Credit unions today face challenges such as increasing competition from digital banks and lenders, rising regulatory compliance costs, and needing to modernize technology while maintaining a member-focused service model. To attract new members and deepen relationships with existing members, credit unions must offer digital account opening and self-service options that provide fast and easy ways for them to manage their banking.

Alkami’s Digital Banking Solution enables financial institutions to provide digital banking functionality, unifying sales and service on a platform that grows retail and business relationships. With Alkami, financial institutions can choose features to provide members and employees, including onboarding and account opening services as well as data and marketing functionality. Its unified platform provides an integrated solution to help institutions onboard, engage, and grow relationships with members. And through partnerships with vendors offering complementary solutions, Alkami allows clients to take advantage of a wide array of banking technology.

Alkami commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying the Digital Banking Solution.¹ The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of the Digital Banking Solution on their organizations.

To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed 11 decision-makers from five credit unions with experience using the Digital Banking Solution. For the purposes of this study, Forrester aggregated the experiences of the interviewees and combined the results into a single composite organization, which is a regional credit union with just more than 100,000 members and total assets of $1.79 billion.

Interviewees said that prior to using the Digital Banking Solution, their organizations lacked strong digital functionality, which impacted member experience and limited their organizations’ ability to leverage data for member support and targeting. However, prior attempts to implement digital solutions yielded limited success, leaving them without the modern capabilities needed to attract and retain new members. These limitations led to difficulty customizing digital applications, operational inefficiencies, and an inability to integrate and scale.

After the investment in the Digital Banking Solution, the interviewees could better support members through digital channels, more smoothly offer products, and improve internal operations for member support, marketing campaigns, and fraud management. Key results from the investment include increased income from loans and other products, improved internal efficiency, and decreased loss due to fraud — benefits driven by improved digital banking adoption and user engagement and growth in deposits and loans. Some interviewees also reported eliminating costs associated with prior digital solutions or replacing/reallocating the costs and associated development resources from maintaining homegrown solutions.

Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:

• Loan interest income increase from a 3% growth in overall loans. Due to Alkami functionality and improved targeting, the composite organization increases total loans by more than $37 million in Year 1 of the analysis, growing year over year in tandem with member growth. The income associated with this loan growth is nearly $6 million over the three years of the analysis.

• Marketing team efficiency gains equivalent to the output of more than two FTEs. By leveraging Alkami’s functionality, including the Data and Marketing Solution, the composite organization runs and manages campaigns more efficiently and effectively, due in part to the included automation capabilities.

• Credit card income increase of $9 per card. After implementing Alkami, the composite organization drives increased usage of its credit cards, leading to additional income of nearly $600,000.

• Electronic document savings of an average of $2 per member. The ability to move members to electronic documents instead of paper statements saves the composite organization between $140,000 and $170,000 per year.

• Development cost reduction of $50,000 per application. By leveraging Alkami’s software development kit (SDK) for internal development use, the composite organization saves on internal developer time via less effort and avoids the need for external development support.

• Fraud loss reduction of up to $150,000 per year. Using the Alkami platform in conjunction with a partner, the composite organization successfully identifies fraudulent activity and stop losses before they occur.

Additional benefits. Benefits that provide value for the composite organization but are not quantified for this study include:

• Membership increases and account holder growth. Supported by Alkami’s functionality and scale, the composite organization facilitates membership growth. Although Forrester quantified benefits associated with increased loan income and credit cards, the composite gains additional value from asset growth as well as other types of products (e.g., deposit accounts).

• Member service center improvements. The composite organization improves call center operations with improved visibility into member accounts and activity. As the use of Alkami’s Digital Banking Solution grows throughout the organization, efficient and effective call center operations become increasingly important. Member support and self-service are critical as the composite organization grows total membership and offers more complex offerings that require additional support.

• App Store ratings improvements. App Store ratings had previously been a pain point for the composite, as members had concerns with the mobile app. After deploying Alkami, the composite sees a significant uptick in App Store ratings.

• Average products per member increases. Due to the improvements in member management and targeting, the composite organization steadily increases the average products per member. Some product types (e.g., credit cards) have associated revenue streams (as reflected in the quantified benefits), while others (e.g., opting into multi-factor authentication) do not. Although not all of these products generate revenue for the organization, using them indicates greater member engagement and protection.

Costs. Three-year, risk-adjusted PV costs for the composite organization include:

• Alkami costs of $3 million over three years. Alkami costs include an upfront cost and a monthly cost per active digital banking user.

• Internal implementation costs of $1.2 million. The composite organization has an internal team to support the rollout of Alkami’s Digital Banking Solution, which includes a core team and subject matter experts from across the organization.

• Ongoing Alkami administration costs of $38,500 per year. Approximately one-third of one FTE’s time is included in the analysis, representing several staff members at the composite.

• Marketing campaign administration costs of $110,000 per year. To best leverage the Data and Marketing Solution, the composite organization has two marketing analysts who devote a portion of their time to creating and managing campaigns.

The financial analysis that is based on the interviews found that a composite organization experiences benefits of $7.9 million over three years versus costs of $4.6 million, adding up to a net present value (NPV) of $3.3 million and an ROI of 71%.