Credit Unions

PSCU On The Digital Shift And Branch Banking's Future

digital banking

Amid the digital leap that is confronting financial services lies the opportunity to cement relationships with consumers, according to Dean Young, executive vice president and chief experience officer at PSCU.

And, he said, to transform the experience in the physical branch, once the pandemic lifts.

For credit unions (CUs), “It’s more important than ever that we really dive into this digital transformation, and credit unions are perceived to weather this pandemic, maybe, better than other FIs,” Young said.

These CUs, he said, are by necessity looking at ways to leverage digital channels. They have to understand consumer preferences and how they are going to choose the channels that will satisfy consumers — whether through branch settings or digital offerings.

It’s all about going through the journey with a member and making sure the channels themselves are secure and frictionless, he said.

“There really isn’t a one-size-fits-all strategy for branches,” he said. “It’s more like a one size fits one and credit unions will make philosophical and strategic decisions based on their membership habits.”

It’s no surprise that branch traffic is down. But as CUs look at what might change as lockdowns ease and banking returns at least a bit to physical channels, said Young, CUs will likely continue to reduce their physical footprints and utilize interactive teller machines (ITMs) as a critical channel for serving members.

ITMs benefit credit unions in that “members prefer that face-to-face consultation, but with a little distancing,” said Young, and that is tied to the appointments that are made for members as they come in to conduct their daily financial lives.

“The days of a bunch of people standing in line — whether you think that’s a good idea or a bad idea — at least for the foreseeable future has gone away,” he said.

Thus far the ROI on ITMs has been mixed, he said, partly because the technology is not cheap. But as he said, credit unions have the gift of collaboration, so they can always connect with peers that are “further down the road.”

In the meantime, the pace of technological change wrought by the pandemic is fast, and “It’s going to push us pretty quickly to 10 years ahead of where we are now,” said Young.

Along with that frantic pace, he said, there’s less time to verify and authenticate transactions, as there is so much commerce coming to consumers’ literal doorsteps. Consider the fact that the U.S. payment industry processes, in any given year, 25 million card disputes, and there are tens of billions of card transactions a year, and you get a sense of magnitude.

Chargebacks and disputes are ramping up, he said — and can make or break relationships between merchants and their end customers. Handling those disputes gets a bit tougher as so much of the workforce in the financial services industry and across the merchant landscape has transitioned to work from home (WFH) models.

“Merchants may not be able to respond to consumers who attempt to address their disputes with them,” he told PYMNTS. The WFH model also impacts the ability of merchants to handle issues like shipping delays and inventory management, which also introduce friction into the relationships with consumers.

The pivots toward work from home and card not present transactions also introduce new avenues of opportunity for fraudsters.

Collaborative efforts to tackle consumer satisfaction and combat fraud can be especially effective for credit unions, he said, and he referenced the recent announcement that PSCU had joined the World Council of Credit Unions as an associate member as a step toward boosting the digitization of the industry.

“We believe it’s our responsibility to collaborate and help credit union system partners better serve members in their channels of choice. And the channels of choice, especially when it comes to digital, have to be secure,” Young added. “They have to be frictionless as possible.”

And with a nod toward the new world the coronavirus has thrust upon us, he pointed to the fact that PSCU’s upcoming Virtual Member Forum will be held digitally on June 16 and 17. PSCU’s annual Member Forum was originally scheduled to be held in San Francisco in April.

“If we can’t bring everybody together in one place, we’ll do it virtually,” he said.

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