March 7, 2019

Why credit unions must go digital

In recent years, credit unions have experienced remarkable growth, adding members at a record pace and deepening engagement among its users.

This should not come as a surprise given that financial institutions such as these provide very interesting advantages to banks such as lower transfer fees and overdraft fees, as well as no ATM fees, higher savings rates and lower interest rates.

However, many fail to see the ways in which they could provide an even more efficient service and exponentially grow costumer engagement. Digitalization is key to achieve such goals.

Mobile penetration, an unavoidable reality

Globally, credit unions provide services worth billions of dollars and yet, most of the business handled by companies of the sort is done in person. Although this may promote a deeper engagement among long-time customers, it doesn’t actually help bring in new customers.

Mobile usage has grown so exponentially that according to Zenith Media, these devices will drive 80% of global internet usage. The frequency with which costumers access their online banking platforms further enhances the need to quickly adopt digitalization: a report by the British Bankers Association indicates that U.K. costumers access banking apps over 7,610 times a minute.

Mobile devices have become an intrinsic part of everyday life and as such, in order to provide a better service to their customers, financial institutions have to address this situation.

In the more mature mobile markets such as the U.K, the United States, France and Germany, mobile banking is a reality, while in emerging markets, the trend has accelerated consistently. Over 60% of Internet users in Thailand, Sweden, Turkey, South Africa, South Korea and China already access banking services via mobile devices on a daily basis. Additionally, according to a 2017 online global survey conducted by Statista, online banking is one of the top 10 most popular internet activities among adult users.

Why go digital

By embracing digitalization, financial institutions can provide convenience, while strengthening customer loyalty, without compromising their core values. The reason behind this logic is that users can now be aware of their current financial state (thus avoiding overdrafts), they can quickly notice discrepancies or fraud, they can pay their bills and handle all sorts of transactions in just seconds and without having to leave their homes.

In sum, digitalization reduces operating costs and human error while increasing productivity. It also develops information systems which are an invaluable asset to managers, empowering their decision-making process by providing access to massive amounts of processed data. By swiftly identifying and reducing discrepancies, managers can better shape business practices and operations.

To continue to grow at the same pace, financial institutions have to adopt more efficient ways to connect with their audience and foster their financial involvement. Digitalization is the first step towards achieving this.

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