BOSTON–Credit unions frequently talk about innovation, but how do members define being innovative? The answers will likely surprise many, as two people here demonstrated, stressing there is a good reason CUs should care about how they are perceived by members when it comes to innovation.
During Filene’s Spark conference the findings of a survey called the Credit Union Innovation Index were shared by Gina Woodall, VP and group director with Illuminas, a research firm, and Cortney Arnold, community development director with Filene.
The credit union study is modeled on the American Innovation Index Study that is conducted by Illuminas in partnership with Fordham University and the Norwegian School of Economics
The CU Innovation Index defines an innovative credit union as one that is creative, sets trends and comes up with new solutions for members. On a scale of 1-100, members gave credit unions a score of 67. That is compared to 69, the score given to other companies in general.
A second metric was also measured, the Credit Union Social Innovation Index, which defines a socially innovative CU as one that focuses on innovating for the benefit of society and environment. CUs were given a score of 61 by members, nearly identical to the score given to other companies, 62.
Credit unions do continue to rank higher than most banks on innovation, but trail fintechs.
“Interestingly, there are a few fintechs that members feel are more socially innovative than credit unions, with SoFi continuing to be on the top with all financial providers,” Woodall noted. “SoFi makes it feel very much like a member organization. They and others that are newer can better shape perceptions.”
Why Should CUs Care
According to Woodall, the findings are critical because from the viewpoint of consumers, innovation helps drive loyalty and ultimately share of wallet.
Consumers were asked open ended questions about what drives their perceptions of innovation, and Woodall said a wide variety of responses were provided that the organization and Filene eventually boiled down to 19 attributes.
While credit union leaders often define innovation as meaning technology, Woodall said that’s not how members define the term, as shown in the slide above.
Instead, members say the table stakes for CU innovation are:
- Safe and secure to do business with
- Better interest rates on loans
- Better interest rates on deposits or savings
- Lower fees/eliminated or reduced fees.
“You have to do these four right before any other type of innovation,” Woodall told the Filene meeting. “It’s not about digital tools.
At the bank you are a number, at the credit union they know you by name. That to them is a differentiator.”
The sweet spot differentiators for CU innovation are, according to the research:
- Cares about its members
- Available when I need them
- Fast and responsive service
Disruptors for CU Innovation
According to Woodall, the research showed the disruptors to perceptions of innovation include:
- Makes me feel like I belong. Member of member-owned cooperative. “That rated at the bottom. What they cared about was that they feel like they belong.”
- Rewards me for my loyalty. Both of the first two play into caring, said Woodall. “With rewards, you may think of expensive things like credit card rewards, but think in terms of other ways you can just recognize and appreciate them. This also scores much higher for members under 45.”
- Adapts to change quickly.
- Excellent products and services
- Continually introduces new and improved products and services
- Products and services are personalized to my needs.