Credit Unions Bring Digital Technology To Customer-Centric Strategy

Credit unions have never strayed far from their original value proposition. By their very nature they’re built by the people and for the people, and have used that spirit to compete against larger banks. And during the pandemic, that “people helping people” spirit worked to their advantage. As one recent CU blog post stated: “While big banks put their wealthiest customers first during the first stimulus check rollout, credit unions were there to support their members with interest and fee relief and financial wellness tools. Our members won’t forget that; but is incumbent on us now to grow those member relationships through payments.”

In short, when consumers asked, “How are we going to get through this?” credit unions answered in a different way than big banks would. And answering that question, CO-OP Senior Vice President of Pay Products Tom Church-Adams told PYMNTS, has seen consumers rewrite their daily routines and preferences around contactless, digital and virtual.

And this, he said, has meant credit unions have to rewrite their priority list to serve their members best.

“When they look at ways to get through this time, members are looking at speed, they’re looking at convenience and they’re looking at the sorts of tools that can reduce the risk of picking up the virus,” Church-Adams said. “Credit unions may have a long, long list of things they want to get done within the year in terms of technology and things that were not directly correlated to the pandemic. Then all of a sudden those got dropped down and things like wallets and contactless payments went up.”

Because what the pandemic most required for service-oriented organizations like credit unions, he said, was a quick shift in priority. The temptation in the event of an economic calamity of the sort COVID-19 grew into is to batten down the hatches in an attempt to stem losses. And while banks of every description need to be very concerned about managing risking around underwriting, it was critical to bear in mind that in an environment of mass joblessness brought on by shut-downs and furloughs, penalizing those already punished by the situation would both “hinder yourself and your members.” The issue is figuring out how to safely and carefully find ways to make it easier for members to access their funds, how to remove the obstacles that stand between them and a seamless experience.

What credit unions have historically done well is prioritize the personal member experience. They’ve done it so well, Church-Adams said, that over the last decade or so an increasing number of FinTechs have come to the market offering the kinder, gentler and more tempting consumer experience. Attempting to build something out quickly that is organically a part of credit union DNA, he said, means CUs are naturally positioned to do “something that everyone else is forcing themselves to do.”

And while their FinTech competitors have a strength in pushing out consumer-centric innovation, he said, the pandemic has demonstrated that credit unions are ready, interested and able to do the same thing. Alongside the exploding demand for CU issuers and consumers for contactless payment methods, there has been a twin growth in digital wallets and credit unions rushing to better enable them. It has led to adopting new features like digital issuance, to make it easier for consumers to start using a card the second they apply for it — as opposed to waiting for plastic to ship in the mail.

Mobile wallets got off to a slow start among American consumers in terms of demand, Church-Adams said. The pandemic tide that pushed the contactless boat to the front and center of consumer consciousness, he said, has a similar effect on mobile wallets like Apple Pay and Google Pay. Mobile payments, he said, prior to COVID-19, didn’t feel like a natural way to make payments to many credit union members. But the pandemic, he said, has gone a long way to persuade them of the opposite. Apple and Google Pay were both highly usable — and in many contexts preferable, mechanisms for paying. And what credit unions need to do, across the board, Church-Adams said, is be ready to meet the customer in whatever context they can most usefully serve them in. It’s about the credit union meeting their members where they are, he said, and making it clear that their purpose is to help.

Because being helpful is the right thing to do, it is also in the credit unions’ proper business interest, he said. Being ready to serve the customer as they want to be served in multiple contexts, he said, is the strongest way to establish the top of (digital) wallet relationship that can be a critical revenue generator for an institution. More critically, he said, it is what will keep members tied in and loyal to an institution over time — meaning acquisition costs will ultimately be lower.

Because credit unions are in the long game with their members, and committed to using technology tools to build that long-term trust relationship, getting it right at the critical junctures has a tendency to cement those relationships.

“The member should feel that by joining or staying as a member of that credit union, I am investing in myself as a consumer,” said Church-Adams. “That has always been the credit union goal, and it will become much more prominent as time goes on, because it will be more and more true.”