The recent CULytics Webinar on Practical Advice for your Digital Strategy involved the discussion between Jeffrey Kendall and Dawn Brummett who pick their brains through expertise gained over the years by observing credit unions undergoing the journey of digital transformation. Jeffrey Kendall is Senior Vice President and General Manager at Global Banking and Financial Solutions of KONY DBX, and Dawn Brummett is Senior Vice President and Chief Operating Officer at ORNL Federal Credit Union.
They help us understand the steps that credit unions undergo in the journey of digital transformation and how can digital transformation be broken down into smaller tactics.
ORNL Credit Union was chartered in 1948, initially to serve Oak Ridge National Laboratories and is now a community chartered credit union at 2.1 billion in assets, 162,000 members, 29 branch locations and a large call center to support that infrastructure as well. On its 70th anniversary, they gave huge dividends to their members, with a motive of returning value back to the members.
In the past five-ten years, this credit union has grown tremendously. According to Dawn, this growth can be attributed to
- Strong leadership over the history of the credit union and Board of Directors who are forward thinking and willing to take on new projects and new directions as it refers to digital transformation and similar endeavors.
- A strong membership base and focus on those members.
- Ensuring that value is returned to these members.
- Providing services that they believe are important to the members, and when and where the members need them.
- Being where the members are through different branch locations and strong presence has served very well.
- HR who supports employee development and offers conveniences like education support and leadership development programs to ensure that strong leadership is built in the credit union.
Some key objectives of ORNL FCU :
- The credit union looks through a membership perspective and the ability to return value to the members in an ongoing and sustainable manner whether through gestures like membership dividends, or rates on deposits and loans, or services that it can provide at a higher level.
- It focuses on the delivery channel so that the credit union can balance how the members choose to be served and hence, stay on top of the mind. Whether it is physically, digitally or both the credit union makes sure that it has an alignment which meets the needs of the current member, while at the same time preparing for changes that members will undergo in their behaviors.
- Keeping in mind accessibility for and convenience of members and ensuring that the task of banking does not become a burden and making it easy for members to do business with the credit union.
- Being there for the members to help them with the money management task and making available different channels to them and ensuring that the credit union supports those channels, in an efficient, effective and ongoing manner.
According to Jeffrey, in similarity to Dawn’s practice, digital transformation is not about how much you are transferring people to mobile versus branches or call, but it is about optionality and flexibility and making sure that the customers are receiving what they want.
ITM Technology by ORNL Federal Credit Union has gained a lot of favor from its members and they have adopted it very swiftly. By adding that type of equipment in the market, they have been able to extend their hours efficiently and effectively.
When did ORNL FCU first decide to “go digital”? What were the initial drivers?
Back in 2013, the credit union made a very dedicated project around it when they saw digital as the primary driver for the credit union and realized that they are not in a position to move forward with what they have and provide the level of service that their members deserved and expected. The first part of their mission was to engage with the current vendor at that time and understanding the vendor’s roadmaps, investments, and plans as they were related to digital. The second part of their mission was to compile the list of vendors and explore the market for what other digital services were available, at the same time making sure that the board had the appetite for the change. At the time the change was made, the credit union was not much leveraged in digital. It was a much smaller proportion of members that were in the digital channels especially mobile, and they had a much higher adoption rate of the desktop. To identify the reasons for this disparity they made a scorecard and listed the things that they wanted out of the new vendor and then branched out to a second priority list. Followed by this was research of practices in digital services offered by other credit unions known in the market. Before the project, they had separate vendors for digital, vendor and online banking. This had begun to be a problem because the members were not receiving the seamless channel experience when they went from one device to the next and they had a different user experience which was a problem for digital members since they did not expect that, they planned a seamless experience.
In this research, it was their objective to replace two vendors with one vendor to provide a consistent member experience, so they compiled all the information and reviewed a lot of vendors, and through the initial reviews and scorecard comparisons, they weeded the large list down. They wanted to make the necessary change for the credit union, even if it meant going with a vendor who was not well known in the credit union space. The desire was to go with a known vendor in mobility to set a high bar, also making sure that the vendor could work well with other vendors. By recognizing the ability to integrate and ensuring that all requirements were fulfilled, within a restricted timeline(they aimed to go live in 2015, and did a pilot in 2014), they chose the vendor who could be quick and could support the timeline.
According to Jeffrey, time to value and speed to money are the critical drivers for most credit unions concerning the importance of a partner.
When did ORNL FCU decide to go with a platform approach?
(It was a shift from existing core processing provider.)
The previous vendor of the credit union had a slow ability to roll things out in the market and the ability to consume things in a customized fashion, which was a concern for them.
ORNL FCU wanted the ability to customize and to experience the games of being on a platform where there is an ongoing roadmap and whether they can consume the development that was going on with their partner and take advantage of that. Most importantly, they also did not want to be limited by these abilities. also did not want to be limited by these abilities.
On customization of platform and going after the targeted audience.
They were the presenting sponsor for the Dogwood Art Festival, which is celebrated for the appreciation of art and beauty of the area but also included a music festival. The credit union wanted a way to reach out to the public, however, the public didn't have any way to tie in a single location to purchase tickets without walking in a branch or a different location. They observed that it was an excellent opportunity to use the app, put it out there, create a schedule for all of the events and allow members to purchase their tickets. The members would be able to use the app throughout the festival for functions like navigating the venue or knowing when an event is. It was loved by the members and was fun and engaging for them. It was also a very quick project.
