“The future of banking is no banks”
Online-only financial service organizations are here to stay: why Saccos must accelerate their digital transformation
“How does a credit union remain relevant if the future of banking is no banks? What are some of the ways that you could create value for that new generation of customers,” asked Greg Verdino, a business futurist and digital transformation expert, during the 2021 World Credit Union Conference.
Verdino said those are the types of questions credit unions must be able to answer if they are going to be successful in the future.
He noted that that Covid-19 ended the normal as we know it, but instead of entering a new normal, he believes we financial institutions should plan on facing a “never normal” that will feature a pace of change that has never existed before that will require each credit union (Sacco) to build a foundation for a change-ready, future-proof organization.
“All leaders need to embrace ambiguity, not merely tolerate it—lean into it,” said Verdino. “Commit to acting in the face of imperfect information, commit to experimenting in the face of uncertain outcomes.”
According to Verdino, acknowledging that new, online-only financial service organizations are here to stay and will peel off a sector of consumers is part of the ambiguity Saccos must embrace and navigate.
Changing the Culture of Digital Transformation
Another key speaker at the conference held virtually, Joe Sullivan, CEO of Market Insights, noted that the biggest roadblock to successful digital transformation in the financial services industry is culture.
Sullivan explained culture change requires intense effort and is often the most challenging part of digital transformation.
“The importance of culture for you to be able to invest in digital and invest in technology is crucial,” said Sullivan. “It is an ongoing way of living at your organization. It’s an ongoing way of being.”
He also shared a framework for creating and cultivating a culture that both understands and advances digital transformation.
World Council of Credit Unions last year launched the Challenge 2025 initiative, which seeks to establish the digital transformation of the global credit union system by 2025.
Digitalization of cooperatives is set to increase cooperatives membership.
World Council will measure the digitization of credit unions in four key areas and report annually on the progress being made toward Challenge 2025.
Digital Channels
Offering members core digital transaction services such as online and mobile banking, online payments and online loan processing.
Shared Platforms
Connecting your credit union to a shared payments system that allows for mobile payments and is integrated with a national payments system.
Risk Management
Implementation of a cybersecurity system that complies with national regulations to protect members’ identity and consumer data from digital attacks and intrusions
Data Analytics
Employing data analytics to determine additional service offerings to members and helping to identify those that need financial literacy or counselling services.
WOCCU stated that members require digital service channels and local payments ecosystem interoperability for convenience. It noted that digital transformation is necessary to Sacco’s sustainability and resilience.
The Council has established Digital Growth Award to recognize the digital initiatives of member credit union associations and their individual member credit unions.
Asian Confederation of Credit Unions (ACCU), the Philippine Federation of Credit Cooperative (PFCCO) and the National Association of Credit Cooperatives (NATCCO – Philippines) received the award that was presented for the first time this year for their collaborative work on the Kaya Payment Platform.
