In the rapidly evolving financial services industry, credit unions face the challenge of adapting to remain competitive as larger banks bring innovative technology and new products and services to the market at large. Many credit unions across the United States rely on legacy systems that were simply not designed for today’s speed of doing business, emphasizing the need for open solutions that unlock barriers to innovation.

With open finance now at the forefront of the industry, credit unions have access to the tools they need to not just keep pace with these larger competitors, but to thrive. Here are three critical strategies credit unions must adopt as they navigate this new era.  

Embrace an open core system

An open core system provides the flexibility needed to integrate with a multitude of financial technologies, enabling credit unions to offer a wider range of services and products. This adaptability is crucial for staying ahead in a market where customer expectations are constantly shifting.

With openness at the forefront of a credit union’s tech strategy, they can implement cloud and digital-first infrastructure while embracing analytics, increased security, and the fintech ecosystem to deliver on their innovation goals. Through this approach, firms can be more agile and transform as needed to keep pace with customer needs.

For example, one of Finastra’s customers, Community Choice Credit Union, is embracing the company’s core system, Finastra Phoenix, to support rapid innovation and replace manual and complex back-office processes. Their leadership team recognized that an open, agile core system was needed to support its growth plans, especially when it comes to moving with the market. Legacy systems cannot move this quickly, but an open core allows credit unions to plug into the latest innovations in fintech to provide new services with little implementation time.

Thanks to open architecture and automation, credit unions can scale quickly and refocus employee efforts on more member-centric innovations and tasks.  

Ensure frictionless access to data

Next, ensuring frictionless access to data is key. In an age where data is king, credit unions must leverage platforms that provide seamless access to financial information. By doing so, they can responsibly offer personalized experiences that meet the individual needs of their members, fostering loyalty and trust.

This data must also be used responsibly, which leads to sustainable decision-making, social responsibility, and an improved member experience, all key pillars of the credit union model. Using the most current platforms and tools, credit unions can combine data with the expertise of long-standing team members to build out actionable long-term growth strategies.

With responsible, data-driven banking, credit unions can tap into the droves of member data available to tailor experiences, products, and services. This approach goes beyond generic product offerings - it means understanding individual needs and providing solutions before the member even recognizes the need themselves.

Community Choice Credit Union utilizes Finastra's data analyzation tools to better serve its members. Employees can pull data into various formats, enabling quick and more seamless decision making. This easy access to data helps the credit union make decisions quickly and efficiently, including employing better pricing strategies. 

Appeal to diverse market segments

Lastly, finding creative ways to appeal to multiple generations and diverse segments is vital for sustained growth. Credit unions must recognize that each generation and market segment have unique financial behaviors and preferences. By utilizing solutions that cater to a diverse member base, credit unions can attract and retain members from all walks of life.

When talking to customers about their growth goals, we often hear that many Gen Z and Millennial consumers, for example, are hungry for financial education and often seek this information from community financial institutions. This presents an opportunity for credit unions to stand out amongst the competition by delivering financial education. This education, combined with a tech stack that brings these consumers the instant and efficient digital experiences they expect, demonstrates why credit unions are well-positioned to appeal to new member segments as their current demographics age.

While some generations have rapidly adopted technology, many expect a combination of both human and digital interactions within their financial services journey. Credit unions can easily provide both, as they already excel at the human side of the business.

By focusing on these three areas, credit unions can position themselves at the forefront of the open finance movement, delivering value and innovation to their members. The integration of robust systems will be instrumental in achieving this transformation. With the right approach, credit unions can not only survive but flourish in the era of open finance.