CREDIT UNIONS REVEALEDRESULTS OF THE 2019 INDUSTRY SURVEY

Analytics Breakout Digital Transformation

AXFI Conference | June 9ndash12 2019 AXFI19

Results from the BIG | OnApproach Semi-Annual Digital Survey

Spring 2019

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consulting in partnership with OnApproach

is excited to present our third in a series of

national credit union surveys The Digital

Transformation Survey delves into how credit

unions are using digital and data strategies to

serve their members and run their businesses

This survey asked a national audience of credit

union leaders how far their institutions have

evolved in their digital transformation

Is The Digital

Transformation

Revolution

Leaving Credit

Unions Behind

AXFI Conference | June 9ndash12 2019 AXFI19

Top Line Results ndash Two Themes

bull Credit unions see that there is a revolution coming and are fully aware that

digital powered by data is changing everything they do

bull Credit unions may not be prepared for the digital war They realize they are

behind vis-agrave-vis the big banks FinTechs and BigTechs and are investing to catch

up

The degree to which credit unions see digital as an all-encompassing corporate

revolution rather than a channel strategy will determine their degree of success

in the transition from the retail banking model and ultimately in their ability to

survive

AXFI Conference | June 9ndash12 2019 AXFI19

Survey Results

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Seventy-nine percent of banks are moving Fifty-one percent of banks have

implemented a digital transformation strategy and another 28 are in the

process of doing so

bull FinTechs base their entire business model on digital The competition sees the

future and is attacking it

bull Gartner recently reported that 80 of financial intuitions will be out of business

in 11 short years if they do not embrace the digital revolution now

bull Digital takes time Digital requires new strategy culture skill sets

organizational structure channel integration (OMNI) and technology

architecture where data drives everything and all systems are interconnected

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Credit unions are now keenly aware that the digital revolution is dramatically

changing every retail business model including financial services

bull Eighty-one percent of credit unions see themselves as one or more years behind

their competition and 45 see themselves behind two or more years

bull Let that sink in In a world that invests more each day in digital services and

where banks are investing billions in new digital and data technologies almost

half of credit unions see themselves as being two or more years behind

bull A call to action Credit unions can not afford to lose their service advantage to

banks by being less effective in digital service then their competitors

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull To demonstrate how far credit unions need to evolve realize that today only

23 of credit unions are processing more than 60 of their business through

digital channels

bull Compare that to 100 of the transactions at direct banks neobanks or at

FinTechs (payments lending and savings competitors)

bull Fifty percent of credit unions believe that 60 or more of their transactions will

be processed digitally in two years

bull The question is whether credit unions are creating a strategy based on a digital

vision and an integrated roadmap that identifies digital data culture and

information technology architecture or are they buying desperate digital

products hoping to keep up

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Strategic awareness of an extraordinary shift in the market occurs in two steps

First understanding something is happening (awareness) and then

acknowledging that the threat is large enough that you have to change (action)

your strategy and business model to thrive if not survive

bull BIG thinks that credit unions are aware and are beginning to take action but not

at the rate they need to

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Results from the BIG | OnApproach Semi-Annual Digital Survey

Spring 2019

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consulting in partnership with OnApproach

is excited to present our third in a series of

national credit union surveys The Digital

Transformation Survey delves into how credit

unions are using digital and data strategies to

serve their members and run their businesses

This survey asked a national audience of credit

union leaders how far their institutions have

evolved in their digital transformation

Is The Digital

Transformation

Revolution

Leaving Credit

Unions Behind

AXFI Conference | June 9ndash12 2019 AXFI19

Top Line Results ndash Two Themes

bull Credit unions see that there is a revolution coming and are fully aware that

digital powered by data is changing everything they do

bull Credit unions may not be prepared for the digital war They realize they are

behind vis-agrave-vis the big banks FinTechs and BigTechs and are investing to catch

up

The degree to which credit unions see digital as an all-encompassing corporate

revolution rather than a channel strategy will determine their degree of success

in the transition from the retail banking model and ultimately in their ability to

survive

AXFI Conference | June 9ndash12 2019 AXFI19

Survey Results

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Seventy-nine percent of banks are moving Fifty-one percent of banks have

