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The architecture of transformation: Transforming the infrastructure of your credit union

The architecture of transformation: Transforming the infrastructure of your credit union

Synopsis
8 Minute Read

Is your credit union future proof? In this section of Is your Credit Union Prepared for the Future? Part 2: The architecture of transformation, we will examine the areas of your infrastructure that your credit union needs to transform during its journey toward the future, including:

  • Policies, procedures, and processes
    • Process mapping
    • Increase standardization
  • Alignment of functions and capabilities
    • Enterprise architecture

We will explore each of these areas in detail below to help your credit union seize new opportunities, overcome obstacles, and secure its position in the future.

Partner, National Credit Union Leader
Leader, Consulting – Organizational Renewal
Partner - Financial Services Institutions Leader

Your credit union's transformation journey must also examine your infrastructure to identify areas where you can streamline operational processes and integrate new technology. This will not only increase member satisfaction — it will also improve the efficiency of your credit union and enable it to react quickly to changes in the financial services industry.

A successful transformation of your credit union’s infrastructure involves comprehensive process mapping and carefully considering where you can increase standardization within your organization. It will also include evaluating your enterprise architecture to ensure the alignment of functions and capabilities. This will help ensure your credit union’s infrastructure aligns with its strategic objectives — and supports the achievement of its goals both now and in the future. 

Policies, procedures, and processes

It is essential for your credit union’s transformation strategy to consider the policies, procedures, and processes it currently has in place and identify areas for improvement through a process mapping exercise. This will enable you to streamline workflows and allocate more resources toward your future goals. Additionally, your transformation strategy should assess the areas where your credit union can enhance standardization to increase operational efficiency, reduce errors, and provide consistent services to your members.

Process mapping

Creating diagrams that outline the step-by-step sequences and interactions involved in the various operational processes within your credit union is a valuable tool. This allows you to document, analyze, and improve workflows and procedures with the goal of ultimately enhancing operational efficiency and member satisfaction.

Process maps provide consistency. Streamlining operational processes within your credit union results in quicker responses to member inquiries and requests, leading to improved member satisfaction.

Process mapping also ensures that the employees of your credit union follow standardized procedures, reducing errors and improving the consistency of your services. During the transformation journey, identify where you can make improvements to the processes within your credit union. For example, streamlining the loan approval process to reduce turnaround times can help your credit union improve member satisfaction and potentially increase loan volumes. Additionally, your credit union can demonstrate compliance with regulatory requirements and internal policies by documenting these processes.

“Credit unions need to step away from traditional business models and start to learn and understand what needs to be in place for the future,” says Daniel Johnson, Chief Executive Officer at Innovation Federal Credit Union. “While we still have regulatory processes that are required on a quarterly basis, we’ve streamlined many of our processes to make decisions quickly and respond to challenges. I think it’s important to look at work differently and recognize that what worked before may not work now.”

Leveraging technology can help your credit union achieve this efficiency. Consider using automation to streamline routine tasks and paperwork that may be time-consuming and prone to errors. This will help you not only enhance operational efficiency, but also empower your staff to allocate more of their time and energy toward engaging with members — providing them with the personalized attention and support they need. Technology is a valuable tool in the journey to transform the overall member experience with your credit union. Identifying where to introduce technology in your operations through process mapping contributes to member satisfaction, operational effectiveness, and helps support your credit union’s future success.

Increase standardization

It is essential to establish consistent and uniform processes, procedures, and practices across various aspects of your credit union to achieve greater standardization during your transformation journey. Identify variations, redundancies, and areas where standardization can be applied after your assessment of existing member-facing and internal processes is complete. This further step may involve creating standardized operating procedures (SOPs), checklists, and guidelines for various activities.

It is crucial for credit unions to tread carefully when undertaking standardization. While standardization brings about several advantages in efficiency and uniformity, it is important to recognize the potential trade-offs that may arise.

Credit unions are inherently member-focused institutions, and prioritizing member needs and preferences is paramount to achieve a successful transformation. However, standardizing on specific technologies and platforms may limit the flexibility to adapt to the unique demands of your members — especially as they continue to evolve in the future.

For instance, while adopting a standardized suite of tools may bring cohesion and ease of management to your credit union, it may not always address highly specific requirements. In these cases, the use of third-party business intelligence (BI) tools tailored for specialized needs may be necessary. However, it is imperative to weigh the costs and complexities associated with integrating non-standardized solutions against the potential benefits they may offer to your credit union.

Ultimately, the decision to standardize or deviate from standardized technologies should be a result of a thorough cost-benefit analysis during the transformation journey. Credit unions must carefully assess whether the advantages gained from non-standardized tools or approaches outweigh the potential drawbacks. These drawbacks may include increased complexity and the risk of diluting competitive differentiators that may impact the future success of your credit union.

Alignment of functions and capabilities

It is essential to ensure your functions and capabilities are aligned during your credit union’s transformation journey. Comprehensively mapping your enterprise architecture can help you identify areas for improvement and ensure your IT investments support your strategic objectives and vision for the future.

Enterprise architecture

Developing or updating your credit union’s enterprise architecture, mapping ongoing enterprise architecture projects and initiatives, and defining focus areas for improvement are essential activities to ensure effective organizational alignment. Taking a proactive approach can help contribute to the long-term success and competitiveness of your credit union in a rapidly evolving landscape.

During the transformation process, your credit union should aim to develop and/or update its enterprise architecture to show key functional areas, capabilities, and interconnectivities across the organization. This helps provide a holistic view of your credit union’s key functional areas, structures, processes, and technologies. It also helps align these elements with your credit union’s strategic objectives — ensuring that IT investments and initiatives support your overall mission. By mapping out existing technology systems and infrastructures, your credit union can make informed decisions about resource allocation, identifying where investments are needed most.

The next steps are to map how ongoing projects or initiatives are impacting your enterprise architecture and define focus areas for improvement. This will enable your credit union to align its technology and operations with strategic objectives, optimize resource allocation, and mitigate risks. It will also help ensure that improvements and innovations align with member-centric goals and support a sustainable transformation both now and in the future.

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