If there is one thing that is certain with COVID-19, it is that the question is not if digital banking has to be deployed, but how. Unfortunately, many credit unions have learned the hard way that their digital banking capabilities are not at the level they need to be to support a member base sheltering at home. The good news is that there are still ways to make a positive difference for current and future members by rolling out enhanced digital banking offerings.

Now more than ever, credit unions need to prioritize digital capabilities that enable their members to access all their financial needs in the palm of their hands. And the demand is high. In a February 2020 survey, Cornerstone Advisors found that top priorities for financial institutions were growing deposits, achieving new customer growth and launching new banking products.

The challenge many credit unions face is that implementing digital banking offerings traditionally has meant having to overhaul the core processing system, which, with COVID-19, won't be an option for many who may have thought about it. However, with the advances in open banking support and APIs, credit unions can now move much more quickly to update their digital offerings without a conversion. This enables them to select the tools needed to help their members access all their banking needs from their smartphone or computer.

Lessons From COVID-19

Between managing SBA loans, navigating the Paycheck Protection Program process and working to help members manage finances during job losses or pay cuts, credit unions have their hands full in the short-term. But once all this is over, they will need to revert back to business, and the challenge will be magnified since many tasks must be managed from afar due to reduced staffing at branches and members choosing not to conduct business in person due to concerns over the health and safety of themselves and others.

On top of the logistical hurdles, an influx of back-office needs are creating challenges due to their volume and the fact that they must be navigated from a distance. Some credit unions already face challenges when it comes to account opening, fraud management tasks such as resetting a PIN or blocking a card, and even the printing and shipping of new debit and credit cards – and the pandemic has made things even more difficult. Credit union employees have become overwhelmed with requests and are working around the clock to ensure they do not sever members from their accounts or even lose those members entirely.

While credit unions face many challenges, now is also a great time to incorporate focused digital solutions that meet members' needs and help make day-to-day financial goals more attainable.

The Core Becomes the Foundation for Building New Solutions

When considering digital banking options, credit unions have too often felt stuck between two extremes. On one end, they can stay with their current core provider. This has traditionally limited them to the offerings and partners of that core provider, and depending on the age of the core, it might come with some serious technology limitations to incorporating digital solutions. On the other end, they can carry out a complete core conversion, which carries its own risks in cost, effectiveness and training. And of course, during an economic downturn, it is common sense to say that many credit unions will think twice before committing the capital needed for a core conversion, and more importantly taking on any lethal risk (and a core conversion is a very risky process).

However, credit unions can take advantage now of banking's evolution to a more open environment by keeping their core as the foundation, and launching new banking products and digital services on top of it. Digital banking can now be implemented as a hub that sits on top of the core, connecting via a database integration, API or batch process to communicate account data.

Using this hub, credit unions can select the digital banking tools they need most, including online account opening, managing virtual and physical cards, digital wallets or transaction controls. The individual tools can be built like Lego bricks to create custom services for members.

For example, a credit union may create a tailored digital onboarding service so members can open accounts, order physical cards, utilize virtual cards that are so necessary in a pandemic situation, and operate their accounts in real time 24/7. As a self-service bundle, new members can quickly open the account they need and begin using payments tools virtually. It would also ease back-office and customer service demands due to its self-service nature.

Credit unions could even put together bundles that address the specific needs of parts of their member base during the pandemic. Families trying to help elderly or sick family members need a suite of offerings that meet the unique needs of managing someone else's funds while also protecting against fraud. A digital bundle combining digital payments, transaction controls and online account management would assist these family members and caretakers without putting the health of their loved ones at risk by requiring in-person interactions.

Due to COVID-19, credit unions have been put into a sink or swim situation. By offering the right kinds of digital banking offerings that can be implemented in a quick, cost-effective manner and provide real-time self-service options, credit unions can ensure they do not become a COVID-19 casualty.

Arcady Lapiro is Founder and CEO of Agora Services, an Atlanta-based fintech serving credit unions and community banks.

Instant Insights /

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