 million people in the United States alone have student loans of some kind. While it's absolutely true that not every credit union offers student loan refinancing, the ones that do—and that do so strategically—often find great success.

Like all services you offer to members, there are pros and cons to embracing student loans. In order to make the most informed decision for your organization, it is crucial to have a deep understanding of the challenges and payoffs of offering student loans. 

The Student Loan Crisis

According to one recent study, Americans owe about $1.77 trillion worth of federal and private student loan debt as of 2023. The same source estimates that about 45.3 million people have federal student loans alone. On an individual level, the typical federal student loan debt stands at $37,718, with the overall average balance (including private loan debt) potentially reaching as high as $40,499.

People are stressed out about paying back their student loans for a wide range of different reasons. Some didn't get the jobs they'd dreamed of—the ones they went to school for in the first place—and are now questioning everything. They feel like they now have a degree that they just aren't sure what to do with. Others feel trapped by the sheer amount of money they must pay back. Regardless, people are anxious, to say the least.

The Pros of Offering Student Loan Services to Members

All told, there are a myriad of different, positive reasons why you would want to offer student loan-related services to your members. They include but are not limited to the following:

1. Increase Loyalty: It's a terrific opportunity to serve your membership in the way that only a credit union can. Student loans can be frustrating and overwhelming. This is a chance to ease those concerns and again prove your value in someone's life. Being in a position to not just answer them but to provide a solution is a great way to increase loyalty.
2. Reach a New Type of Member:It's the perfect chance to target a new group of members that you may not be making as much of an impact with as you'd like. There's no reason why you can't leverage student loans to help members use other services and develop a long-term relationship, too.
3. Expand Your Service Offering: Student loan refinancing products can be another way to diversify your credit union's overall portfolio. That way, your entire organization is more protected in terms of risk toleranceas it is unlikely a single economic event could negatively impact all products.
4. Get Involved: Student loans are an opportunity to ramp up community involvement. Even going beyond the products themselves, they can become a part of your organization's continued financial education initiative to empower both students and their family members in the areas that you serve.
5. New Marketing Opportunities: They can be another way to get your credit union's name out there. Similarly, offering student loans opens the door to starting a relationship with not only more members but also local schools and other educational institutions in the area. It's also another way to differentiate yourself from bigger banks since most of them stopped offering student loan-related products years ago.

The Cons of Student Loan Refinancing: Breaking Things Down

There are also a number of possible downsides to offering these services—or, at the very least, obstacles that will need to be overcome. These will include things like:

1. Not Everyone Needs Student Loan Help:Even though millions of people around the country have student loans, it's still likely to be a very small segment of your business. Most people need car loans or mortgages. Not everyone will need a student loan.
2. Growth Can Be Slow:Members may be slow to adopt, especially if they've already recently refinanced. You may not see the immediate impact to your bottom line that you were hoping for.
3. You Will Need to Educate Members:It will require a lot of outreach and education on your part. If members are in the market to refinance their student loans, it may not immediately occur to them that they should do it with you.
4. Minimal Revenue Increase:By their nature, student loans may not be a quick fix in terms of increasing revenue. They will certainly help, yes—but again, this is a situation where "slow and steady wins the race." For the best results, you'll want to think of it less as the centerpiece of your larger strategy and more as just one of many techniques that your credit union is offering.
5. Loan Volume Has Decreased:The FFEL federal student loan program ended in 2010. Because loan volumes have decreased since then and profits are no longer guaranteed, there is little incentive for credit unions to offer student loan refinancing.

Exploring Student Loan Options at Credit Unions: Is it Right for You?

Given the list of advantages and disadvantages outlined, decide if offering student loans makes sense for your organization. Many credit unions don't offer student loans. But if yours does, you're looking at yet another opportunity to grow your credit union and get more personal in terms of your member experience than ever, all while also differentiating yourself from your competitors.

Just know you can help members in many ways. By helping them to navigate student loans, you can again cement your reputation as an organization that offers personalized services and attention to detail that larger financial institutions simply cannot match. Here’s how your credit union can help:

Educate your members
One of the most important services that you offer to your credit union members is education. Offer classes, one-on-one meetings, and content that helps your members receive the education they need to pay off their student loans. 

Show members how to save money and make money-saving goals
This could involve helping them set up a savings account or taking advantage of some of the other digital solutions you have to offer. Talk to your members about investing, including matching, traditional, and Roth 401k accounts. 

Direct members to products and services that can help them manage their finances
Guide members to the right tools that will help them better plan for future financial needs. Consider how mobile banking, payment services, and early pay can alleviate your members’ financial burdens. 

Post digestible content on social media
Paying back student loans can be overwhelming. Being required to start paying student loans again after such a long forbearance period is going to be stressful for a lot of people. Create posts about where they can start to see how much they owe, how to set up a payment plan, and when their payments are going to end. This will empower members to take charge of their financial situation.

Connect members with a loan officer to go over options
If they're looking for financing options for a big upcoming purchase like a car, educate them on the pros and cons within the context of the monthly student loan payments that they're about to start making again. If they have a mortgage, find solutions to pay both the mortgage and their student loans. 

There are two other lending opportunities your credit union should consider to help with growth:

HELOCs

A HELOC is a great opportunity for credit union growth because of an increase in "tappable equity." This is the amount of equity that a member could theoretically borrow against using this type of loan, which has been increasing. Most lenders only allow people to tap into roughly 80% of their equity at a given time.

Some experts anticipate that HELOC originations will grow an enormous 24% by the end of 2023. This is due in part to the tappable equity that people can draw from, plus a desire of many to use home equity to pay down other debts they have that carry higher interest rates.

Personal Loans

Finally, we arrive at personal loans—a type that have a slow-but-steady growth rate that can absolutely become a part of your larger scalability strategy.

According to one recent study, total unsecured personal loan balances increased 26.3% in the first quarter of 2023 compared to just one year prior. The number of those loans also increased by 12.6%. Naturally, you should work to diversify the loan types you're using to trigger growth for your own credit union. Although other loan types may have faster growth rates, the stability of personal loans is what will serve you over the long-term.

