By Ray Birch
SCOTTSDALE, Ariz.—While a recent study shows that for the first time American consumers have rated service provided by credit unions below that provided by banks, one analyst believes it’s not yet a tipping point–but is certainly a “big red warning sign” indicating how consumer definitions around service are changing.
“One thing this new report tells us is that the big banks’ service is getting much better,” said Cornerstone Advisors Senior Director Sam Kilmer, who believes one reason the shift is occurring is banks are now spending less time on mergers.
As CUToday.info reported, for the first time in the history of the American Customer Satisfaction Index (ACSI), banks have been given a higher customer satisfaction score than credit unions. In the wake of this report, questions and issues around what’s taking place in member service at credit unions are being highlighted in a series by CUToday.info.
The study found banks surpassed credit unions in the survey conducted by the University of Michigan, which found overall satisfaction with all types of financial institutions has declined.
“I would not call this a tipping point yet,” said Kilmer. “But this is a warning sign that credit unions need to pay close attention to.”
Getting ‘Incrementally Better’
Excluding the recent BB&T and SunTrust merger to create the new Truist Bank, Kilmer said big banks have been focusing much less on consolidation, which not only frees up resources to focus more on service, but also eliminates service setbacks that often occur when a merger takes place. Kilmer noted the move away from big bank mergers is due in part to bank concerns the government will consider them too large and focus on their operations.
“Banks are getting incrementally better at service now,” said Kilmer. “I don’t think the ACSI study’s findings are due to credit unions getting worse at service; banks are getting better.”
The study did show CUs’ service rating fell in the recent report—credit unions were down 2.5% to 79. Bank scores, as well, were down 1.2% to an ACSI score of 80.
In addition the rededication by banks to service-related issues, the for-profit institutions also have the deep pockets to invest in improved digital delivery, likely at a faster pace than credit unions, Kilmer said.
The Most Important Point
What it is most important to take from the ACSI report, emphasized Kilmer, is the definition of service is changing in the minds of consumers. Service is no longer as much about face-to-face—a friendly smile and attentive listening—as it is about digital and speed, said Kilmer.
“There is a new standard of service. It’s not really how full-service you are, it's how quickly you can get something done, especially with everybody walking around with their phone in hand,” Kilmer said. “Even six years ago it was common for credit unions and banks to talk about how to get certain types of processes—like account opening—down from 45 minutes to 25. Now you can open an Apple Card in three minutes. The point is the emphasis on speed has really picked up.”
Banks Invest Big
Kilmer pointed out what CUToday.info has regularly reported–that banks have plowed significant dollars into technology to get better at digital delivery, to be faster and to offer more self-service.
“They have put a lot of money into technology and marketing,” said Kilmer. “I'm not saying customers and members don't want to come into the office, but service is no longer about locations as much as it is about people wanting to get things done when they want to get things done. And now, that means digital.”
Kilmer agreed with analysts who have stated consumers like digital for the daily transactions, but still like to come into a branch to speak with someone on a complicated matter.
“One of the most complicated financial matters consumers will ever face is a mortgage,” he said. “However, mortgage processes went digital the fastest. That’s just a point to consider.”
Steps to Consider
Kilmer outlined several steps he recommends credit unions consider following the study’s findings.
“First, they need to look at their resource allocation in terms of where they spend their money,” said Kilmer. “Credit unions are typically spending about 12% of their marketing budgets on digital, so the other 88% is still going turn very traditional types of marketing. That’s one thing that needs to change.”
When considering servicing and staffing, Kilmer said credit unions still adhere to the 80-20 rule.
“Eighty percent of these expenses are still happening in the branches, and only small slivers in digital and the contact center,” he said. “I have found it’s absolutely critical to not only have a strong inbound contact center but also a proactive one—more outreach.”
Sam Kilmer
Kilmer also believes credit unions don’t have enough “accountable technology human resources” on hand, and rely too much on vendors. While he said using vendors to increase their digital offerings and streamline processes is good, it still takes having skilled people on board to execute either the credit union or vendor solutions and processes.
“Credit unions have to hire more here,” he said.
Rethinking Contact Centers
Credit unions, too, must look at contact centers, as well as what they do digitally, as profit centers, according to Kilmer.
“Right now, too many credit unions treat these things as cost centers. That has to change,” Kilmer said, adding it’s also in CUs’ best interests to create ways for consumers to “pull at them.”
“You don’t want to always be pushing at consumers,” he said. “Find ways to encourage consumers to reach out to you. For example, let members know they can contact the credit union once a year for a free financial health check-up. Offer a ‘financial wellness’ rating on your mobile app, or have other things that keep you top-of-mind with your members without having to be pushy.”
Dump the ‘Dumb Rules’
Finally, credit unions need to remove barriers to service often created by outdated policies.
“Like dumb rules,” said Kilmer. “I'm not saying compliance is not important, it is. But if some of these rules slow down processes—like asking needless questions and filling out needless forms—you have to streamline today. If banks can complete a credit card application in three to four minutes…You have to knock down barriers to get these 30 to 40 minutes processes down to three to five minutes.
“The definition of service is changing. It used to be that credit unions could get by with just having better rates, but now they are wondering why some members are leaving even for a higher rate. Price is only one lever anymore. Speed is now the key driver, along with a good experience.”
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