Is Your Credit Union in Denial?

It’s no secret that members want personalized, interactive experiences across all areas of their lives, including financial services. It’s also no secret that credit unions are falling short on delivering that. If you’ve seen one mobile app, you’ve seen them all.

According to a recent report from SalesForce Research, two-thirds of consumers feel they’re generally treated like numbers despite their expectation for personalization. And as if this statistic wasn’t bad enough, credit unions are in serious denial about it.

A new Harris Poll survey revealed that while consumers are not exactly raving about their experience, the majority of financial marketers (95%) think they’re doing great, especially when it comes to engagement and personalization.

Clearly, there is a disconnect between what credit unions think they’re offering and what members think they’re getting.

It’s time to face the music. Credit unions must get on the same page as their members, starting with accepting that they are not, in fact, delivering great experiences.

After all, acceptance is the first step to recovery, right?

Superior Digital Tools

Since the start of the pandemic, headlines about the rise in digital adoption have dominated the industry. We get it already – consumers are going digital. This isn’t new or earth-shattering.

Consider for a minute the scary reality that there are people opening bank accounts right now who were born the same year the iPhone was invented. Granted, it’s teens opening junior accounts (you can breathe now), but these individuals have no understanding of a world without digital. In a couple of years when they become young adults, how do you think they’ll bank?

Digital isn’t new, but what is new are consumers’ expectations regarding digital and what they’d like their mobile apps to do.

Here’s an idea on that. It turns out, Americans aren’t financially literate, but they are looking to change that. Mobile can help.

Financial Wellness

Over the last decade, the industry has discussed the shift in consumer expectations, driven by non-financial services platforms like Netflix, Hulu, Amazon and others. But these platforms meet consumers’ needs for entertainment and retail.

Additionally, consumers are looking for apps that are more stimulating. Remember when Angry Birds was the top downloaded mobile app? Sling-shotting birds using a six-inch screen on your phone was a favorite pastime. Checking financial statements and account balances? No thanks. It’s unlikely those activities will ever beat out Angry Birds or any other gaming app. Consumers flock (no pun intended) to mobile apps that are engaging and offer rewards, even if they do rot your brain and the reward is a ping on your phone.

Similar to fitness and health apps (think Fitbit or Orange Theory), consumers are interested in apps that help increase financial literacy. Consumers across all generations are looking for guidance on how to improve their financial standing, and increase their understanding and knowledge for the financial decisions they make.

Unfortunately, many adults aren’t that literate when it comes to finance. In fact, 77% of Americans reported feeling anxious about their finances because they lack a sufficient understanding, according to a Mind over Money survey by Capital One and The Decision Lab.

As a result of this insufficient understanding, around 61% of Americans – 157 million people – are living paycheck to paycheck with little to nothing left over for savings or retirement. Additionally, more than one-third of these individuals earn over $250,000, according to a report from LendingClub, indicating that this isn’t just a problem for individuals earning less.

The good news is that consumers want to understand their finances better and are making efforts to do so. According to another Harris Poll survey, more than two in five consumers turn to digital sources for financial guidance, and nearly half of Gen Z, millennials and even Gen Xers are tapping social media for advice. They’re even getting advice from TikTok (15%). However, this is creating an opportunity for financial institutions to better leverage their existing digital banking tools.

Tapping Into Personalization & Gamification

Credit unions must combine members’ desire for financial guidance with digital, but with a personalized and gamified approach. Outdated PFMs do nothing more than provide fancy pie charts that show a member’s spending. Additionally, getting alerts that tell you how many Starbucks drinks you purchased last month that could have gone to your 401(k) instead does nothing more than shame members and discourage engagement.

Imagine if a fitness app pointed out to you how many cheeseburgers you ate last month versus providing you with positive encouragement for how many steps you took. You’d likely avoid that app altogether. Financial wellness is no different. Positive encouragement is critical to keeping engagement high.

Credit unions can do this by embedding a financial wellness platform into their existing mobile app that empowers them to deliver the right experience, service or product at the right time to their users with a gamified financial health level, focused on helping to improve their financial life. By combining the importance of financial wellness with the fun of gamification, members have a fun, interactive and engaging way to improve their financial health regardless of what journey they might be on.

To further personalize the experience, credit unions must ensure that the scoring system is based completely on each member’s financial lifestyle. It can’t be generic and simply show how much they’ve saved or spent. And let’s face it, that’s not always helpful in meeting goals. To truly aid in their financial journey, credit unions must provide specific goals, such as how much a member needs to save to create an emergency fund specific to their finances.

Again, going back to the fitness app, if it merely told you how many cheeseburgers you spared that week, it doesn’t tell you how close you are to your goals, nor does it provide much-needed milestones to keep engagement and encouragement high.

As members increasingly look for ways to improve their knowledge of finance, credit unions have an opportunity to enhance their digital tools – and they need to. Credit unions can no longer afford to keep their heads in the sand. By combining digital with financial wellness, but with a personalized and gamified approach, credit unions can truly engage with members in a more meaningful way, moving up their share of wallet and providing them the best possible service.

Parker Graham is the founder and CEO of Finotta, an Overland Park, Kan.-based provider of embedded fintech for digital banking.