NEW ORLEANS—A digital app may look great, but if it doesn’t deliver a great experience and solve a need, it’s simply “art,” asserts Rahm McDaniel.
The VP of strategic solutions at Q2 spoke with attendees during NAFCU’s Annual Conference and shared insights about delivering an effective digital experience to members, and further offered some advice on how to compete with fintechs.
McDaniel emphasized fintechs are growing at a faster pace than financial institutions because what they are delivering digitally is often a solution to a consumer problem or pain point, rather than just offering a commodity digitally.
“Who do you compete with? Obviously with large financial institutions. But you also compete with Apple, Target Netflix … These companies are setting the benchmark for digital experiences and therefore the expectations of your members. You members will go to Amazon, for example, and then when they visit your site they will measure what you offer against their experience with Amazon—you either better, worse or the same as Amazon.”
Making it Easy
McDaniel said fintechs are stealing current and existing credit union members by offering money management tools that make moving money, managing it and even saving it simple and easy. He noted these type of accounts compete very effectively with credit union checking accounts because rates are have been very low.
“Millennials, for the most part, have never seen high rates, so the interest they receive on their checking accounts is not keeping them at your credit union,” said McDaniel.
What is attracting their attention he said, are apps that make their financial lives easier. As an example he pointed to the app Acorns, which offers micro-investing and robo-investing. The service takes a user’s spare change and invests it in different portfolios made up of ETFs.
“What Acorns has done is build a tool that makes investing easy, it automates it,” said McDaniel. “What’s working with fintechs and making them strong competitors is they are coming up with new ways to do things digitally. It’s digital transformation—doing things that were not possible before. It’s great if your credit union’s mobile app looks attractive and clean, and works well. But if it doesn’t really do anything different sometimes it might as well just be art.”
Square is another example of digital transformation in that it also solved a problem, McDaniel added.
McDaniel said Amazon may attract consumers to its checking account simply because it’s Amazon, but he said absent additional features, he’s not certain consumers will embrace Amazon as a bank.
The Role for Bricks and Mortar
While digital channels are quickly becoming the channel preference for members, McDaniel cautioned credit unions to not overlook bricks and mortar.
“In an age where digital is becoming the dominant channel, the physical locations and in person interactions still count,” he said, advising against moving to branchless banking.
Like many experts who believe branches are becoming consultation centers, McDaniel agreed the brick and mortar are the best places for members to get very detailed advice. He also said they can be used to help people with digital banking.”
“Have your branch staff work with people who might need some extra help with digital banking, like applying for a loan. Walk them through that process when they stop in,” he said.