Humanizing CU Technology Leads to Longer, More Meaningful Financial Journeys

Credit unions are in the business of helping people; they are not just pipes and plumbing – the latter being a concern many people have when it comes to traditional institutions today. They empower people to live their lives with financial security, safety and choice.

Credit unions are not just a vault for member money, doing little more than the opening and closing of doors. They are much more than just a place where money goes. In fact, they are the place people go for support when their lives are moving forward. And this meaningful, multi-faceted financial relationship feels ever more important in the era of COVID-19, a time when member needs are shifting and changing faster than ever.

Unfortunately, many credit unions are continuing to suffer from being regarded as institutions with outdated business models and mindsets that no longer serve today’s market demands. Providing a suite of varied services alone is no longer enough to retain members throughout every stage of their financial lives.

Findings from a July 2020 survey of U.S. consumers conducted by Cornerstone Advisors found that 14.2 million Americans (6% of U.S. adults with a checking account) now consider a digital bank to be their primary bank. This push to digital banking underscores the changing demographic of the American consumer and is a massive 67% jump compared to what member preferences were in January 2020 before COVID-19.

Member retention and long-term client lifecycles are exactly what credit unions need to protect their own longevity. Serving members in different ways at every stage of their lives, whether it be through a mortgage, first credit card or student loan, is key. Protecting market share from challengers or competitors means growing with each member as their individual banking needs change over a lifetime.

But remaining that lasting financial partner is not just about which products and services credit unions have to offer. It is about having the set-up and infrastructure necessary to nurture, retain and add value to members’ lives on a consistent basis, no matter what change is happening at any given point. This demands the availability of slick and simple touch points across the entirety of a member’s journey, giving them frictionless access to what they need most.

Services need to be provided in a way that mirrors the lives and behaviors of today’s consumer – and because technology facilitates heightened personalization and efficiency, that means being digital-first.

With the move toward digital banking, accelerated during the pandemic as shown through the Cornerstone Advisors survey, members are increasingly seeking tech-powered interfaces to help satisfy their requirements. This growth has resulted in the largest digital bank, Chime, becoming a top 10 bank in the U.S., sitting just under Citibank in terms of client size.

Recent research from Javelin Research & Strategy also showed that U.S. millennials have an increased reliance on other fintech services outside of their core bank. As consumers get older and their financial needs become more varied, they are turning to fintechs more than ever for add-on services like payments transfers. This underscores the appeal of nimble, innovative technology, and shows how it is offering consumers value over and above what they get from traditional credit unions.

Millennials and other tech-savvy members are increasingly seeking out a range of providers to meet their changing needs. Over one-third of Americans have two or more checking accounts, according to the Cornerstone study, and of those, 15% call an account with an online bank their secondary account.

Challenger banks are already offering services in a way that uses tech to be humanized, slick and usable – integrating seamlessly into the lives of users. And what’s more, they’re increasingly diversifying and broadening their services, meaning they’re encroaching on the territory of traditional credit unions more and more – positioning themselves as rivals to all of those new services banks and credit unions want to offer as their customers and members mature and change.

Part of the need for a digital-first approach is of course efficiency – simply making services more easily accessible to members through mobile apps or online. But it is also about seamlessly bringing together all facets of a credit union’s offering together on a single integrated digital hub, so that members do not overlook opportunities to take advantage of new or add-on services as their needs evolve. This means using a tech platform to remove siloes, to personalize advice throughout a consumer’s financial life, and to enable them to swiftly self-direct to lateral services using technology.

Without this, the whole member service process becomes fragmented, and turning to slick challenger banks for whatever new service is needed begins to look more appealing to members. Siloed credit unions with different divisions for various product lines, each with their own separate tech stacks, simply cannot take proper advantage of the many opportunities a consumer with ever-changing needs presents. What’s often lacking is not product availability, it is connection. Now more than ever, credit unions need to increasingly prioritize their own digital member journeys and ensure they’re using technology to meet the expectations and needs of members who exist in a digital-first world in all areas of their lives. Only then can they hope to take the full journey alongside them.

Vincent Bezemer is SVP of Strategy – Americas at Backbase, a fintech software provider based in Amsterdam, The Netherlands.