What future technologies will help credit unions compete with banks, payday lenders, and nontraditional financial providers in the future?
Those that help credit unions connect with members, says Joerg Engelhardt, vice president, financial industry marketing, for Diebold.
In the first of a two-part series, Engelhardt shares his impressions about technology innovation and offers insights into what credit unions can expect to see in the months and years ahead.
Credit Union Magazine: What new technologies will Diebold provide in the next few years that are largely unknown at this point?
Engelhardt: Many of the technologies Diebold introduces to the financial market aren’t unknown; it is the application of the technology that’s unique.
We seek innovative ways to apply technologies that have already been proven in other industries. And we do this in a way that supports a credit union’s business priorities of increasing operational efficiency and improving consumer experiences.
A 4G-LTE connected ATM, for instance, takes the successful mobile communication network popularized by mobile phone providers and applies it to the financial services sector. This allows advanced functionality at the self-service channel, such as two-way video interaction at the ATM.
The concept of a virtualized ATM is another example of applying proven technology to a different channel. In this case, virtualization technology that has been applied in back-end financial systems is applied to optimize the ATM channel.
By sharing consolidated resources across an ATM network, credit unions can operate their ATMs more efficiently and, ultimately, better serve their members.
It’s important to note that technology in today’s environment is not “one size fits all.” Technology providers and service firms are doing more to customize technology applications to ensure the solutions credit unions are implementing are strategically integrated with their existing business structures.
Because technology—both on the provider and credit union side—changes rapidly, service-based partnerships are emerging as a preferred business model.
Credit Union Magazine: What technology will have the biggest impact on CU operations, marketing, or other disciplines in the next decade?
Engelhardt: Mobile technology has already changed the consumer landscape and will continue to revolutionize how credit unions interact with their membership and recruit new members. But a credit union’s focus shouldn't be solely on what technology to deploy—it also must be on how the technology is applied.
Some technology providers may aggressively push credit unions to adopt the latest and greatest mobile tools or functionality, but mobile implementation must be done strategically.
Credit unions should start by determining how the mobile channel should be integrated with existing channels in a way that meets consumers’ expectations and is consistent with their business priorities.
Credit Union Magazine: What technologies will be most helpful to credit unions in competing with banks, payday lenders, online financial providers, and nontraditional financial providers in the decade ahead?
Engelhardt: Looking forward, using products/solutions that enhance credit unions’ “connectedness” with members will enhance their competitiveness.
Knowing what offers to market, knowing each member’s preferred mode of interaction, advising members on the best plans of action for their financial situations, and understanding or anticipating each member’s financial needs will help to build the trust that it takes to keep and retain lasting relationships.
The emergence and rapid growth of mobile has heightened consumer expectations and highlights the need to be strategic when incorporating new technologies.
Credit unions shouldn't adopt new technology just because it’s “hot.” They need to validate that there’s a need from the consumers’ standpoint before jumping on the latest technology bandwagon.
If there’s a need for a new technology, the credit union should implement it strategically so it’s integrated with other offerings and not a stand-alone component.
For the last decade or so, credit unions have explored options for transforming the branch environment in a way that combines key technologies to support process efficiency. Diebold works with credit unions to implement branch transformations across all channels in a way that drives member retention and the consumer experience.
The result is a true experience-based sales environment in the branch and a deep connectivity across all delivery channels. This environment enables credit unions to implement new technologies strategically in a way that benefits members and their [own] well-being.
Credit Union Magazine: How big of an issue is security in this new environment?
Engelhardt: Security will continue to be a crucial component of a credit union’s operation as technology drives the continued evolution of the threat environment.
Especially within the mobile channel, where technology changes rapidly and competitive pressures may entice credit union executives to move more quickly than in the past, securing credit union and consumer information must be a top priority.
Credit unions need to stay one step ahead of the threats, which often means relying on industry partners to constantly address vulnerabilities. As digital criminals continue to become more sophisticated, digital security should become a heightened priority for credit unions.
Credit unions can capitalize on an opportunity here to deepen their member relationships by educating members about the potential risks of the digital landscape. Because security has always been—and will continue to be—a priority for credit unions, they have an opportunity to educate their consumers, especially where new technology is involved.
As changes in technology accelerate, consumers will expect their financial institutions to educate them about the risks in the new digital spaces and provide guidance on how to conduct transactions securely.
Stay tuned: In part II of this interview, Engelhardt will reveal how virtualization and cloud computing may affect the financial services industry, and how credit unions can use technology to attract and retain young adult members.