Could the Way Credit Unions Use Digital Hurt Member Satisfaction?

In the past few years, credit unions have gotten caught up in the digital arms race, heavily investing in digital capabilities, but sometimes losing sight of what their members or prospects truly want and/or need. A recent Finalytics.ai survey found that most members are not pleased with their credit union’s digital banking platform and are likely to leave their primary financial institution for digital banking that compares to an online shopping experience.

A separate Finalytics.ai survey, designed to gauge the digital maturity of credit unions, highlighted the reasons for their shortcomings, namely the failure to successfully convert what has traditionally been a transactional environment into a relational one. Credit unions participating in the survey indicated limited use of personas and member journey maps, and a systemic inability to apply new technology.

Transactional vs. Relational: Survey data found that more than 80% of credit unions identified digital as a key competitive differentiator, yet only 14% provide solutions that focus on members’ digital experience and are tailored to each person’s need. The strategic importance of digital channels is recognized by credit unions, yet these findings show that many executives still see digital through a transactional rather than a relational lens. Unfortunately, the fast transition to digital has dissolved the innate relational dimension – the human touch – that credit unions are often known for.

Credit unions should look at how big tech and large e-commerce entities, like Amazon, build relationships with their customers and find ways to follow that formula. That means offering a banking product wrapped in an experience that goes beyond personalization will show their members that their credit unions “know” what their needs are – sometimes even before they do. Progressive credit unions will use big data and modern technologies like artificial intelligence to present relevant offers to existing and new members in their moment of need, delivering a relational, branch-like, digital experience.

Generalization vs. Personalization: Credit unions surveyed rated their use of personas and member journey maps relatively low, a 2.8 on a 1-5 scale. The use of member insights and research to shape their digital strategy was rated only slightly higher at 3.1. Credit unions need to work on increasing the use of these tools, as they will help describe in detail who their members are, why they feel a certain way, how they prefer to interact, when products meet and don’t meet their expectations and areas where the organization can improve. These details will enable credit unions to continue to deliver their humanized approach – their secret sauce – in their digital channels.

When interacting with banks and credit unions, consumers take unique, individualized paths based on their needs at a given moment. They do not want to receive poorly targeted banner ads and campaigns based on attributes drawn from static and generalized demographic information. Applying an effective journey orchestration strategy that leverages modern technologies and data analytics can help credit unions create a segment-of-one digital experience for members that goes beyond personalization and continues through product purchase and service after the sale. Those that lack journey orchestration risk losing members to other financial institutions that deliver more thoughtful and relational banking services.

New Tech vs. Legacy Tech: According to a report by the Economist Intelligence Unit, 65% of financial institutions view new technologies as the biggest driver of change for the next four years. Yet only 13% of the credit unions rated their incorporation of modern technology, such as APIs, cloud, AI, etc., as high.

For credit unions to apply real-time big data and machine learning in a way that can quickly and easily deliver segment-of-one marketing, they must understand that new technology is key and not be afraid to invest in it. Strategic partnerships with fintechs that have the infrastructure and expertise to guide credit unions in this direction and become trusted advisors in the process, will help – especially for those institutions that lack access to the necessary recourses and technology. These partnerships can help credit unions more easily build and strengthen member relationships, drive more consumer acquisition and improve retention.

The future will belong to credit unions that can move beyond transactional and generalized digital experiences and deliver branch-like banking in their digital channels, at scale. Reaching this goal requires leadership from the highest levels of the organization to understand the challenges they face to digitally please today’s members and demonstrate a commitment to address it with a modern approach. Otherwise, the path of a credit union toward digital maturity will follow the familiar cadence of one step forward and two steps back.

Craig McLaughlin is Co-founder and CEO of Finalytics.ai, a San Mateo, Calif.-based provider of a customer-centric data platform for credit unions.