Article

Credit Unions Should Bank on Chat

overhead view of a woman using a chat or instant messaging app on her smartphone
By Andreas Suma

4 minutes

Members live on chat apps to communicate with friends and family. Is your credit union on their contact lists?

The pandemic has driven more consumers than ever to bank by mobile app, and seven in 10 would use a chat app for banking if their bank offered it, a new study shows.
 
WhatsApp, Facebook Messenger and Apple Business Chat are widely used by consumers to talk to friends and family. The study, conducted by Dimensional Research in partnership with mobile and chat commerce leader Clickatell, found that half of U.S. consumers have already used such chat apps to talk to businesses, too.
 
The research underscores that consumers love chat—and they’d like to do more banking on their favorite chat apps as well.

A New CX Battleground

While the survey dealt with bank customers, the results portend big opportunities for credit unions to harness the power of chat apps to keep and retain members and compete with larger FIs, as well as to boost the customer experience in a world forever changed by COVID-19.
 
Credit unions have long ranked higher on the customer service and satisfaction scale than retail and commercial banks, given credit unions’ cooperative nature, nonprofit status and focus on providing a more personal and flexible member experience.
 
But the availability of digital technologies at retail banks and the explosion of fintech challengers is eating away at the credit union CX advantage. One study from the Everest Group found that less than 5% of credit unions in the U.S. had a mobile banking app as of 2019. Retail banks, meanwhile, invested heavily in digital technologies before and during the pandemic, and those investments have scored well with consumers. A recent J.D. Power survey found the proportion of digital-only customers at retail banks jumped to 41% during the pandemic, up from 30% the previous year, and that satisfaction improved the most among heavier users of digital channels.
 
Thanks to the pandemic, more consumers have gotten into the habit of not physically visiting neighborhood credit unions or banks. And that’s a problem, since high-touch service has been a mainstay of the credit union connection with consumers, especially if branches were located at work or in shared commercial spaces.
 
Accelerating changes to customer service are likely, as digital technologies continue to infiltrate more of the financial services industry. All of these forces support the case that credit unions can take advantage of chat apps to:

  1. Add high-value digital capabilities. Currently, when consumers contact banks or credit unions on an app, they mostly do it through branded apps that each organization creates for its customers. Such apps take time, money and marketing power to optimize. Credit unions, especially smaller ones, may not have the investment capability to deliver a branded app experience. By offering chat banking via existing chat apps, such as Apple Business Chat and WhatsApp, the credit union has a chance to offer the same or even higher quality chat experiences than the big banks do on a chat app. Also, on chat apps, brands sit in the same contact list in consumer phones as do friends and family. That’s a great place to be.
  2. Replace lost in-person moments with personalized and convenient chats. Chatting is asynchronous communication. Consumers send messages or ask for information when it is most convenient for them and then receive a response. No waiting for a branch to open. The Dimensional/Clickatell study found that 65% of consumers say COVID-19 has changed the way they use banking apps, including 12% who started using an app for the first time. Millennials increased their banking app usage the most during COVID-19.
  3. Attract and retain younger consumers. Not surprisingly, younger consumers are the most invested and interested in chat apps to interact and transact with businesses, the Dimensional/Clickatell research shows. For credit unions, where current members tend to be older, chat will be especially important to win over and retain younger consumers. While half of all banking consumers have used a chat app to talk to a business, the number jumps to 68% when considering just millennials, according to the study.
  4. Keep the high-touch feel, even if the channel changes. Financial matters are important, and consumers appreciate an institution that is ready to assist. The Dimensional/Clickatell study found the top three things consumers want to do with banks on a chat app are to access customer support, check account balances and pay bills. These simple activities are also what members often did at credit union branches prior to the pandemic. Plus, live chat for customer support via a mobile app can be highly personal, providing an opportunity to boost the member experience even while digitizing it.

Moving as an Industry

The credit union industry’s move to digital has been hampered by multiple factors, such as lack of in-house technology experts and relatively small technology budgets. For many credit unions, the digital offerings provided depend on what third-party technology providers make available.

But consumers have clearly shown preference for chat apps and a desire to do business and banking through this channel. The faster credit unions—as well as the technology providers they rely on—move to meet members on chat apps, the more successful they’ll be.

Andreas Suma is senior vice president at Clickatell and an industry expert in business and financial services. He has been a leader for 20 years at companies like FICO and Clickatell, where he works on technology solutions that drive business strategies in banking. He’s spent years helping businesses scale and navigate the financial services landscape.

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