For decades, credit unions have been seen as invaluable contributors to the communities they operate in. This is especially true when compared to the stale, impersonal experiences that are often offered to those that bank with larger financial institutions.

However, even in this space, things are growing more competitive all the time. People now have more choices than ever with regard to how they handle their important financial matters. Therefore, to remain competitive, credit unions need to fully embrace modern digital enhancements, and digital account opening is one of the many ways to do exactly that.

Anywhere, Anytime Account Opening

Allowing members and non-members to open accounts digitally lets them do so on their terms—anywhere, at any time. Rather than needing to take time out of their busy schedule to go into a physical branch, they can go right online and establish their account in a fraction of the time and effort.

Credit unions can even take this one step further by integrating the online account opening solution into their existing digital banking platform. That way, instead of a "one size fits all" process, each credit union can create its own flexible solution that is based on its strategy, risk tolerance, and other factors.

Harnessing Data to Your Advantage

Digital account opening can also be another opportunity to capture even more data that can be put to good use elsewhere across the credit union. Think about the volume of significant personal information that is required to open an account—particularly in terms of verifying someone's identity.

The more you know about this person, the more you're able to offer them related, personalized products and services. You can use that data to cross-sell and up-sell with far more effectiveness than ever before.

Bringing Together That Omnichannel Experience

Finally, don't forget that digital account opening capabilities can be an effective building block toward creating what should be any credit union's ultimate goal: a legitimate omnichannel experience in every sense of the term.

These days, people want as many options as possible in terms of how they handle the financial side of their lives. If they want to handle things in person, they will. If they want to use an app, they will. If they want to go to an ITM or do their banking via a web browser, they will—provided that all of these options are available, that is.

Digital account opening becomes another building block toward a seamless, omnichannel member experience. Members have indicated overwhelmingly that this is something they are passionate about and to remain competitive in an environment that is growing more crowded all the time, credit unions need to get passionate about it, too.

Optimizing Credit Union Digital Account Openings

You must create the most straightforward, frictionless account opening experience for your members. One that is inherently engaging and that is safe as well. One that stands head and shoulders above what everyone else is offering simply because it strives to be better than the bare minimum.

Be Objective

To get to this point, you must first start by objectively evaluating where you stand with any existing digital account opening capabilities that you are offering. What is currently working? What isn't as enjoyable as it could be? Which parts of the process take six steps that can be further condensed down to three? Is the interface easy to use? What are our members saying? The answers to questions like these will uncover significant opportunities for improvement right before your eyes.

Leverage Analytics

Another best practice involves resisting the urge to guess about what needs to be done and instead involves looking toward the data you already have. According to one recent study, the abandonment rate for online account opening is a massive 19%. Look to your data analytics to see which parts of the process people are using as jumping-off points. Find out why and what you must do to fix them.

Use Digital Authentication Whenever Possible

Finally, create a safe process and avoid fraud by putting digital authentication to good use. You need to obtain member data safely and accurately because this is one of the ways you build trust in a credit union/member relationship. Verify information such as bill payment history, income, and more to support these efforts. All the tools—and data—you need to accomplish this should be ones you already have.

Review Every Touchpoint

In the end, remember that if you are to create a truly exceptional experience for all credit union members, you must pay attention to every touchpoint they might have—not just the ones in the "beginning." Yes, it's true that you can only make one first impression. For some, that will come by way of opening a new digital account. For others, it may come elsewhere in the member onboarding process.

All of this is to say that while you need to pay attention to the quality of your digital account services like new account openings as individual components, they must also feed into the larger whole that is your credit union. Optimize today. Measure tomorrow. Use that insight to evaluate and apply what you learn to create experiences that are even better down the line. The more often you're able to do this, the farther you'll be able to get.

The recent explosion in popularity of digital payments can be attributed to many things—from a younger and more tech-savvy generation of consumers becoming more financially stable to the rise of eCommerce and beyond. Regardless, 2/3rds of adults worldwide now make or receive digital payments regularly—a trend that shows no signs of slowing.

But what are digital payments in a more precise sense and why are they something your credit union should explore? The answers to those questions are straightforward, but they do require you to keep a few key things in mind.

Digital Payment Options: Facts and Figures

The concept of digital payments in general can be further broken down into two related ideas: digital payment applications and digital wallets.

• A digital payment application would be something like Zelle, Venmo, or Cash App. Here, people can use their smart devices to send and receive money as needed via an application that is connected directly to their bank account.
• Digital wallets also exist on mobile devices, but they can contain so much more than just digital versions of your credit or debit card. They can also securely store information related to rewards programs that you might participate in, memberships that you have to brands, and even identification cards in certain situations.

They've also become overwhelmingly popular—to the point where one recent study estimates that the total transaction value in all digital payment segments will reach an enormous $9.4 trillion by the end of 2023. Additionally, that transaction value is expected to continue to grow at an annual rate of 11.8% between now and 2027.

Why Digital Payments Have Become So Important

The biggest reason why digital payments have become so critical to credit unions in particular can be summed up in a single word: choice.

Members flock to credit unions in the first place because they don't want to be told how to handle their financial lives. They want to be able to manage their accounts where they want, when they want, and on whatever device they want.

Digital payments are a natural extension of that, allowing people to stop carrying physical cards in favor of a secure device that has all the same flexibility that they were already carrying around with them in their pocket all day long.

The Major Benefits of Digital Payments

As an extension of that, it should come as no surprise that a significant advantage of digital payments for credit unions has to do with control. Members simply have more control over how their funds are being used. They can also enable granular restrictions via their mobile banking platform of choice.

Most people also love the added transparency and visibility that comes with digital payment options, too. For example, every transaction made with a digital card is tied to a separate identification number. Therefore, it becomes easy for both credit unions and members alike to track not just overall balances, but also individual transactions, in real-time. In addition to cutting down on the possibility of fraud, this makes investigating the rare instances of fraud that do occur easier and much more straightforward.

