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Guest blog: Purpose-driven digital transformation in credit unions

Guest blog by Ben West, Head of Business Development, London Mutual Credit Union.  First published in Society Matters magazine.

Ben West shares how London Mutual Credit Union embraces digital transformation.

Credit unions have long been defined by their emphasis on interpersonal relationships, local links, and - most fundamentally—the concept of the 'common bond'. So for us, the process of digital transformation has specific implications. Over the past decade, London Mutual has embarked on a journey to understand how to use the best digital technology to meet growing member expectations, while enhancing the things people value most about us.

The first and most obvious issue is one of scale. In the UK, credit unions tend to be relatively small, with growth constrained by the common bond. However, that is starting to change as larger and more diversified credit unions including ours begin to emerge. Nonetheless, with in-house and external resources limited, we have had to be strategic about which aspects of the customer journey and internal processes to retain in-house, and which to deliver through external partners.

For us, that has meant partnerships with reputable vendors such as TCS to provide a robust and reliable core banking infrastructure, while developing our own in-house design, UX and development capabilities. Nobody understands our members like we do, so a particular priority for us is retaining control over the customer front-end itself. This mix of in-house and external capabilities means that we can quickly respond to opportunities presented by emerging technologies. For example, by retaining in-house developers, we were able to integrate an external vendor’s Open Banking services into our bespoke loan origination and payment systems relatively easily. This mixed approach also gives us the flexibility to choose the best of the third party tools on the market, while controlling costs and avoiding vendor lock-in, which can limit ongoing innovation.

A critical decision for any financial services firm has to be deciding which processes it is appropriate to automate and, conversely, where to retain 'the human touch'. This is especially important for credit unions, which tend to have disproportionate numbers of vulnerable and digitally excluded members. At London Mutual, this has meant investing in technology to accentuate, rather than replace, person-to-person customer service by phone, email and SMS. This includes adopting platforms such as Zendesk to deliver consistently high levels of customer service. We aim to use technology to free up staff to spend more time interacting with our members, and less time on administrative processes that we can automate.

This leads to another aspect of digital transformation that is often overlooked – that of internal culture and change. New technologies will inevitably require colleagues to work in different ways, and it is vital that they embrace it and understand the opportunity, rather than it being seen as an inconvenience or threat. This will mean different things for different organisations. For us, it has meant adopting modern project management methodologies, and forming cross-departmental teams. It also means using BI tools to widen access to key metrics affecting the business, so that staff understand and act on them on a daily basis.

It is bit of a truism to say that digital transformation will never be complete. However, for us, we are finding that the real value does lie in the journey itself, rather than the destination. Ultimately, it’s important to see digital transformation not as a hurdle to overcome, but as an opportunity to focus on your organisation’s purpose and to play to your strengths.

Next steps: Visit www.creditunion.co.uk


The views, opinions and positions expressed within guest blogs are those of the authors and do not necessarily represent those of the BSA.

Posted by Ben West on 30 May 2022