By Ray Birch
BROOKFIELD, Wis.—More credit unions—large and small—are recognizing the need to dig deeply into their data, segment membership and analyze purchasing behaviors to serve them better, says Fiserv.
The change arrives at a time when for the first time banks surpassed credit unions on service levels. 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.
Prior to the arrival of the pandemic, Fiserv spoke with CUToday.info about trends shaping up in the CU community, including two divergent outlooks on branching.
Looking at changes in service levels, Fiserv seconded what CUToday.info has been reporting—that the credit union advantage of face-to-face personal service has been slipping away as consumers migrate much of their daily banking activity to digital.
“I am talking now about a pretty diverse set of our clients, all the way from small credit unions to very big ones,” said Derek Everett, general manager in the credit union solutions division at Fiserv. “They're starting to invest a lot more in areas that can help them really segment their clients and understand their members better so they can cross-sell solutions that are very relevant to their members. They are digging into their data to understand purchasing behavior within each segment. They are doing things like, for example, trying to figure out if certain members are more prone to take out a loan right now.”
Still Fighting
Prior to the arrival of the pandemic and its economic devastation, which is challenging the mettle of all credit unions and particularly small ones, Everett said the outlook among small CUs was most wanted to keep fighting.
“Many are focused on sustaining themselves—they don't want to be merged out,” said Everett. “So, a lot of the focus of small credit unions has been on operational efficiency.”
While net worth is now being watched carefully, Everett said credit unions had been digging into their reserves a bit to invest in member experience improvements.
But they are spending some of their reserves to upgrade their digital offerings to improve the member experience, added Everett.
“We are now seeing a lot better online banking and mobile offerings from smaller credit unions,” he said.
Divergent Attitudes
Turing to the outlook on branching for all credit unions, Everett said attitudes are divergent.
“Many are on separate journeys here,” said Everett. “I recently spoke with three clients, and all had very different outlooks on branching. One said they want to eventually have zero branches. Another one wants to be able to take their existing branches and transform them to serve different consumer segments better. And another is thinking about how interactive kiosks would change the branch experience.”
Everett emphasized what typically influences a credit union’s attitude toward branches is their members—the demographics within the member base and their particular banking needs. He shared what many other experts have stated, that many credit unions are offloading daily transactions to digital and leaving branch activity for more consultative and higher-value interactions.
“I don't think the branch in general is going to go away for a while. I just think you’re going to see more credit unions tailor them to their specific needs,” he said.
Focus on Efficiency
Tim Milz, general manager, credit union solutions at Fiserv, agreed with Everett that what he is seeing from small credit unions is an even stronger focus on operational efficiency.
“Community credit unions are really driving operational efficiency and seeking better ways to enhance members’ digital experience,” said Milz. “We are working closely with credit unions to help them on both of these efforts.”
While small credit unions focus on the steps they need to take to grow and survive, one aspect of the their business they should pay attention to, said Milz, is the threat to checking deposits from new financial transaction platforms.
Deposit Competition
As CUToday.info has reported, digital wallets—including Starbucks’ highly successful offering—prepaid cards, PayPal and Venmo accounts, and Health Savings Accounts, all are diverting away balances, sometimes even before they make it to the direct deposit.
“There are a lot of competing platforms out there that are looking to take members’ deposits,” said Milz, who added Fiserv is working with credit unions to help them address this growing concern. “One of our focuses at Fiserv is how quickly can we work with small credit unions to solve their problems to get them to that level of member satisfaction they need.”