6 Trends Shaping the Banking & Credit Union Industry

As Brett King, CEO and co-founder of Moven and bestselling author, once said, “If you don’t like rapid, earth-shattering change and you work in a bank, you should start looking for a new job in another industry.”

The financial services industry has never been static — banks and credit unions have long been subject to disruptive technologies, shifts in government regulations and tax codes, inflation and interest rates, a volatile economy, and more. And while change can be a good thing – the adoption of modern technology in banking has helped banks and credit unions solidify customer and member relationships, simplify day-to-day operations, and identify new revenue opportunities – success all depends on whether you choose to carry on business as usual or embrace change as it happens.

Based on industry forecasts, 2024 looks to be another year characterized by major changes. Read on to find out how these six banking and credit union trends are reshaping the industry, as well as how you can incorporate them into your business strategy.

1. Developing a Customer and Member-centric Strategy with Data Analytics and Insights

Over the past several years, there’s been a marked shift across multiple industries, including banking and credit unions, away from the traditional sales-driven, push approach towards a more customer-centric approach. A customer-focused approach goes hand-in-hand with the emergence of digital banking and data analytics.

Customers and members generate more valuable data now than ever before, meaning banks and credit unions are sitting on a veritable goldmine of information. Monetizing that data is the key.

Banks and credit unions are doing this by leveraging advanced analytics to extract valuable data-driven insights into consumer behavior, preferences, and financial patterns. The result is banks and credit unions can use these insights to target marketing efforts, product development, and partnerships with third-party vendors, creating additional revenue streams and enhancing customer engagement.

But managing data to gain insights can be a daunting task. Most financial institutions need modern data management to help. The Hitachi Solutions Empower Data Platform is one method to simplify and speed data management and analytics. Banks and credit unions using such a platform to access analytics and insights spend 90 percent less time on account planning and have seen a 55 percent faster access to usable data.

Along with a data management platform, you also need the right cloud-based tools — such as AI and machine learning, predictive analytics, and RPA to name a few — to turn your data into actionable insights. Data insights can show which customer segments are responding and converting across product groups and expose real-time trends that can help you tweak an already inflight marketing program.

Advanced analytics can also assess profitability and fit for products and services based on a range of other factors such as industry, credit tier, household segment, and market. Modern solutions can even track the success or failure of marketing initiatives and provide qualitative feedback on how these initiatives align with respective target groups.

2. Connecting Channels for Improved Customer and Member Service

Multichannel isn’t new, but it continues to feature prominently on banking and credit union industry trends lists because the meaning has changed in the era of technology. Where multichannel once referred to things like print advertisements, ATMs, and local branches, it’s more recently expanded to include digital channels such as websites, mobile applications, and social media.

Establishing a strong multichannel approach is just the first step in elevating your customer/member service. To provide a truly modern, convenient service, you need to ensure all channels and interactions are connected and offer the same, seamless experience — whether digital or physical. This is called omnichannel support.

The idea of omnichannel is to tear down silos and unify customer and member data. It’s exciting because it provides smooth, consistent, and personalized interactions for the customer/member and arms employees with the power to solve issues faster, personalize service, and be more proactive with other products and opportunities.

The key to omnichannel is a centralized platform for customer/member data that is easily accessible by all. Leveraging [PD1] collaboration tools — that enable your employees to share documents, receive alerts, and facilitate referrals — across business lines drastically reduces internal bottlenecks, enhances cross-channel growth, and improves customer relationships.

3. Strategically Implementing Generative AI and Other Digital Solutions

As innovation continues to move at a rapid pace, it can be difficult for banks and credit unions of any size to keep up. With industry disrupters like FinTechs and AI, the way financial institutions do business is constantly evolving. For this reason, digital solutions, integration, and automation have consistently been leading industry trends for the past few years.

