The Secret Sauce for FIs to Retain Customers Is to Be Invisible, Fast and (Nearly) Free

“The notion of having a single financial relationship is really a thing of the past,” said Todd Clark, president and CEO of CO-OP Financial Services, a 40-year-old, nationwide credit union service organization (CUSO).

The key for financial institutions (FIs) is to position themselves as the primary financial relationship for their members, he said.


The mobile phone has allowed consumers to scatter their financial activities across a range of providers, Clark said. The increased flexibility of payments choices, a broad range of accounts, and even the offers that come at the point of sale (POS) mean that loyalty can be fickle. As a result, incumbent FIs, credit unions (CUs) among them, have to work extra hard to keep as much of their member relationships “in house” as they can.

Generally speaking, said Clark, people want their banking relationships to be “sort of invisible — they want things to be fast and they want it to be free, or at least as close to free as possible.” They’re willing to take more advantage of what CUs have to offer, too, as most consumers are financially healthier than they’ve been in a while, with thousands of dollars in stimulus checks saved up.

Drilling down into the spending patterns themselves, and the banking services consumers want, Clark noted that debit spending continues to be strong — a common hallmark of times of economic turbulence as consumers tend to want to spend the cash on hand. Credit card balances have declined, paid down in part with those stimulus checks.

“Those credit card balances have started to trend back up a little bit, but they have certainly not recovered,” he said.

CO-OP does not expect credit spending to recover to 2019 levels for at least another year. Some CU executives, he said, believe members have more than half of their stimulus funds in their checking accounts — waiting to be spent in a flurry of pent-up demand.

CUs have hardly been idle in anticipation of meeting a changing tide of consumer rebound and demand for high-tech omnichannel banking services. They’ve had to reinvent themselves against the landscape of the great digital shift and against the upstart digital-first and digital-only neo banks that have chipped away at some parts of those relationships, especially among younger customers who crave a digital interaction.

The conversation came amid a busy year for CO-OP. Clark said the company delivered on several new products and technology launches, had conversions to its platform and launched a new program called CO-OP Insights Center, an advanced business intelligence tool that lets CUs examine their cards and terminal volumes.

CO-OP introduced digital card issuance, which lets CUs push cards directly into consumers’ digital wallets and is readying a new rewards offering.

None of this is to say that it is only the member demanding renewed focus from CUs amid an uncoiling of pent-up demand. On the commercial side of the equation, business spending will see a snapback, said Clark. Businesses that will reopen may find that they must redo their office spaces or even order new tech — and that takes money.

Staying Competitive

The goal would be “for CO-OP to help our credit unions be in a position to compete and be ready to go toe-to-toe with all of the upstarts — the new guys in the space plus the longstanding stalwarts and the best in the industry,” Clark said.

One key initiative revolves around the persistent problem of disputes and chargebacks, he said. The consumer who sees a transaction that was unauthorized should not have to call an 800-number; they should simply hit a button that initiates a dispute and fills out an online form. Besides limiting frustrations for consumers, said Clark, “It also takes a huge amount of load off a credit union’s back office because that’s one less phone call they have to take in the contact center.”

CO-OP is planning to offer such a solution with its CO-OP Resolution Center.

Looking ahead, there will be a few things CUs won’t be doing as much two years from now, he said. One is building out branches, which will underscore the need for the industry’s shared branch network to maintain community presence. The trend to video-based lending and video teller services will continue.

As the pandemic fades into the rearview mirror, said Clark, CUs will “have to keep all of their technology on par or above what the expectations are from the mobile user.”