Believe it or not, this is just the tip of the iceberg in terms of the major benefits that digital payment flexibility brings with it.

The Various Types of Digital Payment Options

All told, there are a few different types of technologies that fall under the umbrella of digital payments for credit unions. They include ones like:

• Electronic payment systems: These are options that many are already familiar with, especially if they've ever sent an eCheck or wire transfer from their bank.
• Mobile payment apps, which include options like Venmo and Zelle.
• Mobile wallets, with Apple Pay and Samsung Pay being two of the top examples.
• Digital cards, which can be credit, debit, or even prepaid cards that are issued by a credit union or other financial institution.
• Contactless payments, which can include payments made using NFC (near field communication) technologies or even MST (magnetic security transmission).

How These Digital Solutions Work

While the technology behind these digital payment options may be sophisticated, the nuts and bolts of how they work are actually quite straightforward.

First, someone must have an established account with a financial institution—like they would if they were a member of a credit union that offered digital payments. Digital issuance is then used to make sure they have the necessary mobile capabilities. They also need to have sufficient funds in said account to cover whatever transaction they're trying to make.

If they're paying directly from a payment app that is linked to that account, the money is simply debited the same way it would be in a transaction with a credit or debit card. If they're using a mobile wallet, the information passes through what is essentially a secure third party like Apple Pay or Google Pay.

The digital transmission itself occurs through the underlying processing system. Provided that the merchant has a point-of-sale system that supports various digital payments, all relevant information is transmitted securely in seconds and all parties can go about their business.

The Power of Digital Cards From a Security Perspective

One of the major features of digital payment solutions—and one of their biggest benefits—has to do with the concept of security. A digital card, for example, allows for a process called tokenization. This replaces sensitive data (like a credit card or bank account number) with a unique identification symbol. All of the same information is retained, just in a far more secure manner.

So where someone might steal your physical wallet or credit card, the same cannot be true of a digital wallet or other solution thanks to this type of digital security technology. Digital payments also offer far superior methods of authentication and data encryption as well.

The overarching goal of any credit union is simple: it's your job to actively seek out and capitalize on new ways to enrich the member experience daily. People come to credit unions specifically because they're getting something more personal and enjoyable than they could find at a big bank. The moment you lose sight of that is the moment members start to look elsewhere for their financial service needs.

Over the last few years, digital wallets have become a big part of that quest for continuous improvement. They help benefit the member experience and streamline financial transactions in a number of ways that are worth exploring.

The 6 Benefits of Digital Wallets

1. The Art of the Mutually Beneficial Situation

A major reason why digital wallets benefit both credit unions and their members has to do with how they enable a practically unmatched level of personalization for both parties. Using a standard debit card for online purchases is convenient, yes—but there isn't much in the way of data attached to that transaction information. From the point of view of a credit union, they might know what someone purchased and when, but they don't have the ability to dive much deeper than that in terms of the larger behavior.

With digital wallets, on the other hand, they do. Not only is it more convenient than a debit card (it's more akin to something offered by Apple or even PayPal than a traditional financial institution), but it collects more data with each transaction as well. That insight can then be used to offer more personalized experiences to credit union members based not on general trends or hunches, but on actionable, accurate intelligence.

In addition to housing transaction data, a digital wallet can also give credit unions a peak into the preferences of members by way of chatbot interactions, for example. Artificial intelligence can be deployed to help make more accurate predictions about not only what services a member needs today, but the ones that might interest them tomorrow.

All of this is a great way for credit unions to learn more about their members than ever. In that way, digital wallets directly improve the organization's ability to establish a meaningful relationship with those people. This helps to further separate them from their larger competitors in the minds of the people they're trying to serve.

From the point of view of the members, they get exactly what they want: a more personalized experience that speaks to who they are rather than to a general audience. It's also one that becomes more convenient and pleasing to engage with every day.

It truly is a "win-win" situation in every sense of the term, and it's one that wouldn't have been possible—even as recently as a decade ago—were it not for the advancements that concepts like digital wallets and digital payments have brought with them.

2. Think About Your Unique Use Cases

Before you do anything pertaining to digital wallets, you first need to think about the use cases that your members would need them for. Digital wallets naturally make it easier to embrace solutions like the digital issuance of credit and debit cards, for example. This is a way to cut down on the normal wait time that someone has to deal with when a new card (or a replacement for one that was lost or stolen) is sent through the mail.

3. Navigate the Challenge of a Phased Approach to Digital Wallets

Expanding digital services options to members in a way that enables digital wallets won't be as easy as flipping a proverbial light switch. It requires a carefully phased approach that seamlessly introduces various solutions without disrupting the overall user experience. For instance, incorporating multiple digital options like Zelle necessitates meticulous planning to ensure a smooth and disruption-free experience.

4. Seize the Opportunity to Gain New Members

On the one hand, adding support for digital wallets is a great opportunity for credit unions to bring new members into the fold—those people who were looking for a more modern experience that you maybe didn't offer up to this point.

At the same time, it will also require a shift in your marketing to attract the attention of these people. You'll need to work to raise awareness. Make sure the digital wallet providers you're partnering with are able to offer support to that end.

5. Understand the Network You're Buying Into

It's equally important to understand that your members' adoption of digital wallet services will depend largely on which solutions you choose to offer. Zelle, for example, processed 2.3 billion payments with a total value of $629 billion in 2022 alone at over 1,800 participating financial institutions. There are others that only have a fraction of that support, which will absolutely translate into what you see in terms of adoption.

6. Embrace the Opportunity to Innovate

One prevalent misconception about credit unions is that they don't have the same technology that big banks have access to. However, by incorporating digital wallets, your credit union can showcase its competitive technology, proving to potential members that you are on par with other financial institutions. While integrating a digital wallet may present challenges, it also presents a valuable opportunity to demonstrate your commitment to innovation.

Within the Wallet: Pros and Cons of Digital Cards

Convenience

Digitally issued cards are digital versions of traditional credit or debit cards. 

