TAMPA, Fla.–Credit unions are the primary financial institution for approximately 19% of members, and have been for years—which means CUs could triple assets without adding a single new member, observed one person.
But how can they do that? There’s only one way, according to Todd Clark, CEO of CO-OP Financial Services: by delivering on digital.
Speaking to CO-OP’s Road Show meeting at the still-new offices of Suncoast Credit Union here, Clark spoke to the how’s and why’s of transformation to meet the evolving expectations of the digital consumer.
Credit unions intimidated by the perceived cost and scope of digital transformation should begin with the basics, according to Clark: “Think of your member journey and solve one problem for them at a time.”
A Comparison With One Big Bank
To that end, Clark drew a comparison between Wells Fargo and credit unions, at least in terms of assets.
“The entire CU industry is about the same size as Wells Fargo,” observed Clark. “The difference is we have about 6,000 technology organizations and they have one. We are trying to make (technology) easier to work with and easier to implement so you have just one (provider).”
Clark said the company has sought to become a digital delivery partner that offers a “wide variety of solutions intentionally designed in an integrated ecosystem that makes CO-OP the ideal partner for credit unions as they transform to meet the evolving expectations of the digital consumer.”
What Credit Unions Do
As CO-OP’s name implies, Clark said it’s collaboration and cooperation that will become an even more important key moving forward. “What credit unions do is share,” he said. “That’s what makes us better and stronger in the long run.”
To build trust, Clark said it’s critical to “innovate on the basics.” He noted financial institution service models are judged against the delivery models of tech giants.
According to Clark, the values that most impact consumer loyalty to FIs include:
- Quality. Products/services tailored to members.
- Saves Time. Convenience in tasks or transactions.
- Reduces Anxiety. Reduce worry and feel more secure.
- Simplifies Interactions. Reduce complexity.
“You can now open a bank account with Capitol One in five steps and it takes less four minutes,” Clark said. “You can’t make your member mad or these other options are out there.”
Realize It or Not
Where every company is attempting to get to, even credit unions that likely don’t realize it, according to Clark, is to be a “360-degree financial services experience via a living, breathing ecosystem.”
“Are you thinking about what financial technology can do for you today, or are you and your team thinking about what it will mean for you five years from now?” asked Clark, pointing out that rollout of 5G technology is only going to increase the expectations consumers have for speed of service.
That’s especially true in payments, according to Clark.
“Amazon Pay is the most frightening now. They know more about your member than you do. The only reason Amazon Pay isn’t even a bigger deal is they aren’t making enough money on it–yet,” he said. “What we know: payments cannot be neglected. Payments revenue is 26% to 50% of non-interest income at credit unions and banks. There are multiple players in the payments industry that are trying to take that revenue.”
No Hands Raised
Clark asked credit unions in attendance at the Road Show how many were actively working to ensure their card is the one the member is using for their Amazon Prime transactions. No hands were raised.
“That can be dozens of transactions a month, and then multiply that across your membership,” said Clark. “If you are using CO-OP, or even if you’re not, call us and let our solutions group go after Amazon. With Amazon or Netflix (payments) it really is a set it and forget it once the card is in there. If you pay your members $10 to put (your card) into Amazon and keep it there, for most users you would get that money back in three months.”
Other Points Raised
Other Issues Touched on By Clark
- There are many pressures, but the U.S. debit and credit markets are expected to continue to enjoy healthy growth. “You are going to see continued push into card-not-present transactions to steal from you. The other thing you are going to see in a major way is account takeover fraud. If you have your directors’ names or your employees’ names on your website, take them off. You are basically just advertising where they bank.”
- CO-OP’s 2019 Digital Initiatives are around data accessibility, payments, service, and fraud.
- Clark said CO-OP has invested/is investing $11 million in 2018-19 in its Contact Center solution. It is adding chat and chatbots to fulfill some services this year.
- The government shutdown offers an example of the kinds of insights data analytics can provide. “If we have the right data and you see a household suddenly shift from a debit card to a credit card, what does that mean? Maybe it means one of the two in the household lost their job and their living a little above their means right now and they are looking for a credit union to do what a credit union does. What if one of them works for TSA?”
- Clark said when figures are published by a company indicating its anti-fraud efforts helped stop X amount of dollars in would-be fraud, the number is irrelevant in a vacuum. “You can stop all fraud, but your false positives are going to go through the roof. If you say you stopped $500 million in fraud, the real question is how many legitimate transactions did you decline, how many members did you make mad? Any time someone gives you a number for the amount of fraud stopped without giving you a figure for false positives, it doesn’t mean anything.”