Technology advances have significantly impacted consumers’ expectations for every service provider they interact with, including their financial institutions. Uber and Lyft can immediately populate frequent destinations, Publix can suggest weekly groceries (that they’ll deliver to your front door) and Amazon can accurately recommend relevant products – all from the convenience and ease of consumers’ smartphones. Credit unions must be able to provide members with equally instant, personalized and digitally optimized interactions at every touchpoint, or they risk losing considerable market share.
There is no time to waste. Alternative competitors like challenger banks, major tech companies and even retailers continue to attempt to infiltrate the financial services landscape, threatening to disrupt the relationships credit unions have built with members for decades. In fact, Varo announced just last month that it has received a FDIC charter, putting traditional players on high alert. To meet rising expectations, operate more efficiently and nimbly and maintain their relevance in members’ financial lives, savvy institutions are modernizing their approach to banking, which requires redefining member service and overarching business strategies. Digital has quickly become the primary touchpoint, so a sophisticated, personalized and digital-first banking experience must be the norm – for all member segments.
The gig goldmine: better serving small businesses and gig workers
In addition to enhancing the experience for consumers, it’s critical to increase the emphasis on small businesses and gig workers as well. The gig economy continues to gain significant traction; the Bureau of Labor Statistics recently reported that by the end of the year, gig workers will make up 43% of the U.S. workforce. Despite this growth, the segment remains largely underserved by financial institutions. These workers typically have no choice but to conduct their banking with either modified versions of too-complicated commercial offerings or inadequate retail solutions that lack the financial tools they need.
Wise credit unions are embracing this opportunity; small businesses become large businesses and better serving these organizations now can lead to increased revenue potential down the line. Institutions successfully engaging with these groups are leveraging data to identify the behaviors and habits of those in the category and then customizing offerings based on their unique preferences and needs. Gig workers and small businesses are notoriously on to go, so experiences should be quick, easy and digitally optimized while providing access to the robust tools and functionality they need.
Credit unions are uniquely positioned to be the financial partners of choice for gig workers and small businesses because of their square focus on member service and deep community ties. Those that do their homework, properly analyzing the data available to them and offering customized services and solutions, are positively contributing to their bottom lines and growing these relationships. Such efforts are especially important today as nontraditional competitors like Uber Money continue to aggressively market to this segment.
Coming together: unifying previous disparate channels through digital transformation
It’s a common mistake to think about digital transformation solely in the context of digital banking apps. However, it’s much broader than that. Credit unions have traditionally operated in siloes, leading to inefficiencies and extra expense on the backend while causing inconsistent and fragmented member experiences. True digital transformation means eliminating these siloes to simplify and streamline channels while connecting previously disparate member profiles, effectively merging the digital presence and physical footprint.
Legacy technology and disparate channels have historically presented a significant roadblock to quickly and nimbly introducing new features and innovations. Credit unions can’t afford to continue to accept such limitations, especially as fintechs, bigtechs and challenger banks continue to vie for market share. In response, institutions are increasingly leveraging modern technology like API layers to break down these barriers. Those that invest in more contemporary, flexible infrastructure that allows them to evolve with changing business objectives, technology developments and member preferences will be better positioned to grow and compete.
When digital and physical experiences are effectively merged, it’s easier to provide members with the personalized, consistent interactions they expect, regardless of touchpoint. For example, this convergence allows members to transcend channels: they can initiate a cash withdrawal from their mobile device, preorder cash and collect it in a fast lane or locker (especially beneficial for gig workers and small business owners) and connect to familiar branch staff through an intuitive chat function via digital apps.
This streamlined approach notably enhances self-service interactions in the branch. Even though we live in a digital-first world, physical branch locations still play an integral role in the financial services ecosystem. In fact, a recent PwC survey found that 61% of respondents ranked close physical branch proximity as an important factor when choosing a financial institution. The branch is and will remain important to members, but the branch of the past will no longer be good enough; it must evolve to run more efficiently and better meet today’s members’ preferences and make self-service banking simple.
Leveraging more modern technology will also provide access to relevant data that has previously remained unactionable. A more comprehensive view of members enables credit unions to deliver more accurate, relevant recommendations and offers. Experience is the new customer battleground, so providing tailored offerings, advice and interactions is more important than ever before. Plus, this data is beneficial for credit unions as well. They can analyze data to determine the status of individual member relationships, including potential opportunities and red flags. For example, if there have been several atypical transfers from a member’s account, this could be an indication that the member has formed a relationship with another provider.
Adjusting the member experience and business strategies to keep up with the shifting landscape will prove to be a key differentiator. While modernizing offerings and operating models isn’t an easy undertaking, the benefits far outweigh any temporary pain points. To defend their market share and strengthen member relationships, credit unions must be willing to forgo siloed operations in favor of a more unified, seamless approach across channels that enables more frequent innovations and quicker introduction of new products and features. By embracing change and prioritizing personalized, digitally optimized experiences to all member segments, credit unions will be equipped to deepen member loyalty, gain deposits and more effectively compete with competitors of any kind.
Doug Brown is the SVP and GM of NCR Digital Banking. NCR is a leading software- and services-led enterprise provider in the financial, retail and hospitality industries.