When I’m not “ready for my closeup,” a nifty photo filter can be a godsend, but it won’t remedy the skin that’s been giving me fits. For credit unions, it’s akin to putting a slick user interface (UI) atop a brittle legacy core. Surface-level aesthetics may boost appearances but won’t make people happy when real-life experiences don’t deliver.
Today, fintechs and challengers seek tech that allows flexible product configuration, accelerated time to market, and scalability to support fast-growing customer bases. Larger organizations want this, too, but rationalize patchwork fixes motivated by worries about modernization risks. Still, consumers continue to want gorgeous, frictionless, and relevant banking experiences that outdated mainframe systems can’t support.
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This highlights two technology truths for all credit unions:
Doing nothing isn’t an option.
Predictability is crucial.
So, how can credit unions ditch the filters and leverage new banking technologies to corral risk, promote profitability, and deliver better experiences? Let’s examine a few options:
1. Start small.
If we’re talking skin again, starting small may begin simply with a new face wash that’s better for my skin type. For many credit unions, it means starting with one or a few products for which business cases have already been built. This approach can be easier to sell internally, piloted with a subset of members, and serve as a launchpad for broader renovation.
2. Ensure executive sponsorship.
Leadership should be 100% behind projects to remove barriers and promote efforts as opportunities to show how quickly and capably a profitable product can be configured on the new stack. Proper governance is also needed to support momentum and quick decisions.
3. Get a handle on data.
Project prerequisites of ordering, standardizing, and cleaning data can be daunting, especially for larger credit unions. When this stems from uncertainty about how to access, cleanse, and break data down, partners like Temenos—which has helped others address the same issues—can be tremendously beneficial.
4. Stand up a separate instance.
Moving from one core to another in one fell swoop isn’t an option for most credit unions. Many find success in standing up new stadiums next to existing ones for parallel performance and product offers that legacy infrastructure alone can’t support. This approach eliminates core system disruptions and provides a path for the new technology stack to prove itself before wider implementation.
Real change and removing risk
Clever photo filters make for in-the-moment fun—but the change isn’t real. In contrast, thin-core solutions designed with purpose-built and flexible application programming interfaces (APIs) and microservices now make it possible for credit unions to safely and successfully implement technology changes.
Inaction in the face of member demands for better banking experiences isn’t a sound business strategy. Neither are rip-and-replace approaches to modernizing infrastructure that introduce great risk without certainty of success. Avoid the pitfalls of revolution and opt for impactful evolution that new technology provides by starting small, ensuring executive sponsorship, taming data, and standing up separate instances to show project merit and scalability.
The Winter 2023 issue of Credit Union Magazine explores award-winning marketing, board training on a budget, developments in instant payments, service to small businesses, and NCUA’s final rule on member expulsion.
