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Credit Unions’ Approach to Digital Transformation (RPA, BI, AI)

Digital disruptions are swiftly taking over and transforming the financial industry. To thrive, Credit Unions need to offer a high-end experience to all stakeholders and deliver on enhancing expectations in a more agile, safe, and faster way. A vast ground of opportunities is here, and the credit unions have to be active enough to embrace digital transformation to grow exponentially in the long term. 

Credit Unions in the U.S. and most other countries are “not for profit” corporations that exist solely to serve their members. As members’ needs and preferences change, credit unions must adapt their offerings to remain competitive and relevant to meet these changing expectations. They must leverage digital transformation in ways that benefit their members. 

What is Digital Transformation in Credit Unions?

Digital transformation often referred to simply as digitization, moves from analog to digital. However, you only achieve true transformation if you also change the processes themselves. Additionally, digital transformation is more than just digitizing paper with OCR and database-driven “core” applications. It is about completely rethinking processes without installing or changing the underlying core technology. 

Digital transformation relies on small, lightweight, easy-to-program software tools that can automate various digital activities that impact your people, your members, and your operating costs. These new digital tools enable transformation without gutting entire business processes while maximizing your existing platform investments by adding a layer to your current technology “stack.” 

Digital Transformation for Credit Union Definition includes implementing and leveraging new technologies in Credit Unions, which do not use database-driven technologies or require installing new core platforms. 

Digital Transformation Tools for Credit Unions

Some technologies and tools credit unions can use to support digital transformation are: 

  • Robotic Process Automation 
  • Business intelligence and Big Data visualization 
  • Artificial Intelligence and predictive analytics 

Many credit unions have begun pilots with the above technologies, but many have not. If you have not started yet, do not worry; most credit unions we work with are just getting formed. So, it’s not too late to dip your toe into the pond of the emerging field of effective technologies.

Robotic Process Automation for Credit Unions as part of Digital Transformation strategy

One of the most commonly used tools for digital transformation in credit unions and banks is robotic process automation (RPA). RPA robots, or “bots,” mimic how humans process data between systems and how they perform repetitive tasks and processes. These bots are the “glue” that connects underlying, non-integrated applications like legacy systems to mobile banking. 

  • RPA bots are rule-based and can be easily configured to save thousands of man-hours on routine processes in a short period. Consider RPA as the next logical step in process automation for financial institutions. 
  • RPA is a significant time- and cost-saving tool. McKinsey estimates that 85 percent of organizations’ 900+ processes can be automated. This automation reduces human error and improves data accuracy. Nearly all (97 percent) business decision-makers IT believe RPA is essential for digital transformation. 
  • By connecting previously unconnected data sources, you can use RPA for a variety of tasks. Bots are ideal for everyday transactions and reconciliations in financial institutions that employees have to perform manually daily.  

Business Intelligence, analytics, and Big Data visualization for digitization in credit unions

Business Intelligence transforms data into observable insights and helps you make more informed strategic and tactical decisions. Big Data visualization works hand-in-hand with business intelligence to present this data from disconnected systems in an easily digestible format and management dashboard. 

When you think of business intelligence, you often think of dashboards that show you at a glance what’s happening, such as the impact of non-performing loans on portfolio risk or trends in customer churn rates. 

Business Intelligence (BI) aims to collect and present data that enables credit union management to make more informed decisions. BI uses analytics, data mining, and visualization tools to present current and historical data and identify trends. 

Artificial Intelligence and Predictive Analytics as a tool for the digitization of Credit Union

If business intelligence shows you what happened, artificial intelligence and predictive analytics show you what could happen. For example, these tools can predict how many members will leave your credit union for a competitor due to a decline in your Net Promoter Score (NPS). Machine learning is an AI technology that finds patterns in data and then uses what it learns to predict future patterns. Credit unions often use the following programming languages to build digital products based on AI or machine learning and predictive analytics: 

  • Python 
  • R 

Artificial intelligence (AI) and predictive analytics are future-oriented, learning from current data to conclude. For example, AI can identify patterns that indicate fraud in transactions and assess the fraud risk of individual members. 

Credit unions can use AI and predictive analytics to: 

  • Analyse members’ financial relationships and personal data 
  • Identify member behaviour and preferences based on location and activity context 
  • Educate members about different types of checking accounts 

Final Words

It’s not an exaggeration to say that every credit union area can benefit from digital transformation. Whether member-facing or back-office tasks, digital transformation can make your credit union more competitive, more agile in adapting to ever-changing economics, and improve its ability to engage members. 

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