It’s tough to boil down a massive, 12-month-long digital pivot that transformed the credit union (CU) landscape into one word.
A few words, however, will suffice, as offered by PSCU CEO Chuck Fagan: Personalization. Acceleration. Speed.
As he told PYMNTS’ Karen Webster in an interview, the demand for personalization and on demand digital experiences were big drivers of innovation in 2021 across financial services — and they will keep driving it at an accelerated pace.
Fagan said that right now, this year and beyond, “the reinvention of the credit union is going to be around the branch, which is certainly in transition right now.”
The days of visiting the CU in person on payday are in the rearview mirror, and now CUs must bring various aspects of in-person banking to the digital space while also meeting the demands of the next generation of members.
That innovation has been informed and influenced by the massive shift away from in-store retail to online commerce, where Big Tech companies created the expectation of curated offerings, said Fagan.
Advanced technologies have enabled these streaming firms and platforms to learn more about the consumer and what they like. Telehealth has eliminated the need, in many cases, for in-person visits to practitioners, while self-checkout lines at big-box retailers can let you load gift cards without having to visit a cashier.
The expectation for a similarly seamless customer experience, he said, “migrates into the banking industry — and specifically around payments and how they conduct their commerce.”
In other words, the traditional financial institutions (FIs) must follow in those footsteps. At CUs, that means rolling out new products and services, but also casting a critical eye on tried-and-true experiences, he said.
Bringing the Traditional Into the Digital Age
Fagan offered the card issuance process as an example. As consumers use digital wallets more and more, the new expectation is that CU members shouldn’t have to wait for a plastic card to come in the mail to shop online.
“Though card issuance has been in place for decades, we had to digitize it,” he told Webster.
Through the personalization process, with new features overlaying the old, consumers can wield tools like alerts and controls. Fagan noted that they can even tap into buy now, pay later (BNPL) options, adding that in making the digital leap to meet consumer expectations, speed has been critical.
“It’s no longer enough to just be checking the box,” he said. “You have to be out with things that the consumer wants now.”
Miss a step, time a rollout too slowly, said Fagan, and CUs run the risk of losing members to more tech-savvy upstarts and FinTechs. Loyalty, after all, is a fickle thing.
Moving at the Speed of the Member
Fortunately, CUs have managed to move quickly and accelerate the cadence of innovation, using artificial intelligence (AI) to meet members where they want to be met across a spectrum of offerings — whether they’re buying a car, planning for retirement or just checking their account balances, he said.
“We’re a much faster organization than we’ve ever been,” said Fagan.
That’s a marked change from the conventional wisdom that FIs tend to move slowly than other verticals when it comes to digital projects. Legacy infrastructure accounts for a lot of the problem, but CUs — and credit union service organization PSCU in particular — have been making the investments necessary to match pace with FinTechs.
CUs have at least some strategic and competitive advantages here, maintained Fagan, as they have been able to integrate well with partnerships that seamlessly link experiences across branch-focused and online settings.
Looking ahead, CUs will be on tap to deliver “much stronger” loyalty programs, he said. Last month, PSCU delivered its first rewards points redemption in cryptocurrency. CUs will also make strides in digitizing their small business relationships and setting up BNPL programs.
Which brings us to yet another key word offered by Fagan, one that is less about summing up 2021 but looks ahead as 2022 progresses (and well beyond): adoption.
After all, new offerings simply fizzle without critical mass — without the knowledge that consumers’ preferences, through physical interactions or digital ones, will be accommodated.
“You’re always going to have the early adopters, the 25-year-olds,” he said. “But an adoption strategy has to spread.”
CUs must embrace education and marketing programs to alert members to what’s new and make them comfortable with trying something new.
“We can show them a better way to engage with us,” said Fagan. “This is the year for an adoption strategy has to ‘spread’ among credit unions”
As he summed up to Webster, “To the degree that credit unions can get their members to adopt those new technologies … it’ll make the consumers’ lives better, and it’s better for the financial institution, too.”