LOYALTY: What Is the Future for Credit Unions and Loyalty?



Has your credit union been accused of playing it too safe in terms of innovation? Turns out, that may not be such a bad thing. Read on to find out why the customer loyalty of the future hinges on a consistent, individual experience rather than innovative technology and why that’s good news for CUs.

 In the United States today, the focus on disruptive players in the payments space has hit a steep upward trajectory. Mobile handset manufacturers and smaller niche players are labelled as innovators who are at the forefront of technology and, by association, the consumer experience. Reveling in the publicity they receive, disruptors are increasingly being named as the reason big banks and credit unions are losing the payments popularity contest. They are also bearing the guilt for the subsequent demise of the bank branch.

The solution to the issues all financial institutions face today is customer loyalty. Everyone knows that the key to consumer retention is not necessarily technology. Rather, it is the ensuing first-hand experience on an individual level, although ultimately on some level the two do combine. Is technology strong enough to change consumer behavior? Or does loyalty lie deeper than this disruptive hurdle?

Credit unions aren’t seen as leaders in the innovation game, and they are often chastised for playing it safe. However, according to findings released in 2014 by the American Customer Satisfaction Index (ACSI), Americans who use credit unions as their primary or sole financial institution are significantly more satisfied with their experience than those who use established brick-and-mortar banks.

Research carried out by Bain & Company found that more than one-third of bank customers bought a financial product from a competitor over the last year, whilst credit union membership growth broke records in 2014 (ACSI). Credit unions might not be ahead of the bell curve in the technology stakes, but clearly loyalty is about a lot more than being cutting edge.

Financial institutions are increasingly looking at service quality, customer experience, trust and loyalty to maintain and grow their positions in the marketplace. Relying on brand and the associated products and services is a passive approach and it is detrimental to maintaining the level of consumer retention financial institutions have achieved historically. In 2014, the Chicago Booth Kellogg School’s Financial Trust Index found that trust in credit unions is at 60 percent whilst trust in big banks is only 30 percent, so credit unions are comfortably ahead.

A recent survey carried out by Filene Research Institute found the top three requisites for members between the ages of 18 and 34 to be:

  • Good customer service and respect
  • Ease and convenience
  • Advice and guidance through situations

Whilst credit unions certainly seem to have the monopoly on good customer service as well as guidance and advisory services, according to Filene Research Institute, banks are the leaders in offering convenience. As banks begin to up their game and strategically become more customer-centric, credit unions need to retaliate and become more user friendly.

Credit unions have taken the top spot in financial services satisfaction for each of the seven years in which they have been included in the ACSI. However, with the rise of the tech-savvy Millennial, ease and convenience are becoming increasingly important, and CUs need to jump on the bandwagon if they want to maintain and grow market share. Ease and convenience go hand in hand with technology, and this is where the omni-channel experience comes in.

Omni-channel isn’t just about offering a consistent experience across all channels; it is about understanding your members and both reacting to and anticipating their needs. Looking at the credit union strategic business models that are already in place, omni-channel is the natural evolution to providing a superior member experience.

Often misunderstood, misrepresented and labelled as an expensive and unobtainable goal, omni-channel gets both over-praised and disregarded too quickly, without exploring the simplicity of the concept: a consistent experience. At a very basic level, this can be about messaging, making sure the brand and what it stands for is articulated across all available channels, from the ATM to staff, Internet to mobile. At a more sophisticated level, it includes the graphical user interfaces and layout of products and services, regardless of device or terminal, expanding into cross-channel usage, whereby a member can use multiple channels to perform one action.

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