Plus, ten takeaways from these revelations that should inform your credit union’s digital transformation strategy.
Finalytics.ai, an AI platform provider that allows credit unions to deliver digital experiences to members tailored to their unique, individual needs, recently interviewed members one-on-one to understand how they manage their finances and how satisfied they are with their credit unions. The following are ten things we heard that members might never take the time to share with their credit unions:
- Members do not come to credit unions for advice. Members often get advice from friends, families or peers. Those who reach out to their institution have already formed specific relationships with an employee. For example, we found a group of Brazilian immigrants that always went to a specific Brazilian-born teller for advice.
Takeaway: Members seek advice from those they believe know enough about them to be trusted.
- Members don’t like branches. Members said that they choose their financial institution based on branch proximity or quantity in case a need arises that would require physical interaction with a service representative. However, most members think going to the branch is a chore. Some even stated they “wouldn’t go to a branch for any reason,” preferring to bank digitally and seek help via a call center should an issue require it.
Takeaway: A branch that has not evolved to accommodate the digital- or call center-first mindset of members is an expensive billboard.
- Members don’t like using their credit union’s digital banking. In a survey fielded in early 2022, Finalytics.ai found that more than 80% of the credit unions identified digital service as a key competitive differentiator, yet only 14% provide solutions that focus on members’ digital experience. Members shared dissatisfaction from overcomplicated digital experiences as well as those that lacked functionality felt to be “table stakes.”
Takeaway: If digital is the branch (and it is), it has to be like the branch; static websites and digital banking apps that do not change won’t do the trick.
- Members want digital banking to be more like shopping. In another recent survey conducted by The Harris Poll, 40% of respondents said they are likely to leave their primary financial institution for digital banking that compares to an online shopping experience. The decline in consumers identifying credit unions as their primary financial institutions speaks volumes about the reality this data highlights.
Takeaway: Members do not judge their credit union’s digital experience by comparing it to what other financial institutions offer, but by how Carvana, Apple, Uber, Instacart, etc., make them feel.
- Members don’t act their age. We interviewed Gen Zers who didn’t use mobile apps and went to the branch even during the pandemic, baby boomers who refinanced their homes and bought their cars only online, and octogenarians who had not visited a branch in decades and actively helped their younger friends with “computer banking.” Consumer behaviors cut through all demographics. Financial institutions that continue making assumptions based on age or ethnicity continuously miss the mark.
Takeaway: Beware of thinking that demographics will suffice in determining digital strategy. Access to real-time data sources from outside and inside the credit union is a cornerstone that must be in place to offer a digital experience that is “relevant” to the member.
- Members hack products to get convenience. For digital-first members, it is all about convenience. When a service is no longer convenient, they will “hack” their experience to find that quality elsewhere. An extreme example of this was the members who told us that the most convenient way to transfer money between institutions was to write a paper check to themselves and immediately deposit it using their mobile banking app.
Takeaway: Any unnecessary friction in a credit union’s digital experience will cost them. Best case, they will pay the prices associated with a paper check. Worst case, the member will find an institution that offers them a fully digital alternative.
- Members are already filling the gaps. Members have no reason to tell their credit unions about the alternative financial providers they are using. Several years ago, bankers were surprised by the success of Venmo, yet members did not mention a need for person-to-person payments. (Zelle was released eight years later.) More recently, consumers are adopting buy now, pay later fintech services like Affirm.
Takeaway: When a credit union is “surprised to find” members are using a fintech product or service, the habit of doing so is likely already too entrenched to change. External data sources can uncover these trends and offer credit unions a chance to demonstrate another way they deliver value.
- Member spending doesn’t match their income. During these interviews, we found that members with low-paying jobs still found ways to budget, save and invest. Conversely, some members at the other end of the income spectrum live paycheck to paycheck, are overextended and don’t know how to budget, save or spend less.
Takeaway: Financial management and wellness advice that speaks directly to the member’s income bracket and financial situation is a value add for all members—especially if it’s integrated seamlessly within the flow of digital interactions.
- Members don’t think about relationships with credit unions. Most members told us they don’t particularly feel they have a relationship with their credit union. If members refer to a relationship with their “financial institution,” it often manifests as a connection with a specific employee, not the organization. Digital makes sustaining such a connection tenuous at best.
Takeaway: The secret sauce credit unions claim as their differentiator is the quality of their relationship with members. Transforming digital in such a way that this secret sauce is preserved requires more than a change in digital platforms or core providers.
- Members don’t understand loyalty programs. Many of our credit union clients told Finalytics.ai about their successful points-based loyalty programs. Yet, when we asked their members, few could explain the points system of those loyalty programs. Many were openly frustrated with the complexity of the loyalty program.
Takeaway: Loyalty programs are one way a credit union can be relevant to its members daily outside of the physical confines of a branch. To achieve this goal, a loyalty program must allow members to personalize the reward scheme to fit their buying patterns.
The common theme from these interviews was the need for credit unions to translate their historical focus on delivering value to members into the digital-first age, where more than 75% of banking services are delivered digitally. The opportunities to do this are all anchored in a digital transformation strategy focused solely on the member’s desire for a relationship tailored to their unique individual needs.
Craig McLaughlin is co-founder and CEO of Finalytics.ai. Based in San Francisco, Finalytics.ai is led by a team of fintech fanatics with diverse backgrounds in the fields of retail banking, digital experience design and analytics.