Partners FCU models a new approach to digital development as credit unions fall behind banks in member experience survey.
Long before the COVID-19 pandemic temporarily shuttered branches, the definition of excellence in financial services delivery was shifting to digital channels. That evolution in member expectations likely accounts for a worrying warning signal: For the first time ever, banks surpassed credit unions in the annual American Customer Satisfaction Index.
Banks and credit unions both posted lower scores in the ACSI Finance, Insurance and Health Care Report 2018-2019, with banks’ average score of 80 down 1.2% from the previous year and credit unions’ average 79 down 2.5%. In a press release announcing the survey results, ACSI Managing Director David VanAmburg attributed the results to big banks applying their considerable resources to developing the mobile services consumers want.
“As technology improves, so does customer satisfaction,” VanAmburg said. “The personalized service that’s the hallmark of smaller banks and credit unions may no longer be as critical to customers, especially a younger demographic.”
Charting a Distinctive Digital Path
Credit unions’ comparative dip in the ACSI customer satisfaction ratings is largely due to the significant investments by big banks in digital capabilities like account opening and loan applications over the past several years, agrees Ryan Myers, director with CUES strategic partner Cornerstone Advisors, Scottsdale, Arizona.
Chase alone committed to a 2019 technology budget of $11.5 billion, half of which, its CFO reported, was used to finance “innovative change,” Myers notes. “That scale is hard for smaller organizations to fathom, much less keep up with.”
Credit unions don’t need to match the big banks dollar for dollar in their technology investments to regain their service superiority, but they should aim to partner with tech vendors to deliver a digital experience that takes full advantage of their knowledge of members’ needs, says Larry Edgar-Smith, VP/business solutions and product strategy for CUES Supplier member Temenos, Malvern, Pennsylvania.
Credit unions’ ratings declined in several areas of the ACSI survey, including helpfulness and time to process applications and resolve problems, notes Kris Frantzen, senior product manager for Temenos Infinity, a cloud-based digital banking and front-office product offered by Temenos that focuses on customer experience. Those metrics underscore the need to look beyond the design and feel of websites and mobile apps to the people and processes working to support the functionality and timeliness of those channels.
“We need to get things done quicker and more efficiently. What ultimately matters is meeting the financial needs of the people coming to us in a way that best suits who they are and what they’re looking for,” Frantzen says. “Credit unions have to make sure they’re not losing that focus on the individual because they’re trying to be like everyone else and have slick-looking technology.
“Never lose sight of what has made the credit union successful—just marry that to your credit union’s digital technology,” he advises.
Members’ increasing reliance on mobile and online channels doesn’t mean they’re willing to forgo personal service, cautions CUES member John Janclaes, CCD, president/CEO of $1.9 billion Partners Federal Credit Union, Burbank, California. “Credit unions need to improve their members’ digital experience across the board from mobile all the way into their branches and call centers and deep into their operations,” Janclaes says. “The promise to members is that anytime, anywhere, you can get something done, and if done correctly, with personalization. You don’t have to give up that great service you got in the branches in the digital world.”
Launching a Cultural Revolution
Partners FCU started down the path to deliver on members’ new service expectations three years ago and, along that journey, committed to more agile and iterative digital development in close partnership with its technology vendors. The credit union measures its progress via direct member feedback, surveys and app store ratings as it continues to introduce new touchpoints, like its Partners Connect mobile and online channel offering text and phone consultations.
For its success in executing on the digital front, Partners FCU was honored in 2019 with the GonzoBanker Ecosystem Award from Cornerstone Advisors for its collaborative member experience work with digital banking vendor Kony—a division of Temenos—to enhance its competitive position against the nation’s biggest banks.
“Our real competition is the big banks, like Chase, Wells Fargo and Bank of America,” Janclaes says. “When we ask members who don’t have a full relationship with us where else they bank, it’s those three. As sexy as Apple, Robinhood (“commission-free investing,”) and some of these outliers are, that’s not where the competition is where right now.”
Offering a comparable digital experience with big banks requires credit unions to “get cracking,” he urges. “This is a hard problem. It’s a long road. And it isn’t something you can just go buy from somebody. You need to change your culture in order to be able to deliver at a higher speed a continuous stream of digital offerings.”
Partners FCU’s adoption of an agile approach to transforming member service delivery required an organizational commitment, Janclaes says. “The discussions have to be about people, processes and technology—how we get things done. That’s the definition of culture.”
The credit union’s aim to speed up decision-making and implementation, to simplify technologies and processes, and to aim for progress over perfection took more time than expected to get rolling in the first year—but it has moved quicker than estimated over the last 18 months, he notes.
Partners FCU and its tech providers have gone from making one or two updates to its digital delivery channels annually to five updates to its mobile app in one month alone. Some changes are small and implemented regularly and seamlessly alongside the development of major initiatives. One such major change is a new online platform and member onboarding solution scheduled to roll out this year, working with Kony and Avoka (also a division of Temenos), respectively.
Measuring Members’ Digital Embrace
Members have taken measurable notice of their credit union’s digital transformation. In just a few weeks after introducing its new mobile app last year, Partners FCU’s Apple App Store ratings doubled from an average 2.3 to 4.6.
The credit union also works with Medallia—the same company its major sponsor, Disney, relies on to gauge the visitor experience at its theme parks—to gather direct feedback from members using its mobile app.
“A member might comment, ‘What’s up with this update?’ and we can see that and right away we can start to engage in the digital channel,” Janclaes notes. “That responsiveness is part of what makes our app store ratings go up.”
