Credit Unions That Lag on Digital Strategy Lose out on Customer Loyalty

For financial institutions of all types — but especially credit unions — the great digital shift has taken on special urgency over the past 18 months.

Most of them, at least. PYMNTS/PSCU joint research recently found that as many as 15% of CUs still haven’t committed to a comprehensive digital strategy to modernize operations and respond to members’ (and prospective members’) demands for a better customer experience.

In a conversation with PYMNTS, Jeremiah Lotz, managing VP, digital and data at PSCU, said credit unions that make the necessary investments into digital experiences are reaping the rewards. To put it simply: Members are keeping their accounts with their credit unions — and even interacting with them more frequently. Especially, he said, as the pandemic (eventually) fades into the rearview mirror.

“The idea of returning to ‘normal’ is unique and different for every member — but all consumers are looking for strong digital experiences across everything they do,” he noted.

Upon crafting a digital strategy, said Lotz, CUs must take a number of factors into consideration. Members’ financial goals always come first — but well-crafted digital experiences can also open up new possibilities in the customer journey, connecting members to a continuum of services that emphasize the personalization and community “feel” for which credit unions are renowned.

Community and Personalization

The pandemic, he said, has made consumers across the board acutely aware that they need that sense of community — and credit unions are ideally positioned to provide it.

The urgency to do so is there: The data also show that most people will simply switch providers if they aren’t getting what they need from their credit unions. And Lotz noted that the alternatives are multiplying as traditional FIs and FinTechs give consumers an ever-broadening range of convenient financial tools. He noted that in some cases, credit unions can capitalize on this trend by partnering with FinTechs to craft new offerings themselves — one-upping “big-box” banks by embedding personal service that huge institutions simply can’t match.

At present, he said, banks and credit unions are looking for ways to “sweeten the deal,” offering incentives as they compete to become customers’ primary banking providers. Data can help craft a series of rewards, benefits or other features that keep credit unions top of mind.

Lotz pointed to prepaid cards as one example. “Consumers are very conscious of their spending. They want to be able to have flexibility. They want to have that personalization and to truly understand what their financial status looks like. And they want to be able to have unique and exciting tools that work for them,” he said.

Prepaid products, he said, don’t look the way they used to — when they were often only embraced by consumers who were struggling financially. Now, he said, all sorts of customers view them as a tool for promoting financial wellness. Consumers can use prepaid products on offer from their credit unions to help manage budgets, knowing they can have a built-in cap on spending.

Overall, Lotz said, “It’s not just about investing in one large digital strategy. It’s about how you connect those pieces together to create the best experience for your members overall, when managing their financial lives.”