implemented a digital transformation strategy and another 28 are in the

process of doing so

bull FinTechs base their entire business model on digital The competition sees the

future and is attacking it

bull Gartner recently reported that 80 of financial intuitions will be out of business

in 11 short years if they do not embrace the digital revolution now

bull Digital takes time Digital requires new strategy culture skill sets

organizational structure channel integration (OMNI) and technology

architecture where data drives everything and all systems are interconnected

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Credit unions are now keenly aware that the digital revolution is dramatically

changing every retail business model including financial services

bull Eighty-one percent of credit unions see themselves as one or more years behind

their competition and 45 see themselves behind two or more years

bull Let that sink in In a world that invests more each day in digital services and

where banks are investing billions in new digital and data technologies almost

half of credit unions see themselves as being two or more years behind

bull A call to action Credit unions can not afford to lose their service advantage to

banks by being less effective in digital service then their competitors

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull To demonstrate how far credit unions need to evolve realize that today only

23 of credit unions are processing more than 60 of their business through

digital channels

bull Compare that to 100 of the transactions at direct banks neobanks or at

FinTechs (payments lending and savings competitors)

bull Fifty percent of credit unions believe that 60 or more of their transactions will

be processed digitally in two years

bull The question is whether credit unions are creating a strategy based on a digital

vision and an integrated roadmap that identifies digital data culture and

information technology architecture or are they buying desperate digital

products hoping to keep up

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Strategic awareness of an extraordinary shift in the market occurs in two steps

First understanding something is happening (awareness) and then

acknowledging that the threat is large enough that you have to change (action)

your strategy and business model to thrive if not survive

bull BIG thinks that credit unions are aware and are beginning to take action but not

at the rate they need to

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consulting in partnership with OnApproach

is excited to present our third in a series of

national credit union surveys The Digital

Transformation Survey delves into how credit

unions are using digital and data strategies to

serve their members and run their businesses

This survey asked a national audience of credit

union leaders how far their institutions have

evolved in their digital transformation

Is The Digital

Transformation

Revolution

Leaving Credit

Unions Behind

AXFI Conference | June 9ndash12 2019 AXFI19

Top Line Results ndash Two Themes

bull Credit unions see that there is a revolution coming and are fully aware that

digital powered by data is changing everything they do

bull Credit unions may not be prepared for the digital war They realize they are

behind vis-agrave-vis the big banks FinTechs and BigTechs and are investing to catch

up

The degree to which credit unions see digital as an all-encompassing corporate

revolution rather than a channel strategy will determine their degree of success

in the transition from the retail banking model and ultimately in their ability to

survive

AXFI Conference | June 9ndash12 2019 AXFI19

Survey Results

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Seventy-nine percent of banks are moving Fifty-one percent of banks have

implemented a digital transformation strategy and another 28 are in the

process of doing so

bull FinTechs base their entire business model on digital The competition sees the

future and is attacking it

bull Gartner recently reported that 80 of financial intuitions will be out of business

in 11 short years if they do not embrace the digital revolution now

bull Digital takes time Digital requires new strategy culture skill sets

organizational structure channel integration (OMNI) and technology

architecture where data drives everything and all systems are interconnected

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Credit unions are now keenly aware that the digital revolution is dramatically

changing every retail business model including financial services

bull Eighty-one percent of credit unions see themselves as one or more years behind

their competition and 45 see themselves behind two or more years

bull Let that sink in In a world that invests more each day in digital services and

where banks are investing billions in new digital and data technologies almost

half of credit unions see themselves as being two or more years behind

bull A call to action Credit unions can not afford to lose their service advantage to

banks by being less effective in digital service then their competitors

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull To demonstrate how far credit unions need to evolve realize that today only

23 of credit unions are processing more than 60 of their business through

digital channels

bull Compare that to 100 of the transactions at direct banks neobanks or at

FinTechs (payments lending and savings competitors)

bull Fifty percent of credit unions believe that 60 or more of their transactions will

be processed digitally in two years

bull The question is whether credit unions are creating a strategy based on a digital

vision and an integrated roadmap that identifies digital data culture and

information technology architecture or are they buying desperate digital

products hoping to keep up

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Strategic awareness of an extraordinary shift in the market occurs in two steps

