Increased competition in the banking industry and the rise of digital providers is leading traditional financial services to seek out ways to upgrade their technology. In 2020, over 69% of executives stated they had accelerated their digital transformation strategies to try to stay ahead of the digitization game. This is an increase on previous years, indicating a determined shift toward a more digital infrastructure overall. Back in 2018, just 9% of banks had launched a digital transformation strategy, while credit union software upgrades were accelerating at 16%.
Fast-forward to today and we are still observing banks and credit unions experiencing challenges when engaging new software and technology systems. So, let’s take a look at what is the best solution, which steps to next, and why partnerships with a reliable LendTech provider could be just what the client ordered.
Challenges to Upgrading Bank or Credit Union Software Systems
In countless consultations with banking and credit union professionals, when it comes to upgrading their technology—whether that’s loan origination systems for credit unions or a total loan system overhaul for a multinational bank—we’ve come across some commonly believed myths and challenges that prevent financial providers from engaging meaningfully. Let’s take a look.
Myth
Bank and credit union providers believe lending software is an all or nothing venture. It’s expensive and will involve a lot of work.
Fact
HES Core: Digital Lending Engine Behind HES Software While we can’t say a digital transformation will be a piece of cake. It is manageable and certainly not an “all-or-nothing” venture. It can be as simple as upgrading one module, such as onboarding, to make the client’s life easier.
Myth
It’ll involve on-premises deployment, which will be problematic for COVID restrictions let alone finding a provider in the area. Plus, there’s a lot of security risk.
Fact
Digital transformations in bank or credit union lending software don’t have to be on-premises anymore. Cloud solutions are gaining popularity and proving themselves to be efficient and secure. So, these could be an ideal solution for your business.
Myth
Digital lending is only for small credit unions and so are the software solutions.
Fact
Digital lending solutions are for banking and credit union services of all shapes and sizes. This can be from a small local lending provider to a multinational company. Module services, such as HES, are a great example of small credit union software. They allow you to optimize and customize a solution that fits your business.
Myth
Getting staff onboard is a no-starter. They don’t want to change.
Fact
Customer Experience in Digital Lending: 5 Onboarding Best Practices Digital transformation often optimizes processes and makes manual labor easier. However, 46% of executives noted pushback from their team. At HES, we always recommend integrating staff onboarding as part of the digital transformation process in union lending.
Myth
The internal team lacks the skills and training to manage a digital transformation
Fact
50% of executives suggest that lack of skills and training are a blocker to digital transformation. While this is a significant obstacle, it is not insurmountable. By partnering with LendTech providers, you not only get your tech upgrade, but you can also upgrade and train your team to work with the new technology, learning from the experts to ensure your solution gets the results it intends.
Effective Roadmap for Upgrading Your Bank or Credit Union Software
Although we all sometimes yearn for the good-old-days, when it comes to finance, the future is a digital, easy-to-use experience. Working with a LendTech provider can help your bank or credit union realize its strategic goals more effectively. Here’s five steps you should take first.
Step 1: Assess your digital readiness
Before any digital transformation can begin, it’s time to put your ducks in order. In this case, that means assessing your current digital capabilities. Look for where digital systems are already functional, how they function, and which parts specifically require upgrades as a priority. You may consider looking at this through three lenses:
People—consider the capabilities of your team, current culture, staffing needs, and more skills.
Processes—digital transformation often means adapting to new processes. Explore your customer segmentation strategy, user journey, data storage strategy and more to ensure you know these steps before adjusting them.
Systems—the technology part. Any digital transformation requires a holistic approach to solving problems. Here you should look at the options for digital transformation, including but not limited to CRM, Reporting, Data Warehouses, Core Banking Systems and more.
Step 2: Evaluate and decide on clear goals and objective
Loan Management Software Features to Invest in at the MVP Stage Interested in loan origination systems for credit unions? Great! But what does that mean exactly? By breaking down the vision into achievable steps, you stand a much better chance of succeeding. Decide on the goals and objectives that you want to achieve from your transformation—the primary ones only—and then look at the MVP (minimum viable product) solution. This will give you a realistic starting point to realize your digital transformation effectively and work for large enterprises as well as small credit union software upgrades.
Step 3: Plan your bank or credit union software upgrade strategically
Now it’s time to put all that learning into action and start to build your strategy. At this stage, you should look at how your digital transformation or software upgrade for your bank or credit union will merge into your current strategy. In addition, explore the tangible benefit for the client—how it will improve their experience and work from there.
Like every business strategy, it should be meaningful. Otherwise, you risk spending for spending’s sake. At the same time, it’s important to consider your “tech vs. touch” ratio. This explores what percent of your business will become digitized and which percent will remain human. While there are some amazing advances in technology, sometimes the human touch can dominate in certain areas, and this is something to take account of.
Step 4: Seek out potential technology partners
How to make the impossible possible? Simple. By getting the right people and team onboard. Depending on your specific digital transformation needs you may seek to add to your internal team, source external specialists, or a mix of both. This isn’t to say that your internal team isn’t capable, however, by working with professionals who do this every day, you run the best chance of avoiding common risks and pitfalls.
For example, you may seek partnerships with providers who specialize in customer acquisition, underwriting, analytics, repayment, collections, or customer engagement, to bolster your team and ensure a robust solution. At the same time you may mix and match or look for a specific provider who ticks all the boxes. Here, the most important thing is finding the right fit for your business.
Step 5: Review the plan and put it into action
Once you’ve brought all the pieces of the puzzle together, it’s time to take a deep breath and review. Often, even at this early stage, we may identify areas we’d like to improve to get results. It’s absolutely ok, and, in fact, necessary, to change something now, rather than later. By doing so, you can effectively tailor your plan and get the best solution for your business.
After that, it’s all systems go. It’s time to put your strategy into action.
Psss… Wanna start lending within 90 days?
Moving forward: LendTech and Bank and Credit Union Software Upgrades
There is no doubt that digital transformation is a challenging process and upgrading any bank or credit union software systems takes time, energy, and resources to do effectively. Failure often occurs because of a lack of singular focus or lack of innovation meaning the solution is by default ineffective. By adequately preparing and working with the right team, your business stands the best chance of creating meaningful, effective solutions for its team and customers.
