Tag: digital

Future of Credit Unions: Do Digital Different, or Perish! | Blog

For more than 100 years, not-for-profit credit unions have effectively provided their members with a wide range of financial services at comparatively affordable rates. However, they’re falling far behind in all aspects of what it takes to compete against large banks and FinTechs in today’s digital world. And, per our recently released report, Future Proofing Credit Unions from the Digital Onslaught, that’s causing credit unions to close at a staggering rate of one every two days.

To be fair, a good number of credit unions have invested in next-gen technologies like voice banking platforms and distributed ledgers, and made other moves to bridge the digital divide.

For example, Canadian credit union Meridian is launching a full-service digital-only bank named Motusbank in spring 2019. One Nevada Credit Union, Knoxville TVA Employees Credit Union, and Northrop Grumman Federal Credit Union have begun their implementation of a voice-first banking platform from Best Innovation Group (BIG). The following image shows other digital initiatives in the credit union space.

Future of Credit Unions blog image

But overall, credit unions’ digital investments pale in comparison to their competitors. For example, our research found that less than five percent of credit unions in the U.S. have a mobile banking app. And the top four banks in the U.S. spend five times more on technology than does the entire credit union industry.

Credit unions’ move to digital is hampered by multiple factors including dearth of talent and relatively small technology budgets that make it challenging to decide on run versus change investments.

But the biggest hurdle they face is lack of an overall organizational IT strategy for transformation. Their intent to invest and transform is there, but disjointed. This siloed approach fails to create a satisfying omnichannel experience for members. A glaring example is Navy Federal Credit Union, the largest credit union in the U.S. It faced multiple outages from December 2018 to February 2019, during which members couldn’t see the deposits in their accounts, the bank’s phone lines and digital channels, both mobile and online, weren’t working, and reporting delays led to inaccurate account balances.

So, how can credit unions stay relevant and afloat?

Share Costs with Other Credit Unions

We believe a solid short-term solution to delivering a better member experience is moving to a partner network wherein multiple credit unions mutualize costs. In this collaboration, the participating companies would share run-the-business costs. They might even co-invest in or co-secure funding for the latest technologies. One such example already exists: CU Ledger is a consortium of American credit unions that is exploring use cases for distributed ledger technology (DLT); and it’s already secured US$10 million in Series A funding.

A partner network with pooled resources would also create leverage for credit unions to collaborate with technology service providers. In a mutually beneficial situation, credit unions could share run-the-business costs while the providers could gain economies of scale.

Become Experience Orchestrators

In the longer-term, credit unions should embrace the role of lifestyle experience orchestrators. This means that they should orchestrate and integrate their offerings with those of third-party providers, serving as service and product aggregators to offer rich experiences to their members.

This could take on multiple shapes and forms. For example, they could integrate with a local car dealership and leverage data and analytics to recommend and finance purchase and lease options. Members would undoubtedly be more comfortable with their credit union’s recommendations than those from an unknown organization.

Future of Credit Unions

Future of Credit Unions

There’s no question that credit unions need to modernize their digital touchpoints to deliver experiences that will retain their members. The types of creative partnerships we outlined above will help them survive – perhaps even thrive – in today’s increasingly competitive and digital financial services industry.

Is your credit union undergoing some type of transformation journey too? Please write to me at [email protected] to share your experiences, questions, and concerns.

In the meantime, to learn more about the future of credit unions and the modernization journey they’re facing, please read our recently released report, Future Proofing Credit Unions from the Digital Onslaught.

Video: Digital Transformation and The New Breed of CIO | Blog

Over the last year, it seemed that CIOs faced an existential threat. This threat was coming from new roles – Chief Digital Officer, Chief Security Officer, Chief Data Officer – as well as the business becoming more and more involved in digital transformation, and looking to inject its influence into IT.

It even got to the point early on last year, where there were questions as to whether or not the CIO’s role would continue, or would it dissolve or devolve into these different roles.

During the course of the year, we investigated this, and have come up with a strong point of view that in fact, the CIO has survived this challenge, redrawn its charter, and has emerged as a very powerful and sustaining executive role in the organization.

