Once upon a time, checking accounts were the key to preferred financial institution (PFI) status. Now, as mobile payment volume increases at a compound annual rate of 80 percent annually (Auriemma Consulting), primacy in payments is not what it used to be. Today, evidence is mounting that PFI belongs to the financial institution that meets the consumer’s increasingly digital needs with seamlessness and security.
“Where the checking account used to be the leading indicator, now there’s more to it,” says Kelly Mendenhall, Vice President of Product Management at CO-OP. “It’s important for credit unions to offer members the payment tools they need, so they don’t have to go elsewhere to accomplish everything they’re trying to do.”
Chris Sibila, Executive Vice President of Payments and Technology at Elements Financial in Indianapolis, says member engagement increasingly means digital engagement: “Three years ago, Apple Pay set into motion a proliferation of payments options that have dialed up the competition. We used to measure PFI status by where the primary checking account was. But now everybody has more than one checking account. A lot fewer people go into branches now. Cross-selling used to be the big thing, but we don’t look at that anymore. We’re working to define what makes a truly digitally-engaged member – the types of transactions, the number of transactions, the number of digital interactions, and who is top of wallet in the digital space.”
Welcome to the New PFI
How can credit unions cultivate digitally-engaged members? Sibila says that Elements considers a number of touchpoints including direct deposit, mobile and digital logins, and debit/credit transactions to measure their members’ digital engagement. Additionally, Elements is constantly looking for ways to achieve top-of-wallet status in the digital space.
“That’s the real bear,” Sibila says. “We have to fight hard to make sure members have put our Elements cards in their Amazon, PayPal and Apple or Android Pay apps. We know that once a card goes in – especially as the default payment method – it generally stays there.”
Key Takeaways for Credit Unions
If digital payments and digital engagement are the new keys to PFI, what should credit unions be doing differently to compete? For Elements, a complete strategic overhaul centered around digital excellence is in the works. They’re examining member experience – especially around digital – by going onsite at employer member groups and interviewing people about their experiences and expectations. They’re examining selected customer journeys: “We’re mapping the experiences, first from the member perspective then all the way around the organization, to see how we’re delivering end to end,” Sibila says. “We want these to be ‘wow’ experiences.”
Elements is also installing state-of-the-art security tools, including mobile CardNav controls and alerts and – behind the scenes – using their improved analytics to detect fraud. “We’re partnering with CO-OP to figure out how to be smarter with our data to enhance security,” Sibila says.
Mendenhall offers additional perspective: “Winning your members’ loyalty in payments isn’t so different today,” he says. “When you talk about credit, for example, you can start with the portfolio itself. Do you have different offerings to meet the diverse needs of your members – whether that’s low rates or better rewards? Can members use your cards in any of The Pays or other digital platforms out there?”
Though checks themselves may be going the way of the hoop skirt, debit is not. That’s why, Mendenhall says, “Everything I just said about credit also applies to debit.” By offering a robust transaction account and the payment options your members need – coupled with a superior digital experience – “That’s what allows a credit union to bring it home,” says Mendenhall. “That’s when members can say, ‘I do everything here.’ At CO-OP, our sales team has been working overtime to learn new ways to help credit unions achieve that status, so that being the preferred financial institution isn’t a happy accident, but the deliberate result of a credit union’s strategy.”
Download CO-OP’s eBook “Payments Disruptors, Innovations and Trends” for more information on bringing your payments experience up to speed. To learn more about gearing your credit union up for PFI predominance, contact Sales@co-opfs.org.