Great opportunity exists as credit unions emerge from the challenges of the pandemic.
All right, let’s put this pandemic behind us and get going and, more importantly, get growing. That’s the sentiment you often hear when you talk to credit union leaders right now about what they hope for as vaccination levels rise, economies reopen, and members get back to more regular activity.
But after 14 months of historic uncertainty, how do we get back into growth mode? What has changed? And what might we miss if we don’t stop to think hard about our current reality?
To get insight into what factors you need to keep in mind, we asked leaders from three different credit union industry sectors for advice.
Mind Your Mindset
Brian Scott says that while CUs face challenges this year as the economy gets back in gear, “there are good things happening too.” Chief growth officer of CUESolutions provider PSCU, a credit union service organization based in St. Petersburg, Florida, that provides 1,500 credit unions with payments processing, risk management, marketing, digital banking and collections services, Scott encourages credit unions to be more aggressive in lending and more purposeful in their marketing right now, particularly looking to expand their reach to family and friends of members.
“Fewer than 10% of family members of credit union members also belong to that credit union, and it should be the inverse of that,” Scott says. “It should be 90% are members.”
Scott says that he and the team at PSCU “think about the pandemic as an accelerator of things that were already happening. It wasn’t like there was a new trend that came out of it. It stomped on the gas of things that were already happening, both things that were coming up and things that were going down.”
For example, cash use and check writing have been declining for years, but the pandemic pushed the move to digital, causing credit unions to place even higher priority on transforming their offerings.
Scott also urges CUs to increase their efforts in working with the small business sector, noting that many entrepreneurs who were hammered by the pandemic are going to be looking to get back into business on their own or expand their current operations.
“I think credit unions could play a huge role in that small business market space,” he says. “It was one of the first and hardest-hit areas, but it could be one of the fastest growth areas.”
Credit unions have a lot of data about their members and need to use it to help them, Scott says. He urges credit unions to move beyond basic financial literacy initiatives to using data to serve more specific needs. Some members may need loans, for example, while others could use investment advice.
“Being able to have that data and make smart decisions about what’s best for members’ financial health is really powerful,” he says. “By harnessing that power, credit unions could become champions for financial wellness. They have a high level of trust, and using that trust to help members is a great place where credit unions could be doing a lot more.”
While credit unions and their competitors are offering information and advice, they aren’t advising consumers well, Scott says. “If I actually guide you towards what is best for you, that’s the step that nobody in the marketplace has really been willing to take. I think that’s a place where credit unions could really differentiate themselves.”
A big challenge to implementing this is the need to retrain staff and change their mindset.
“Training starts at the board level, training the board that this is a different and better way of interacting,” he says. “Imagine if every teller or MSR (member service rep) was proactive, reaching out to say: ‘Hey, it looks like you’ve been struggling to make ends meet for the last two months. Let’s talk about how we can change that.’”
An option Scott favors is an “anytime” or “anything” loan that gives members a constant line of credit of perhaps $20,000 and the freedom to use it for whatever they need—a car repair, bill payments or a vacation—without telling the credit union.
Make Critical Pivots
“Now is the time to demonstrate that your credit union is accommodating and working together with your members,” says Jim Giacobbe, president/CEO of CUES Supplier member United Solutions Company, a Tallahassee, Florida-based technology CUSO founded in 1983, which offers such technology solutions as data processing, the OnCore office automation suite, network services and email hosting.
“Examine the pros and cons of the past 12 months,” Giacobbe advises. “There have been a lot of things that have gone wrong, but there have been a lot of good things too.”
Giacobbe cites the increased focus on digital strategy, reduced lobby hours and earlier closing times that have lowered expenses without hurting member service.
“COVID taught us that people will make drastic changes in their lives to protect their safety and security,” he says, suggesting that credit unions need to consider how they can incorporate a sense of safety and security into their advertising and marketing over the next 12 to 24 months. “People are focused on that right now,” he notes.
“If you are bent on returning to the way things were, you may be missing a critical pivot in the market,” Giacobbe continues. “I don’t want things to go back to the way they were pre-COVID. Too many good things have come out of this. I want to concentrate on some of those things going forward.”
