Traditional Banks Can Adapt to a Digital-Only Model. Here’s Why They Should Consider It.

Alliant Credit Union CEO Dennis Devine shares insights on digital-first banking, highlighting how a branchless model allows for better rates, fewer fees and rapid growth. He offers strategies for traditional banks to adapt to the digital age.

The banking industry is grappling with how to best serve their customers in an increasingly digital world. With a background that spans traditional banking giants and his current role leading a digital-only credit union, Dennis Devine, CEO of Alliant Credit Union, brings a unique perspective to this challenge. With over 20 years of experience in financial services, Devine has held leadership positions at KeyBank, Citizens Financial Group and PNC. In conversation with host Jim Marous of the Banking Transformed podcast, Devine offers insights into the future of banking and how institutions can adapt to meet changing customer needs.

Q: How has banking changed from your perspective, especially in terms of digital transformation?

Dennis Devine: My first job in banking was as a CFO. And when a really awesome leader gave me an opportunity to do something different in the business, he asked me, “How would you feel about leading our alternative channels?” At the time, that meant digital — and it meant contact centers and other channels like that.

It’s funny for me to think about during my career, that something that was once regarded as maybe a nice to have that we ought to build out — because some of our customers might ask for it — became the very center of the way most of our clients, members, customers now interact with us every single day.

No matter what institution we’re representing in this room, most of the interactions occur digitally. We know it and we’re building experiences around it.

Alliant Credit Union’s Unique Model

Q: Can you talk about Alliant’s growth over the last several years and what sets it apart?

Devine: Many of you might not know Alliant Wealth. We are a national digital credit union, one of a kind. Not many institutions look all-digital the way we do, have 20 billion in assets entirely focused on consumer digital experiences and are structurally organized as a credit union.

Because of our digital model, we have the best cost structure in the industry, 10 or 15 points better than good banks and credit unions. We also have other structural advantages, such as best-in-class experiences, top-of-market deposit rates, the full elimination of fees and partnerships that offer more free ATMs than the top two banks in the country combined.

A good credit union has grown its membership 5 or 6% over the last few years, that’s faster. Credit unions are good purpose-driven institutions, that’s faster than most banks have grown their customer base over the last couple of years. We’ve grown about three times that fast.

Q: What have you done since you joined Alliant to improve banking, first for your members and then for your employees?

Devine: Everyone participating in this podcast and discussion has a priority to serve clients and members and folks mean it. When you’re organized the way Alliant is as a national digital credit union, you could make some real structural difference to that.

For example, we don’t have shareholders to serve. So, if you look at our annual report, the first headline number is: “How much better is it to be an Alliant member than to be a member of an average bank or credit union?” It’s very easy to calculate that because we all issue call reports every quarter.

For example, this past quarter, the answer at Alliant was $498 million.
I’ve got a good CFO. When he would not round up that little, I was like, “Come on, Mark, how about half a billion?” “Nope, 498 million.” That’s how much better. And so, we sweat that detail every single time the call reports.

Building Financial Wellness Capabilities

Q: How are you leveraging investments toward financial wellness and improving your digital platform integration?

Devine: The average person in our country is swimming in debt. Interest rates are increasing and it’s getting tougher and tougher to service that debt and they don’t have the basic savings to address it.

We do a lot of work with employers as well and we talk with employers and we’re like, “Take a peek at the borrowing that’s going on in your 401(k) right now.” Because people are stressed and they’re looking for unsustainable ways to deal with near-term issues, we’ll work with employers and other partners on things like emergency savings and sustainable savings efforts.

For example, one of our close partners is the famous investor and influencer Suze Orman. We built a savings product in partnership with her called the Ultimate Opportunity Savings Account.

It’s not just about making sure people are putting that large sum in savings, which is good for the balance sheet of every financial institution, but also about working around the behavior of how to do it month after month after month.

Combating Silent Attrition in Digital Banking

Q: How do you help make it so you stop that attrition? Do you monitor the flow of funds?

