As we look to the future, there is little doubt that the financial services industry will continue its transformation driven by a drive-for-scale and the ability to make appropriate investments in technology and innovation. The industry consolidation trend we have witnessed for decades will accelerate.
In parallel with industry consolidation, rapidly accelerating technological advances are creating entirely new business models impacting every aspect of how people and businesses manage their financial lives. Technology has created a massive increase in the availability and use of data, shaping consumer expectations and the ability of financial institutions to use consumer data to price, target and market their products and services.
To compete and remain relevant, financial institutions are adopting new technologies at an ever-increasing pace. Demand for online access has caused a shift towards more direct and immediate interactions that allow consumers to take more control over their financial lives, and financial institutions have had to shift their focus to demonstrate how they add value, including the provision of exceptional (and personalized) service experiences.
In parallel, competition in the financial services industry is intensifying. Broad-based access to the latest technological capabilities, coupled with the breakneck speed of change, has destroyed industry barriers-to-entry and has allowed tech-centric start-ups to compete in a highly effective way. As new entrants and FinTech firms entice consumers and small businesses that demand customized and targeted experiences, traditional players - like Credit Unions - have to re-think how they do business.
In particular, the value FinTechs bring to their customers can be measured in the real, everyday difference they make for those who do business with them, and the result so far has been easier online offerings and more competition. Within this, the role of technology has evolved from being a vital enabler in the operating models of the traditional financial firms to driving, shaping and redefining business models and revenue streams.
To remain relevant, credit unions will need to embrace digital transformation together with new business and organizational models which are more agile and collaborative, emphasizing the successful delivery of exceptional experiences for their members.
As digital technologies weigh in all consumer and business interactions, people will appreciate, and indeed demand, the provision of creative and customized digital services. Understanding the digital trends as well as the stated and still unarticulated needs, will allow credit unions to devise successful digital services strategies. Effective service offerings will thrive on availability, convenience, localization, personalization, transparency and trust.
As a key component of “digital”, electronic payments are accelerating the transfer of physical and digital goods or services. With the growing prevalence of instant mobile payments and interaction habits, consumers demand ubiquitous access anytime, all the time. Regulators in various parts of the world are also stepping-in to spark innovation and open the payments domain to a broad ecosystem of digital service providers such as FinTechs and companies outside the financial sector.
This post is provided by credit union advocate and technology thought-leader Mark Sievewright. He recently joined World Council President and CEO Brian Branch for a WOCCU COVID-19 Response Committee webinar, Driving Digital Transformation in the COVID-19 Era. Sievewright is the founder and CEO of Sievewright and Associates, and the co-author of the new book, Digital Life: A New Era in Financial Services, which is on sale now.