A Challenge and an Opportunity: The Future of CUs Lies With the Member

The banking landscape is becoming more congested and fragmented every day. New fintech challengers continue to crop up, and it’s estimated that the neo and challenger bank market will reach $578 billion by 2027, according to a Facts & Factors research report. The reality is, credit unions now face an existential threat in the face of rising competition from fintech platforms that offer more simplified, streamlined and personalized banking experiences – all on consumers’ mobile phones.

With every great challenge, however, comes great opportunity. The challenge presented by the booming fintech market also provides an opportunity to transform their businesses, fill the gaps that fintech challengers still leave in their wake, better meet the banking needs of consumers, and become the consumer’s preferred choice.

The credit union that succeeds in this regard will be the institution that creates an experience centered around the full lifecycle of retail banking – from member onboarding to ongoing financial wellness, to major financial moments – on a single, unified platform accessible from anywhere, from the branch to the member’s smartphone. In other words, the credit union that is there for its members daily, with easier, quicker and more personal banking, will be the institution that survives and thrives in years to come.

Fast, Bundled Origination

It all starts with the first impression. First impressions matter, so it should come as no surprise that delighting members starts with getting them in the door smoothly. Seamless onboarding and origination mean making the experience fully digital, removing friction and getting members on board in a way that wows them. However, research from Marous showed that only 50% of institutions engage in customer onboarding. Automation and digitization are key here. Offering a superior digital experience means making the best possible first impression, which becomes a self-reinforcing cycle. Consumers will keep coming back if their experience is high quality from the get-go.

Credit unions, therefore, need to remove the traditional pain points of onboarding and product origination and create instant member satisfaction. One of the most important factors here is allowing members to complete a digital identity verification – traditionally one of the most painful parts of onboarding where financial institutions see the most drop-off. By using instant photographs of an ID, then having the member complete a live check via a self-recorded video, credit unions can have them onboarded in a matter of minutes.

Digital onboarding can go further, though, and enable members to originate multiple products in one go, increasing member stickiness and loyalty. By putting multiple product offerings in front of the member in-app, in a clear and helpful way, credit unions can offer a bundled approach to onboarding. This allows them to cross and upsell and provides value for both the member and credit union. For example, with the right digital experience at sign-up, a member could be prompted to open a checking and savings account simultaneously or even add on a credit card, getting engagement up instantly. For this approach to pay off, though, the execution has to be almost instant, meaning members need to be able to see the sign-up through in mere minutes, with minimum inconvenience.

Powering Healthy Financial Lives

Once a member is in the door, the challenge becomes keeping them there – again, this is reflective of the rise in fintech challengers competing for attention and offering additional value elsewhere. Credit unions therefore need to shape their everyday digital banking capabilities to keep members interested and expand in-app engagement. This depends on delivering maximum value across a member’s entire financial life.

With the right digital technology in place, institutions can deliver smart app features that give members value they can’t get elsewhere, such as an in-depth view of financial wellness to empower their everyday decisions. By delivering a holistic view of all accounts and financial products in one place – including an overview of any accounts or products with other financial institutions and fintechs – credit unions can provide unique, meaningful insights to help members get a better handle on their overall financial well-being.

But true financial wellness depends on not just having an overview of all accounts, including investments and debts; it also requires insights into the impact of new decisions on overall financial health. Digital technology allows credit unions to add capabilities such as smart savings features, which help members analyze their transactions; set new, lower budgets for certain expenditures (like their daily latte); and re-allocate the extra money saved into separate savings accounts for the things they care about most – such as a holiday. What’s more, by offering an instant view into a member’s credit score via their app, credit unions can digitally suggest actions a member could take to impact their overall financial picture. This could include suggestions to consolidate credit cards or the creation of a digital budget to help control spending behavior in certain areas. By using analytics and automation, credit unions can deliver in-app experiences like this, enabling them to advise members on how to make better decisions for their financial well-being, and instantly show the potential impact of change. This is the type of market-beating value that will translate into member loyalty.

Personalizing Experiences to Pivotal Moments in Life

Key moments in our lives are always tied to financial implications. That’s why, to deliver more value and become the banking app that members love, credit unions need to better understand how their members’ needs change at pivotal moments in life and get ahead of what personalized services can be offered in response.

Meaningful, digital and well-analyzed data can empower employees to craft more impactful member interactions. For example, by using data and automation, credit unions can provide tailored advice on cross and upsell opportunities that match key milestones members are experiencing. And these communication points can be executed across various digital channels, like via a push notification on a member’s mobile phone, that invites them to take out a product that is hyper-relevant to their needs. Better and faster access to data means harnessing the power of the cloud, allowing institutions to be proactive. That being said, a recent IBM report stated that while 91% of financial institutions are using cloud services, there is a missing gap in which only 9% of mission-critical regulated banking workloads have shifted to a public cloud environment. This is a much lower number then other industries. By having a clear, aggregated view of all member data in one place – tracking their habits and recording every previous touchpoint they’ve had with their financial institution – while combining that with smart analytics and automation, credit union employees can be more productive and efficient with member relationships. They can send in-app prompts that give members the ability to originate new products that underpin key moments in their lives, such as car loans or mortgages.

Customer Banking for the Future

It’s not enough to just compete in the current banking environment. In order to survive, credit unions need to be the orchestrators of easy, but personal digital experiences, creating engagement with members that goes far beyond what they currently get from core banking services. Financial institutions need to personalize every facet of the banking experience with the goal of improving their customers’ or members’ daily lives, while also increasing operational efficiency for themselves. And this can only be achieved by taking a platform approach to technology, where all data, products, channels and touchpoints are centralized and feed into one another to create intuitive, smart and – crucially – pleasant digital experiences.

Vince Bezemer is SVP, Strategic Business Development at the Atlanta-based Backbase.