Credit Unions, ATMs And The Great Digital Banking Shift

COVID-19 showed up unbidden, unwanted and unexpected, frustrating the best-laid plans of companies, financial institutions (FIs) and more with little warning.

But for credit-union service organization CO-OP Financial Services, an 18-month effort to stand up a 150,000-person-hour-per-year call center came to fruition in mid-March, just days before shutdowns began going into effect nationwide. So, while knowingly preparing for the pandemic was impossible, the firm unknowingly ended up well-prepared for a period that was wildly unpredictable.

“The changes we’d been building to over the last year-and-a-half allowed us to be nimble, and also enabled us to load-level the credit-union member volume across our strategic contact centers,” CO-OP COO Nick Calcanes told PYMNTS in a recent conversation. “In some cases, we had 150 percent of the volume that we had seen daily in the days before [the pandemic]. So, many of the investments that we made early on in the company – and really our company strategy – paid off and were validated.”

Validated but challenged, he noted, as the lay of the land began to massively pivot toward digital services. That forced CO-OP to increasingly rely on its infrastructure improvements to support its partner credit unions’ (CUs’) roughly 60 million members. After all, consumers facing uncertain times want continuity in their financial services, even as their mode of accessing CUs was rapidly switching to digital.

“We had seen most of the volume increases coming from the fact that people were forced to stay at home, so the online channel of how they interact with CO-OP and our partners began to grow significantly,” Calcanes said. “And that is tied to our ability to handle those increased volumes, monitor continuity across all of our products and services, and then handle the situation when local branches closed. We could step in for credit unions and allow members to transact in a manner that was basically familiar through their credit-union brands.”

In fact, he said that CO-OP’s guiding light is to build out a smooth continuity of services offered across channels, so CU partners can be nimble throughout the post-pandemic recovery.

Adapting to Changing Consumer Needs

During the pandemic’s early days, ATM runs by panicked consumers got a fair amount of media attention.

However, CO-OP’s overall data from its network of nearly 30,000 ATMs didn’t show a lot of people loading up on cash. In fact, the company found quite the opposite: ATM usage dropped sharply in March and April, bottoming out at around a 23 percent decline before starting to rebound in May, Calcanes said.

But with consumers now returning to ATMs, CO-OP has begun not only expanding its network, but also rethinking the machine’s purpose in an ec ccra where people are likely to use less cash. As Calcanes noted, that means switching many ATMs to “ITMs,” or “interactive teller machines.”

ITMs are similar to ATMs, except that they have built-in interactive functionality. Users can video-interface with a live teller if their needs are more complex than simple withdrawals or deposits – even if it’s after banking hours or members don’t have the time to stop at a branch.

“Many, if not most, of [the company’s future network] will be ITMs,” Calcanes said. “And that goes directly to tying ATMs to member and credit union needs [and] how they are changing from a paradigm perspective.”

CO-OP is also pushing into technology that combines contactless cards with ATMs or ITMs. After all, if fear of physically handling money in a post-pandemic era depresses consumer interest in cash, it will also decrease customers’ desire to physically insert plastic cards into machines.

Calcanes pointed out that contactless technology at the ATM had been on CO-OP’s investment list before the pandemic, but it is now on an accelerated path due to rapidly evolving consumer preferences.

A Data-Driven Future

One thing CUs have lots of is data – even if they don’t always know how to gather, organize or leverage it, Calcanes said. CO-OP now has data from interactions with its partner CUs and their 60 million members, but in an increasingly digitized financial services landscape, the trick will be getting that information to work for CUs.

That means continually investing in tools that will give CUs a more transparent view into what their clients want and need in a reshaped landscape, as well as a path to actually provide those things, Calcanes noted.

“We’ll certainly continue to invest in the developer portal and APIs,” he said. “That way, the integration opportunity that allows credit unions to integrate their existing solutions with ours and others is tremendous from an insight and information reporting perspective.”