Myers recommends that credit unions closely monitor usage of their online and mobile channels as an indication of how they’re keeping pace with members’ evolving service expectations. The rate of membership and loan applications submitted via those channels in comparison to branches and the call center is another useful metric. According to the Cornerstone Performance Report for Credit Unions, high performers have about 60% of their members actively using mobile banking, and nearly a third of loan applications are originated via the internet.
Credit unions should also monitor metrics within their digital systems to identify “fallout spots” where members are abandoning transactions, Frantzen recommends. If a credit union sets a goal to bring in 5,000 applications through its mobile app but only gets 2,500, that data may pinpoint why there’s a gap so that pain points can be fixed.
Edgar-Smith shares an example of a financial institution that measured a 12% drop-off around the phone type field (mobile, home, work) on an application. By digging deeper into the data, its tech team discovered the real problem was a big block of disclaimer text immediately after that field detailing how the institution might use applicants’ contact information for marketing. By revising that text, moving it lower in the application and making the disclaimer linkable, the institution eliminated that pain point.
“Being able to track the member experience statistically is really important in terms of figuring out how to improve it,” he notes.
Social media comments from members on their experiences interacting with the credit union also provide valuable data—and require private follow-up to pursue resolution of complaints and ensure member satisfaction. The greater opportunity in monitoring social media input is to ferret out broader underlying service problems, Myers says.
“What if these complaints are not isolated to the one or two members who spoke up? You could identify ways to improve policies, procedures and efficiencies if you look for patterns and repeats of similar requests,” he notes. “Dig down to the root causes to resolve problems more globally. Good data management and analysis can help spot those patterns.”
Redirecting Capital, Strengthening Vendor Partnerships
Credit unions can’t match the resources big banks are pouring into digital development, but they should make the most of what they’ve got. Myers supplies an example from outside financial services: Chewy distinguished itself from giants like Amazon and PetSmart by providing value and excellent customer support to a niche market. (In fact, Chewy did such a great job that PetSmart bought it.)
Myers advises credit union executives to be very deliberate in their investment decisions in terms of how they try to enhance the digital experience for members. “First and foremost, remove the friction folks encounter when they’re trying to open a new account or apply for a loan,” he suggests. “Then, redirect resources that might have traditionally gone to big physical locations and put those toward more technology-enabled, remotely supported applications.”
In addition, he says, credit unions should consider a narrower aim in potential member growth. “Become the most appealing option for your ideal member, and design products, services and experiences with that group in mind rather than attempting to compete across the board,” he adds.
Two components of Partners FCU’s cultural shift were a capital study to figure out how to fund the rollout of service delivery enhancements and closer collaboration with technology vendors.“As you bring capital in to compete, your regulators are going to want to know—and your board’s going to want to know—that you’re addressing any safety and soundness issues around investing capital in this,” Janclaes says. “That can be a mindset shift in thinking about how we are paying for value for members.”
In describing Partner FCU’s working relationship with its primary technology vendors, he cites management expert Peter Drucker’s observation that “the best way to predict your future is to create it.” Janclaes and members of his executive team meet regularly with the leadership teams of those companies to coordinate ongoing projects and with a longer view “to inform their strategies toward our priorities.”
Developing true partnerships with technology providers can be challenging in a rapidly changing market with new offerings and providers being bought up by competitors. “While we’re all attracted to fintechs, we should be mindful that the forecast is for continued disruption, so we need to get good at managing that,” he cautions.
Credit union service organizations are stepping up their commitment to roll out offerings in a more agile manner that will allow their clients to compete on the digital front, which may provide an antidote to disruption in the larger financial services market, Janclaes notes.
“They’re credit union-owned. They’re not going to get bought up. They just need to get their focus on the right things and continue to work effectively,” he adds. “As CEOs of credit unions who participate in these cooperatives, we need to collaborate to focus on the industry’s top priorities and not spread their resources too thin.”
Peering into the future, Myers suggests that “this next decade will be won by smarter credit unions.
“It really comes down to being very thoughtful about the digital experience investments you’re making and pursuing much better use of data analytics—not just for everyday operational activities, but also in translating that data into more personalized digital interactions,” he says. “That’s where credit unions are going to have to keep pace to be successful.”
While Partners FCU was launching its pandemic response in March, it was also piloting Partners Connect. Available through its desktop and mobile app, this service lets members contact personal bankers who specialize in specified service areas via text for short inquiries and to arrange phone consultations (and, when branches reopen, in-person visits) for more in-depth matters.
The aim of Partners Connect is to “put personalization into the digital environment,” Janclaes says. Instead of connecting with a different anonymous service representative every time they sign in, members can continue to consult with their preferred financial professional.
“Text is the main means of communication, because that’s what people want,” he notes. “This is our latest experiment to focus on the customer experience. It’s less about the technology and more about how we deploy our people to create personal experiences in the digital world.”
This ongoing effort to keep pace with members’ evolving expectations and the competition “is going to take time and money and stick-to-it-iveness,” Janclaes acknowledges.
But CUs have an advantage in the agile development of digital delivery innovations, he adds. “If you’re smaller, you can turn quicker than big banks. They have to turn 80,000 employees in a new direction. We’ve got to turn 450.” cues icon
Karen Bankston is a long-time contributor to Credit Union Management and writes about membership growth, operations, technology and governance. She is the proprietor of Precision Prose, Eugene, Oregon.