By Ray Birch
ARLINGTON, Va.—While the credit union difference will always be important to the success of the movement, the mobile app and all of the emphasis on digital will make that less important as time goes on, according to one person.
It's a reality credit unions must recognize as they plan for a future in which there will be a greater emphasis on technology and the ability to afford the right tools, said NAFCU’s Greg Mesack, who noted the challenge lies in solving the puzzle of delivering personal, friendly service over data lines.
“Credit unions will always have that a special value proposition because people know credit unions have been there for them from the beginning,” said NAFCU’s senior VP of government affairs. “Members know the credit union is going to be there for them through the good and the bad, and that the credit union is going to work with them. That is how credit unions have delivered.”
That long-time strength has kept credit unions at the forefront of members’ minds for years, yet the impact of that attention and the friendly faces at the cooperative is slowly fading. As CUToday.info has extensively reported, perceptions of credit union service has slipped below banks for four consecutive years in the American Consumer Satisfaction Index, largely due to perceived shortcomings in digital solution offerings.
CUToday.info is examining the trend line as credit unions plan for 2023 and beyond.
Mesack said NAFCU has had many discussions about the credit union difference, and how it has helped the movement.
“As I said, that is a key part of it. I think that matters,” said Mesack. “But today you have to have the technology, right? You can't expect the credit union difference to solve for the fact you don't have a good app. You're not going to survive, right? You have to have the phone app. You have to have remote deposit. You have to have some sort of payment system. You have to be on par with your competitors.”
It Begins With the Budget
And all of that requires the budget to afford the technologies, money that a lot of smaller credit unions may not have, Mesack said.
“To compete anymore…the big banks are throwing tons of dollars at being digital first and trying to bring personal service to digital,” explained Mesack. “It’s critical that credit unions learn how to bring that personal service to digital.”
Mesack believes credit unions will solve this challenge.
“But I think a lot of the success will come from credit unions being more involved with third parties,” he noted. “There are some really great companies out there that are helping credit unions.”
Greg Mesack
Mesack also believes the pooling resources, too—that is cooperation among cooperatives--play a part in credit unions offering their members the types of digital services that can compete with banks.
“Anymore, one (smaller) credit union by itself cannot compete, such as your average Main Street credit union, average teachers credit union…,” Mesack said. “They can’t compete with Bank of America and its huge budget.”
The Role of NCUA
As other leaders within the industry have stated, Mesack said NCUA must play a key role in helping credit unions grow their digital skills.
“The regulators have to get involved, modernizing the rules so that we can work more with fintechs and do more with partnerships. Board Member (Rodney) Hood talks a lot about that,” Mesack said. “They're looking at ways they can try to modernize the regulatory regime so credit unions are better able to compete. At the end of the day we’re only going to be able to really compete if we work together as an industry—work with third-party companies and band together multiple credit unions to share resources.”
Mesack pointed out that despite all that is changing quickly around credit unions, what won’t change is that CUs are not-for-profit, and that will always be a fundamental difference and advantage.
Customers as ‘Piggy Banks’
“Big banks are incredibly important to our economy. They do a lot of good things for their customers. But we all know a big bank still views its customers as a piggy bank and their focus will always be on their shareholders,” Mesack said. “That's legally how it's supposed to be in. And that's fine. There's nothing wrong with that. But at the end of the day, credit unions are always going to be focused on their members. We’re going to be focused on our communities and Main Street. But it's going to take leadership from credit unions and some innovative thinking. The financial services industry is changing day by day, and credit unions have to adapt. And I think they will.”