Tech Drives CU Loyalty For Long-Term ROI

Investment can be measured in more ways than one — far beyond dollars and cents, and beyond expanding margins.

Traditional metrics, to be sure, but according to Brian Scott, senior vice president and chief growth officer at PSCU, for credit unions, measuring returns on investment changes as the very nature of those investments also changes.

As Scott said in an interview with PYMNTS, credit unions in general are investing in many of the same things as Amazon, deploying technologies and services that look to improve the member experience, the day-to-day interactions with companies that, if done right, pay off across the very long term.

And, as he noted, “it’s really hard to measure the traditional ROI on the experience that someone has.” Whereas some companies can measure the impact on the bottom line in terms of basis points, or back-office efficiencies, the focus here is on expanding relationships.

Self-Service Loyalty Programs

When asked what needs to be improved, Scott pointed to recent Credit Union Trackers (crafted in collaboration between PYMNTS and PSCU) showing that 93 percent of respondents receive some sort of loyalty points with their purchases.

“As people get used to that environment, I think it translates into all the other types of activities they’re doing with the credit union,” he said.

Scott added that it’s become reasonable for consumers to expect loyalty and rewards tied to activities such as gathering deposits, securing auto loans or taking out mortgages from the credit union.

“If I’m a consumer, I can find a lot more value in creating my own loyalty experience,” he said. “It becomes a matter of choosing which items I want to get rewarded on versus the financial institution choosing what to reward. It creates a better experience for the consumer. And it actually creates more loyalty to the credit union into the future.”

Scott pointed out that technology can also give the consumer more control in crafting that experience while promoting a deeper overall relationship with the CU.

With the traditional model, consumers visit a website and choose among options for points redemptions. With PSCU’s model, Scott noted, members have the ability to redeem loyalty points at the point of sale, such as at the gas pump or other retail settings.

“You really have to start with the consumer in mind first,” he said, noting that CUs should focus on how to drive activity from a very specific transaction. “It may not be something the credit union is actively pushing through a loyalty program. But if I created that loyalty effectively, the member knows they will likely get rewarded for going to the [CU’s] credit card first. That’s the activity you’re trying to drive.”

Call it a case of building a top of mind/top of the wallet scenario, Scott said.

The Fraud Aspect

Against that backdrop of building relationships in part through loyalty programs, Scott noted, the onus is on CUs to be especially vigilant about fraud. After all, as many as 75 percent of people make decisions about how to pay for something based on what they believe to be the most secure conduit. “Fraud is one of those areas within loyalty that has been a growing area of focus both for consumers and fraudsters,” he said.

Consumers may check traditional rewards balances only once a month. But in the interim, fraudsters have ample opportunity to hack into accounts and redeem reward points.

One of the most notable trends observed by PSCU revolves around synthetic identity fraud, where far-flung pieces of real data tied to different people (such as Social Security numbers and names) are cobbled together to craft a new identity for the fraudster.

The more creative the fraudsters get, Scott told PYMNTS, the greater the need to use advanced technologies such as artificial intelligence (AI) to combat that creativity.

Beyond the Fraud Battle

Beyond the never-ending battle against fraud, AI can, and already is, helping to transform the way people interact with their credit unions, Scott said, setting CUs’ sights on the consumer experience. The benefits can accrue to large and small FIs, he noted, and can level the competitive playing field a bit.

Scott cited the ability for individuals to check their financial statuses across various accounts through the use of voice assistants. AI can also help to streamline call center operations. He pointed out that call centers can leverage technology to quickly gain access to the information CU members want right when they dial in, rather than having to put them on hold for 30 seconds while validated information is retrieved.

“We can answer the phone and say, ‘Thanks for calling. What can we do for you today?’ instead of asking a series of questions like ‘Okay, what’s your mother’s maiden name?’ It creates a much better experience,” he said. Text interactions also offer another conduit to cement customer loyalty.

Technology, Scott added, offers “an incredible opportunity for financial institutions to improve the financial lives of the members they serve — which is one of the key missions for credit unions.”