First understanding something is happening (awareness) and then

acknowledging that the threat is large enough that you have to change (action)

your strategy and business model to thrive if not survive

bull BIG thinks that credit unions are aware and are beginning to take action but not

at the rate they need to

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Top Line Results ndash Two Themes

bull Credit unions see that there is a revolution coming and are fully aware that

digital powered by data is changing everything they do

bull Credit unions may not be prepared for the digital war They realize they are

behind vis-agrave-vis the big banks FinTechs and BigTechs and are investing to catch

up

The degree to which credit unions see digital as an all-encompassing corporate

revolution rather than a channel strategy will determine their degree of success

in the transition from the retail banking model and ultimately in their ability to

survive

AXFI Conference | June 9ndash12 2019 AXFI19

Survey Results

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Seventy-nine percent of banks are moving Fifty-one percent of banks have

implemented a digital transformation strategy and another 28 are in the

process of doing so

bull FinTechs base their entire business model on digital The competition sees the

future and is attacking it

bull Gartner recently reported that 80 of financial intuitions will be out of business

in 11 short years if they do not embrace the digital revolution now

bull Digital takes time Digital requires new strategy culture skill sets

organizational structure channel integration (OMNI) and technology

architecture where data drives everything and all systems are interconnected

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Credit unions are now keenly aware that the digital revolution is dramatically

changing every retail business model including financial services

bull Eighty-one percent of credit unions see themselves as one or more years behind

their competition and 45 see themselves behind two or more years

bull Let that sink in In a world that invests more each day in digital services and

where banks are investing billions in new digital and data technologies almost

half of credit unions see themselves as being two or more years behind

bull A call to action Credit unions can not afford to lose their service advantage to

banks by being less effective in digital service then their competitors

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull To demonstrate how far credit unions need to evolve realize that today only

23 of credit unions are processing more than 60 of their business through

digital channels

bull Compare that to 100 of the transactions at direct banks neobanks or at

FinTechs (payments lending and savings competitors)

bull Fifty percent of credit unions believe that 60 or more of their transactions will

be processed digitally in two years

bull The question is whether credit unions are creating a strategy based on a digital

vision and an integrated roadmap that identifies digital data culture and

information technology architecture or are they buying desperate digital

products hoping to keep up

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Strategic awareness of an extraordinary shift in the market occurs in two steps

First understanding something is happening (awareness) and then

acknowledging that the threat is large enough that you have to change (action)

your strategy and business model to thrive if not survive

bull BIG thinks that credit unions are aware and are beginning to take action but not

at the rate they need to

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Survey Results

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Seventy-nine percent of banks are moving Fifty-one percent of banks have

implemented a digital transformation strategy and another 28 are in the

process of doing so

bull FinTechs base their entire business model on digital The competition sees the

future and is attacking it

bull Gartner recently reported that 80 of financial intuitions will be out of business

in 11 short years if they do not embrace the digital revolution now

bull Digital takes time Digital requires new strategy culture skill sets

organizational structure channel integration (OMNI) and technology

architecture where data drives everything and all systems are interconnected

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Credit unions are now keenly aware that the digital revolution is dramatically

changing every retail business model including financial services

bull Eighty-one percent of credit unions see themselves as one or more years behind

their competition and 45 see themselves behind two or more years

bull Let that sink in In a world that invests more each day in digital services and

where banks are investing billions in new digital and data technologies almost

half of credit unions see themselves as being two or more years behind

bull A call to action Credit unions can not afford to lose their service advantage to

banks by being less effective in digital service then their competitors

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull To demonstrate how far credit unions need to evolve realize that today only

23 of credit unions are processing more than 60 of their business through

digital channels

bull Compare that to 100 of the transactions at direct banks neobanks or at

FinTechs (payments lending and savings competitors)

bull Fifty percent of credit unions believe that 60 or more of their transactions will

be processed digitally in two years

bull The question is whether credit unions are creating a strategy based on a digital

vision and an integrated roadmap that identifies digital data culture and

information technology architecture or are they buying desperate digital

products hoping to keep up

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Strategic awareness of an extraordinary shift in the market occurs in two steps

