Why Credit Unions Are Stealing The Banking Spotlight

The evolution of consumer expectations has greatly impacted the banking landscape, putting the pressure on banks both big and small to keep pace with the change.

For credit unions, which have gained attention more recently as being the “cool” option for banking, staying relevant in a competitive and growing banking sector means relying on more than just being those liked or preferred by consumers.

In preparation for the upcoming Innovation Project 2017 panel on how banks and digital upstarts are working to attract and keep customers in a more digitally driven banking ecosystem, Kari Wilfong, CFO, EVP of CO-OP Financial Services, and Karen Webster sat down to discuss the role of credit unions and how they are faring.

Credit unions specifically are seen as offering something outside of the traditional banking norm, which Wilfong attributes to the institutions being more socially and community-aligned.

“It seems to fit very nicely with what’s resonating with the social values of the community,” she added.

Though those characteristics may be enough to bring in consumers, credit unions are still faced with the challenge of keeping its members by ensuring they can offer the same caliber of digital financial services being made available throughout the banking landscape.

“You still have to be competitive with your offering regardless by providing relevant services that fit needs,” Wilfong explained. “You can’t be subpar just because consumers like you.”

Balancing Consumer Needs

There are a lot of factors and influences driving consumer expectations around financial services, but certain expectations continue to stand out when it comes to their impact on this shift in the banking landscape.

Wilfong said that security and convenience continue to be intertwined — sometimes seemingly in a constant tug-of-war and at other times going hand in hand.

“Everyone has a heightened awareness around fraud and making sure that they have the capabilities to self-manage or have an easy solution in place,” she explained, noting that consumers want banking security to be both strong and fast.

Many consumers expect a real-time experience when it comes to how a financial institution safeguards their personal data and financial information, which can enable them to make decisions quickly and feel more protected when fraud strike.

However, Wilfong said this sense of protection is coupled closely with the fact that it has to be fast. When a consumer is declined while trying to make a payment with no reasoning as to why, it immediately becomes a bad experience.

While consumers want instant information in event of fraud taking place, there is much debate around how that communication should take place — basically, to ping or not to ping?

Some believe that consumer want to be pinged or notified immediately when there’s a question of fraud on their account, whether that means they receive a text or a phone call. On the flip side, there are consumers who prefer to have their bank handle everything on the back end and simply want to be able to look at their statement every month and see there are no fraudulent charges.

“Consumers at least want an idea of why they’ve been pinged so that they can proactively make decisions, but mainly they don’t want to have to deal with it unless it’s absolutely necessary,” Wilfong explained.

Obviously, mobile plays a big role in making these communications more possible than ever before, but there are still challenges from a merchant technology perspective in making this happen seamlessly, because if there’s latency in the system, it can cause responses to time out.

Stepping Up To the Digital Wallet Plate

In today’s world, you can’t talk about banking without talking about mobile.

The mobile channel is driving significant innovation in the banking space, from mobile banking to wallets, and it’s a lot for financial institutions to keep up with. As new technologies and offerings come on board, one of the biggest challenges when it comes to digital wallets especially is how banks can position themselves to be “top of phone” in the eyes of consumers.

When it comes to mobile wallets, there’s certainly a move toward credit unions getting provisioned inside of existing wallets as well as an initiative for credit unions to have their own wallets in play.

From CO-OP Financial Services’ perspective, it’s about how to bring an experience that’s unique to the credit union and deliver that experience within those applications as much as possible.

It can be a challenge for banks to position their own brand within mobile wallets such as Apple Pay or Samsung Pay. It becomes a question of who really owns the transaction — the bank, the mobile wallet or the big brands on the cards.

Wilfong said that CO-OP provides a lot of educational assistance concerning the pros and cons of what that mobile wallet experience looks like and how credit unions can navigate all of the relationships at play.

This means not only educating the consumer on how to use the mobile wallet, but also continuing to share the message out to membership that the offering of a mobile wallet is actually a partnership with Apple Pay and not a substitution for the banks on brand.

This approach helps the provisioning look purposeful and like companies are leveraging each other’s brands rather than substituting them out, Wilfong explained.

“I don’t know if they can get away from the technologies that drive it because when a member goes to Macy’s to use Apple Pay, that’s what they are seeing — they aren’t seeing the credit union’s name,” she noted, adding that more decisions must be made on the part of the credit unions on how to link their branding in the wallet itself.

As CO-OP looks to enable participating credit unions to implement Zelle capabilities in 2017, credit union members will gain the ability to send and receive faster P2P payments as well as use check deposit and bill payment from their mobile phones or online banking platform.

“It has created a lot of opportunity to create that guiding user experience and how we’ve devised our own APIs to help support some of the technologies in our mobile offerings,” she said.

Join the conversation at Innovation Project 2017.