5-credit-union-onboarding-system-challenges

Onboarding is your credit union's best opportunity to make a memorable first impression. Like all great relationships, though, that initial encounter is an important one. Absent a solid onboarding system, you may not be bringing on as many members as you could. The onboarding process is one of the most critical for your credit union. A good process supports new member acquisition and provides the foundation for continued growth. It’s about providing the best experience for your customers.

5 Challenges in Credit Union Onboarding Systems

Credit unions face a number of challenges, particularly when it comes to digital transformation. In this article, we’ll explore some of the most pressing issues. Of course, there are multiple ways to tackle any problem, but we’ve also included some solution ideas to get you started.  

1. Forced Digitization

For credit unions, the pandemic accelerated the digital transformation as members went online in large numbers. This was challenging for credit unions that were unprepared. For one, members taxed the scalability of systems that had limited processing capability. 

But the most important factor was the customer experience. Customers often struggle to transition to digital. A McKinsey study found that:

  • The most satisfied banking customers are frequent users of digital.
  • The second most satisfied users don't use digital tools at all. 
  • The least satisfied use digital infrequently. 

Clearly, there is a learning curve. When users understand the tools and use them frequently, they’re happy. But when they use them infrequently, they become intimidated and confused, interrupting a seamless experience. The study also says that many banks don’t actually know which parts of the digital experience work well and which do not.  

It’s likely that this data holds for credit union members, as well. If customers are unsatisfied and abandon the onboarding process, however, you can assume that something isn’t working for them. It’s critical that the onboarding process is intuitive and frictionless. 

Challenge: There is a digital learning curve.

Solution: The digital learning curve is one that will flatten as more and more people gain experience with digital tools. But for now, credit union solutions must be intuitive and easy to use without ever having to visit the branch. Credit unions don’t need to reinvent the wheel. Using Instnt-powered quick and easy forms, your members will have a smooth user experience. 

2. Branches and Service Centers

Many credit unions still rely on an in-branch legacy platform during the branch onboarding process. This can result in a disjointed workflow, manual processing errors, lengthy delays and the inability to identify fraud. In addition, customers may experience long wait times for something they could accomplish online in minutes. Nonetheless, some people will continue to prefer to use branches and service centers. 

But, as the old Bob Dylan song goes, “the times they are a-changin.” When Marine Credit Union in La Crosse, Wisconsin closed 18 of its 37 branches in 2020, they expected to lose quite a few customers. In reality, they lost 806, slightly more than one percent of their 76,858 members. Where did they go? Most of them went online, of course.

The challenge for traditional credit unions is to resist the urge to replicate old, inefficient systems on their websites. This will not create the customer experience that members expect as they transition online. Credit unions must perform the necessary due diligence and comply with regulations. In fact, there is considerable room for improvement during the KYC part of the process

Challenge: Branches will continue to use legacy systems.

Solution: Steps can be automated and streamlined in the branch to mimic the online experience. Tellers and service representatives can use tablets at their workstations to take advantage of online tools. Representatives can also demonstrate how to use these tools so that members become increasingly self-sufficient.

3. Technology

Credit unions come in all sizes. The smaller ones don’t always have the scale to afford new technology. Even larger credit unions may struggle, as all businesses do, to keep up with the technical debt they have already incurred with their legacy systems. Plus, technology is becoming increasingly complex. Artificial intelligence technology requires tremendous computing power as well as specialized knowledge that is not yet commonplace. The investment required to keep abreast of new developments can be prohibitive. 

Challenge: Technology is complicated.

Solution: Credit unions can work with fintechs and other partners like Instnt, to provide a comprehensive onboarding experience. Instnt allows credit unions to deliver the service that members expect without needing to put a team of engineers to work.

4. Customer Expectations

Apparently, when Amazon set the bar for online service delivery, they set it high. Customers use mobile applications or online banking services with the expectation that it will be painless and easy. They are exercising their preference to bank from the convenience of their office, sofa or backyard — anytime, anyplace. It’s the digital promise .... fast, intuitive, and simple. Customers do not want to come into the branch to complete their applications. If they do, the credit union may lose out: one of your competitors will provide a better experience. 

Challenge: Customers expect a great experience.

Solution: Ensure that your onboarding solution provides a seamless, frictionless experience for your customers from start to finish. The best way to do this is through periodic usability testing. Of course, the best onboarding solution providers like Instnt have you covered. But, you’ll want to see for yourself that your members have the experience they expect. 

5. Regulatory and Compliance Risks

In the past, AML compliance did not apply to credit unions in the same way as banks. That’s all changed. In the face of rising fraud and other cybercrime, the rules have changed. The burden is large for all financial institutions. It’s even greater, however, for smaller credit unions. Those that rely on manually intensive legacy systems have a mountain to climb. These systems are difficult to maintain, expensive to operate, and prone to error. The regulatory penalties are stiff for mistakes, omissions, and non-compliance. 

Challenge: AML is the new credit union boogeyman. 

Solution: Credit unions that expect to remain competitive in the future will do so because they are using superior technology solutions to create the best customer experience. Amidst rapidly changing compliance regulations, manual compliance processes just won’t cut it. The price for non-compliance is steep. Credit unions should either buy or build technology solutions. Human beings are too prone to error.

Combat Credit Union Challenges with Instnt

Credit unions are typically constrained when it comes to IT resources, so the best option is to partner with a company like Instnt. We provide the security credit unions require, as well as $100MM in annual fraud protection. Onboard and keep great customers with innovative Instnt technology.