While traditional financial institutions (FIs) have historically dominated the industry, credit unions (CUs) have carved out a unique niche for themselves, serving the needs of their members with personalized attention and a focus on mutual benefit.
However, faced with the dual challenge of technological disruption and changing consumer expectations, the once traditional image of CUs is undergoing a profound transformation, and smaller banks are reconsidering their strategies and embracing innovation.
For bankA $3.2 billion community bank with a workforce of 135, adapting to this evolving financial landscape required the appointment of a chief innovation officer to lead the bank's innovation and technology strategy.
According Ryan HildebrandWHO fictional Taking up the role in July last year, the first order of business was to ensure the basics were covered.
“The journey to digital transformation,” he told PYMNTS, “started by making sure that every surface, from account opening to online banking and lending, [operated seamlessly] and that we have the best systems that reach our clients in all areas.”
This need becomes even more evident when considering the increased competition from FinTechs, which have reshaped the financial landscape with their innovative technologies and customer-centric strategies.
Read report: Credit Union Innovation: How Credit Product Rates Impact Financial Institution Selection
According to findings detailed in a PYMNTS Intelligence investigation studyWhile CUs have reduced setup times for several products, with 45% reporting significant progress, they continue to face intense competition from FinTechs due to a perceived lack of variety in their product offerings.
In addressing this vulnerability and exploring strategies to stay ahead in the competitive landscape, Hildebrand, a serial entrepreneur and Y Combinator graduate, emphasized the importance of a strategic mindset that prioritizes collaboration over competition.
“For us, the strategy is to find some really strong FinTechs to partner with, not just involve them as suppliers, and think about ways that we can help both sides improve,” he said, adding that “having a true relationship of partner rather than a The relationship with suppliers is how we can differentiate ourselves in the market.”
Taking the pain out of small business lending
As noted in separate PYMNTS Intelligence investigationHowever, several obstacles, ranging from high costs and strict eligibility criteria to the complicated nature of the application process, prevent small and medium-sized enterprises (SMEs) from accessing working capital.
Additionally, lending to small businesses can be labor-intensive, which, coupled with their typically lower profitability compared to larger commercial clients, often deters big banks from engaging with them.
To close the gap and make small business lending more efficient and innovative, the Connecticut-based bank has been testing a generative AI-based virtual assistant called Sarah to streamline the loan application process for small business owners. .
The virtual assistant performs various tasks traditionally performed by loan officers, including data validation, qualification evaluations, and loan approval, reducing processing time and administrative burden. Sarah's 24/7 availability also ensures that SMEs receive support and guidance, even outside of working hours, making the loan process easier and faster.
So far, the implementation of the AI tool has yielded promising results, with higher quality of leads, higher conversion rates, and better customer engagement.
“The majority of applications, 63%, are actually received outside of banking hours, and this is where Sarah comes in to answer any questions and help them complete their applications,” Hildebrand said, adding that Sarah has already reactivated the 42 .3% of desertion. applicants, leading to an increase in loan application volume of $12.3 million since December 31.
Building elite customer experiences
Moving forward, Hildebrand emphasized Bankwell's commitment to forging strategic partnerships aimed at improving offerings for customers, particularly homeowners' associations (HOAs) and municipalities. This includes customized solutions to efficiently manage multiple accounts, as demonstrated by a recent collaboration with Z Suite Technologiesa provider of digital escrow sub-accounting ledgers.
Additionally, the community bank is looking to bolster its small business services by launching a small-dollar Small Business Administration (SBA) loan and deposit program, leveraging partnerships with lenders like Cooperative, and leveraging networks like Y Combinator to reach more entrepreneurs. and business owners.
Finally, when asked about Bankwell's vision for the coming year, Hildebrand expressed a continued commitment to digital transformation, aimed at elevating customer experience services such as account opening, online/mobile banking, loan application systems and risk and fraud systems. standards.
“We will focus on how to continue creating experiences for elite customers with modern technology,” he said.