Consumers are adopting digital banking at a faster pace than ever before.
Over 45% of respondents to a recent survey identified mobile banking as a top 3 factor in selecting a bank or credit union. And 80% of the survey’s respondents who have used mobile banking say it’s their primary method of accessing their accounts.
This trend away from the branch and toward digital banking has accelerated noticeably during the pandemic. Research from Boston Consulting Group found that 24% of consumers planned to reduce or abandon their use of branches, while more than half of consumers reported increased use of digital banking applications since the start of the pandemic, with 87% saying they intended to maintain that higher level of usage over the long haul.
This pivot toward digital offers opportunities – and some challenges – for credit unions, which have largely built their reputations for providing exceptional service and trusted advice on the foundation of a network of brick-and-mortar branches.
Competition for member wallet share is arriving from every corner of the market, including upstart fintechs and challenger banks, as well as Big Tech and mega-banks. For example, Bank of America is reporting success with its digital services, with an 11% increase in digital logins in the most recent quarter. Meanwhile, fintechs like PayPal and Chime are capitalizing on their digital dominance to capture a greater percentage of primary financial relationships (PFR), as the Co-op CU Growth Outlook research, done in partnership with EY and Filene, shows. And, according to research from Cornerstone Advisors, more than 25% of Gen Zers and nearly a third of Millennials use a digital bank as their primary checking account provider.
The member experience centers around digital payments
Members want — indeed, demand — access to digital banking solutions and if their credit union doesn’t offer them, they’ll seek them out elsewhere. The research shows that 66% of consumers use some form of digital payments, yet only 16% report doing so directly with their credit union.
According to the latest ACSI customer satisfaction index, overall credit union satisfaction scores fell behind banks for the third straight year, while banks have expanded their lead to 2 points. The gap is largest with the regional & community bank sub-sector, which represents credit unions’ primary historical competition. This group maintained a customer satisfaction score of 80 in the latest index—4 points higher than credit unions.
Why is this happening? It’s a matter of trust: the CU Growth Outlook research shows that 41% of respondents would consider leaving a credit union because the products don’t meet their current needs. And 78% of respondents don’t expect their credit union to offer the digital payment options right for them.
Delivering the right products and services to meet daily needs now rivals data protection, security and personal relationship as the most important factor when trusting a financial institution.
How to deliver on your digital promise for your members
The challenges confronting credit unions are clear. But so is the opportunity. To build trust with today’s members, credit unions must provide them with anytime, anywhere access to their financial lives, offer convenient payment solutions in a variety of formats, and create active, daily engagement aimed at enhancing financial well-being.
Here are some proven ways for your credit union to get started on your digital journey:
- Invest in your digital ecosystem: Fintechs have risen to relationship primacy over the past few years through the deployment of innovative digital technology and solutions. The pathway to primacy for credit unions will require accelerating their investment in digital capabilities and bridging the gap between their digital and non-digital channels, which will enable them to deliver financial well-being through digital tools.
If credit unions invest in lifestyle banking product offerings, they can gain significant market share of both members (+16%) and prospects (+13%) versus the status quo. Conversely, their current lead with members can be lost if they don’t invest at all.
- Offer the right digital features and functionality: Capturing greater wallet share and stickier primary financial relationships will require regular, active engagement with your members. Specifically, such engagement should be focused on supporting members’ daily spending habits, as well as their financial well-being.
The Co-op CU Growth Outlook research shows that by offering members the 10 “most impactful” relationship features (such as control over personal data, virtual access to a financial planner, relationship pricing discounts and the ability to receive paychecks up to two days early) on top of eight “table stakes” features, credit unions can achieve a 34% increase in member market share, and 40% higher market share among prospects.
- Offer the digital products that members desire most: Today’s consumers expect their financial institution to provide digital services that compete with those offered by the most popular fintechs and the biggest banks. These products include convenient, frictionless digital card issuance, which allow members to begin using their credit and debit cards immediately and without interruption while waiting for a new or reissued physical card. Digital wallet enablement is another must-have. It empowers members to use their preferred form of payment with any of the leading wallet apps, including Google Pay™, Apple Pay®, Samsung Pay™, Fitbit Pay™ and Garmin Pay™.
Enabling fast, safe and easy P2P transfers is also growing in importance. Credit unions can support this need seamlessly within their mobile banking app through Zelle®, one of the most popular solutions on the market today.
Members also look to their credit union to provide the latest and best data security protocols, and are willing to take part in the process of protecting their accounts from fraud. That’s why self-service card controls and alerts should be another core element of any full-service credit union payments program.
How Co-op can help
Co-op Solutions is the credit union-owned proven innovator of reliable, secure, digital-first payments for the modern member, and serves as the fintech solutions partner for credit unions large and small. Members expect (and deserve) meaningful interactions that enable their financial well-being. With a wide range of digital products like Zelle®, CardNav® by Co-op cardholder controls and alerts, Digital Card Issuance and Digital Wallets, Co-op is committed to helping credit unions grow through exceptional member experiences.
For more information, contact your Co-op representative today.
The original article Creating a Better Digital Experience for Members Leads to Growth can be found on Insight Vault.