First understanding something is happening (awareness) and then

acknowledging that the threat is large enough that you have to change (action)

your strategy and business model to thrive if not survive

bull BIG thinks that credit unions are aware and are beginning to take action but not

at the rate they need to

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Seventy-nine percent of banks are moving Fifty-one percent of banks have

implemented a digital transformation strategy and another 28 are in the

process of doing so

bull FinTechs base their entire business model on digital The competition sees the

future and is attacking it

bull Gartner recently reported that 80 of financial intuitions will be out of business

in 11 short years if they do not embrace the digital revolution now

bull Digital takes time Digital requires new strategy culture skill sets

organizational structure channel integration (OMNI) and technology

architecture where data drives everything and all systems are interconnected

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Credit unions are now keenly aware that the digital revolution is dramatically

changing every retail business model including financial services

bull Eighty-one percent of credit unions see themselves as one or more years behind

their competition and 45 see themselves behind two or more years

bull Let that sink in In a world that invests more each day in digital services and

where banks are investing billions in new digital and data technologies almost

half of credit unions see themselves as being two or more years behind

bull A call to action Credit unions can not afford to lose their service advantage to

banks by being less effective in digital service then their competitors

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull To demonstrate how far credit unions need to evolve realize that today only

23 of credit unions are processing more than 60 of their business through

digital channels

bull Compare that to 100 of the transactions at direct banks neobanks or at

FinTechs (payments lending and savings competitors)

bull Fifty percent of credit unions believe that 60 or more of their transactions will

be processed digitally in two years

bull The question is whether credit unions are creating a strategy based on a digital

vision and an integrated roadmap that identifies digital data culture and

information technology architecture or are they buying desperate digital

products hoping to keep up

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Strategic awareness of an extraordinary shift in the market occurs in two steps

First understanding something is happening (awareness) and then

acknowledging that the threat is large enough that you have to change (action)

your strategy and business model to thrive if not survive

bull BIG thinks that credit unions are aware and are beginning to take action but not

at the rate they need to

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Seventy-nine percent of banks are moving Fifty-one percent of banks have

implemented a digital transformation strategy and another 28 are in the

process of doing so

bull FinTechs base their entire business model on digital The competition sees the

future and is attacking it

bull Gartner recently reported that 80 of financial intuitions will be out of business

in 11 short years if they do not embrace the digital revolution now

bull Digital takes time Digital requires new strategy culture skill sets

organizational structure channel integration (OMNI) and technology

architecture where data drives everything and all systems are interconnected

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Credit unions are now keenly aware that the digital revolution is dramatically

changing every retail business model including financial services

bull Eighty-one percent of credit unions see themselves as one or more years behind

their competition and 45 see themselves behind two or more years

bull Let that sink in In a world that invests more each day in digital services and

where banks are investing billions in new digital and data technologies almost

half of credit unions see themselves as being two or more years behind

bull A call to action Credit unions can not afford to lose their service advantage to

banks by being less effective in digital service then their competitors

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull To demonstrate how far credit unions need to evolve realize that today only

23 of credit unions are processing more than 60 of their business through

digital channels

bull Compare that to 100 of the transactions at direct banks neobanks or at

FinTechs (payments lending and savings competitors)

bull Fifty percent of credit unions believe that 60 or more of their transactions will

be processed digitally in two years

bull The question is whether credit unions are creating a strategy based on a digital

vision and an integrated roadmap that identifies digital data culture and

information technology architecture or are they buying desperate digital

products hoping to keep up

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Strategic awareness of an extraordinary shift in the market occurs in two steps

First understanding something is happening (awareness) and then

acknowledging that the threat is large enough that you have to change (action)

your strategy and business model to thrive if not survive

bull BIG thinks that credit unions are aware and are beginning to take action but not

at the rate they need to

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Seventy-nine percent of banks are moving Fifty-one percent of banks have

implemented a digital transformation strategy and another 28 are in the

process of doing so

bull FinTechs base their entire business model on digital The competition sees the

future and is attacking it

bull Gartner recently reported that 80 of financial intuitions will be out of business

in 11 short years if they do not embrace the digital revolution now

bull Digital takes time Digital requires new strategy culture skill sets

organizational structure channel integration (OMNI) and technology

architecture where data drives everything and all systems are interconnected

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Credit unions are now keenly aware that the digital revolution is dramatically

changing every retail business model including financial services

bull Eighty-one percent of credit unions see themselves as one or more years behind

their competition and 45 see themselves behind two or more years

bull Let that sink in In a world that invests more each day in digital services and

where banks are investing billions in new digital and data technologies almost

half of credit unions see themselves as being two or more years behind

bull A call to action Credit unions can not afford to lose their service advantage to

banks by being less effective in digital service then their competitors

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull To demonstrate how far credit unions need to evolve realize that today only

