By Ray Birch
MADISON, Wis.—The faith credit unions have that member service is a strength could actually be clouding their decisions around the best path forward in a landscape in which digital disruption is disrupting things in many ways, according to one person, who added there is a “surprising” data point CUs need to be giving attention.
As a result of the countless financial choices now available to consumers—and just a click or two away--there has been an erosion in the primary financial institution status many credit unions long enjoyed with members, said Steve Heusuk, senior manager of customer intelligence for CUNA Mutual Group.
Heusek further noted that also deserving of attention is a surprising data point that reveals mounting problems within CU call centers.
“Yes, there is a great deal of digital disruption happening today, as we all know,” acknowledged Heusuk. “What the industry also has to pay a great deal of attention to, and be concerned with, is all the choice members have now with financial services. The amount of choice is simply huge.”
And all those suitors for the attention of members has lead to an erosion in the number of members who make their CU their primary provider.
Erosion Taking Place
Heusuk said that is eroding the PFI relationships within credit unions.
Steve Heusuk
“Data show that credit unions in 2018 controlled 21% of the PFI relationships nationwide,” reported Heusuk. “However, by 2021, that number had fallen to 12%. This just shows members now have more opportunities to go elsewhere with their next product or service that they need…I think the real danger for the movement is the weakening of member loyalty.”
As CUToday.info has extensively reported, credit unions, their vendor partners, their members and even regulators already know all about the “new normal” that has changed everything about how credit unions plan to meet member needs moving forward. This CUToday.info series looks at how credit unions are approaching their planning for 2023 and beyond.
Where to Begin
To address this concern in planning, Heusuk recommended that credit unions begin at the top.
“It’s a planning-to-win framework,” he said. “Determine what is your winning aspiration? When you know that, then go through what you think are your best strategies to win.”
In mapping out their strategic responses, credit unions must ensure they don’t create new points of friction for members, a concern echoed by a number of analysts as the perception of credit union service slides among consumers. As CUToday.info has extensively reported, for the fourth year in a row the perception of credit union service has slipped below banks in the American Consumer Satisfaction Index study. The primary reason for the slide, according to the study’s authors, are too many friction points in credit unions’ digital service delivery.
Not the End, the Beginning
Heusuk said simply investing in e-services is not just the end of the process, it can be the beginning of new challenges.
“They are building out these digital capabilities in lending, payments…But it’s really about how seamless and friction-free these services are for members,” he explained.
Next, Heusuk said, credit unions must understand their strengths and what it needs to do to win with those skills, fine-tuning efforts based membership makeup.
“It's difficult to be good across all the consumer segments, and there are segments within the credit union membership that leadership wants to target,” said Heusuk, adding the CU must figure out how it will win against those segments. “What is your value proposition and can you demonstrate that you are able to win on that value proposition?”
Heusuk emphasized that if a credit union decides it’s going to differentiate based on service--a recent CUNA Mutual study of CUs found 41% of respondents ranked member service as a top competitive strength—another question follows.
“When credit unions say that it's member service that’s the advantage, they better be sure they are winning on that,” Heusuk said.
Another Interesting Finding
Inside the American Customer Satisfaction Index data are some interesting findings, Heusuk believes. There’s not only evidence that credit unions are falling short in how delivery of digital service delivery is perceived, but also indicators members are dissatisfied with call center support, a point of contact that has increased as fewer members visit branches.
“The ACSI study shows that credit union service has stumbled, but the highest decline in service, according to the report, is not digital, it’s their call centers,” Heusuk said. “Credit union call center satisfaction in 2018 stood at 84. By 2022 that number declined to 76.
A Disconnect
“That’s an eight-point point drop, yet we have member service as the most commonly selected source of a competitive advantage for credit unions,” Heusuk continued. “Something's going on here—friction, dissatisfaction, maybe?”
Heusuk reiterated that credit unions must determine what their competitive advantage is and be certain that’s something they truly excel at doing.
“And make sure what you are doing truly differentiates you in the market,” he said.