With the possibility of a recession looming, now is not the time for banks and credit unions to be timid.
It’s no secret—the current economic environment is unpredictable, at best, or in a recession, at worst. The meteoric rise in inflation is driving prices to their highest levels in decades, while a reliance upon unsecured lines of credit and increasing debt continue to drive uncertainty. At a time when banks and credit unions are poised to generate high-net interest margins, they’re instead bracing for volatility.
Historically, that meant going on the defensive—increasing loan loss reserves, tightening lending standards, managing liquidity, and optimizing operations, to name a few—and deprioritizing investments in their institutions. But if previous recessions have been any indicator, banks and credit unions that go on offense and make strategic investments in customer experience, technology, and risk management often emerge from a downturn as victors—especially compared to their peers that didn’t take a risk.
So, today, bank and credit union leaders are left questioning: Is now the time to continue down an investment-heavy path of digital optimization, or do we focus on cutting costs and mitigating risk for operational resiliency?
The simple answer is—investing in the right digital banking solution can help you do both. Here’s how.
Make every dollar count—for your financial institution.
Investing in digital banking solutions is an investment in operational efficiency, especially in a time of economic uncertainty when every dollar matters. Before you start cutting jobs, budgets, and investments into critical technology, consider what digital banking can do to make your existing processes more effective, efficient, and cost-effective. A robust digital banking solution can:
Automate tasks and processes: A digital banking platform helps reduce labor costs by automating tedious, manual tasks, such as depositing checks, transferring funds, and paying bills. It automates processes such as customer onboarding, loan processing, and account opening to reduce manual errors and increase efficiency.
Get better insights: Digital banking solutions generate valuable data insights, including customer behavior patterns, transaction history, and preferences. This helps banks and credit unions identify opportunities for new products and services, improve existing products and services, and better target marketing efforts.
Mitigate risk: Digital banking reduces fraud and risk associated with physical transactions by implementing robust security measures such as two-factor authentication, biometric verification, and artificial intelligence-based fraud detection. This can reduce the need for costly fraud prevention measures and lower the risk of losses due to fraud.
Make every dollar count—for your customers.
Now, more than ever, customer experience is the name of the game, and it transpires predominantly online. With the possibility of a recession looming, people are stressed—inflation is impacting their everyday lives, and they’re looking for solutions to manage more with less. Banks and credit unions that want to ensure loyalty (and retention) should provide customers with the resources and tools they need to navigate an impending recession. The best way to do that is by investing in a digital banking solution that is convenient, accessible, and seamless. A customer-focused digital banking solution can:
Provide flexibility: A digital banking solution can offer customers more flexibility in accessing and managing their finances. For example, customers can set up automatic bill payments, schedule recurring transfers, and adjust their account settings at any time. This can help customers better manage their cash flow and avoid unnecessary fees and penalties.
Enable better financial management: Many digital banking solutions provide financial management tools to help customers better understand their spending habits, track their budgets, and plan for the future. These tools can help customers adjust their spending and saving habits as needed during times of economic uncertainty.
Provide alternative lending options: In an economic slowdown, customers may need access to credit or loans to help manage unexpected expenses or bridge short-term gaps in income. Digital banking solutions may offer more flexible lending options, including smaller loans with lower interest rates or payment plans tailored to the customer’s needs.
The right partner can help.
In an economic climate full of uncertainty and unpredictability, one thing is for sure: now is not the time for banks and credit unions to pull back on their investments in digital banking solutions. At Lumin Digital, we help banks and credit unions implement the right digital banking solution, one that optimizes processes, ensures customers have options in times of uncertainty, and helps financial institutions come out ahead in the end. As a digitally native technology company, Lumin’s ability to think differently about technology is fundamental to who we are. It’s ingrained in everything we do—from our advanced digital banking solutions to our internal operations, to our culture of curiosity. Contact us to learn more about how we can illuminate your success.