The changing tech stack

With an industry in flux—what are the smart ways to move the “providing a better member experience” needle across all channels?

It's a common challenge most financial institutions face amid a fierce battle for deposits, loans, and convenience. The answer increasingly lies in an array of technologies and strategies to help bridge the gap and modernize legacy systems.

New data from CFM+NXTsoft’s recent survey of 384 financial executives sheds light on what credit unions are focusing on and the tactics they’re using to get there.

1. Technological progressiveness has remained stagnant while most executives give themselves a so-so grade.

Overall, financial institutions are feeling slightly optimistic about their technological progressiveness, giving themselves a 62%. While most agree there is work to be done, it seems executives may be stuck, as this ranking remained stagnant year-over-year when compared to CFM+NXTsoft’s research from 2022.

While there are industry leaders and laggards in financial institutions of all asset sizes, the average tech progressiveness score for financial institutions under $500 million in assets is five points lower (60) than for institutions above $500 million (65).

While feeling a little behind on their efforts, the majority of executives agree that improving banking experiences across all channels remains a top tech priority. Seventy-two percent of respondents say enhancing the digital banking experience is a top priority, while 63% say achieving greater sales growth, and 61% say improving the branch experience.

2. Digital strategies dominate the quest to improve member experiences.

To create a better member experience, 69% of executives are focused on digital onboarding, while 63% are trying to improve their mobile app.

With such a strong focus on improving digital onboarding and services to meet rising consumer demands, the anticipated rise of embedded fintech and banking as a service is real. Sixty-eight percent of financial institution executives consider integrated fintech partners critical to their technology investment strategy. That makes it even more critical for API connectivity to integrate these services directly into banking cores, and mobile apps to provide a seamless member experience.

Reducing transaction times and improving self-service are in a close fight for the third top tactic, depending on asset size. Financial institutions with more than $1 billion assets are keen to invest in self-service machines, while smaller financial institutions are looking for ways to reduce transaction times.

3. Financial institutions are seeing a higher return on their tech investments.

More executives are seeing their investments pay off. More than 47% of respondents have seen an increase in wallet share from their tech investments—which is 12% higher than in 2022. Similarly, 32% say they have reduced their FTE spend (up from 28% in 2022).

For financial institutions who scored in the more innovative category, 61% say they increased sales through tech investments. That’s almost three times higher than those in the lagging category.

Even amid uncertain economic times, 40% of executives say they are increasing their technology budgets. Somewhat surprisingly, cost cutting slid down in priority, falling from third last year to fifth this year.

4. The people part of the equation: Technology alone doesn’t equal success.

When asked what their top strategy was for increasing wallet share, 79% of executives said improving staff training, while 74% said upgrading mobile and digital offerings. Encouragingly, most recognize that building it doesn’t necessarily mean people will come. Convenience is key, but it doesn’t necessarily replace having the right advisory conversations to help convert.

When it comes to technology financial institutions are willing to spend money on, 85% of executives say the most important factor is the impact it has on the client experience. Integration ranks second at 68%, with pricing coming in at 62%.

5. Self-service and cross-trained staffing models deliver the highest ROI.

Executives who say improving the branch experience is their top priority are finding self-service machines and cross-trained staffing models are effective at increasing client convenience. Seventy-three percent of respondents attributed the increase to self-service, and 84% said universal associates were effective.

6. Cash recyclers are considered the most critical branch technology.

When executives were asked what the most critical branch technologies are, cash recyclers came in at No. 1 with 48% of the votes. ATMs (47%) were a close second, followed by ITMs (37%).

Nathan Moore is chief strategy officer at CFM+NXTsoft, a CUNA Strategic Services alliance provider.