Devine: We do. Well, I mean, so I shared the one example. So, of course, every good financial institution is going to know its flow of funds well. We all know that deposit growth disproportionately in any short period comes from your existing members. Your existing clients are bringing you additional funds. All of your clients have other financial relationships and are finding ways to bring those experiences.

But yeah, where you have new and traded memberships is something that you’re going to manage very closely and that’s why digital experiences have become so very important.

If all it is is a rate, then folks will pick one rate and as soon as the rate is lower, they’ll pick another rate.

Enhancing the Digital Banking Experience

Q: How have you built out this experience over the last four years? How have you made it a better digital banking experience?

Devine: Automation and ease are amazing builders of trust. When people find that the experience is excellent, that they don’t have to pick up the phone or reach out and that the net promoter scores are higher than ever, that is a great way to build the foundation of a long-term sustainable relationship itself rather than forcing them to go down a path that they didn’t want to.

This insight challenges the traditional notion that trust can only be built through human interactions, suggesting that seamless digital experiences can be equally effective.

Cross-Selling in a Digital-Only Environment

Q: How do you cross-sell using only digital channels?

Devine: In a digital environment, you can use the power of data to understand why that person is there and what they are trying to accomplish.

What does the rest of that relationship look like? Our best CRM systems in a distributed retail network and database bring ideas to the RM for delivery.

But you can just do that in a digital environment, reach out to them during the onboarding experience, or reach out to them when they just called in.

So, the power of data and presentation across digital channels is an excellent way to ensure that you personalize the experience in a way that’s right for the member. It’s one that will be presented at the right time consistently and thoroughly.

Lessons for Traditional Banks from a Digital-Only Model

Q: If you were to go back to work for a traditional financial institution, what’s the first thing you’d do to improve their digital transformation?

Devine: I think if I were hypothetically part of a traditional financial institution, I would start with the premise that most of our customers are visiting us digitally more than they’re visiting any other channels. Let’s make that experience astonishingly good.

Let’s make the investments necessary for that to be our core strength and then let’s supplement that with purpose. Why would they visit a branch? Why would they visit a contact center rather than the opposite, which is let’s try to build out all those channels and have digital as a supplement?

Dig deeper into Digital Transformation:

Overcoming Core System Challenges in Digital Transformation

Q: How do you work around or work with your core systems to digitally transform and innovate?

Devine: Alliant’s been around for nearly 90 years, so we’ve got a legacy core system you would know well. And nevertheless, we’re able to do the things we want to do.

We have invested in ensuring that there’s a good integration layer with APIs so we can make as many connections as possible and that there’s much less over … and this takes a period of years, much less direct connection into the core for the things that we want to do.

Everything that’s legacy connected that way is complicated; it’s complex. It’s more likely to be buggy when we want to go with releases. It takes a lot more testing. And so, it’s a period of change over years to think about that decoupling and modernizing given that historic relationship but commit to it and it’s doable and you start to get really excited about what’s possible on the other side.

Overcoming Core System Challenges in Digital Transformation

Q: As a digital credit union without a strong connection to a specific community, how do you discuss your purpose online with your member base?

Devine: First, we exist for them and to disrupt banking for good by serving our members. And so, we say to our members, five U.S. financial institutions hold 50% of all U.S. deposits. They disproportionately make their money through paying low rates to grow an interest margin and growing fees, which is now a political issue.

With Alliant, we’re making conscious choices every day, which they see as different from that so that they can build those experiences.

The second is that our brand DNA is organized around savvy members. You’ve got to be thoughtful and digital to want to be an Alliant member served by savvy employees. Our team is selfless. We’re in it for them, not for shareholder return.

The third is socially responsible. We’ve massively increased the scale of our foundation efforts with one particular mission: to bridge the digital divide and improve digital equity in our country.

Justin Estes is an award-winning writer, strategist, and financial marketing expert with expertise in banking, investments, and fintech. His clients include the NYSE, Franklin Templeton, Credit Karma, Citi and, UBS, and his work has appeared in Forbes, Barrons and ThinkAdvisor as well as The Financial Brand.

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