Creating a Parallel Universe for Reimagined Banking

‘Out with the old, in with the new’ not a requirement of digital transformation

By Shazia Manus, Chief Strategy and Business Development Officer, AdvantEdge Analytics

For many of the financial industry’s tenured leaders, today’s culture of creation is uncomfortable. For others, it’s downright alien. That’s because the fail-forward concept is not only characterized by a “launch before it’s perfect” strategy; it also places a high priority on speed.

As this culture of creation sets an increasingly urgent tone among consumers, credit unions and other traditional financial institutions are feeling the time crunch of transformation. And because we have a tendency to consider “transformation” in the most hyperbolic sense, it’s easy to predict the strategic paralysis that often sets in when the word is uttered in board rooms across the movement.

But, here’s the thing: Digital transformation does not call on a credit union – or any legacy organization, for that matter – to blow up its entire business model overnight. Nor does it require leaders to ditch their most loyal vendor relationships and take up with the hottest fintech du jour.

Explore and Exploit

At its core, digital transformation is about exploring a new frontier. But that does not mean explorers must abandon the homestead. In fact, when done right, digital transformation reveals new ways of looking at the old. So, explorers return from that new land with fresh ideas for modernizing the old home front.

Exploring the possibilities while simultaneously exploiting what’s already great is sometimes referred to as organizational ambidexterity. It’s the strategic intention to exploit strengths while also exploring future possibilities. And the credit union movement is in the perfect position to execute such an intention as they journey toward digital transformation.

There is not a soul in the movement (save for a few of the most optimistic) who believes digital transformation of our industry will be easy. Whether rooted in myth or reality, there are all kinds of challenges capable of slowing our progress.

Legacy infrastructure is a big one.

Most of the systems credit unions use to conduct everyday business were built 40 years ago. They were designed to manage robust, scalable transactions, not help a single member optimize her finances or live her best financial life.

That’s the world we live in. The technology credit union staff lament is the same technology they depend on to serve members. It’s counterproductive to insist on (or even imagine) blowing it up overnight. Instead, the industry must explore how to maintain the best of our existing technology, exploiting it for the transaction data we can mine, while at the same time exploring what’s next.

It’s really the only option. The technology so deeply engrained in the credit union space is not likely to change fast enough for us to satisfy member demand for a new kind of banking. That’s just the way it is.

Experiment to Learn

So, what do we do about it? To evolve – quickly – credit unions must explore a new world. Not one that replaces the world we live in, but one that runs parallel to it. If your credit union has determined that delivering your very best member experience requires a new business model, experiment with it. Move quickly, being okay to learn from the inevitable micro failures that will happen along the way.

If an exciting new vendor partner can help you get there, experiment with them. So many fintech providers – new and old – are looking to hone (and scale) their solutions; it’s prime time for betas and pilots. Get in there and try!

With an open mind and a fail-forward mentality, your experiments just may become strategic imperatives faster than you ever imagined.

Building this so-called parallel universe enables two important things: 1) It helps credit unions keep their current systems and maintain loyalty to their favorite vendors; 2) It helps them find their way in the digital realm, establishing new value points and new member experiences that will carry them into the future.

In both the real and parallel universes, credit union leaders will become empowered and enabled to reimagine value, adapt and evolve – ultimately positioning the credit union for growth well into the future.

For more on adopting organizational ambidexterity to push past many of the cultural and practical roadblocks to transformation, download our latest white paper: How Humans and Machines Will Transform the Credit Union Industry.