23 of credit unions are processing more than 60 of their business through

digital channels

bull Compare that to 100 of the transactions at direct banks neobanks or at

FinTechs (payments lending and savings competitors)

bull Fifty percent of credit unions believe that 60 or more of their transactions will

be processed digitally in two years

bull The question is whether credit unions are creating a strategy based on a digital

vision and an integrated roadmap that identifies digital data culture and

information technology architecture or are they buying desperate digital

products hoping to keep up

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Strategic awareness of an extraordinary shift in the market occurs in two steps

First understanding something is happening (awareness) and then

acknowledging that the threat is large enough that you have to change (action)

your strategy and business model to thrive if not survive

bull BIG thinks that credit unions are aware and are beginning to take action but not

at the rate they need to

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Credit unions are now keenly aware that the digital revolution is dramatically

changing every retail business model including financial services

bull Eighty-one percent of credit unions see themselves as one or more years behind

their competition and 45 see themselves behind two or more years

bull Let that sink in In a world that invests more each day in digital services and

where banks are investing billions in new digital and data technologies almost

half of credit unions see themselves as being two or more years behind

bull A call to action Credit unions can not afford to lose their service advantage to

banks by being less effective in digital service then their competitors

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull To demonstrate how far credit unions need to evolve realize that today only

23 of credit unions are processing more than 60 of their business through

digital channels

bull Compare that to 100 of the transactions at direct banks neobanks or at

FinTechs (payments lending and savings competitors)

bull Fifty percent of credit unions believe that 60 or more of their transactions will

be processed digitally in two years

bull The question is whether credit unions are creating a strategy based on a digital

vision and an integrated roadmap that identifies digital data culture and

information technology architecture or are they buying desperate digital

products hoping to keep up

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Strategic awareness of an extraordinary shift in the market occurs in two steps

First understanding something is happening (awareness) and then

acknowledging that the threat is large enough that you have to change (action)

your strategy and business model to thrive if not survive

bull BIG thinks that credit unions are aware and are beginning to take action but not

at the rate they need to

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Credit unions are now keenly aware that the digital revolution is dramatically

changing every retail business model including financial services

bull Eighty-one percent of credit unions see themselves as one or more years behind

their competition and 45 see themselves behind two or more years

bull Let that sink in In a world that invests more each day in digital services and

where banks are investing billions in new digital and data technologies almost

half of credit unions see themselves as being two or more years behind

bull A call to action Credit unions can not afford to lose their service advantage to

banks by being less effective in digital service then their competitors

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull To demonstrate how far credit unions need to evolve realize that today only

23 of credit unions are processing more than 60 of their business through

digital channels

bull Compare that to 100 of the transactions at direct banks neobanks or at

FinTechs (payments lending and savings competitors)

bull Fifty percent of credit unions believe that 60 or more of their transactions will

be processed digitally in two years

bull The question is whether credit unions are creating a strategy based on a digital

vision and an integrated roadmap that identifies digital data culture and

information technology architecture or are they buying desperate digital

products hoping to keep up

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Strategic awareness of an extraordinary shift in the market occurs in two steps

First understanding something is happening (awareness) and then

acknowledging that the threat is large enough that you have to change (action)

your strategy and business model to thrive if not survive

bull BIG thinks that credit unions are aware and are beginning to take action but not

at the rate they need to

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Credit unions are now keenly aware that the digital revolution is dramatically

changing every retail business model including financial services

bull Eighty-one percent of credit unions see themselves as one or more years behind

their competition and 45 see themselves behind two or more years

bull Let that sink in In a world that invests more each day in digital services and

where banks are investing billions in new digital and data technologies almost

half of credit unions see themselves as being two or more years behind

bull A call to action Credit unions can not afford to lose their service advantage to

banks by being less effective in digital service then their competitors

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull To demonstrate how far credit unions need to evolve realize that today only

