By Ray Birch
THE NORTH POLE—While they might not fit under the tree, interactive teller machines are a much-needed gift for credit unions this Christmas, according to one person’s wish list.
In the second of a two-part series, CUToday.info talked with industry experts about the gifts CUs need December 25 to help reverse the trend of banks outperforming cooperatives in a well-respected consumer satisfaction study.
The opinions were shared as part of another holiday tradition in which CUToday.info asks voices from throughout the CU community for what they are asking Santa for this year and for the years to come.
As CUToday.info was first to report, for the third year in a row the nation’s credit unions have not only again fallen behind banks but also hit another “historic low” when it comes to consumer “satisfaction” with their financial institutions in the 2021 American Consumer Satisfaction Index (ACSI).
Joe Woods
The survey results have played a role in many a wish list this holiday season.
“While concerning, the results of the 2021 American Consumer Satisfaction Index confirmed what credit unions have feared: A bank-favored shift in consumer satisfaction is resulting from digital banking efficiencies taking precedence over old-fashioned, friendly, face-to-face customer service,” explained Joe Woods, SVP of sales and marketing at Dolphin Debit.
Woods pointed out the pandemic accelerated the trend and that banks have responded more quickly with new digital offerings and interfaces, in large part due to having the deep pockets needed to invest in digital delivery.
So, how do credit unions reverse this troublesome trend?
“With a reputation for always, and I mean always, putting the member first,” said Woods. “Consumer satisfaction was a category in which credit unions have historically stood head and shoulders above the competition. It’s not the service that has changed, but rather how consumer satisfaction is defined in the current financial services landscape. So, it’s time to adapt, adjust, and give your members the gift of innovation in 2022. Reversing the trend means modernized self-service approaches, digitizing your branch strategy, reallocating manpower and capital, and leveraging relationships to position yourself to keep pace with the digital consumer.”
On the Nice List
Although consumer satisfaction may have dipped overall in 2021, the ACSI report revealed credit unions still scored high in areas such as helpfulness of staff and speed of transactions in the branch, characteristics that have long been foundational strengths for credit unions, Woods pointed out.
“The rise of digital banking has heightened consumer demand for self-service leading to a simultaneous increase in popularity of interactive ATMs, better known as ITMs,” Woods suggested. “This adoption creates an opportunity for credit unions to capitalize on their strengths while modernizing their service approach. How? ITMs significantly increase the number of transaction types a member can perform at the kiosk and provides them with the option of on-demand video chat with a credit union expert. The flexibility of ITMs bridges the gap between the strong member service credit unions are known for, and self-service convenience members crave through an efficient, personalized solution that maintains the human element.”
With branch visits remaining low either by member choice or local market laws as the pandemic continues, financial institutions have had to transform into 24/7 “capable self-service zones” by adopting the necessary software and hardware required to achieve digital branch transformation, colloquially known as “smart branches,” said Woods.
“This is a design that flips the traditional branch model ratio with majority of floor space now being dedicated to 24/7 automated self-service devices,” Woods said. “Leading the charge for branch transformation are core-connected ITMs capable of advanced transactions that allow members to access all of their accounts, open a new account, cash checks, pay on a loan, all with the option of assistance from a remote teller. This smart branch approach provides members with convenience and efficiency while allowing credit unions to extend branch hours and shrink their cost per transaction by reducing staff and overhead cost.”
Need to Get Faster
Anthony Hernandez
With mortgage refinancings likely slowing in 2022 as rates rise, first mortgage business will be more critical to the portfolio and many credit unions will need to get faster at processing the loans, according to Tony Hernandez, president and CEO of the Defense Credit Union Council.
“Focus on closing real estate deals inside of 30 days,” Hernandez advised. “There really is no excuse for the current 45–60-day window. It does not serve members, particularly those in the military. Incoming military families need to move in right away. Outgoing military families need the sale to close so they can purchase or rent a home at the new location. When your credit union cannot close in a timely manner, it sends a signal. In fact, most realtors will steer their clients to a local lender so their clients can compete for the sale. Other lenders—and some credit unions—have figured this out.”
Hernandez urged credit unions to avoid mistakes and problems within their digital platforms, emphasizing that keystrokes and “button pushes” have to be kept to a minimum, and said there is one big key to how these solutions perform.
“It doesn’t really matter how members feel about you or your credit union’s digital platform. What makes a difference is how your credit union’s digital platform makes people feel about themselves and their decisions,” said Hernandez. “Getting there takes time and effort.”
Hernandez reminded that only an emotional response can produce action.
“And when people do something that feels good, people will do it again and again,” he said.
The DCUC leader also said Santa, fittingly, should give credit unions another gift.
“Get better at storytelling,” he said.
Christmas Comes Early
Not every credit union has had to wait for the gifts to appear, as Christmas came early for some credit unions this year when Congress appropriated $12 billion to CDFIs, including credit unions. That’s 50 times greater than in any prior year, said Stacy Augustine, CEO of CU Strategic Planning.
Stacy Augustine
“With downward pressure to eliminate fees like overdrafts and emerging technologies pushing customers away from mainstream lenders, CDFI-certified credit unions are leveraging the gift of that funding to be truly relevant, solve problems and create opportunities in the lives of the 52% of Americans that are struggling to make ends meet,” Augustine said.
Based on CU Strategic Planning analysis, 75% of all credit unions are eligible to be CDFI-certified, although not all have an explicit mission of community development, Augustine noted.
“Credit unions were the first community development financial institutions—even before the U.S. Treasury coined the term as a designation. Credit unions should immediately take steps to obtain the certification,” she recommended.
Nice Stuffing Stuffer
Credit unions also received a nice stocking stuffer from the Biden Administration’s Build Back Better bill, “or whatever pieces of the proposal that eventually pass,” said Augustine. That massive piece of proposed legislation includes another $150 billion in funding, with some of the programs specific to CDFIs, but it is currently treading water in Congress in its current form.
“Many credit union challenges are solved by doing the right thing—and doing it right,” she said. “The more credit unions find unique ways to meet their members’ needs and to fill gaps that leave consumers unserved and vulnerable, the more they will increase customer satisfaction, lending, and membership in 2022.”
The Gift for Everyone
Finally, said Dolphin Debit’s Woods, it’s time to wrap up 2021 and head into 2022 with new gifts that “streamline operations for credit unions and give members the convenience, efficiency, and satisfaction they demand from their financial institution,” he said. “The member experience has been credit unions’ calling card for decades, so, reclaiming the top spot in consumer satisfaction is well within credit unions’ wheelhouse.”