Three key opportunities for credit unions today
Although few would argue that credit unions represent a trusted brand, trust itself is on shaky ground. Nerve-wracking bank collapses aside, financial institutions have been struggling for years to pin down precisely what it takes to maintain their customers’ confidence.
The problem may be one of definitions. Over time, trust has become less about faith in a credit union’s competency to provide good financial guidance or keep a member’s money safe. Today, trust is earned by delivering on an entirely different set of expectations—namely, being there for every financial moment, no matter how large or small.
Take everyday payments, for example. Research from Co-op Solutions shows that consumers don’t trust credit unions to have the payments tools they need. A stunning 78% of respondents to a recent survey said they don’t expect their credit union to have the digital payment options that are right for them. This is a big deal. That’s because delivering the right ecosystem of products and services to meet daily financial needs is now the most important factor to consumers when it comes to trusting a financial institution.
No surprise, competitors are capitalizing on this trust sea change. By strategically shifting away from delivering the best “one-off” financial experiences to serving the whole consumer, big tech, big banks and fintech startups are earning “PFRs”—primary financial relationships.
Instead of offering a mixed bag of a la carte services, competitors now are leaning on digital platforms that cross-pollinate to provide “always-on” multi-channel services. Therein lies the credit union opportunity.
By deploying a trifecta of strategies that focus less on transactional relationships and more on holistic financial experiences, credit unions will win the trust of more members. The three-pronged approach calls on credit unions to:
- Redefine trust
- Focus on lifestyle rather than life stage
- Commit to technology integration
Now is the time to reexamine what it means to be trustworthy. At Co-op Solutions, we talk about this as the “new member-centricity agenda,” and it rests on three main ideals:
- Knowing members like never before
- Becoming their choice for every moment
- Embracing the power of connection
We are living in an “on-demand” economy in which fintechs are delivering seamless, holistic, PFR-generating experiences. But the credit union difference can be the signal through the noise; so long as trust is well-defined (perhaps redefined).
Once that new definition is in place, it needs to be socialized from the front line to the boardroom. Without support for the new definition of trust, change agents within any credit union will struggle. Their proposals for investment will be met with a lot of “If it ain’t broke, don’t fix it” objections.
As you work through how your credit union defines trust in this modern era, consider approaching it from three pillars: knowing your members, being there every day and embracing the power of connection. In other words, offer them a full suite of products and services to meet their holistic needs.
Focus on Lifestyle Rather Than Life Stage
That brings us to the second opportunity for credit unions in the “on-demand” economy: Delivering lifestyle solutions informed by needs-based consumer insights.
Gathering those insights means gathering data from daily transactions and active members that represent the highest-contributing folks within a membership. We certainly can analyze data from loan portfolios, but they aren’t nearly as excellent at delivering the kind of real-time, up-to-the-moment and needs-based insights as things like credit, debit and P2P portfolios.
Payments products are critical to data ingestion. With highly competitive, digital, holistic payments products that serve lifestyle needs, credit unions feed data right back into the member-centricity machine. This, in turn, enables service of the everyday needs of members.
Commit to Technology Integration
Of course, serving the whole member takes more than data. It takes more than insights. It requires a strong and well-connected tech stack capable of transforming once clunky experiences into seamless, elegant and enjoyable ones. Enter tech integration.
To be sure, every credit union is at a different stage in terms of integration competency. The good news is that with credit union service organizations like Co-op Solutions investing in the democratization of developer tools and focusing on pre-integration with common industry providers, even the most resource-strapped credit unions can play along.
Credit unions can get involved in many ways. Among them is joining trusted fintech partners in betas and pilot programs that push the movement farther along in the digital transformation journey. It’s not easy, but participating credit unions learn a lot. And it’s not just about technology but about the member experience and what today’s banking consumers are responding to.
This kind of collaboration is ultimately what produces the speed to market on the financial innovations we need to compete with big techs, big banks and nimble fintechs. And most importantly, the seamless integration of technologies is going to help your credit union earn that newly defined trust from members so you can deepen your PFR with even more people.