How do you determine when to make dramatic shifts vs incremental changes while exploring new services and capabilities in digital?
Dawn answers that when the credit union participates in strategic planning each year, it creates a three or five-year plan, but each year it revisits it and ensures that it is in alignment with the project, from both a budgetary and business/ strategic standpoint. It is advised to try to stay as connected to digital innovation as possible.
For ORNL FCU it was essential to stay aligned with how members are using not only their services but also the services within and outside the industry. The aim should be to adopt the technology, but not before there are security measures to protect it or before members can use it. She mentions that before rolling out any change, the credit union always asks, “if we do this, how will our members use it ?” and try to go through the intended changes ( the ones which are not planned) and look out for consequences if the change is rolled out. They look out for vendor insights from the market so that they can balance both adoption and implementation.
How do you and the leadership team at ORNL FCU define success in digital?
This year ORNL created a call center for digital services, which is currently the most utilized branch from a transaction standpoint and they measure digital at its call center. The measure of enrolment in its own is not sufficient, the actual utilization of the application is the focus. So the credit union measures the number of active users on the platform, how quickly these active users are growing and migration of member activity. For them, it has been a steady decline in branch transactions, whereas in the digital space it has been an upward trend. This analysis helps make sure that the right resources are invested in the right place. To measure the utilization of new functions, each feature is monitored to understand how the members are responding and utilizing this new feature. This is reviewed on a monthly basis against the investment and other metrics. They try to ensure that there is an upward trend in usability and proven usability.
Growth vs cost takeout for the benefit of digital.
Dawn answers that while building the volume in digital transformation, the credit union sees in a lot of cases an opportunity to not replace staff, which is one of the benefits which comes from the transitioning in your channel , but it's not something that would not be considered successful if it was not possible to eliminate full-time employees, certainly if the channel traffic dictates the need for full-time employees. The credit union would want the full-time employee to be there and provide an excellent member experience wherever the member is. The effect that it has from a cost perspective is that they see the ability to consolidate vendors instead of eliminating staff. Just by analyzing the contracts, reviewing them, taking advantages of services that are offered directly from the vendor versus plugging in a third party has drastically reduced costs.
What would you do differently in executing your digital strategy?
Dawn shares how changing vendor was a new experience for the credit union and they were not ready to completely let go although they had not hosted their digital services in the past, yet still made the decision to do that.
The advice that she shares is to choose a vendor that you believe in the skill set and then trust those skill sets and only take on what you know your team has the skill sets to balance because it will make the implementation much smoother. The Credit Union had to shift a lot of work to people who were not prepared for that level of work. So if you are looking to make a change know what your vendor can support and what you can support in a sustainable manner that doesn’t stress your resources and pull them away from other duties that are going on a day to day basis.
Secondly, the credit union over customized their very first implementation and then worked on pulling the customization out to make it a cleaner application and that according to her, before customizing it is necessary to look at the platform without customization, make sure that when you begin to add or remove things they are relevant. They had a team which had expertise in UI UX mobility, but they also had some conflicts with internal teams who thought they knew better, so it was a big lesson.
Digital transformation is now a lot more cost effective than the past.
What digital solutions do you think will have adoption with CUs in the next 18-24 months?
Dawn answers that In general, credit unions are going to be faced with a decision of how they adopt a voice in chat and that it's going to be a commonplace. Chat is already commonplace and in the majority of apps so how it is adopted and when you adopt it is something that all credit unions will have to consider.
She adds that as ORNL is reviewing the voice banking, what she would advise others is to ensure that they have a good back in security on the voice banking.
Secondly, onboarding and lending most of the most of the vendors visible, it is either you have multiple vendors to offer each service or the services you do not like, but you would undoubtedly be looking at a better member experience for both onboarding and lending. Onboarding and lending solutions on mobile are going to be critical features for moving forward.
What are some key pillars of the digital framework from your perspective?
According to Dawn, the platform with the user experience and interface being top of mind is one of those pillars. It has to be appealing to both your current members and the members you are trying to attract.
The ability to look forward and being future proof at the same time, so it goes to say that we are not solving for today’s problem, but we are settling for a problem years ahead of us. Even if you have everything, you need today if you can’t pivot quickly as the industry develops so rapidly that your ability to pivot becomes very important. There should be alignment and integration with core systems, the ability to be flexible, adaptable should be in both you and your partners.
As we move forward because there need to be tools out there to make it easier to use the analytics and this is certainly an important pillar.
Towards the end, she talks about voice and video banking and how chat is going to be more utilized by the members and that the video requires dedicated space and time. For ORNL, it is voice banking first, but video banking is on the roadmap as well.
Your investment in digital can allow you to expand your base beyond your branch locations.
The webinar ends with advice from Dawn for credit unions half the size of ORNL and twice the size of ORNL.
For credit unions half the size, she advises that they should not let the exercise of digital transformation be hindered by what their thoughts are about the same. You can create a box and put yourself in a situation where you are not allowing yourself to see all of the opportunities by doing so.
For credit unions that are larger, she suggests that the credit union should not forget about the member experience and try to balance it. The credit union should focus on personalizing experience for the member in a digital environment and make it feel like a trustworthy credit union
A credit union should always be able to leverage its size no matter what the size is and focus on creating innovative, cost-effective solutions. It is important that your list of objectives is transparent so that vendors can offer recommendations instead of offers and what you should want out of them.