Pro: If your credit union offers digital card issuance, you can be at the front of your members wallet every time they want to buy something. They don't have to come into your credit union to get a new one if theirs was lost. This frees up employee time while increasing your credit union's card use. 

Con: Although digital payments are accepted at over 85% of stores, some major chains like Walmart do not accept them. Digital cards are extremely convenient until a store does not accept the payment method. 

Intuitiveness

Pro: By design, digitally issued cards are easy to use. You do not have to spend time and money training your members. If a credit union member can use a phone, they can view their digital card, see spending information, and start using it in a matter of seconds.

Con: Sometimes, digital cards are declined during checkout. Even though digital cards require minimal explanation when first issued, your credit union will have to train its employees on how to help members when problems arise over time. 

Security

Pro: Your credit union does not have to pay as much for fraud detection and prevention. Digital cards use biometric authentication (fingerprint or facial recognition) to make sure that only one person is capable of using the card. It also uses technologies like tokenization to help maintain visibility over transactions, and encryption to make sure that nobody can intercept important financial information when in use.

Con: Although the risk is low, digital cards can be stolen. This is easily mitigated by instantly closing the card. 

Personalization

Pro: Even if your credit union offers digital cards, you can still offer traditional cards. This expanded set of offers helps your members feel like they have options, and they don't have to look any further than your credit union to find everything they need. 

Con: Some members will not embrace digital cards. This decreases their perception of how flexible and convenient your credit union is. Make sure to offer other relevant, personalized features to members who don't like digital cards. 

Member Experience

Pro: Another benefit of digital cards and digital wallets is that they create a frictionless experience for members. If someone loses their existing physical card, they don't have to wait to get a new one in the mail. They can use a digitally issued card right away.

In the end, digitally issued cards are a good start toward creating the convenient, enjoyable experience that members crave and the beginning of your credit union's transformation into the digital services powerhouse it was meant to be.

Con: In the event of a digital card malfunction or a member's unfamiliarity with its usage, there is a possibility of frustration arising from this new technology. To address this concern, it is advisable to continue offering traditional cards as a backup solution.

In the fast-paced realm of financial technology, the landscape of payments is undergoing a remarkable transformation. Instant payments, once a niche sector, are now at the forefront of innovation, driving unprecedented growth and reshaping the way individuals and businesses conduct transactions.

As we peer into the future of instant payments, the potential for exponential expansion and disruption is palpable. With market projections soaring into the billions and technological advancements paving the way for a new era of financial empowerment, the stage is set for a revolution in the way we move money.

Current Landscape

The instant payments market in the U.S. currently stands at a substantial $17.57 billion, with immense potential for growth and transformation on the horizon. In the year 2022, Statista revealed a staggering 2.8 billion real-time payments taking place.

Research indicates that a significant portion of consumers show a strong preference for instant payments when offered the option. With the alignment of consumer preferences and advancements in technology solutions, the real-time payments market is poised for substantial growth in the years ahead.

The Future of Instant Payments

Statista estimates that the instant payment industry will skyrocket to approximately $376 billion by 2030. This growth presents an extraordinary opportunity for your credit union to position itself as indispensable partners in meeting member needs.

The Decoupled Era: Shaping the Future of Payments

A McKinsey & Company report highlights the advent of the Decoupled Era in the payments industry. This era represents a monumental shift where payments become increasingly detached from traditional bank accounts or fixed repositories of value. Users now demand greater control, flexibility, convenience, affordability, and security in their payment experiences.

Pivotal technological advancements like PaaS (platform as a service) models and generative AI will personalize customer experiences, streamline payments, and enhance fraud protection. The Decoupled Era brings innovation and disruption, fueling competition among payment providers. But what does that mean for your credit union?

• Adaptation of Payment Services:Your credit union may need to adapt its payment services to accommodate the increasing detachment of payments from traditional bank accounts. This could involve offering innovative payment solutions that cater to users' demands for greater control, flexibility, convenience, affordability, and security.
• Investment in Technology:Embracing the Decoupled Era may require investments in technology infrastructure to support new payment mechanisms. This could include developing or partnering with fintech companies to offer mobile payment solutions, digital wallets, or other innovative payment platforms.
• Enhanced Customer Experience:As users demand greater control and flexibility in their payment experiences, your credit union may need to focus on enhancing the overall customer experience. This could involve streamlining the payment process, improving security measures, and providing personalized services tailored to individual preferences.
• Competitive Landscape:The Decoupled Era is likely to intensify competition within the payments industry as traditional financial institutions and fintech companies vie for market share. Your credit union may need to stay aware of emerging trends and competitors to remain competitive in this evolving landscape.
• Regulatory Considerations:With the proliferation of new payment technologies and services, regulatory oversight may increase. Your credit union will need to ensure compliance with relevant regulations while still innovating to meet customer demands.
• Risk Management:As payments become increasingly detached from traditional bank accounts, your credit union may face new risks related to fraud, cybersecurity, and data privacy. Implementing robust risk management strategies will be crucial to safeguarding both your institution and your customers.

The Pros and Cons of Each Payment Method

As a credit union leader, your members come to you for advice about how to improve their lives. Therefore, you have to ask—when should you promote FedNow instead of an established player like Zelle or Venmo? Understanding the differences between the choices can help bring you clarity. 

The Most Widely Accepted: Zelle

Thanks to the fact that Zelle is owned by seven of the big banks, it has already been seamlessly integrated across a wide range of platforms, making it an incredibly attractive and convenient option over Venmo.

While Venmo requires all parties involved in a transaction to be using the same app to send and receive payments, Zelle offers a more inclusive approach. Your credit union members can effortlessly send and receive payments not only within the credit union but also with other financial institutions that support the Zelle service. This interconnected network of participating banks and credit unions ensures that your members can enjoy fast and hassle-free transactions with a larger community of users, enhancing the overall payment experience.

The Most Established: Venmo

Naturally, the appeal of Venmo is that it lets people send and receive money quickly and easily using a mobile app. It's part of a category of services called P2P platforms, otherwise known as "peer-to-peer." It supports instant payments and is generally fast and easy to use.