Even more recently, banks and credit unions are increasingly turning to generative AI, a branch of artificial intelligence that involves generating new content — such as text, images, or even music — based on patterns learned from existing data. Here are the most popular ways companies are using GenAI to do business today more efficiently and effectively:

• Customer service and communication. Chatbots powered by GenAI (such as Microsoft Copilot) can engage customers in natural language conversations, providing personalized assistance, answering queries, and even resolving simple banking tasks. This technology enables banks and credit unions to enhance customer experiences, improve service efficiency, and reduce operational costs by automating routine interactions.
• Risk management and fraud detection. By analyzing large volumes of transaction data and historical patterns, GenAI algorithms can identify anomalies, detect suspicious activities, and flag potential instances of fraud in real time. This proactive approach to risk mitigation helps banks and credit unions safeguard against financial losses, protect customer assets, and maintain trust in the integrity of their services.
• Product development and innovation. By generating insights from diverse datasets and simulating various scenarios, GenAI algorithms can assist in the design of new financial products, investment strategies, and personalized recommendations tailored to individual customer needs and preferences. This enables financial institutions to stay competitive, anticipate market trends, and deliver innovative solutions that meet the evolving demands of their customers in an increasingly digital and data-driven landscape.

Implementing GenAI and digital solutions isn’t always easy, but there are measures you can take to make the transition easier. Consider investing in back-office solutions that evaluate your business’s performance, specifically of your people, products, and solutions that enable performance measurement across customer and member segments. This includes moving away from outdated data platforms and legacy solutions in favor of modern, cloud platforms that provide better interoperability, analytics, and[PD2] [HS3]  connectivity to common productivity tools and toolsets.

4. Doing More with Less Through Automation and Low Code

One way to gradually introduce new technology to your business is to use automation in your back office. This includes replacing manual processes and paper with simplified and streamlined, automated business tasks and processes. By now, you’re probably already familiar with some of the benefits of automation:

• Automation increases productivity by cutting back on manual, administrative work and enabling employees to focus on more complex tasks often resulting in an improved user and employee experience
• It frees up employees to dedicate more time to customer service, improving the overall CX
• It eliminates the risk of human error from transactions and ensures consistent results
• It reduces operational costs, especially those associated with staffing and training

Banks and credit unions that take advantage of automation — that is, those that automate processes and residual operations — see a huge improvement. For example, this leading U.S. credit union has reduced fraud loss by more than $60,000 a month through Power Platform intelligent automation technology.

However, as the desire for automation grows, IT resources remain limited and expensive — hindering attempts to automate. This has led to the popularity of low-code development. Leveraging tools like Microsoft Power Platform, your business users can innovate without IT — automating tasks, streamlining processes, and creating apps to solve unique business challenges. It’s a great way to cost-effectively introduce automation — and its benefits — to the organization.

The biggest advantages of low-code app development for banks and credit unions include:

• Accelerates the delivery of innovative solutions to market, helps you respond swiftly to changing customer needs, and provides a competitive edge.
• Offers greater flexibility and agility for banks and credit unions, allowing you to adapt quickly to evolving business requirements and regulatory changes.
• Streamlines the app development lifecycle, enabling more experimentation, reducing costs, and speeding up time-to-market.

As proof, according to Forrester’s The Total Economic Impact of Power Apps, Power Platform solutions are leveraged to develop end-user solutions as much as 74 percent faster than traditional application development with a more than 140 percent return on investment!

So, if you have yet to take advantage of automation or low-code development, there’s no time like the present to begin. To ensure a solid foundation of success, it’s best to start with planning, governance, and education. It’s also good to understand where it makes sense to automate and where it doesn’t. You can do this by establishing and prioritizing use cases.

For example, you might want to streamline new client onboarding or tighten up the automation around specific lending processes. Over half of bank applicants report being most dissatisfied with long wait times for credit decisions and a difficult application process, according to a survey from the Federal Reserve. If you have the opportunity to reduce end-user or customer effort, then you are on the right track.

