Redefining digital transformation: How small credit unions can beat the big guys

Tune in to any business conversation today and you will soon hear someone mention digital transformation. That should come as no surprise. After all, two-thirds of Global 2000 CEOs are making digital transformation the core of their corporate strategies, according to market intelligence firm IDC. Moreover, 85 percent of enterprise decision makers say they have no more than two years to make significant digital transformation inroads before it affects the bottom line and knocks them behind the competition.

This is a boon for small credit unions, because their size – defined as less than $100 million in assets, usually with an average of four FTEs – offers a certain “digital agility” that larger financial institutions can’t replicate. Before I explain why, it is important to understand how a small credit can redefine digital transformation.

Digital transformation for small credit unions

Many regard digital transformation as little more than the shift from analog technologies to digital business processes. Implementation of software solutions that replace outdated, manual systems, while certainly key in an overall digitalization strategy, does not equal true transformation.

Digital transformation encompasses business and organizational activities, processes, competencies and models that fully leverage the changes and opportunities digital technology presents. Competencies that allow us to “be more agile, people-oriented, innovative, customer-centric, streamlined, efficient and able to leverage opportunities to change the status quo and tap into new information,” according to digital consultation firm i-SCOOP.

Thus, small credit unions – and maybe everyone – should think of digital transformation more as a methodology than an outcome. The journey rather than the destination, you could say.

Creating an effective digital transformation methodology, then, begins with a review of digital initiatives within the organization. How do your initiatives allow the credit union to master transformational change that delivers business results?

How you can beat the big guys with digital transformation

In many ways, this is where small credit unions gain an advantage. Size matters in this instance, because, while larger institutions have the luxury of discretionary funds to invest in new systems and technologies to meet perceived needs, they also have to manage larger IT stacks. Since “current IT systems” rank as the third largest obstacle to achieving digital transformation, according to SloanReview, your big competitors have their work cut out for them.

Small credit unions, on the other hand, must constantly—and consistently—work at finding new ways to more fully utilize the systems they have – and that’s often not a lot. Faced with resource constraints that limit their ability to invest in an ever-widening range of technologies, efficiency comes from more effective use of the technologies small credit unions already have and finding new and creative ways to use those systems.

Interviews with successful small credit union senior executives, conducted by Cornerstone Advisors, revealed a particular focus on process capabilities and operational discipline driven by their smart use of technology.

“We have highly efficient processes that other FIs don’t,” reported one credit union. “For example, our wire process has been greatly improved. We used to send a courier to accounting, who would go find approval, fill out a form, then route for approval. We’ve taken that from several hours to minutes. One added benefit has been in the review process. Instead of a query to pull and view reports, reports are put in a review queue with a proactive notification to managers to review. It’s made it easy for auditors to review, as well.”

Digital, nimble, competitive

New and matured technology, like enterprise content management, offers efficiencies for small financial institutions that help them remain nimble and stay competitive.

Despite the challenges and disadvantages facing smaller financial institutions, Cornerstone Advisors believes small credit unions can carve out an advantage in the market by “playing smarter, not bigger”—i.e., creating efficiencies in delivery processes that many would think would only be available to larger institutions with deeper pockets.

Considering how to best use existing systems, and making strategic solution investments to enhance existing core systems, is one way small credit unions can play smart – and achieve digital transformation.

For more, download Playing Smarter, Not Bigger: How Small Credit Unions Compete on Efficiency, by Cornerstone Advisors.

Michelle has expertise in the financial services industry and has been a contributor to the Hyland blog.
Michelle Harbinak Shapiro

Michelle Harbinak Shapiro

Michelle has expertise in the financial services industry and has been a contributor to the Hyland blog.

... read more about: Michelle Harbinak Shapiro