Why Data Personalization is Critical for Credit Unions Retaining Digital-First Customers

The credit union industry continues to show solid growth, with the US industry increasing its market size faster than the finance and insurance sectors overall and is now worth a considerable $90.8 billion. However, a rapidly changing member preference, a more competitive market, and the constant threat from digital disruptors has made the need for automation and digitalization especially urgent. While many credit unions have embraced the challenge, those which still struggle to attain a 360-degree view of their customers will never be able to deliver the personalization demanded by today’s members and will quickly lose out to credit unions and banks that can.

The growth of Credit Unions (CUs) has been especially laudable considering the advantage of the larger banking sector which enjoys all the benefits of their economies of scale. This is particularly evident when it comes to designing and implementing new technologies. In addition, CUs are facing growing competition from digital banks that have all the benefits of national scale but none of the burden of branch costs carried by the credit unions.

The Changing Profile of Customers Demands Better Digital Offerings

Credit unions have an excellent reputation for customer service and have won generational support from many families because of their close community ties. However, Covid resulted in changes in consumer behavior.

In fact, A PYMNTS survey showed that seniors and Baby Boomers showed a strong preference for CUs, with 60% of those ages 65 and older reporting membership. Younger consumers, however, show a clear preference for banks over CUs with just 19% of consumers aged between 35 and 44, and 14% of those between 25 and 34 belonging to a CU.

In a surprising turn of events, those in the youngest demographic showed more support for CUs than their elders, with 26% of those between 18 and 24 belonging to a credit union. The study goes on to suggest that if CUs can optimize the way they use their member data and offer the same or better digital tools this generation looks for in their bank, CUs could win over these valuable customers of the future.  

Winning the Hearts and Minds of Gen Z Requires Personalization

Today’s customers want personalized experiences, no matter which channel they may be on. This is even more important for the younger generations who are used to having whichever digital services they want, when they want them, wherever they are. Unfortunately, many financial institutions have failed to deliver on these digital expectations.  

Forrester defines personalization as: “An experience that uses customer data and understanding to frame, guide, extend, and enhance interactions based on that person’s history, preferences, context, and intent.”

In order to deliver true personalization, financial institutions need to ensure that they understand customer needs across all the touch points and across all channels – physical and digital. This requires that all customer data generated across the entire customer journey must be immediately available and actionable.  

However, this can pose a real challenge for CUs. As every CIO in the banking game can attest, getting data out of a core banking system and into a numerous best-in-class system can be a real struggle. However, if credit unions hope to deliver a personalized service, they must be able to extract relevant member data, including member contacts, financial data, account roles and other data-based insights generated across all their channels and systems.  

Connecting Systems to Give a 360-Degree View of the Customer

The success of any customer personalization effort depends on the effective synchronization of core banking systems with  other financial solutions, and this relies on excellent system integration. A Hybrid Integration Platform (HIP) holds the key to success. Through a HIP, CUs gain access to a unified data tool. to build connectivity between core banking systems and best-in-class technologies such as CRMs, Loan Origination Systems (LOS) or Accounting Systems. And this integration happens with with agility, speed, and ease.  

The democratization of data between multiple systems provides CUs with a clear view and understanding of customer data that drives greater customer value. In addition to integrating data between systems, CUs can leverage innovative tools like API Management to expose data to customer facing apps and websites allowing CUs to further differentiate their product offerings to their customers by leveraging data from CRMs and other core banking systems.  

Using a HIP to integrate a CRM system, and other line of business solutions, with the core banking systems, be it Symitar, Temenos, FIS or other third-party systems, gives the credit union team a 360-degree view of their customers’ current balances and latest transactions as well as all other member interactions. This, in turn, gives member-facing teams a holistic and fully informed view of customer activities and product portfolios, allowing them to design a more personalized experience. Further, it allows members to gain access to a holistic view of their data within customer portals.

Another key area in which system integration plays a crucial role is in developing a 360-degree view of the client is within the loan application process. A HIP can enable CUs to integrate data between their LOS, core banking solution and their CRM, the latter of which is often used as a single source of truth for the client data. By creating a bidirectional flow of data between these systems the LOS will be able to send data back to their CRM, automatically updating the CRM with the status of the loan and the types of loan a member has been approved for. This provides member-facing teams with accurate data as and when they need it.

Synatic’s HIP also enables Credit Unions to better serve their members with highly tailored offers made possible through relevant, complete, and accurate information at every interaction.  

What is more, CUs are also able to integrate digital and assisted channels with their transactional system and create a unified platform across marketing, sales, customer service, and origination functions to give client-facing teams (from branch and contact center staff to relationship managers), a truly complete and actionable view of customer interactions.  

By connecting disparate systems across the organization, CUs can immediately begin to create improved services, designed for a digital-first member experience. More importantly, it lays the foundation to start adding new technologies, such as AI, to take their offering to the next level.  

Laying the Groundwork for Hyper-Personalization

According to a paper from Deloitte, hyper-personalization is the next logical step for financial institutions. The company describes the next evolution as “the most advanced way brands can tailor their marketing for individual customers. It is done by creating custom and targeted experiences through the use of data, analytics, AI, and automation.”  

Analysts at Deloitte believe that by delivering a more personalized experience, hyper-personalization can help companies further maximize revenues, reduce costs, and elevate customer experiences. And, for credit unions, this could be the sought after solution they have been looking for to elevate their offering to not only equal those of banks, but even those of the new, nimble fintechs threatening to take over the market.  

However, none of the exciting new technologies that hyper-personalization depends on are even worth a consideration without an integrated backend, and this will undoubtedly require the power of a Hybrid Integration Platform.  

To find out how you can take the next step in personalization and aachieve a 360-customer view of your data that allows you to unlock the full potential of your core banking system, contact Synatic today.

Darryl Pieroni
June 14, 2022