If someone wants to engage in a transaction with someone else, so long as that other person is using Venmo, it can be done. Money is transferred into a person's Venmo account instantly. Note, however, that transferring that money into an actual bank account will take at least one business day—meaning that it may not be ideal for urgent transactions.

RTP

The Real-Time Payments (RTP) system, developed by The Clearing House, is a modern and innovative payment infrastructure designed to facilitate instant and irrevocable electronic fund transfers in the United States in any situation. 

Same Day ACH

Same Day ACH is an enhancement to the traditional ACH network in the United States. It allows for faster processing of certain ACH transactions, enabling same-day settlement of payments, including credits and debits.

The Most Recent Option: FedNow

One groundbreaking development in the evolution of instant payments is the impending launch of FedNow, a revolutionary instant payment system orchestrated by the Federal Reserve. Poised for introduction in the near future, FedNow promises to redefine the landscape of financial transactions in the United States.

What is FedNow?

FedNow is designed to facilitate real-time, 24/7 payment processing, offering unparalleled speed and efficiency to individuals and businesses alike. By enabling instantaneous fund transfers, FedNow addresses the escalating demand for swift and seamless payment solutions in today's digital era.

From seamless peer-to-peer transfers to expedited bill payments, FedNow has the potential to reshape the financial ecosystem and propel economic advancement. Some examples include:

• Enhanced Payment Services: FedNow's real-time payment processing capabilities will allow your credit union to offer faster and more efficient payment services to your members. This can improve member satisfactionand attract new customers who value speed and convenience in their financial transactions.
• Competitive Advantage: Being an early adopter and effectively leveraging FedNow's capabilities can give your credit union a competitive advantage in the market. By offering instant payments, you can differentiate yourself from competitors and attract customers looking for innovative financial solutions.
• Increased Efficiency:FedNow's 24/7 payment processing will streamline your credit union's operations, reducing the time and resources required to process transactions. This can lead to cost savings and improved operational efficiency, allowing your credit union to allocate resources more effectively.
• Opportunities for Innovation:The introduction of FedNow is expected to stimulate innovation in the payments industry as a whole. Your credit union can explore new products and services that leverage FedNow's real-time capabilities, such as instant loan disbursements, expedited payroll processing, or innovative payment apps.
• Regulatory Compliance: Your credit union will need to ensure compliance with any regulations associated with FedNow and real-time payments. This may involve updating your systems and processes to meet regulatory requirements and ensure the security of transactions conducted through FedNow.

Comparison of Each Instant Payment Method

Transaction Types

Settlement Time

Transaction Limits

Security Features

Sometimes, members are more than willing to come into a branch to accomplish their goals. But in other situations, they don't have time and will want to take their favorite branch with them wherever they are. It's up to credit unions to provide that functionality in the most effective way possible and go through a digital transformation.

The Mobile Era is Upon Us

Part of the reason why mobility and on-the-go financial services have become so important has to do with the preferences of the next generation of credit union members.

Indeed, Preston Packer, Chief Marketing Officer at FLEX, echoed these sentiments. "We're seeing now a mobile-only generation. Members don't want to go between the browser and an app... whatever features have historically been available in that Internet banking space, they expect those to be available in the mobile app."

When it came to the previous generation of members, you were talking about people who were introduced to the concept of the smartphone in their 20s and beyond. Although these powerful little devices are now a ubiquitous part of our lives, it's important to remember that Steve Jobs only introduced the iPhone in 2007—just 15 years ago.

Yet at the same time, in that 15 years, there has been an entire generation of members who have grown up without knowing a world that lacked smartphones and mobile functionality at every turn. It's no longer a novelty—it's a foregone conclusion. It's a "need," not a "want" and credit unions everywhere need to be ready to rise to the digital transformation challenge.

While it is true that the concept of a mobile banking app is hardly new, credit unions are in a unique position to push things in a new direction. One recent study indicated that a significant number of financial industry consumers aren't actually that impressed with their current mobile banking apps. They use them, but mostly because they value mobility and there isn't a better alternative available. In other words, current solutions aren't a choice so much as they are a lack of options.

Credit unions can learn from other apps, however, and digitize the full, satisfying experience of being in a branch and allow people to take it with them on the go. With the right technology, a mobile credit union solution can anticipate a member's needs the way other apps do. It can offer highly personalized experiences. The same study mentioned above indicated that this last point is particularly crucial, as a lack of personalization was the cause of a big drop in consumer satisfaction for the industry in 2021.

It's All in the Relationship

When it comes to allowing members to take the experience they know and love with them wherever they go, credit unions need to lean heavily on something that their competitors cannot match: pre-existing relationships.

For years, the success of credit unions has been built upon intimate relationships with its members. It's something that other organizations operating in the Fintech space don't have. Therefore, when it comes to determining what functionality to digitize and how to best offer those mobile experiences people crave, your efforts need to start with the experience you already have.

Take what you know about your members and let that inform the decisions you're making during this digital transformation. Use that, along with other essential data like credit reports, to see what shape that transformation needs to take. Any digital solution needs to give people a chance to quickly do what they want, when they want, wherever they want so that they can get on with their day.

If you're able to do that, your credit union will accomplish so much more than just entering into the mobile banking world. It will make interacting with your credit union a daily and accepted part of your members' lives. It will create a situation where they don't even think about venturing elsewhere to perform banking needs because they already have a solution that they're drawn to and enthusiastic about. That's how your credit union can continue to differentiate itself from competitors and that's how it can create a new generation of loyal followers at the same time.

Providing an Exceptional Experience Anywhere at Any Time

Overall, credit unions need to go beyond simple (and traditional) banking services and embrace the next stage of the industry as a whole. Members have always wanted a personalized, convenient, and consistent experience from their credit unions—now, modern technology makes a digital transformation easier than ever.

Even as recently as a decade ago, giving members an opportunity to take their favorite branch with them wherever they went would have been unthinkable. Now, it's a reality and for many credit unions, it's one of the keys to creating deeper and more loyal relationships with members moving forward.

