Unleashing digital transformation in Credit Unions

The financial sector around the globe continues to experience significant transformation and the latest developments mean that credit unions and their members are perfectly poised to be the beneficiaries.

The Credit Union (Amendment) Act 2023 enacted in Ireland in mid-2023 has ushered in a new era of digital transformation for credit unions in Ireland, fundamentally reshaping how they interact with members. As financial services evolve, credit unions, which have long served as community-oriented institutions are now unhindered in embracing digital innovation.

These changes represent part of an overall paradigm shift for credit unions in Ireland who have just witnessed a 21% increase in lending versus the previous quarter and a 10% increase specifically in mortgage lending. As a direct result of this new data, the Irish League of Credit Unions is pushing for a further relaxation of lending limits placed on Credit Unions by the Central Bank of Ireland. A report on this is expected from the Central Bank later this year and will be awaited with interest by the sector.

This renewed vigour and energy from credit unions in Ireland can act as a test case for other financial institutions which have historically been shackled by regulations. The case of the Irish credit unions can provide a valuable learning curve for organisations in other jurisdictions.

One immediate benefit of changes in the Credit Union Amendment Act for both members and credit unions is the freedom to lead with digital communications for member engagement. Until now, there has been a reticence to opt for digital-first communications due to varying interpretations of legislation but these latest developments have paved the way for streamlining complex customer journeys and introducing automated solutions which will result in enhanced member engagement and a significant reduction in operational costs.

A Changing Landscape for Credit Unions

Traditionally, credit unions have maintained close personal relationships with their members, typically relying on paper-based communication and in-person interactions. While this approach fostered strong community ties, in recent years as technology became pervasive in modern life, it revealed glaring inefficiencies for credit unions — particularly as member expectations shifted towards the kind of seamless, digital-first experiences provided by larger retail banks and other fintech companies.

The Credit Union (Amendment) Act 2023 represents a valuable step forward in addressing these challenges. It provides credit unions with the legal framework to implement digital solutions, particularly around the regulatory customer journeys such as of AGM notices and annual statements and other key communications. These reforms enable credit unions to shift away from manual processes, creating opportunities to streamline member journeys and reduce the cost to serve through automation.

Automating Customer Journeys

One of the most significant benefits of the new legislation is its potential to simplify and automate customer journeys. The Act has confirmed that credit unions can send AGM notices, annual accounts and other important documents via electronic means such as email or secure online portals. This shift is more than just a convenience — it’s an opportunity to consider the impact of automated customer journey playbooks across the lifetime of the customer. The net effect of this is that much of the labour-intensive aspects of traditional paper-based manual onboarding can be digitised and automated.

For example, as outlined in the Guidance on the Provision of Electronic AGM Notices from the Irish League of Credit Unions, credit unions can now adopt a more ‘hands-off’ approach to AGM notifications. Members who have already provided email addresses can receive notices electronically and those who have not can be targeted through a range of automated outreach efforts, including SMS and phone calls. The benefit of CustomerMinds’ Digital-to-Print Waterfall solution comes to the fore here as all members can be managed through a single communications workflow – simplifying an historically onerous process and removing the tedious de-duplication and cross-referencing which were commonplace in previous campaigns. As well as reducing the administrative burden, this approach drastically slashes the cost associated with print and postal campaigns.

Reducing Cost to Serve Through Automation

The move to digital and automated solutions directly addresses one of the biggest challenges faced by credit unions: the cost to serve. By automating routine communications and processes, credit unions can significantly lower their operational expenses.

Implementing an automated playbook for sending AGM notices, annual statements and other routine updates eliminates the need for manual processing and paper documentation. These communications can be securely delivered by email, SMS and WhatsApp — with the best part being that once the campaign is activated, it happens seamlessly in the background without the need for manual intervention. The Whihc50 platform from CustomerMinds enables credit unions to create automated journeys that are not only compliant with the latest legislation but also highly efficient.

These automated playbooks provide a solid foundation for scalability and a means for credit unions to accelerate their transition to digital. As credit unions grow and member bases expand, automation ensures that operational costs do not rise proportionately as they would with traditional print and post communications. The same playbook can manage communications for thousands of members with minimal human input, ensuring that the cost to serve remains low, even as demands increase.

A Digital Customer Lifecycle Playbook

For years now, the immediacy and convenience of digital solutions from larger banks has hindered credit union growth. As mentioned earlier, credit unions are fighting back with a greater share of the mortgage market in Ireland, which tallies with the performance of ‘competitive’ building societies in the UK and Australia too where digital transformation is said to be pivotal to future success. The lending landscape is changing and now credit unions have the digital tools to act as a springboard to for future growth.

The member-centric focus of credit unions has been curtailed by the legislative obstacles in the world of digital transformation. This member-first outlook can now be amplified by those same tools as credit unions leverage automated solutions to deliver an enhanced customer service from everything from resolving queries to loan application journeys.

Responsive, real-time reports

In previous years, the success or failure of marketing campaigns and the measurability of engagement across different customer journeys has been disjointed and fragmented. Through digital campaigns, credit unions have a more immediate insight into member behaviour, preferences and level of engagement. As a result, this new data allows them to be more responsive and adapt their strategies in real-time, delivering a more personalised customer experience at every customer touchpoint across multiple customer journeys. While the immediate cost to serve is a noteworthy reason to embrace digital, it must also be recognised that the indirect benefit of fostering longer-term engagement and improved customer retention also brings cost and revenue benefits way beyond that initial cost saving.

Summary

Regulatory obligations around digital communications have been a hindrance to credit unions in recent years as they watched competitors take advantage of digital solutions to drive growth. Once a key differentiator for big banks, the digital transformation has since been levelled, allowing credit unions to double-down on their member-centric approach with hyperpersonalised, data-driven solutions that will allow for a significant reduction in cost to serve and enhanced customer retention for credit unions, which look set to ride the crest of a wave as a result of recent legislative changes.