You know, in this new charter, what we find is there is no other executive in the organization that has the breadth of vision across all the different operating parts of the organization or the depth of resources to be able to deliver on digital transformation and support the new digital operating models that are emerging – leaving the CIO as the natural place for this responsibility to stay in.

And the new breed of CIO, therefore, is redrawing their charter to support this new vision. Now, redrawing this charter is not easy, and it requires substantial changes in organization, IT organization, as well as a substantial commitment to deepen the relationship with both the business and the board so that the CIO in the organization can play this transformative role.

I look forward to hearing from you this year on how your progress toward this new charter and your experiences as you build this very important role in your organization. 

How To Avoid Frustrating, Mistaken Approach To Digital Transformation | Blog

Digital transformation gives companies new opportunities to change their competitive position. Typically, the objective for using powerful digital technologies is to create new value that changes the customer experience, the employee experience or the ecosystem partner experience. However, executives become frustrated when they need to communicate to their boards or peers on how quickly they can deliver on the promises of digital transformation. We live in a world of instant gratification, agile methodologies and sprints. This leads to an impression that a company can quickly achieve a new competitive position in the marketplace or quickly get meaningful benefit from the investments. Inconveniently, this impression is not the truth.

Read more in my blog on Forbes

Digital Initiatives Yielding Sour GRAPES? Gaps in Reality and Promises | Sherpas in Blue Shirts

GE’s search for a buyer of GE Digital, its apparent “non-core” business, and UBS’ sale of its Smart Wealth digital wealth management platform are causing the old guard to rejoice and claim that digital businesses are bogus and hogwash. Even Everest Group’s research suggests that 78 percent of enterprises fail to scale their digital initiatives, and don’t realize the benefits they envision.

It is easy to naysay the naysayers. But these developments do merit a discussion. Many enterprises are investing in digital transformation initiatives, and they have a lot to lose if they don’t do it well.

So, what is plaguing enterprises’ digital transformation agenda?

Not Moving the Revenue Needle

Most of the industrial enterprises we engage with as part of our research believe that, even in the coming two decades, 80-90 percent of their business will come from their so called “core” products. Though they acknowledge that their core products are not static and continue to be increasingly connected, software-driven, and service oriented, the incremental impact on revenue is not yet clear. Their business modeling and simulations provide numbers that are sufficient to fund digital initiatives, but are insufficient to move the revenue needle.

Digital Fatigue

Enterprises are realizing they have overdone some of their digital initiatives. Because business impact continues to be hazy, leadership is asking difficult questions. Our research suggests that 45 percent of enterprises fail to get funding for digital projects as the decision makers and purse string holders consider them vanity pursuits. Moreover, even strategic initiatives are struggling as the return on investment horizon is becoming longer as time progresses. Leadership is losing patience.

Challenges in CX to Business Attribution

Our research suggests that 89 percent of enterprises believe digital initiatives improve customer experience (CX). However, they struggle to attribute this improvement to business success. Therefore, business success becomes a secondary metric for such initiatives. Moreover, many enterprises confuse customer service – e.g., contact centers – with customer experience, which thwarts their ability to drive meaningful digital transformation.

We discuss another major reason for the gaps in digital promises versus reality in our research on digital operating models. Various enterprises assumed that digital transformation would create completely different businesses or business models for them. A prime example for comparison was about Google, a search and advertising company, getting into autonomous vehicles. Another was Amazon, an online retailer, getting into cloud services. These enterprises also assumed that they would disrupt their entrenched competition in their own and allied industries, just as Uber and Airbnb did.

Related: Important Lesson For Companies Undertaking Digital Transformation

However, I believe enterprises need such a dose of reality in order to separate the chaff from the wheat. As tech vendors, consultants, and system integrators brand everything digital, enterprises need a solid business case for digital transformation lest they spend precious money on worthless pursuits.

Enterprises’ needs of the hour are to develop a realistic digital transformation plan, rely on incubating multiple projects, be willing to fail fast, and leverage broader industry ecosystem. They must also remember that technology disruption always come with high risks.

Not acting is not an option, as the cost of doing nothing significantly outweighs the initial failures your enterprise may experience. Failing today is better than becoming irrelevant tomorrow.

What has been your digital journey experience? Please share it with me at [email protected].

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