As of today, consumers nationwide are facing levels of uncertainty that have no historical parallels. The physical economy is, for all intents and purposes, shut-down. Unemployment filings have set records and consumers are deeply concerned about their futures. There is no shortage of things to be genuinely anxious about out there.
And in this unusual time, CO-OP Financial Services Chief Product Officer Bruce Dragt said there are two opposing forces pushing on consumers — things that are injecting panic in the marketplace and things that are injecting calm to counterbalance it. The panic button pressers, he noted, tend to get a lot of attention: the empty store shelves, the slowed supply chain and the toilet paper shortages.
Credit unions in the last several weeks, on the other hand, have been working overtime to be agents that inject calm into the system. By making sure customers can get cash when they want, he noted, or by reassuring people their payment cards will work the same way they always have.
“It is a lot of small things that happen through these rough patches that help consumers stay calm rather than run off in a panic. The way our credit union partners are stepping into this is really about creating that calm. They feel their longtime mission is to make members know that they will be there to serve their needs first and foremost,” Dragt told Karen Webster in a recent discussion.
It’s a capability, he noted, that will be particularly important over the next several weeks and months as the entire economy is getting through the COVID-19 epidemic, and then, “hopefully soon recovering from it.”
Meeting Members’ Changing Needs
The immediate response to the rapidly changing conditions, Dragt noted, was characterized by a lot of shorter-term thinking. This was when stories started popping up about ATM runs and other kinds of ultra-tactical decisions focused on the day-to-day, week-to-week worries.
That, he noted, is dying down, in favor of consumers thinking more long term about how to manage their financial health over weeks or months where their cash flow could well turn into a trickle.
“Universally, I think we are seeing the attention to the number of dollars in the bank account spiking. People are [making] all kinds of decisions about their payment mix, taking personal loans, using cards and combining a whole host of tactics to make sure their financial life is staying on a stable path during uncertain times,” Dragt said.
Where credit unions have worked hard and leveraged their position of trust in their members’ lives is in quickly moving to rollout programs that specifically speak to those stabilization goals. Allowing consumers to finance mortgages, making it easy to skip payments on a host of products, stepping away from fees — these are all things that credit unions were out the door faster with than their counterparts at the big banks, he noted, because in some ways it is easier for them.
The public markets, he noted, don’t cast a verdict on their efforts, which means credit unions don’t have to worry about how their moves will be perceived outside their customer base. They do have to be careful to manage risk — and not “help” their members by bankrupting themselves, he noted. The current situation opens up the focus on member needs first — and what programs will see them through and then beyond the current emergency — even if it isn’t the most bottom-line focused course of action in the short term.
The recovery will be a long game.
Ramping Up The Roadmap
When they look at the initiatives for better digital processes and products at the beginning of the year, before COVID-19 became the center of nearly everyone’s conversation on Earth — from contactless payments to onboarding to digital security — nothing that is demanded of their credit unions now is all that far outside what they were already building.
The virus, for all the things it did change, he noted, didn’t rewrite the road map, or force them or their partners to chart a radically new course. However, it has upped the tempo on the work on those changes because things that were worth building up to six months ago are now worth getting on as fast as possible. Contactless payments, he noted, were long considered a nice-to-have add-on to be dealt with someday for the 20 percent or so of customers who might want them. That, he noted has managed to be promoted to a top need to do priority nearly overnight.
“There is a very practical reason and it gives us a reason to push it over the edge. It is not longer a question, it is a statement. This is something we have to do in this COVID and post COVID-19 environment,” he said.
But what the COVID-19 pandemic brings to credit union consumers alongside that innovation is their historical offering: trust. Consumers believe their credit union will be there for them and are willing to work with them, which has the right kind of calming dynamic, Draft notes, that helps those consumers make better financial choices for the long term.
For millions of consumers who were living paycheck-to-paycheck pre-COVID-19 and are now several weeks into not getting a weekly check, the “emergency is here already.”
“Information and trust are what binds us together during times like these. This is pushing us to and through so many trends that were already appearing, and I think at the outside of this you will see both service and customer expectations forever changed — and changed for the better.”