The Balancing Act Between Personal Service and Digital Adoption for Credit Unions

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There are significant benefits to being a credit union.

For starters, you can dedicate more time and resources to personal member service when you’re a smaller financial institution not beholden to Wall Street. This, in turn, cascades down to a better member experience. Members who feel like they’re more than just a number are likelier to show loyalty to your credit union. A recent study by Gallup found that almost three-quarters of members who felt their credit union cared for their financial well-being were “engaged.” And as we’ve talked at length on this blog, higher engagement leads to greater lifetime value and longer-term loyalty.

But is this still true?

A lack of digital options detracts from credit union appeal

The Gallup research showed that between 2014 and 2021, credit unions’ engagement premium over banks dropped from 21% to +11%, and the NPS premium from 29% to +17%. According to the National Credit Union Administration, the number of federally-insured credit unions declined to 4,760 in Q4 of 2022 from 4,942 in the Q4 of 2021. Some of this can be attributed to consolidation trends in the industry and members aging out, given credit union members tend to skew older. However, there’s more at play: a general skittishness on the part of credit unions to embrace digital solutions.

Once loyal members, who may have initially been digitally naive, are now abandoning credit unions in favor of the convenience online banking offers. With less appetite for face-to-face interactions, white-glove service is now, unfortunately, not enough for credit unions to maintain business health. People will increasingly gravitate towards more prominent institutions offering digital options to manage all their banking needs.

We all know how the pandemic served as a catalyst for digital adoption across sectors, including banking. But given their smaller size, many credit unions have chosen to forgo the expense and frustration of implementing new technology. This has potentially left them at a serious disadvantage, as only about one in three credit union members strongly agree that their institution provides digital adoption support and education, according to the Gallup research.

In fact, the Gallup research shows that credit union members and bank customers increasingly crave digital solutions in equal measure. The amount of credit union “digital forwards”—tech-savvy customers who use digital tools for simple banking needs and at least try them for most complex ones—rose 11% to 38% between 2020 and 2021. Digital forwards were 40% at large regional banks and 52% at national banks in 2021.

How credit unions can pivot

Knowledge is power, and increasing digital adoption entails training credit union employees, who can then educate members about the available options. This is also a way to provide the white-glove service credit union members expect.

In the same way that larger banks guide customers from paying by mailed check to paying via an online portal, credit unions can use all channels to promote their digital options. This includes putting QR codes and links on postcards and mailings on website banners. Email, social media, and SMS are other options.

Credit unions can also simplify their implementation of digital tools by using one centralized platform that stores data about member transactions, member statements, and communication preferences across channels. These systems allow credit unions to add digital payment options such as Apple Pay and ACH via channels like mobile and web. Credit unions can also use the same platform to orchestrate their messaging and outreach to members, regardless of whether a digital ad or a text message. This also extends to support, whether email or web chat. 

Another important call-out from the Gallup research ties to digital adoption. Credit union members want service geared toward their financial well-being, not just banking transactions. We’ve discussed a lot on this blog—the imperative of looking beyond one-off transactions to the entire customer journey. This includes how, when, and where you communicate, what type of content and offers you tailor to individuals, and how you up-sell and cross-sell.

When you can see the full spectrum of the member journey in one place, you can turn moments to pay a bill into opportunities for engagement that drive long-term satisfaction and loyalty.