Credit Unions Must Digitalize Products, Services and Support To Re-engage Existing Members

Coming out of the pandemic, consumers are looking for a lot of digital-first experiences. When it comes to financial services, many are moving to FinTechs and downloading new apps that offer innovative digital solutions that often save time and money.

This embrace of FinTechs also serves as an entry into the day-to-day lives of consumers, who often grow accustomed to these fast and easy digital interactions.

CO-OP Financial Services Chief Product Officer Bruce Dragt told PYMNTS that credit unions (CUs) need to bring those customers — and their business — back in-house.

“Consumers are saying, ‘Hey, these [are] things that I can use every day, [and they] are easy to access from a digital perspective,’” he said. “‘[I’ll go to] that provider because it fits really well with my lifestyle. This is the way I live, and the technology matches the way I live.’”

Driving Engagement Through Apps

The same has happened with CUs. Consumers who were used to walking into a branch and could no longer do so due to the pandemic had no choice but to find digital channels, so they got their CU’s app and began using it.

“With this greater influx of members [to] digital applications … credit unions are able to start doing this same type of engagement through the applications that they have,” Dragt said.

Consumers now expect to be able to do everything digitally; they do not expect to have to walk somewhere and do something physically. They’ve also come to expect to be able to do things the way they want to do them, not the way the service provider does it.

One way CUs have responded is by issuing digital cards. Where in the past the consumer had to go to a branch, fill out an application and then get a credit card or debit card in the mail, today they can apply, get notified and immediately have a card available to them — all in a fully digital experience.

Reimagining the Whole Experience

“That whole experience has … been reimagined in a way that matches how a member would love to be able to get a product that we’ve had around for a really long time [and] is central to [their] day-to-day activities,” Dragt said. “It really gives them that connection point to their credit union.”

Another emerging offering from CUs brings together traditional digital banking and all of the payment products. Historically, there have been digital banking applications that enabled users to see their debit account and their checking account. Today, the full digital experience is coming to life, with users able to see the status of transactions, suspend a card and check their balances. That causes members to log in and engage more often with their primary financial institution (FI).

“All of a sudden, it becomes a very interactive place,” Dragt said. “[If you have] all the self-service things [in place] as well as those enabling components on top of that, it’s a great thing.”

Working on the Member’s Behalf

A third example of how CUs are responding to changing consumer expectations is by enabling consumers to pay over time in response to demand for buy now, pay later (BNPL). When the CU offers this service, the member doesn’t have to start new BNPL relationships at each of the places they make transactions. Instead, they can do it all through that same digital experience they already have with the CU that is working on their behalf.

“By putting that service into the member’s digital banking experience, it really helps bring together their financial picture versus having it scattered across multiple different providers,” Dragt said.

Together with that convenience, the consumer also can benefit from having a CU watching the number of installment plans they enter into, with an eye to the consumer’s financial health. Since the plans are centered in one place — rather than scattered across different credit cards and BNPL providers — the consumer can receive recommendations on a sliding scale rather than a simple yes or no.

“Credit Unionizing” the Services

“We’re ‘credit unionizing’ [products and services],” Dragt said. “… We’re doing that to make sure that we can serve our members and their needs really well and doing so in a manner that matters and will help them have great financial health.”

While some CU members were resistant to change, that ended with the pandemic. Today, members are more willing to step into the digital transition. CUs can provide new digital products while also providing omnichannel support.

“The pandemic really gave credit unions a runway into their members’ lives digitally that had been impeded in some ways in the past,” Dragt said, adding that CUs are now able to provide financial services to members that “truly suit their lifestyles,” which allows CUs to be able to step back into those members’ lives where perhaps they went to other providers.