Why Developing a Mobile Banking Strategy is Important

Member Expectations

One of the most important factors in choosing a financial institution for consumers is mobile access to their bank account. This is why it is important for your credit union to develop a mobile banking strategy. 

Efficiency

Mobile banking can help reduce operational costs for your credit union. By enabling members to perform routine transactions, such as check deposits and fund transfers, through self-service channels like mobile apps, your credit union can streamline processes and reduce the need for in-person or manual transactions.

Data

Mobile banking platforms generate valuable data on member behavior, preferences, and usage patterns. By analyzing this data, your credit union can gain insights into member needs and preferences, identify trends, and make informed decisions to enhance the mobile banking experience and develop targeted marketing campaigns.

How to Develop Your Mobile Banking Strategy

1. Understand Member Needs

Start by understanding the needs and preferences of your members. Conduct surveys, gather feedback through focus groups, and analyze usage patterns to identify what features and functionalities are most important to them. This could include basic services like checking balances and transferring funds, as well as more advanced features like mobile deposits and bill payments.

2. Focus on User Experience

A seamless and intuitive user experience is crucial for the success of your mobile banking app, and it starts with your members’ needs. Invest in UX design to ensure that navigating the app is effortless for members of all demographics. Prioritize simplicity, clarity, and consistency in design elements, and conduct usability testing to refine the user interface based on member feedback.

3. Implement Security Measures

Security is paramount in mobile banking. Assure your members that their sensitive financial information is safe by implementing robust security measures such as multi-factor authentication, encryption, and biometric authentication (e.g., fingerprint or facial recognition). Educate members about best practices for safeguarding their accounts and provide prompt support in case of security concerns.

4. Offer Personalized Services

Leverage data analytics to offer personalized services tailored to individual member preferences and behaviors. Use predictive analytics to anticipate their needs and offer relevant products or services. For example, sending personalized offers for loans or savings accounts based on their transaction history and financial goals can enhance engagement and loyalty.

5. Integrate Digital Payment Solutions

With the rise of digital payments, integrating mobile wallets and P2P payment platforms into your mobile banking app can provide added convenience to members. Support popular services like Apple Pay, Google Pay, and Venmo to cater to diverse preferences and enable seamless transactions for purchases and person-to-person transfers. These integrations will bring your mobile banking app to the forefront of your members’ minds. 

Tips for Your Mobile Banking Strategy

Member-Centric Approach

Always keep your members at the forefront of your mobile banking strategy. Regularly solicit feedback, conduct surveys, and analyze usage data to understand their evolving needs and preferences. By prioritizing member input, you can ensure that your mobile banking app remains relevant and valuable to your target audience.

Start Simple and Scale Later

When developing your mobile banking strategy, it's essential to start with a solid foundation and then gradually expand and enhance the app's features and functionalities over time. Focus on delivering core banking services effectively and efficiently before introducing more advanced features. This iterative approach allows you to maintain a seamless user experience while adapting to changing member needs and technological advancements.

The growing demand for digital banking services and the rise of fintech companies into the banking space means that credit unions have to change the way they do business in order to stay competitive. Members now want access to a variety of online banking services, and the credit unions that fail to provide them likely won’t be around too much longer.

It’s also important that CUs make sure their mobile banking app is as fast and efficient as possible. There have been huge changes in customer behavior over recent years, and fintech companies have set a new bar for speed and efficiency. While trying to keep up with the innovation of fintech companies can be difficult, the first step is to understand what your credit union can do to improve your mobile banking app.

Simplify Your Mobile Banking App

These days members expect a smooth and easy digital banking experience. That means deciding what to put into your online banking app—and what to leave out—is crucial. Overloading your banking app can slow down functionality and make for a poor user experience. An overloaded banking app can also frustrate users by making important features difficult to find. When there is so much competition in the digital banking space, creating the best user experience for your members is vital.

Here are some important points to consider if you are making changes to or designing your online banking app:

Top Features

To distinguish your mobile app from the competition, credit unions must offer high-value features that members and potential members are looking for. Listed below are a few of the features members are looking for from their mobile banking apps:

• Alerts: Alerts can notify members of large withdrawals, successful transactions, and services and promotions from your credit union. Credit unions can take advantage of alerts and messaging on their mobile banking app to enhance their relationships with members providing a personalized experience.
• Security: Members want to know that their personal and financial information is being protected. Biometric authentication, card controls, managed PIN functionality, and digital card issuance are a few of the security measures that can be utilized in your mobile banking app. 
• Digital lending options: The demand for fast and easy loan processes through a digital banking app is on the rise. 
• ATM and branch locators: Just because there is a trend towards digital banking does not mean members won’t need access to branches and ATMs. Built-in ATM and branch locators in your app is a good way to help members find the services they need.
• Speed: Fintech and e-Commerce companies have reshaped consumer expectations when it comes to transaction times. Whether sending money to a friend or applying for a digital loan, members want the process to be fast and immediate.
• Extra services: CUs can also offer rewards programs, personal finance management, and other extra services through their mobile banking app. 

Cut the Financial Jargon

Remember, not everyone works at a credit union or in finance, so don’t confuse your members with complicated credit union and banking terminology in your app or on your web pages. Rather than filling your app with terms most members don’t understand, such as peer-to-peer payments, keep it simple. For example, “sending money to a friend” is much clearer than P2P payments and won’t be off-putting to members who aren’t tech or financial-savvy.

Reduce Friction

Having too many third-party vendors involved in your banking app could cause members to turn to faster fintech options. The new normal is that members want to make transactions immediately, check their balances and even apply for digital loans. They want a seamless digital banking experience and that’s what your digital banking app should provide them with.

Choose the Right Core Provider

It’s not enough to build an award-worthy mobile banking app alone. Credit unions that partner with a core provider to build a core-driven mobile app are able to consolidate vendors and create the type of seamless mobile banking app their members want. That is the key to creating an award-worthy app that members will enjoy and tell their friends about.

