We can divide financial services into two eras: before the pandemic and after.
The continued pivot toward digital banking and mobile devices substituting for in-person visits to branches is spurring financial institutions (FIs) to reconsider how they deliver new products and services – and what their consumers really need right now.
“Easy is the new loyalty.”
As Young told PYMNTS in a recent podcast, credit unions have an opportunity to anticipate what their members might need as they navigate a “new normal” of eCommerce and economic headwinds – and where health and safety concerns are top priority.
Of these CU members, he said, “Their behavior and their demands will be changing, for sure,” adding that “having digital solutions will be paramount.”
Against that backdrop, CUs, with relatively lighter resources in hand than big banks (in terms of capex budgets and staff), must be judicious and proactive about how they deploy their efforts.
The ideal strategy, he said, is one that connects the physical branch to the digital experience.
To get there, Young told PYMNTS, CUs must have a deep understanding of how their members want to interact with the FI at every stage of their daily financial services journeys.
Pivoting Toward Contactless
Most immediate is the need to embrace and offer contactless cards (tap to pay).
Young noted that across financial services, there’s been a widespread shift away from cash. Members want new payment methods and want to limit human interaction.
“There’s no longer a ‘wait and see’ approach for contactless,” he said, noting that PSCU has estimated that three million contactless cards will be distributed across 140 CUs this year alone.
There’s also room for growth in mobile payments, and contactless card adoption will likely encourage more frequent use of mobile wallets.
That increased consumer adoption of digital payments will come as merchants continue to turn on their near-field communication (NFC) functionality and point of sale (POS) machines, which can accept those payments.
Another tailwind for contactless payments comes as people realize that “contactless cards and mobile payments are the ‘healthy way to pay’ during these pandemics,” said Young.
That mindset is getting a boost as almost all delivery firms are offering door drops with no signatures required, and all payments are being done through bits and bytes.
Though a significant number of consumers may return to the branch experience when the coronavirus is finally thwarted, a significant number will want to be able to conduct their financial activities entirely on their own, through digital means.
Looking forward beyond the pandemic, with “easy” as a guiding principle behind CU innovation, the “culture of immediacy” will prevail, predicted Young.
Consider the fact that, as he related in an anecdote, waiting nine minutes for an Uber these days might seem an inordinate length of time – so many consumers might simply pivot to a Lyft ride.
“Some consumers actually bank with more than one financial institution,” he explained to PYMNTS. In this way, they can cobble their financial journeys from a variety of providers (including FinTechs).
The switching costs are relatively low, so for CUs, the challenge is to ensure loyalty and keep the member in place through a continuum of services.
With a nod toward the new (digitally-driven) use cases that are emerging, Young said the ability to quickly send or receive stimulus money from the government will reinforce the need for faster rails. He noted that the digital issuance of cards can help consumers keep transacting without interruption, as they can provision new account details within their mobile apps in minutes as opposed to waiting several days to get a plastic card in the mail.
“Providing those most sought-out, innovative payment forms is critical for the credit union to remain competitive in the marketplace and to maintain member retention,” Young told PYMNTS.
He said that developing the services consumers need now, and will need in the future, can be an easier lift through collaboration. Credit union service organizations (CUSOs) such as PSCU are able to connect FinTechs and CUs to leverage the strengths from each side of the partnership, especially around authentication and artificial intelligence (AI).
Of the joint efforts toward innovation, Young said, “there’s the ability to test, learn and understand — in small samples and small pilots — what appetites your organization and your members have for change. You don't necessarily have to do everything all at once.”