By Jeff Kline
Anyone who’s worked in business for more than a day knows the rapid pace of digital technology has greatly influenced consumer behavior, with the smartphone leading today’s charge. Last year, Deloitte’s Global Mobile Consumer Survey found that 80% of respondents reach for their smartphones within five minutes of waking up. Further, 77% of all American adults own a smartphone, according to a January Pew Research Center Mobile Fact Sheet.
Even among seniors, nearly half (42%) of those 65 and older own smartphones, compared with 13% just four years ago.
In the financial realm, mobile payments are expected to reach $75 billion in 2017, outperforming desktop, according to a January report by BI Intelligence. And a 2016 Gallup poll found that 56% of banking consumers prefer digital channels over having a personal relationship with their bank.
Wait, What? 56% of Consumers Prefer Digital to a Personal Banking Relationship?
Not only that, but PwC’s 2017 Digital Banking Consumer Survey identified the rise of a group it’s calling “omni-digital” customers – those who avoid physical branches and call centers altogether. In fact, the study found that 46% of consumers use digital channels exclusively, a remarkable increase from a 27% share just four years ago. That’s a hard pill to swallow for credit unions, whose lifework has been serving their members by treating them as part of the family.
Given that strong member relationships are a key credit union touchstone, how can we maintain a high level of connection in an increasingly digital world? If members seldom call or come into the branch, there will be fewer opportunities for staff members to be friendly and show empathy. And there will be little loyalty to the credit union brand if our only differentiator is a logo on the screen.
Credit unions need fresh ways to cultivate the loyalty of members who want to manage their money on a do-it-yourself basis, starting with a digital experience on par with the in-person interactions that have been our tradition.
“Mostly digital” consumers want simple ways to transfer money, obtain online loan approvals, and save for the future, and right now they’re finding them through fintech startups. These financial disruptors aren’t encumbered with legacy core systems, so they can move quickly, designing digital apps that have an easy, logical flow and a sleek, professional look. And without the encumbrance of years and years of banking procedures, they avoid a lot of red tape. How can credit unions compete? Believe it or not, just like we’ve always done – but with a digital twist.
Getting Close to Members in the Digital Age
At MDC, our credit union owner-driven project teams have spent considerable time in the past few years researching ways to personalize member interactions in all channels, but it’s especially challenging in a tech-driven world. Here are three tips we’ve learned for keeping close to members:
- Gather member feedback. Credit unions have a wealth of data about their members. The key is to make best use of it. Take advantage of the data on members’ buying and banking behavior that’s available in your core system and CRM program. Just as important, periodically survey members to get an emotional read on how they feel products and services are working for them. Periodic surveys are useful if not overdone, but perhaps the best way to learn what members think is through short feedback cards or personal phone calls. Ask how quickly problems were resolved, or what their home-buying/mortgage experience was like. Were all their questions answered about opening a college savings program? What else could the credit union do to be helpful? For new members, ask about their onboarding experience and any suggestions for improvement they may have. In addition, make sure to track comments members volunteer, whether online, on the phone or in person.
- Make continual improvements. People are busy, and members don’t want to spend a lot of time doing their banking. Armed with member feedback, credit unions can make smart decisions about adding products, simplifying member interactions or improving digital apps. Application Program Interfaces (APIs) can enhance digital product offerings, allowing credit unions to perform rapid prototyping of new service offerings or process enhancements. Keep members involved, offering feedback on how well your financial apps are functioning.
- Team up with fintech. Initially it looked like tech startups were going to eat traditional financial institutions’ lunch. But fintech firms haven’t earned the high level of consumer trust needed in the financial arena; nor do they have deep regulatory and operations knowledge. Fintech firms are agile, creative and have superior data-analytics capabilities. A quality technology provider can help credit unions use their considerable data to better understand members’ needs and deliver personalized experiences.
Of course, we also need to make sure members’ in-person credit union experiences are superior, too. The Gallup poll cited earlier found that 38% of consumers wouldn’t consider using a financial institution that didn’t have some physical branches. So, beyond finding ways to stay close to the “omni-digital” members, we also need to ensure that those who use multiple channels feel the credit union touch.
Your available data and member feedback is also key here – but not just data that puts them in different demographic or psychographic segments. The smart use of member information can help you build on the ties you already have.
Jeff Kline is CEO of MEMBERS Development Company, a collaborative CUSO helping top-tier credit unions grow by researching, developing and delivering the products and services on today’s members’ terms. Email him at jeff.kline@membersdevelopment.com or use Twitter @JKlineMDC.