Core technologies like FLEX that develop software can help your CU provide a seamless online banking and mobile banking app experience on whatever device members choose to access your site. Don’t let competition from Fintech companies or changes in technology keep your CU from doing what it does best—serving its members. 

Understand the Pareto Principle and How Members Use Mobile Apps

The Pareto Principle, also known as the 80/20 rule, states that 80% of the effects come from 20% of the causes. This rule has been applied to many facets of business and it also applies to mobile banking usage. Most members will use your credit union’s app to perform the following six functions:

1. Checking account balances or recent transactions.
2. Transferring money between accounts.
3. Reviewing alerts (push notifications) from the credit union.
4. Making a deposit.
5. Making a bill payment.
6. Locating the nearest ATM or branch.

While these six features are the most used functions, they make up a very small portion of what a mobile app should be capable of—thus the 80/20 rule where 80% of the member’s time is spent with only 20% mobile app functions. Knowing that most people use mobile banking apps for these six reasons should help your credit union to structure your mobile banking app and make sure these options are easily available and convenient to use.

Choosing a Core Technology for Your Mobile App

One of the first steps your CU should take before designing or re-designing your mobile banking app is to narrow down a list of credit union core providers. One core provider, FLEX, has been used by all types of credit unions to enhance their mobile and online banking services over the years.

Furthermore, FLEX is aware of the features that members use the most and has designed an app that ensures a frictionless experience in this vital 20%. This means:

• Balances are shown on the home screen
• History is easily accessible with one touch
• Transfers are intuitive
• Push notifications are built in, straightforward and informative
• Remote check deposit is a common sense process
• Bill payment (no matter the provider) is integrated directly into the app
• Finding an ATM or branch near you is right at your fingertips

Building an effective cross-selling program for your credit union is essential for long-term success, as it relies on the most valuable asset of all: relationships.

Unlike major financial institutions, your credit union has the opportunity to foster genuine relationships with your members. By offering personalized care, attention to detail, and value that members can't find elsewhere, your credit union can strengthen those relationships and drive loyalty.

Expanding your credit union should go hand in hand with cultivating and deepening existing relationships with satisfied members. In addition to regular onboarding and engagement efforts, targeted cross-selling offers for loan and deposit products can be highly effective in achieving this.

Purpose of Cross-Selling

Cross-selling serves two critical purposes for credit unions:

1. Driving loan and deposit growth:Cross-selling allows your credit union to grow its loan and deposit portfolios beyond acquiring new members. By reaching out to members who are already familiar with your credit union and making them aware of additional services, such as auto loans, you create new opportunities for your credit union to serve their needs.
2. Building loyal relationships:Effective cross-selling nurtures loyalty by satisfying members with one service and quickly meeting their needs with another. As a result, your credit union becomes an invaluable part of their financial life, and they will turn to you before considering alternatives.

Surprising Cross-Selling Stats

Before your credit union dives into cross-selling, there are some numbers you should know:

• Increasing Revenue: Studies have revealed that cross-selling can increase revenue by 50%. 
• Retention: An existing member can be 7x more beneficial than trying to acquire a new member. 
• Using Data: Offering personalized recommendations based on a member's data can increase sales by 35%. 
• Bundling: HubSpot research shows that 63% of sales teams offer bundling, which makes it the most-used cross-selling tactic. 
• Artificial Intelligence: AI is a great way to improve cross-selling efforts. Studies show that AI can improve cross-selling revenue by 114%. 

The Importance of Cross Selling in Credit Unions

Cross-selling for credit unions is almost a time-honored tradition at this point. It's a way to help offer value to members, especially in regard to products and services that they may not have even realized were available.

But there is one element that your credit union cannot afford to neglect if it wants to make the most of these efforts: timing.

It's Not Just How You Cross-Sell, It's When

While timing is only one part of a larger story when it comes to cross-selling, it is a major one. If your credit union promotes an offer for a financial services product too soon, your CU might approach the member before they're ready to take that desired next step. If you approach them too late, it's likely they've already been ready for a while and may have actually gone elsewhere to get what they need.

From that point of view, if your credit union tries to cross-sell a particular product or service to someone, and they don't want it, it speaks less to the quality of what your CU is offering and has a great deal to do with the fact that they may just not need it right now.

The Power of Personalization in Cross-Selling

One factor that many in the financial services industry seem to have lost sight of has to do with the impact that well-timed personalization can make. It's not about cross-selling to members simply because your credit union can. It's about getting a mention of the right product in front of the right person at exactly the right time.

In a lot of ways, that speaks to the foundation of what marketing services are supposed to be about in the first place.

TransUnion, for example, conducted a study of mortgage borrowers to help understand what their behaviors were both prior to and after a new mortgage origination, and whether those behaviors might be able to predict future activity. The organization looked at more than 16 million existing members over two and a half years.

What they learned was that six months prior to a mortgage closing date, there was a significant drop in activity on other types of loans. Once that date occurred, though, people were more likely to take out things like new car loans.

What does this tell us? It would have been a horrible time to try to cross-sell a member a new auto loan in the six months leading up to such a significant financial event. Your CU would have had great success trying right after they got a mortgage loan. 

This also helps to underline the point that personalization matters. If your credit union knows an insight based on someone's previous activity that they're not likely to be in the market for a new auto loan right now, that doesn't mean your CU can't use cross-selling for credit union members at all. It just means your credit union needs to shift which products it's making them aware of based on what your CU knows to be true.

5 Effective Methods to Cross-Sell at Your Credit Union

The financial sphere is a competitive space for attracting consumers and maintaining a steady influx of revenue. However, the process of cross-selling is a practical way to advance your credit union and offer the best, most personalized services to your members. Cross-selling is a sales technique that is truly one of the most profitable ways to retain credit union members and grow your credit union.

First, you need to determine your credit union's current cross-selling ratio. To do this, add up the total products and services you've sold. Then, divide that sum by how many members you have. Once you have your ratio, you can establish specific goals to achieve.