5. Modernizing with CRM for Credit Unions and Banks

To compete today, banks and credit unions must continue to grow. That means keeping existing customers and members happy while continually attracting new ones. Personalized and proactive service and value-added offerings are the competitive differentiator and investing in the right technology is the key.

Modern, data-driven and AI-powered CRM systems automate and simplify processes, centralize and manage data, provide visibility and transparency, manage marketing and sales campaigns, and much more. By knocking down silos and making data accessible to everyone who needs it, CRM for credit unions and banks improves efficiency and productivity and helps them build stronger and more profitable relationships.

While CRM isn’t new technology — the term was popularized in the 1980s — modern, cloud-based platforms take advantage of newer capabilities such as AI, ML, IoT, advanced analytics, and integrations with other systems and applications. This presents opportunities for companies to leverage this functionality to elevate the customer and member experience even more.

The biggest benefits of CRM for credit unions and banks include:

• Improved customer experience
• Increased sales
• Better data management
• Better customer engagement
• Increased customer loyalty

In the past, traditional institutions were reluctant to adopt CRM systems, but now it is considered an essential tool for most businesses. A Capterra study said 47 percent of users said customer satisfaction significantly improved, along with customer retention, when they were using a CRM system. Users of CRM also saw a 45 percent increase in sales revenue and a 39 percent improvement in cross-selling and upselling success.

Modern CRM — along with industry-focused CRM tools such as Hitachi Solutions Engage for Banking and Engage for Credit Unions — makes it possible for financial services institutions to grow while creating a seamless experience for employees and customers and members. It enables credit unions and banks to offer even more personalized and relevant products that use predictive analytics based on individual consumer data to gain even more wallet share.

6. Proactively Securing the Enterprise End-to-End

Today, engaging securely with customers and members is top of mind. They have to trust that you are safeguarding data, ensuring privacy, and meeting regulatory compliance to continue to do business with you. According to a McKinsey study, 53% of consumers made purchases or used digital services from a company only after making sure it had a reputation for being trustworthy and 40% of consumers stopped using digital services if they learned the company was not protecting customer data.

As banks and credit unions increasingly rely on the cloud and digital channels to deliver services and manage customer data — and they leverage innovations like automation, analytics, AI, and more — cybersecurity is a big priority. Because while these new technologies can offer advanced threat detection and protection capabilities, at the same time, cybercriminals are also exploiting them to devise more sophisticated attacks that can adapt and morph in real time.

The bottom line is traditional security strategies don’t work anymore. Leading financial companies are now integrating cybersecurity, privacy, and digital ethics from the inside out — a proactive approach that addresses internal and external threats. This allows you to create a robust cybersecurity framework that safeguards your assets, data, and operations, as well as keeps customer data safe and secure.

Not only does this proactive, end-to-end strategy confidently position banks and credit unions as reliable and trustworthy partners to customers and members, it differentiates them from the competition and fosters long-term loyalty.

Put These Trends into Action with Hitachi Solutions

We hope these trends have enlightened you and provided you with ideas and solutions you need to better support your customers, members, and communities. Leaning into modern, cloud-based digital technology will position you to be more agile, responsive, and innovative and help you deliver the impactful experiences you need to succeed in today’s dynamic and competitive environment.

However, we know digital transformation can be challenging, and most companies benefit from the help of an expert to guide and advise them. Hitachi Solutions has been building cutting-edge data and business solutions for our financial services customer base for two decades. We take pride in our “go-to” status as a trusted advisor and technical powerhouse for financial institutions large and small — from banks and credit unions to clearing houses, stock exchanges, hedge funds, and private equity firms, to broker/dealers, national brokerage franchises, and fintech startups.

If you’d like to learn about how your business can profit from CRM for credit unions and banks, or if you would like to put any of these modernization trends into action, contact the team of qualified financial services technology experts at Hitachi Solutions to get started today.