Digital Velocity Need Not be an Oxymoron for Credit Unions and Community Banks

Last month marked International Credit Union Day, a great time to reflect on the accomplishments of community finance globally.? Having worked with credit unions in Africa, I have seen firsthand the benefits of the cooperative value proposition globally.? Credit unions and community banks support well-being and are an important facet of the financial services landscape. ?In celebrating the accomplishments of community finance to date, just as important is consideration of the future as our environment increasingly migrates towards digital delivery.? Our world is changing, establishing an imperative for credit unions and community banks to modernize as well by adopting a technology framework that confers scale and enables an ecosystem of possibility.

Modern digital shifts markets by enabling new ways to build, buy and utilize products and services.? The transportation industry as an example has been changed by Uber, and financial services is changing in the same manner by institutions who harness digital to deliver innovative and creative experiences that matter, when, where, and how for their customers and members.

The caveat "past performance is no guarantee of future results" reminds us that regardless of past success, the future could potentially look very different.? This is especially true in environments experiencing radical transformation.? The past is an indicator of the future when nothing is changing; when everything is changing, the future becomes less certain.? Standing still in our current financial services operating environment is not an option, credit unions and community banks must innovate.? Make no mistake, the competition is innovating to disrupt, and actively engaging in the process of establishing a robust and modern digital footprint to win share of wallet – Y2K25 will present a different operating model for financial institutions.? While acting to skirt obsolescence is a reactive response, far more attractive is the proactive alternative – digitizing the community value proposition in a modern matter to strongly differentiate in an evolving marketplace.

Digital innovation takes place when products, services, or experiences are created or improved by applying new methodology to increase value and utility. Modern technology enables rapid innovation and agility, making possible open standard-based frameworks that are amenable to change.? Consumer expectations are shifting from being satisfied with linear innovation (as facilitated by legacy) to one where innovation is continuous with an upward trajectory.? ?Most day-to-day apps that consumers include in their lives are updated and improved on a very regular basis – change is anticipated and expected. ?Screentime cannot be taken for granted, it is contingent on the delivery of relative value. ?Keeping ahead of the competition means nurturing products, services, and experiences in an ongoing and adaptable manner.

Complementing and fuelling financial services innovation are developments such as Open Banking and Artificial Intelligence.? Open Banking provides consumers the choice to share their data, giving financial institutions that are prepared the opportunity to leverage standards to further accelerate the delivery of value and build affinity with their customers and members in the process.? Artificial Intelligence will imbue digital experiences with purpose and meaning.? The advent of the commercialization of quantum will magnify the meshing of these two technology trends by significantly increasing processing speed and consequently the power to maintain relevance in the moment. Quantum also introduces the Y2Q problem, the date by which Quantum Computing is expected to defeat public key encryption.? This is part of the modernization discussion as well.? The time to prepare is now.?

As financial services evolve, mid-tier institutions are struggling with legacy dependency and the resources required to modernize. ?Digital velocity need not be an oxymoron for credit unions and community banks. Scale conferred by digital ecosystem and platform economies puts financial institutions of all sizes into the position of being able to adopt a technology framework to support modern delivery.? Cloud, standards, multi-tenancy, composability, and pre-built capabilities combined with collaboration and network effect confer scale that would otherwise not be possible.? Frameworks provide a construct for transformation.? While “big bang” migrations may make sense in some situations, frameworks also support “step by step” transformation with constant proof points to confirm progress.

As we think about the shift from transaction-based digital banking to experiential banking, digital experiences are orchestrated by financial institutions for their customers and members in a contextual manner.? In this sense, “Orchestrate” is the verb, financial institutions are the agent, and customers and members are the subject.? Orchestration requires instrumentation which is facilitated by a financial institutions’ chosen digital ecosystem.? As we look towards Y2K25, Financial Services is at an inflection point - Now is time to adopt technology that will enable and promote institutional change, delighting customers and members in the process.