The world of consumer banking and payments is an ever-evolving space — and most of those innovations are good things.
Take something as simple online bill payments. As Denise Stevens, SVP for product delivery and innovation at PSCU, told Karen Webster in a recent conversation, that arena has seen over a decade’s worth of evolution so far, not to mention the rapidly coming further evolution as real-time payment continues to come into the industry. And what individually look like a lot of incremental changes, she said, over time have dramatically reshaped and realigned customer preferences and expectations for their relationships with their financial services providers.
The credit unions PSCU works with, she noted, are no exception — their customers want all the best when it comes to the speed and friction-free convenience the digital era of financial services has to offer.
But all that innovation, she said, comes as something of a dual-edged swords for providers, who are on the hook to not only provide for customer experience, but also security. The reality every provider deals with is that every innovation that can make a customer’s life easier can be co-opted by a fraudster to make their illegal enterprise more successful.
“The fraudsters don’t stop innovating,” Stevens told Webster.
And that reality, she said, leaves credit unions striking a balance between the innovation and service consumers want and the safety and security credit union customers in particular have come to expect first and foremost from that relationship. That balance can be delicate at times, Stevens said, but far from impossible to hit. And in fact, she noted, security processes sufficiently focused on data and “fully understanding the member journey” not only build a better consumer experience, but also can greatly enhance the construction process.
The Security Cornerstone
The most serious responsibility a credit union has is to the trust relationship it has with its members. That is the essential draw for customers, Stevens said, noting that while banks have a responsibility to their shareholders, credit unions are owned by and primarily responsible to their members. Their choices are about “what’s right” for members, and that is the cornerstone of their brand and their reputation among consumers.
Most essential to that trust relationship is, naturally, security. The first and foremost thing a customer has to trust about a financial services provider is that their funds are safe, and in the era of data breaches, ensuring that confidence is much harder than it once was. According to the PYMNTS/PSCU Credit Union Playbook, 13 percent of credit union customers have been victims of card fraud, and 4 percent have been the victims of identity theft. And that, by the numbers, has left some credit union customers a bit gun shy when it comes to innovation — 44 percent report trepidation about innovation because of security concerns.
And fighting fraud is not as easy as it used to be, Stevens observed. In the old days it was fairly easy to secure a call center with a few basic identity questions, such as mother’s maiden name and first elementary school. Today, she said, it requires much more refined solutions, which is why PSCU partnered with Pindrop about a year ago. And that’s just one channel, and there are a lot of them.
“There is the point of sale, call centers, online interfaces — there isn’t one channel you have to worry about, you really have to lock down everything to provide a complete protective environment,” Stevens said. “Credit unions have to really take a layered approach to fraud — one channel, one product, one solution won’t cover it now.”
But the process of building the rich data networks and proactive artificial intelligence (AI) tools necessary to provide that multi-layered approach to security, she told Webster, need not be a drag on building innovative and more seamless multi-channel banking experiences for customers. To the contrary, she said, they can be a positive aid to that process.
Distributing the Data
One interesting stat that came from the PYMNTS/PSCU study was that while 59 percent of customers report they think innovation is important, it is not at base driving their decision to bank with a credit union or not. Does that take the pressure off credit unions, Webster wondered, or perhaps create and impression that they don’t really have to work that hard to deliver on innovation?
Stevens said while that one could take that interpretation, it is not how credit union members, or their members' customers, are likely to see it as of 2019.
“The customer wants to feel safe first and foremost, but they are intrigued by what is going on in the market around them. They have a sense of what they experience can and should be,” Stevens said.
Data, she said, is really the critical ingredient for credit unions — both when they are providing that feeling of safety and when delivering on the customer’s expectations for the experience. The same data gathered across channels and used to develop a 360-degree view of the customer, and used to identify something anomalous enough to be potential fraud, she noted, is also useful in developing and delivering services for that customer. The basic value that credit unions chiefly deliver to customers, she said, is that “they see them and recognize them” when they transact. That recognition and personalization, she said, is ultimately what credit unions need to be able to deliver across their channels.
What to offer to best deliver those services, however, she said, is best determined by all that data meant to keep the customer safe. It is also the key, she noted, to seeing the specific use patterns emerging among them to also build the offerings that go the extra mile to make sure they remain satisfied.
“There isn’t one solution for all memberships, you have to know what is important and then be able to predict a need before it becomes a need,” she said. “The only way to do that is to understand your members and all the data that surrounds them.”