Giacobbe urges credit union leaders to be prudent this year. “Right now, if I’m a credit union CEO, I want to be cautious, but I don’t want to stop what I’m doing and I don’t want to panic. Stay the course and execute on your strategic plans.”
He says the pandemic reinforced the shift to digital and that caused problems for some credit unions last year.
“They were really struggling to become more efficient, to improve their digital channels and digital strategies,” he explains. "Because of the lockdown, my 90-year-old father was using his iPhone to check his account balances and deposit checks. We need to concentrate on digital strategies because that’s the world we live in. That’s the new reality for us.”
Giacobbe recommends adding such new services to your credit union’s website as chatbots with artificial intelligence that can answer basic questions and even integrate with the core.
“Provide your members with self-service products so they can open accounts or apply for loans,” he advises. “Members don’t want to go to the branch anymore, but if they must, make it easy for them with appointment-setting software.”
One piece of advice: Be sure your team members use your digital and mobile products for their own financial business so they are comfortable with them and ready to help members with their questions. If your employees don’t understand the tools really well, they are less likely to promote them and support them effectively when working with members.
“Everyone is buying online, and convenience is king,” Giacobbe says. “You need to get your credit cards on your members’ phones and linked to their Amazon accounts. You need to help your members add their cards into their phones. Don’t be afraid to be hands-on and show your members exactly how easy it is to do business with you.”
While he’s focused on digital, Giacobbe also tells credit unions not to abandon the voice channel, particularly since it now offers new features and is easier for members to operate than it was in the past.
“Believe it or not, interactive voice response has come a long way,” he explains. “The products we use have more options and even integrate with Alexa and Google Home.”
Be Ready to Evolve
Renato Oliveira says he’s optimistic about the future for credit unions if they respond well to the increased digitalization of financial services caused by the pandemic.
“Credit unions need to start preparing teams to exclusively manage their digital members,” he says.
Chairman and CEO of ebankIT, a digital banking software developer created in 2014 that is headquartered in Portugal with a U.S. office in New York, Oliveira notes that credit unions are the backbone of many communities. With such a critical social position, it is important that credit unions of all sizes be at the ready to offer services to meet member needs “so that communities can get the help and support they need to recover after the pandemic and prosper.”
“Smaller credit unions can have a harder time reacting to the current situation since they do not have access to the same resources,” he emphasizes. To compete, they may need to find external services and integrated solutions that will provide them “an innovation road map.”
Oliveira suggests “this can mean choosing solutions already available in the market” or choosing a service used by others that can be customized to your branding through simple configuration changes.
“Credit unions need to have a vast and greater digital offering that can cover … different ages—and not only the younger members,” he says. “New interfaces and a readiness to evolve will be fundamental to answering members’ current and future needs.”
The need for rapid change may mean that “financial institutions can no longer wait to create their own architecture” and should look for a digital product that can be deployed quickly while providing the capability for continuing innovation.
Digital transformation needs to speed up and, to avoid losing the race against members’ demands, credit unions may need to buy ready-to-use solutions, instead of building them, Oliveira says. “It is important to get flexible, so robust solutions that can be adapted to what the members are looking for at different times (are key). Financial institutions need to start thinking digital-first by looking for products and partners with that mindset that will help build optimized user experiences for every single digital channel.”
Oliveira says that when members want service or have a problem, they expect immediate and helpful action from their credit unions. But until now, the quality of digital service has been second on the priority list of many organizations. That must change.
“It is mandatory to start thinking mobile-first and about how to provide the best service to a completely digital customer that no longer seeks face-to-face interactions but needs to be served,” he says.
Oliveira says new tools that enable “more autonomy for contact centers or marketing and sales teams will be extremely important to capture new users and sell more financial products.”
Another key feature as things move ahead will be the rise of artificial intelligence.
“After this shaky time that we are all facing, members will look to credit unions not only to ask for credit products but also to seek guidance to better manage their money in an experience completely personalized according to each customer’s needs,” Oliveira says. “Artificial intelligence algorithms will help customers decide where to invest, how to apply and what financial products to buy. It will lead financial institutions to sell more and better to their customers.” cues icon
Based in Campbellford, Ontario, Art Chamberlain has written about credit unions for more than a decade and has been a member for more than 30 years.