Know Your Member: How Credit Unions Can Win Via Customer Experiences

We don’t mean to be melodramatic here at PYMNTS, but one can reasonably argue that as a new decade begins, credit unions (CUs) are in the fight of their lives.

Not only do they face challenges from banks – usually bigger and better capitalized – but they also have to keep an edge on the emerging FinTechs and contend with swiftly changing consumer expectations and desires.

The challenges keep coming quickly, and they don’t seem likely to let up. But in a new PYMNTS interview, two experts on payments and the CU landscape – Derek Swords, vice president of product management and electronic payments at Fiserv, and Terri Bentley, senior executive vice president at Redstone Federal Credit Union – gave a rundown on what CUs can do to not only keep hold of existing members, but also to gain new ones. They also told a broader story of payment trends that will help define this brand-new decade.

You may have heard this message before, but it bears repeating: These days, it all comes down to developing better and more personalized customer experiences. Indeed, Bentley drove that point home during the recent discussion with PYMNTS.

“Customization is the norm,” she said. “We have to make sure we can personalize the experience. It’s not about what the next best product is, but what the best product is for me as a [CU] member.”

Research from Fiserv supports her point. The payments services firm found that when it comes to real-time, account-to-account transfers – an increasingly popular part of the financial services ecosystem – 75 percent of the world’s 50 largest global financial institutions (FIs) have pledged themselves to some form of customer experience transformation. That trend is certainly not happening in isolation – it is impacting smaller banks and most, if not all, CUs, according to various experts and even PYMNTS’ own ongoing research.

Drilling Down Into CX

“Customer experience” is a general term that can mean a variety of things. But in the PYMNTS interview, Bentley and Swords were as specific as possible about what it means for payments and financial services in 2020, especially from the CU’s standpoint.

Indeed, Swords put a philosophical bent on “customer experience,” one that Bentley agreed with.

“It’s a journey, not a destination,” he said, speaking about meeting consumers’ rising expectations for deeper, more efficient and more secure experiences. The question, he said – and the challenge and opportunity – is “how we deliver services on demand, and give consumers what they need when they want it.”

Speed promises to play a big role – perhaps even a unifying force. As Swords and Bentley told it, there is evidence of rising consumer demands for speedier payments in the increasing popularity of peer-to-peer (P2P) payments.

“They want it instantly; they don’t want to wait,” Swords said, adding that the need for speed is aligned with consumers’ expectations for other parts of their daily lives. “Look at the remarkable success of Zelle in the marketplace. Consumers clearly have embraced P2P payments in a big way. The expectation for speed in payments is real.”

Swords went on to say that “P2P payments and A2A transfers are the first step into real-time payments for financial institutions. At Fiserv, with one connection via our NOW gateway, we can enable multiple applications for real-time, including TransferNow, our A2A service and Zelle P2P payments.”

That clearly was a value proposition that Redstone Federal Credit Union found to be particularly attractive. Redstone, as a member-focused, innovation-savvy credit union and Fiserv partner, is launching real-time TransferNow (A2A transfers) and Zelle (P2P) in the next few months.

Bentley agreed with the need for speed, saying that consumer experience from the CU’s point of view is likely to revolve around speed and convenience in the coming years. A big part of that reflects what millennials want, she added. After all, that segment of consumers is getting older and moving into what should be their peak earning years, which means their ability to impact the development and delivery of solutions and services from banks and CUs is growing.

“I call millennials the ‘now’ generation,” Bentley said, adding that they will not be loyal to any FI where they have had a negative experience.

CU Trends

As PYMNTS research has shown, CUs, at least in general, enjoy a pretty strong position. The recently released G-19 Consumer Credit Report found that CUs held $64.4 billion in credit card debt as of September – a 6.9 percent year-over-year increase. CUs also continue to display strong showings in the car loans market, holding $382.9 billion, or approximately 31.1 percent, of the nationwide total. Those findings represent an increase of 4.1 percent since September of 2018, a slower gain than average that still underscores CUs’ impossible-to-ignore presence in the broader financial industry.

That market is changing quickly, however, due to digital banking’s dominance. Customers are turning to computers or smartphones more than ever when managing accounts and conducting transactions, and both banks and CUs are working to move services online.

CUs have a variety of tactics available to help level the playing field with their larger competitors, with many relying on what makes members select them in the first place: trust. Emotional marketing targets this quality when CUs attempt to attract new members by selling community and impeccable member service rather than hard numbers. Some CUs have seen improved member engagement and brand awareness through these marketing efforts, and others are just beginning to tap into their potential.

All of that underscores the need for CUs to become better at crafting personalized, custom offers and programs for new and existing members – a long-term effort that, according to Bentley, requires greater collaboration between a CU’s marketing, payments and other teams, a task that makes it easier to track the entire customer journey.

“We want to give our members the means to move money the way they want to move it,” she said.