Banks and credit unions have long struggled with disparate, specialized systems that cannot share data nor present staff with a comprehensive picture of performance. The loan origination system, card system, core processing system, and relationship management systems, to name a few, often operate in isolation unable to readily exchange information short of manual uploads and processes. With the emergence of digital banking came the opportunity to correct this situation, and provide a single, unified vision of the relationship. So, what happened?
History Sometimes Repeats Itself
As digital banking interfaces began to hit the market, providers focused on the core processing system. They delivered accounts and transactions to members from the comfort of their own homes. But consumers demanded more. They wanted to be able to pay bills and move money and deposit checks remotely. To solve this challenge, credit unions looked to their partners, the banking providers and fintechs. They asked them to build and embed their capabilities within the pre-existing banking sites. In many cases, this was accomplished with a link from within digital banking out to the third-party fintech. The consumer was notified that they were leaving the financial institution’s site and, in some cases, would need separate credentials to use the third-party service.
This wasn’t well received – not only was it a hassle to have to remember two sets of credentials, but members didn’t necessarily trust this unknown third-party as much as they trusted their credit union. Credit unions and digital banking providers had a tough choice to make, build and support all these third-party services themselves or find a better integration method. Single sign-on seemed like the answer. Members would not have to authenticate multiple times and the services could be white labeled so it appeared to be a credit union offering.
Taking Online Service Delivery to the Next Level
Fast forward to today and something is still missing. We now have multiple parties of one rather than multiple parties serving one. While the member can access all these disparate fintech services within the singular experience of digital banking, the services are still operating very distinctly. When a user is looking at their account balance, why can’t they see a “real funds balance” that reflects bill payments sent but not yet cleared? Why shouldn’t a loan application be pre-populated with the consumer’s personal information that the financial institution already has access to? When fraud is detected on a card, why can’t the consumer dispute a transaction, cancel the compromised card, request a new card, and add it to their digital wallet all from a single unified workflow?
While single sign-on may appear to create a unified digital experience, it is still overlooking a key component; integration between fintechs. Services cannot be delivered side-by-side in silos with no exchange of experience or data. Members not only want ready access to all these third-party services, but they also want them to present a single comprehensive picture of their relationship with the credit union, from anywhere within their digital banking experience.
Partnership is Key
To truly deliver this integrated experience, credit unions and fintechs need to work better together. They need to purposefully partner to share information and feature functionality. Take the best of each offering and weave them together into a logical user journey and flow. As members look more to digital channels for delivery of what used to be very-hands on, consultative experiences, credit unions need to be prepared to keep it consultative, even virtually. An ideal experience should carry the user seamlessly from service to service with their information and activity following along to inform the next action or decision. Credit unions should be mapping out those paths for the member and then hooking the appropriate services into that path. Members shouldn’t be expected to always know where to go or what to do next.
Our bodies were built as a complex set of systems that share information to inform and guide the actions of other systems. The nervous system itself exists exclusively for the purpose of information exchange. When we need to exert ourselves, a message is sent to our heart and lungs to work harder to supply the necessary blood and oxygen. When we need to cool ourselves down, a message is sent from our hypothalamus to trigger our sweat glands. The delivery model for banking technology shouldn’t be any different; anticipate what the member needs and serve up the right mix of services to satisfy the need. The technology to accomplish this exists today. It requires a shift in approach and thinking though.
Credit Unions Architect the Experience
Fintechs need to continue to excel at solving problems with their products, but they also need to think of them in terms of pieces of a larger puzzle. If services are architected as re-usable components that can be exposed as APIs and delivered via the cloud to be consumed and aggregated with other services, we begin with the end in mind. Credit unions know their members best. They should be the ones to define what those member journeys need to look like and then the fintech community needs to be prepared to raise their hand and say, “I can fill some of those gaps.” Through re-usable services and open exchange of information, credit unions can deliver the experiences their members demand.
The open banking movement is gaining momentum worldwide for good reason. In 2022, there will be an anticipated 200 million digital banking users in the United States and financial institutions are uniquely positioned to be the primary trusted adviser to those users. By creating and delivering a truly unified user experience that anticipates needs and makes seemingly routine processes exactly that, financial institutions can enjoy deeper, longer lasting relationships with their customers.
Author: Dawn Sirras, SVP Fintech Partnerships