CUs can find success through strategic marketing and increased education. Many times you can also find valuable supplementary sales by inquiring about a member's interest in your other products and services based on their relevant needs. Here are four critical steps necessary to effectively cross-sell to your members:

1. Detail & Assess Your Cross-Selling Technique

The main goal of cross-selling is to sell a larger number of services and products to more members who could benefit from them. One key component to successful cross-selling is to fully understand and spell out your credit union's views on cross-selling as a whole. Identify the goals you will work to achieve and find a way to measure the effectiveness of your efforts.

2. Institute Metrics to Examine Performance

Your staff members are the first line of offense when it comes to cross-selling. This is why it's so important to have clear metrics to analyze each employee's personal performance.

A clear, systematic set of metrics will inevitably improve employee engagement in the cross-selling approach. In addition, it will offer them valuable constructive criticism that will allow them to see what is and what isn't working.

3. Improve & Simplify Your Marketing & Cross-Selling Communications Strategy

Make sure you have a solid grasp on how you are communicating about cross-selling with your members.

• Take notes on what is helping and hurting, and quickly abandon any fruitless methods.
• Focus on developing excellent communication with both current and prospective members on all fronts, including initial customer service interactions and monthly statements.
• Send out personalized direct mail and emails that sell other products or services (sell checking accounts and direct deposit to auto loan recipients), which will lead to better member engagement.

4. Celebrate & Reward Exemplary Staff Members

Recognized employees tend to be the most satisfied and motivated employees. Don't underestimate the power of a good reward system! Create a system that honors workers who exceed cross-selling expectations, whether you hand out gift cards or certificates. Showing appreciation will not only improve satisfaction in the workplace but also offers an incentive for other employees to step up their game.

5. Segment Your Members

Segmenting refers to dividing your member base into distinct groups based on certain criteria or characteristics. In the context of cross-selling in your credit union, segmenting allows you to tailor your cross-selling efforts to the specific needs, preferences, and behaviors of different groups of members. You can segment by...

• Demographics
• Life stages
• Financial behavior

Once you've segmented your member base, you can then develop targeted cross-selling strategies for each segment. This might involve creating customized product bundles, designing specific marketing campaigns, or offering personalized recommendations based on the unique needs of each group.

One crucial realization for any credit union is that its own data holds immense power as a tool to boost revenue. It is readily available and waiting to be unleashed, presenting a valuable opportunity that should not be overlooked.

Every interaction you have with a member creates a wealth of data that you can use to learn not only how to serve them better, but how to create experiences that they might not even know they need. Two such opportunities have to do with your ACH files and member information files—and if you're not already actively tapping into them, now would be an excellent time to start.

ACH File

What is It?

An ACH file is a standardized electronic file format used for processing financial transactions. It typically contains information related to electronic fund transfers, such as direct deposits, bill payments, and other types of electronic payments. The specific information you can glean from an ACH file depends on the type of transaction it represents.

How to Use it to Increase Revenue

If you know where someone is sending money and how much those transfers are for, you actually know a lot more than you might realize.

You can see transaction patterns, for example—something that can help you better understand a member's spending habits. You can also see what types of recurring bills they're paying and to what companies. You'd be able to see when someone got a mortgage, for instance.

Their income sources, their transfer patterns—you name it, you can see it and better understand it. That way, you can target them with promotional offers, cross-selling, and up-selling opportunities when important life events occur or even in advance of them.

Member Information File

What is it?

A member information file is a similar source that stores someone's personal and account-related data. This way, your credit union can view a member's account based on relationship, not just based on the type of account in question.

How to Use This Data to Your Advantage

Again, this is an invaluable way to get to know your membership like never before. Using the data contained in the member information file, you can build out more unique member journeys for people. This helps tremendously in terms of timing in regard to cross-selling and up-selling. You don't have to worry about offering something to someone before they're ready. When you target your offer, they'll be able to recognize its maximum value and act accordingly.

The member information file is a great way to help you and your credit union team leaders think about the problems your members might be having so that you can offer solutions to solve them. It can also be a guide to use as you educate both your team and your members about what you offer and, more importantly, why.

Step-by-Step Process to Analyze Your Data From Start to Finish

Contained inside the massive volumes of data that your credit union is creating on a daily basis is the insight you need to better understand your members. It contains valuable insights about the individuals, including their wants, needs, and dreams. Being able to properly analyze your credit union's data puts you in the best possible position to serve them with personalized services and better experiences. Let's explore five essential steps to unlock this invaluable insight.

1. Extract

Data extraction is the process of collecting different types of data from a variety of sources. One of the more prominent of these sources will undoubtedly be your core processing platform. Other sources can include the tools being used by your marketing department, software that is utilized by front-end employees, and anything else that contains personal member information in some way.

2. Cleanse

Next, you'll need to cleanse your data, which means editing, correcting mistakes, and restructuring it in a more useful way. Begin by removing any irrelevant data from what you've extracted. Do the same for duplicate data as well. Address any structural errors that you uncover, manually fill in the missing data gaps, and validate everything to make sure you have the most complete and accurate record to work from.

3. Analyze

Next, you can start analyzing your credit union's data—which is another way of saying that you'll begin to make sense of it all. Start by first defining your overall goals and how you'll measure them. Are you trying to reduce membership turnover? Are you trying to increase revenue per member? Define your goals and let your data analysis act as a guide to accomplish them.

Throughout this time, you can use data analytic tools like Google Looker Studio or Microsoft Excel, along with techniques like predictive or prescriptive analytics, to further work towards your goals.

4. Export

Transferring your data through exporting involves converting it from its existing format to the required format of the application you will use for reporting purposes. Note that many credit unions find success by making data exporting a part of their larger backup strategy. They get to extract specific data into a more versatile, useful format and create a backup copy of critical information for safety as well.

5. Report

Finally, you can report on your credit union's data in a way that helps to visualize it and that makes it easier to derive the right insights from it. Here, you're taking complex information and making it as easy as possible to understand. Be sure to review and finalize your report before sending it to the rest of your credit union's leadership to act upon.