23 of credit unions are processing more than 60 of their business through

digital channels

bull Compare that to 100 of the transactions at direct banks neobanks or at

FinTechs (payments lending and savings competitors)

bull Fifty percent of credit unions believe that 60 or more of their transactions will

be processed digitally in two years

bull The question is whether credit unions are creating a strategy based on a digital

vision and an integrated roadmap that identifies digital data culture and

information technology architecture or are they buying desperate digital

products hoping to keep up

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Strategic awareness of an extraordinary shift in the market occurs in two steps

First understanding something is happening (awareness) and then

acknowledging that the threat is large enough that you have to change (action)

your strategy and business model to thrive if not survive

bull BIG thinks that credit unions are aware and are beginning to take action but not

at the rate they need to

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Credit unions are now keenly aware that the digital revolution is dramatically

changing every retail business model including financial services

bull Eighty-one percent of credit unions see themselves as one or more years behind

their competition and 45 see themselves behind two or more years

bull Let that sink in In a world that invests more each day in digital services and

where banks are investing billions in new digital and data technologies almost

half of credit unions see themselves as being two or more years behind

bull A call to action Credit unions can not afford to lose their service advantage to

banks by being less effective in digital service then their competitors

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull To demonstrate how far credit unions need to evolve realize that today only

23 of credit unions are processing more than 60 of their business through

digital channels

bull Compare that to 100 of the transactions at direct banks neobanks or at

FinTechs (payments lending and savings competitors)

bull Fifty percent of credit unions believe that 60 or more of their transactions will

be processed digitally in two years

bull The question is whether credit unions are creating a strategy based on a digital

vision and an integrated roadmap that identifies digital data culture and

information technology architecture or are they buying desperate digital

products hoping to keep up

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Strategic awareness of an extraordinary shift in the market occurs in two steps

First understanding something is happening (awareness) and then

acknowledging that the threat is large enough that you have to change (action)

your strategy and business model to thrive if not survive

bull BIG thinks that credit unions are aware and are beginning to take action but not

at the rate they need to

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull To demonstrate how far credit unions need to evolve realize that today only

23 of credit unions are processing more than 60 of their business through

digital channels

bull Compare that to 100 of the transactions at direct banks neobanks or at

FinTechs (payments lending and savings competitors)

bull Fifty percent of credit unions believe that 60 or more of their transactions will

be processed digitally in two years

bull The question is whether credit unions are creating a strategy based on a digital

vision and an integrated roadmap that identifies digital data culture and

information technology architecture or are they buying desperate digital

products hoping to keep up

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Strategic awareness of an extraordinary shift in the market occurs in two steps

First understanding something is happening (awareness) and then

acknowledging that the threat is large enough that you have to change (action)

your strategy and business model to thrive if not survive

bull BIG thinks that credit unions are aware and are beginning to take action but not

at the rate they need to

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

The Digital Revolution

bull Strategic awareness of an extraordinary shift in the market occurs in two steps

First understanding something is happening (awareness) and then

acknowledging that the threat is large enough that you have to change (action)

your strategy and business model to thrive if not survive

bull BIG thinks that credit unions are aware and are beginning to take action but not

at the rate they need to

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Strategy

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull One-hundred percent of the retail world is going digital (a minor and

unsubstantiated statistic from BIG ndash but hey can you really dispute it) and yet

only 50 of credit unions have a written and documented digital strategy

bull Compare this to the Financial Brand findings that 79 of banks are executing on

a digital strategy and that 76 of millennials prefer mobile services over other

channels and you see why half of the industry planning for a digital future is not

nearly enough

bull A revolution of this magnitude requires a strategy to align service operations

and technology and to identify and manage the level of change that a paradigm

shift requires

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull The digital revolution is also an unprecedented opportunity for credit unions to

grow and compete

bull Interestingly almost two-thirds of the surveyed credit unions have a digital

