Providing Financial Services in the Post-COVID Age

The pandemic still isn’t finished with us. It has changed everything, including credit union members’ expectations. People do their banking differently now. They need different products – and Sharonview Federal Credit Union has been creating them.

One reason we need new offerings is because the activity within our branches is different now. Branches have their purpose and there are people who will always prefer the branch experience, but we’ve seen a 20% decrease in branch transactions.

Branches are still here for what I call the “moments that matter,” like opening an account and applying for a mortgage or other loan. Our branch employees see the same members over and over because that’s how those members choose to do business, and that’s a great thing. We will meet members wherever they are in life.

That’s the new imperative – meeting our members where they are. Credit unions have to compete now on ease of use. (You can become a member of Sharonview in under six minutes. How easy is that?)

These days, you can go to your phone, swipe three times and have a loan offer in 90 seconds. It’s the Amazon effect. Amazon has made it so easy to do business with them that people now expect same- or next-day service for everything.

In fact, Amazon is what we’re all measured against now. We’re not just competing with banks and other credit unions anymore.

There’s no such thing as a new banking product. Everything – checking accounts, credit cards, loans – has already been created. All we can do is improve on existing products. That’s why I’m a big fan of fintech. Fintech firms are helping us do just that.

Fintechs started partnering with financial institutions in 2017 or so. And financial institutions took the “If you can’t beat ‘em, join ‘em” adage to heart and started partnering with them.

We’re no exception. Our most recent fintech partnership is with Upstart, a company that offers artificial intelligence-powered personal loans. Sharonview funds the loan. Upstart services it. Our staff doesn’t even make those underwriting decisions anymore. Borrowers know what they qualify for before making an application. Talk about ease of use.

I helped create our business intelligence team, which has brought predictive analytics to Sharonview. In 2019, our assistant vice president of business intelligence came up with a different way of looking at our membership. We call it DEBRA – because we love acronyms – and that stands for Demographic Age Behavior Retention Analysis.

DEBRA has helped us break our membership down to their level of engagement. The engagement level is based on the number of products each member has with us. Hyper-engaged members have eight or more products with us. Our “engaged” members have between five and seven products, and our “disengaged” members have four products or fewer.

Thanks to DEBRA, we know who to target certain products to. We try to convert disengaged members into engaged members.

We’re looking at the products members use. We discovered that certificates of deposit – once a key product for financial institutions – are being used by just 3% of our membership. Only the members of the Greatest Generation and the Silent Generation are investing in CDs now.

Each demographic has a different mindset about saving. Younger generations are more likely to want money market accounts. So, we’ve been revisiting our money market offerings to be sure they’re attractive to that market segment.

Early in the pandemic, there were a lot of stimulus checks coming in, and people wanted to park those funds in a money market account that was earning a good return. We were ready. We’re constantly recalibrating our product lineup to ensure we’re offering the products people want.

The pandemic helped us understand that we have to meet people where they are. If it’s a Saturday and they’re at an auto dealership looking for a car loan, we need to be there in some fashion. And now, we are. We have added a lot of new members through that and other indirect channels.

Once they get a car loan from us through the dealership, they receive a new member packet that promotes the benefits of all our products. We try right away to entice these newest members with our other offerings.

Some people assume credit union membership skews older. If you were to judge based only on what you saw in our branches, you’d assume that, too. Our market segmentation data proves that’s a myth. Our average member is 39 years old.

The pandemic also led to an increase in our remote deposit capture. At the height of the pandemic, members were making 15 million mobile deposits a month. But first they needed an app to make those deposits. And we had to ensure the app was easy to use.

Despite now being far beyond the initial lockdown phase of the pandemic, we haven’t seen a significant decrease in mobile deposits. People clearly like the convenience it offers.

How do we know for sure? We actually measure the “member effort score,” the measurement of how easy it is to do business with us. We use a seven-point scale, with seven indicating the greatest ease. We’re at about 6.7 on our digital efforts.

My team and I always have to be thinking: What’s next? AI will continue to be big. We’re looking at conversational AI, specifically a product from Posh Technologies, which handles phone calls and a chat bot that seems like a real person. Calls get routed to a real person only if the AI can’t handle the question. And that happens only 30% of the time.

We currently have some back-end processes that use robotic process automation. We plan to add more in 2023.

I’m also considering the future of ATMs at Sharonview. Only 4% of our membership uses them, and they cost a lot to maintain. It takes seven departments to maintain our ATM fleet. There’s one team in accounting that does nothing but balance the cash that goes in and out.

COVID-19 is a beast we are still contending with, but it has forced us to innovate and automate, and our members have been satisfied with our new offerings. And, while none of us wants to live through lockdowns again, I am glad we were pushed in a new digital direction.

Blaine Lahrs is Chief Digital and Innovation Officer for the $1.9 billion, Indian Land, S.C.-based Sharonview Federal Credit Union.