What does 2015 hold for credit unions when it comes to technology initiatives?
While new technologies such as remote capture deposit and mobile tend to drive the financial services industry, experts says that CUs should be careful not to fall prey to focusing on automation over member service.
"As credit unions have adopted new technologies and moved an increasing number of their products and services online, the experience for their members has become increasingly fragmented," said Trabian Technology CEO Matt Dean. The Fishers, Indiana-based firm currently serves 34 CU clients.
"[Credit unions'] ability to provide their members with a cohesive tool for understanding and managing their financial lives has been diminished," Dean suggested. "In response, many credit unions are choosing to go all-in with a single vendor who promises a comprehensive solution."
Some credit union executives worry that a single vendor could lock them into a product development cycle, which can prevent their institutions from experimenting and innovating.
But Sabeh Samaha, president and CEO of Samaha & Associates, a Chino Hills, Calif.-based financial services consulting firm, said credit unions are in the driver's seat.
"Credit unions are nimble," Samaha noted. "They are dealing with retail consumer services that require fast and flexible delivery. Community banks dealing with commercial services don't have the same pressure on them."
Samaha, who has worked with hundreds of CU clients, said that in recent years, he has seen big banks transforming into rapid delivery service providers through electronic delivery channels.
"These threaten to be the great equalizers, in favor of credit unions," he said.
What Tech and When?
A common quandary for many CUs is determining what technologies should be implemented and when.
"One of the biggest discrepancies credit unions have is there is a list of things credit unions ought to be implementing and a list of things have to implement, and they aren't always the same thing," said Terrance Roche, co-founder and partner at the Scottsdale. Arizona-based Cornerstone Advisors.
Samaha said when a credit union is looking to adopt a new technology, asset class, member count, location and demographics should be key drivers.
"Size matters, as it has direct relation to investment capabilities in these tools. Equally importantly, member profile and their specific needs as just as important," said Samaha. "White collar vs. blue collar; high tech vs. low tech; travelers vs. non travelers. These are all key differentiators that the credit union must understand and customize their offerings to meet in top form."
Though Roche said there's never a "good time" to implement a new technology, he noted that if there is a "slow" time period it would be between November and February.
The Race is On
Whether a big bank, a community bank or a credit union, there is an ongoing technology race in the financial services space
But Christopher Sachse, principal and co-founder of the Baltimore consulting firm, Horsetail Technologies, said coming in first isn't always best.
"There is also a common misnomer when it comes to the big guys." Sachse said. "While they have the R&D budgets and ability to roll out projects, what they also have is a large bureaucratic engine that can't move quickly. Credit unions have the nimbleness to respond to industry changes and trends more quickly."
Now that an increasing number of credit unions are developing in-house apps — especially mobile solutions — product output is at an all-time high. However, the runner that trails in this "race" might have the best perspective.
"We are a place right now with mobile payments where sitting back and watching, while preparing for your next move, might be a good position to be in," said Sachse. "Let the banks be the leaders because we will see quick change. Then once the market shakes out, be prepared to strike. Credit unions are more nimble and will be able to beat them to the punch."
Whether a credit union works with a third-party vendor, or builds a solution in-house, timing the roll out is critical. From concept to fruition the process usually takes 90 days or more.
Samaha said a new solution could be implemented quickly — in less than three months — if the CU is adopting an off-the-shelf product with a vendor it has an existing relationship with. But if the solution involves multiple vendors, the roll-out will take considerably longer and may require leverage from consultants and other "buyer representatives" to effectively implement.
Follow the Curve
"The general rule that we follow is that on the normal curve, services that are still close to infancy will take longer and should be handled with more skepticism and care than services that are higher up and within the maturation peak," said Samaha. "Those will have more traction and will be easier to implement."
He said mobile and EMV solutions, for example, take longer than fraud management or portfolio management tools to implement.