Digital banking is not the main element that drives consumers toward using a credit union. According to the Credit Union Innovation Playbook, a PYMNTS and PSCU collaboration, trust is the driving factor in that choice.
However, as Lumin Digital President Jeff Chambers told Karen Webster in a recent conversation, that doesn’t mean the digital banking experience isn’t critical to credit unions’ relationships with their members. Customers may come in for the trust, but without a reliably good omnichannel experience, they won’t stay.
As of 2019, three quarters of customer interactions with credit unions are digital — the remaining 25 percent is split between branch visits, ATM stops and call center calls. That result, Chambers noted, is just an average.
On a demographic level, Gen X and baby boomer customers still tap into physical channels. Millennials, Bridge Millennials and the rapidly up-and-coming Gen Z consumers mostly prefer digital banking as their go-to when they interact.
What a consumer is going to the bank to do matters a great deal, he noted. Customer service issues or complex cases are still pulling consumers into banks. When paying a bill or checking a balance, though, consumers want it done as quickly and digitally enabled as possible.
“What ends up being really, really important is offering a balanced approach, and making sure that those channels are integrated, so that if I start a process online or in person, I can change channels to finish it,” Chambers said.
Consumers, he added, are accustomed to those experiences in the rest of their lives. While they continue to want the security and trust that brought them to their credit union relationship in the first place, their expectations for financial services now include seamlessness and speed.
Optimizing Old Flows For New Consumers
To take a simple example, Chambers noted, a customer who wants to start a YouTube account can do that pretty quickly — in a few minutes. They can even optimize it for monetization. That same customer who wants to create a bank account will spend much more time, “and, very possibly, will find the entire process cannot be done digitally.”
A YouTube channel and a bank account are different things, certainly from a regulatory point of view. Consumers are willing to be forgiving of the fact that there is more to do in the authentication process — and absolutely want it that way. Yet, if one looks at FinTech innovators in the field, there are ways to work through that, and break up the process of onboarding to smooth the flow dramatically.
“You can be compliant, and check all the boxes on security and conforming with regulations, and still get someone started in digital banking in less than a minute,” he said.
There might be further tasks that need to happen over time, but one can make it much easier and smoother by simply spreading out the process over a few iterations. When looking at how consumers use banks most typically, Chambers said, one can note that the majority of those functions have moved to digital. When consumers want to pay bills, check balances or move funds, the digital channel is preferred.
Three common use cases buck the trend, though: customer service issues, depositing funds and account openings. Some of that, he noted, is the simple fact that a human connection is still a desirable thing for consumers, and that is particularly evident in a case like a customer service problem. However, when one sees a statistic that a vast majority of consumers are still onboarding in person (when the rest of the trend in the financial services segment is moving toward online enrollment), it is a sign of weakness in the industry — a sign that something better can be done.
“For credit unions alone [in] 2015 and 2018, credit union market share of personal lending went from 31 percent to 22 percent. Over that same time period, [FinTech firms] went from 5 percent to 35 percent,” Chambers explained.
They aren’t just grabbing credit union market share, he added, but they are taking it broadly. The reason they are doing it is because they’ve digitally optimized those onboarding flows, and made it that much easier and more accessible for consumers.
Building A Better Package
Consumers are complicated, and changing, Chambers noted. Millennials and Gen Z consumers are focused on the level of service they receive, and the value at which they get it. If both aren’t on point, financial services brands can’t rely on the kind of inertial brand loyalty that was perhaps more common with Gen X and baby boomers.
Trust remains the credit union’s main offering and advantage, but it isn’t something credit unions simply win by default.
“Trust is earned,” Chambers said, “and it is a good way to zoom out to see if the financial institution has earned the business of their consumer.”
In 2019 and going forward, it means the consumer doesn’t just feel safe doing business, but seen. The customer’s trust is boosted by a great experience — and a relevant one. That, he noted, requires a lot of data collection and smart AI to really understand and break down the data, but it’s the toolset credit unions need to make.
“Because that, over time, is what builds that trust, and what really creates that loyalty,” he explained.
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