roadmap and only 50 have a strategy That suggests that 20 of the of credit

unions have roadmaps but may not know what direction they want to head on

the digital highway

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull A few key questions can help you determine if your credit union has a strategy

or simply a project roadmap

ndash When making a decision about investing in a branch or investing in digital do both get

equal consideration

ndash When looking at lending do you see it as a digital platform for end-to-end digital

interactions or as better way for members to apply for a loan

ndash Finally when opening an account does compliance win the day requiring manual

intervention or worse yet branch visits or does frictionless service defeat the old

school thinking

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Strategy drives performance whether it is digital performance or any other

retail model

bull Alignment creates execution and winning performance If you are truly

committed to winning in the digital world you will find ways to answer the

questions above in a way that wins the millennial consumer and ultimately the

entire memberships business

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Strategy

bull Fifty-three percent of credit unions have an integrated digital and data roadmap This is a very positive finding

bull BIG Consulting believes that one of the key drivers to success in the retail banking business is the creation of an integrated and interdependent digital and data strategy and roadmap

bull Each credit union is different in who they service how they serve and ultimately how they win

bull If digital is the channel that will drive 60 of the business then figuring out how you will create a winning digital MVP (member value proposition and strategy) will define the ultimate winners

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Services

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19Source Information to Insights PACE Findings 2019

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

Boomers ndash By The

Numbers

bull Forty percent work with a personal financial advisor

bull Fourteen percent have been victims of financial fraud in the last 12 months a higher number than the other age groups

bull Only 1 in 4 use non-bank financial services

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

Senior Millennials

ndash By The Numbers

bull Eighteen percent have switched from using cash to mobile payments

bull Sixty-nine percent are concerned with investing for the future and retirement planning

bull Twenty-one percent have a financial advisor This is more than twice the number of younger millennials

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

New Digital Services

bull The good news from Question 9 is that credit unions are stepping up their

investments in new digital services with 52 of them investing $250k or more

and one-third investing $500k or more this year

bull BIG believes this demonstrates that credit unions are serious about their digital

investments

bull Credit unions are finding ways to put more of their budget into growing the

channel and that demonstrates awareness and action

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Surprisingly 83 of credit unions indicate that they are offering digital

consumer lending and 55 respond that are offering digital mortgages

bull However two-thirds of credit unions are NOT using data and machine learning

the lifeblood of digital to create the biggest impact on the balance sheet and

for the consumer ndash automated loan decisioning

bull Thatrsquos right Seventy percent of loans are manually decisioned at credit unions

Seven out of 10 credit card loans auto loans and personal loans are manually

decided

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Existing Digital Services

bull Credit unions are trying to live in two worlds

bull The old-world manual loan decisioning has become more and more suspect

with membership expansion beyond original sponsors while the new world

provides a true digital member experience

bull Trying to live in both worlds will not work as credit unions move forward The

win in everything digital is a fast easy and thorough data-driven process not

just a slick user interface with a lot of questions and a multi-hour or multi-day

decisioning process

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Lending

bull Sixty percent of credit unions do not have a digital lending strategy and it

shows as only 30 of the loans are processed digitally in two-thirds of credit

unions

bull That is an incredible statistic given less then 33 of millennials go into a branch

or use a call center according to the Financial Brand

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

Overall Satisfaction Among Mobile and Online Direct Banks

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Credit Unions Have Not Created End-to-end Digital Services

bull A vast majority (90) of digitally initiated transactions require manual input The

holy grail is 100 digital

bull Anything less is likely a failure in most millennialrsquos minds

bull The difference in satisfaction rates is shocking Consumers are 63 satisfied

with the fully-functional digital services offered at direct and neobanks

bull According to the Financial Brand only 57 of credit union members are fully

satisfied with their service Credit union service strength is being usurped by

startups Digital is winning

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Banks are moving toward the direct model to significantly cut their costs

