By Sarah Lietz
No one would argue the COVID-19 pandemic hasn’t changed our industry. Numerous surveys have been conducted, and they all tell us that consumers are moving to digital channels to conduct their banking. As CUToday.info reported in September, research conducted by BAI in August 2020 found that 52% of consumers are using digital banking services more often since the start of the pandemic.
The survey also found that 87% of consumers said they plan to continue their increased usage, even after the pandemic ends.
What does this mean for credit unions?
When every financial institution—and an ever-increasing number of nontraditional sources—are offering convenient digital financial services, how can credit unions stand out in the field? Historically, credit unions would point with pride to the level of personal interest shown their members and the way they were attuned to their members’ needs. But, with increasing numbers of members using digital services almost exclusively, will the connection members feel to their credit union change? Is it changing already?
The results of another survey indicate that it might be. For years, the American Customer Satisfaction Index (ASCI) ranked credit unions ahead of banks on overall satisfaction, as well as in the areas of courtesy and helpfulness of staff. Then came the wake-up call of the 2019 ACSI results when banks outscored credit unions for the first time since the survey began studying credit unions in 2008.
If the days when credit union staff can personally greet members as they walk in the door are gone, what will credit unions be known for in the future?
Where to Spend Resources?
All financial institutions, including credit unions, banks and non-traditional sources such as fintechs and online-only banks, understand the importance of reaching out to consumers in an increasingly digital world. Gartner recently published research on what retail banking executives regarded as highly important and how confident they felt about being able to deal with the topic.
Here are some of the responses:
- Successfully attracting next-generation talent in a competitive job market – 87% thought it was highly important but only 8% felt confident about the issue,
- Providing personalization and assurance to digital-only clients – 82% and 23%,
- Utilizing data to create targeted experiences that win over customers – 96% and 29%,
- Maximizing the impact of AI channel investments in a digital-first environment – 86% and 32%,
- Designing personalized experiences that resonate with customers – 88% and 32%,
- Supporting a culture of sustainable innovation across the business – 93% and 33%,
- Integrating data with analytics to understand how consumers are changing – 98% and 34%,
- Broadening the functionality of digital channels for more types of transactions and products – 91% and 35%,
- Building products that drive increased customer stickiness and successful customer adoption – 95% and 35%.
Analyzing Gaps Vital
Analyzing the gaps presented in these responses is vital, and the low numbers of responders who currently feel able to deliver on these priorities have highlighted areas where financial executives need to focus attention. At Members Development Company (MDC), a network of around 70 credit unions and CUSO owners, we routinely provide our owners with research into upcoming challenges and work with them to prioritize initiatives to help credit unions succeed.
Using the Gartner research as a starting point, MDC identified areas in which credit unions specifically need to focus attention because they are lagging behind competitors. For example, resources need to be invested in technology, process automation and using advanced data analytics if credit unions are going to be able to compete with the big banks, especially as more members are shifting to the digital channels.
Without a doubt the financial industry is changing. Chase Bank estimates they could be able to close 75% of their branches within five years. As more consumers embrace the convenience of digital banking, credit unions are going to have to find ways to balance an increasingly digital world with the ability to give members the personal attention for which our industry is known if they want to remain relevant and successful.
Sarah Lietz is chief experience officer with Members Development Co.