COVID-19 Consumer Behavior Steers Digital Priorities

There is no denying that COVID-19 drastically shifted consumer behaviors. Prior to the pandemic, migration to online banking services and digital account opening had been consistent yet gradual. However, as the world adapted to meet our health and safety needs, digital touchpoints and any friction associated with them were thrust into the limelight.

As consumer needs evolved, credit unions and other financial service providers saw rapid change across the member or customer life cycle including client acquisition, engagement and retention strategies. As we work to understand changes in these areas, we must also explore how credit unions should adapt to successfully serve consumers in 2021.

Acquisition

Credit union memberships reached 124.6 million in July 2020, up 2.9% over the past year, according to a September trends report from CUNA Mutual Group. While the continued growth for credit unions looks promising, trouble could be on the horizon if these institutions don’t rise to meet the evolving needs of their members.

For credit unions, membership growth, deposit growth and portfolio loan diversification are significant needs. As fintechs continue to expand their product offerings and the competition for prime borrowers intensifies, credit unions must maintain their relevance with members and small businesses.

Credit unions can excite their current base through the delivery of credit education and identity protection solutions. These types of offerings increase the value of digital experiences while helping members take back control of their financial well-being as well as protect their personal information. This helps build robust digital experiences for members while giving them rapid access to information that is in high-demand. Touchpoints like these can change a member from a passive participant to an active evangelical willing to recruit friends and family.

By staying a step ahead, credit unions have the opportunity to approach both consumers and small businesses and offer a more personalized experience in their community than larger financial institutions might offer.

Engagement

Since the beginning of the pandemic, mobile banking saw a sizable shift at nearly 45% of users increasing their activity, and 38.2% of online banking customers using digital channels more than before, according to PYMNTS’ “Leveraging The Digital Banking Shift Report.”

COVID-19 shifted the priorities of financial service providers to focus on removing friction from the consumer journey that could be taken due to the shutdown of physical locations. Whether signing up a new credit union member, presenting digital lending options or facilitating loan origination questions, credit unions must strive to present consumers with frictionless digital pathways to meet their needs.

Consistency is key. If you are able to offer consumers the same experience via a mobile application, you’ll be able to continue to grow and expand member accounts without the hang ups of technology, while still providing the same great member experiences credit unions are known for.

Frequently reviewing app analytics can help determine where consumers are having friction in the digital experience. Sometimes simple tweaks – like adding intuitive navigation features or reducing the number of touches to complete applications – can be the difference between securing new loans and app abandonment. Digital frustration often leads consumers to leave their financial services institution for savvier competitors.

Keeping abreast of changing consumer trends will be critical in 2021. According to Experian research, almost 50% of consumers are worried about their credit right now, and three out of four of those surveyed are concerned about coronavirus-related fraud. Tailoring your solutions and content around these topics will keep your members engaged with your brand and loyal.

Retention

Throughout 2020, retention has become a double-edged sword. If technology and personalization meet or exceed customer expectations, then increased trust and retention is easier than ever. The cost of customer flight is high, and there are many aspects to the customer experience.

However, if credit unions make their member experience more challenging or fail to deliver on their brand promise – whether through limited digital capabilities, or unavailable or unknowledgeable call center support staff – retention may not be a guarantee.

As credit unions get up to speed on member data, technology needs and app analytics, they can leverage a few strategies to retain their members in their current state:

1. Use data to assist members. COVID-19 dramatically shifted the world. If you’re able to better assist your members by sending them urgent information about small business loans, rent forgiveness programs or retirement planning, they’ll remember you as a trusted partner in their financial health.

2. Understand pain points. Survey members early and often to determine what the biggest collective pain points are, and so you can make a long-term plan to adjust. In the interim, prioritize pain points that are easy and low-cost fixes. While some pain points, such as rates or location, won’t shift anytime soon, make it easy for members to achieve simple things, and it will pay dividends in member loyalty during difficult times.

3. Celebrate praise points. Listen to what your members do like. If you’re considering retiring a digital feature or shifting to a digital call center, ensure that members aren’t sticking with your credit union just for the ease of use of their favorite loan management tool or live support.

4. Be clear about expectations. If you know you’re undergoing a big app update, give your members a date and plenty of communications for the unveiling. It will keep them engaged as you work steadily behind the scenes and encourage patience as you work to meet their needs.

5. Continuously improve. Once you’ve gone through these steps, review your data and set a path for continuous improvement. Members will always have new pain points and new expectations. Be sure to keep reviewing digital behavior flow where members may be abandoning your app and reassess your digital experience to ensure you are offering them the right solutions.

Looking to 2021

Even if our world were to magically shift back to pre-COVID tomorrow, consumers have grown accustomed to a digital world with low friction to meet their financial needs. Continue to evolve your strategies for acquisition, engagement and retention by staying ahead of consumer trends.

Remember to look toward data and analytics to understand your members’ unique needs. Keep advancing digital capabilities, and consider enlisting partners to add robust solutions to your current portfolio.

Cory Ayres is vice president of market development at Experian and is based in Austin, Texas.