Banks are leveraging their scale as well as their digital and data strengths

to cut costs while delivering better service Credit unions have always

been able to win by offering a better price (lower costs of operations)

and superior service Banks are stealing our fundamental strength with

the use of digital and data strategies and tools

Coupled with advanced verification systems the use of data-enriched

machine learning decisioning engines next best product offerings and

member identified communications (SMS etc) banks and FinTechs have

created aggressive strategies and invested in better technologies that

result in better services and more loans

A Battle Credit

Unions Cannot

Afford To Lose

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Digital Is Strategy and Cultural Change

bull The results of Question 11 provide some very good news for credit unions

They are evolving their digital channels more quickly than in the past with 92

adding functionality in the last 12 months

bull This suggests vivid awareness that digital requires constant learning systematic

change and revolutionary ideas in order to remain competitive

bull That is why digital is both strategic and cultural It is not about automating old

processes it is about redesigning processes around digital mobile and data

The change required affects all departments

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

A Key Question

Is Your Credit

Union Achieving

This Level Of

Digital

Engagement

Setting aggressive KPIs is essential to understanding

how credit unions are evolving their digital strategies

to meet their membersrsquo needs Itrsquos worth noting that

credit unions are effectively measuring digital success

around activity service profit and products used

bull87 of consumers starting at digital

bull90 completing the transactions (not abandoning or changing

channels)

bull95 using digital resulting in doubling net promoter score

improvements (Financial Brand)

Banks and FinTechs are now looking at KPIs in

fundamentally different ways than credit unions

There are new benchmarks

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

A Clear Indication That Credit Unions Are Changing

bull Fifty percent of credit unions have replaced their digital or mobile banking platforms

in the last three years

bull That is a clear indication that digital banking is shifting from online to mobile and

that the old user interfaces do not hold up to the competition

bull Most of the systems being purchased are platforms for digital engagement not

stand-alone online banking platforms

bull BIGrsquos field observations suggest that credit unions are trying to connect the dots or

in this case systems into a mobile-first platform that crosses all products and

channels and which uses data to ask fewer questions verify more information and

make more decisions

bull There is that theme again digital powered by data across all channels is the

strategy that wins the revolution

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

Survey

Observations

Credit unions are aware that a revolution is upon them and yet 50 of the industry is still solving the problems in piecemeal fashion versus the necessary holistic strategy

that ultimately will win the battle and retain banking consumersrsquo dollar

bull The greatest challenges to credit unions based

on the surveys

ndash Credit unions have woken up to the challenges of

the digital revolution

ndash Credit unions are well behind the competition in

digital services but are building strategies

roadmaps making investments and enhancing

their technologies

ndash Digital enhanced lending should be a higher

priority for credit unions

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

BIG Consultingrsquos

Digital Retail

Hypothesis

The Fourth Industrial Revolution is upon us

Digital service providers dominate the retail model

Everything in banking has changed or is changing

Comprehensive digital strategies are necessary and

fueled by data and analytics

Strategy and culture must change to in order to

compete

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

AXFI Conference | June 9ndash12 2019 AXFI19

The Revolution

Is Real and the

Battle is Upon

Us

Digital powered by data is the dominant service channel now and going forward

Digital investments by all sizes and types of credit unions are growing

Competitors are prioritizing digital and data and using it to enter new markets and segments and

to enhance selling

Data is the secret sauce that leads to better business intelligence and frictionless digital member

service

Frictionless interactions powered by data (fewer questions faster responses lowered risk of

decisions automated compliance process automation) is the priority for credit unionsrsquo

competitors

Big banks and big tech are winning the hearts and minds of younger segments because they use

data more effectively (enhancing service) and build better mobile and online experiences (across all

products)

The growth of online (direct) banks is real and now sustainable

Payments have shifted from bill payment and checks to debit peer-to-peer and direct pay online

with debit and credit

The disruption in retail banking is a once-in-a-lifetime opportunity for credit unions to win market

share

Without integrating strategy member value digital and data credit unions will fail to take

advantage of the historic shift in the banking model

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom

Kirk Kordeleski

Sr Managing Partner and Chief Strategy

Officer at BIG Consulting (Best Innovation

Group)

Kirk Kordeleski leads BIGrsquos Management

Consulting practice that was founded with

the objective of offering clients innovative

solutions for strategic growth and data and

digital transformation

BIG Consulting offers comprehensive

analysis of credit union digital and data

resources operations financial

performance shared services and

technology

Contact Kirk at kirkbig-cucom or

call 516-528-5057

wwwbig-fintechcom