TUCSON, Ariz.–How can credit unions deliver on their mission of people helping people in a digital environment? And why do they need to be thinking about “financial wellness” in a new way. One person here offered some answers to both questions, as well as strategies for making it happen.
While those answers are there, it’s not going to be a layup. Complicating the challenge for credit unions is they are operating with a “trust” dilemma, according to Samantha Paxson, chief experience officer with Co-op Financial Solutions.
In remarks to the CUSO’s THINK 23 event, Paxon said consumers and members think very favorably of credit unions but have doubts about CUs in one important respect.
“Consumers define trust as, ‘Do you have the ability to meet my needs?’ We have the capability as credit unions to be in the consideration set,” she said. “Right now, we talk about member centricity and we have opportunity to design our credit unions around our members and to meet them where they are. And when we do that we will win. This is so important, because our members have never needed us more.”
But as much as members and consumers need credit unions, it doesn’t mean CUs are their first choice.
Paxson cited research Co-op has been conducting for three years that found over the last two years there have been declines in the perception of credit unions’ ability to deliver on digital payment needs.
Among the findings:
- 41% of members would consider leaving their credit union because they don't believe they have the solutions
- 78% believe their credit union is going to be able to deliver digital payments
- 2021 research found 66% of consumers use some form of digital payments
Higher Utilization Rates
Paxson said credit unions that have made payments the center of their strategies see 10% higher product utilization than peers.
“Believe it or not, we are all platform businesses. We are technology stacks that happen to deliver financial services. We have to think of ourselves in that way so that we can compete in this environment,” Paxson said. “We have new market entrants in big tech that we never thought would be our competitors and we have big banks that are ingesting those use cases and really building their utilization.
“I’ve worked in credit unions for 18 years and I say while we have the best service, what we're finding (in surveys of Americans) is that service as (credit unions) defined it in their original operating model--the in-person service model--is terrific,” she continued. “But what we're talking about is embedded finance, banking as a service. This is the invisible revolution. They're expecting us to know how to personalize services for them, to understand who they are. We should be able to deliver them solutions based on their financial journey. What we're passionate about at Co-op is helping you to get that interaction in that engagement.”
The Route to the PFR
She repeated a point the company frequently emphasizes, that it is payments that can transform a credit union into a primary financial institution relationship for the consumer.
“Our opportunity here is to design our service model, our engagement model, with the digital solutions surrounding the member and we have to demonstrate that we have the ability to deliver 24 by 7 service,” said Paxson. “This is how you're able to build trust. They believe that they're doing the right thing, but they don't quite trust that our industry has the capability to deliver what they need. We have the opportunity to show up in any way and if anybody can do this, credit unions can do this. We have the passion around the member to be able to serve them and deliver what they need, how they want it .
Additional Points
Other points made by Paxson include:
- Machine Learning. ChapGPT and AI are getting a lot of attention, and Paxson urged credit unions to lean into the technology. “In order for us to compete with big tech and fintechs we need to focus on the consumer. You need to center on the consumer, and not just as consumers of products but as complex, multifaceted human beings who are doing their best to adapt to the current circumstances. We know they’re a little stressed out, they're a little pinched in terms of their own personal balance sheets. That’s where we can come in with our white hats. We're always doing the right thing for members.”
- Optimize Your Data. “Consumers don't understand their financial position. It's not very transparent and so there's a huge opportunity for you to lean into your data and for you to be of service to your members.”
- Financial Wellness. Paxson also advised CU leaders to think about a much-discussed issue in credit unions—financial wellness--in a new way. “A lot of leaders talk about financial wellness as being about education programs; it's not necessarily embedding financial wellness into the engagement they have with their members every day,” said Paxson. “There are ways you can lean into this strategy, because we see that it is a growth strategy for credit unions. Financial wellness has been redefined to mean the daily management of finances in addition to long-term goals. The leading products desired by (consumers) are account reminders, asset aggregators and bill simplification. This is a new way of delivering on your purpose and your mission of people helping people.”
- Shift in Mindset. “When we pursue a multi-dimensional segmentation strategy that considers traditional demographic-based market segmentation and needs-based segmentation, it incorporates life events, lifestyles and a mix of solutions that address both. And when you do this you will grow. It just requires a shift in mindset. We just have to rethink how our solutions sets fit together and bring it together in solutions sets that help members in their daily lives.”
Paxson also shared this advice from Accenture, below.