IRVINE, Calif.–Credit union leaders frequently worry they and their CUs are going to “lose” in the financial services market due to a lack of the latest in technology, but what they are overlooking is the great strength they have in consumer trust, according to one expert. And when that trust and tech are effectively blended, it can be powerful, the same expert added.
Dr. Bill Maurer, dean of the School of Social Sciences and a professor of anthropology and School of Law at the University of California-Irvine, as well as a fellow with Filene’s Center of Excellence for Emerging Technology, shared that message with Filene’s big.bright.minds event, and also offered some interesting insights into what consumers/members increasingly want from and are using chat and chatbots for.
But first, that trust members have in credit unions is a competitive strength that should not be underappreciated he said.
“We often think, ‘Oh, my gosh, there's that technology I need, that I have to have—otherwise, I'm going to lose’,” Maurer said, pointing to how the adoption of digital services has “skyrocketed” during the COVID pandemic (see below).
But other factors are driving consumer choice, especially when it comes to their finances, he said. Indeed, Maurer’s remarks were themed, “Differentiating on Trust With & Against Tech.”
That isn’t to suggest technology isn’t critically important.
Maurer noted research has found credit union members in particular have expressed dissatisfaction at a higher rate than have bank customers when it comes to their e-services experience, which is a priority for both members and customers.
“Yet at same time, paradoxically, human touch became more important,” he noted, referring to how consumer demands have evolved during the COVID pandemic.
An ‘Incredible Push’
“COVID has created this incredible push of everybody into digital transformation, kind of against their will in some cases,” said Maurer. “There’s been incredible uptake and adoption. There are lots of kinks to work out and issues and problems, but mostly people are coming along and then starting to expect that seamless digital delivery of services.”
The Smooth Hand-Off
That seamlessness is a challenge every credit union must content with, said Maurer, as consumers/members expect to be remembered as they move from one technology to the next or from technology to human being back to technology again. Consumers expect each “hand-off” to be updated with the most recent information, he noted.
“You must center the user perspective all the time,” he reminded.
But even in the face of that significant challenge, credit unions still have an advantage to leverage, he said.
“We expect a certain kind of consistency and seamlessness across all of these systems, but that's really an opportunity for credit unions to not just get the seamlessness right, get the tech right, but also to remind your members, ‘Hey you know we’re your credit union. We know you. We’re in your community. You trust us.’ And then to differentiate on that trust. I think that is really the take-home. You know your members in ways the big banks don’t know their clients. You have to use that to differentiate.”
Maurer said that is especially true during this period of “economic precarity that all of us are living with.”
New Technology & An Old Risk
Maurer cautioned that as credit unions race to embrace all the brand-new technologies, however, one risk is some very old biases are often built into algorithms used by artificial intelligence, such as loan data based on redlining practices, and he urged CUs to be aware of those downsides.
“Often, biased data is fed into these systems and guess what comes out?” he asked. “So, when thinking about AI, consumer protection has got to be front and center.”
To help guard against at least some of that risk, Maurer urged attention to “data justice.”
He said in his work with Filene he has been doing some work with credit unions that are partnering with communities to help co-design products with a goal of reducing bias.
Why Chat is Popular
One piece of technology that is growing in popularity among consumers and that cannot be overlooked is chatbots and voice-response systems, according to Maurer.
Consumers have come to expect to be able to use Siri and Alexa to conduct simple financial transactions, he said.
“There is this kind of sense that for everyday stuff like ‘Check my balance,’ automation is the way to go. People like having that experience of connectivity,” said Maurer. “But at the same time they really do value that human touch, so it's about really getting the right balance and having those handoffs work well between the interaction with the bot and the interaction with the human. People have really low expectations of these things right now—how often have you cursed at these devices? So, if you raise the bar a teeny bit then you can really create that experience of delight and connection.
“We also found that people love these things for some of the difficult questions that they feel uncomfortable bringing to a human being,” Maurer continued. “Like, ‘I don't think I'm going to make this payment. What will happen to me?’ They want to get that information from the chatbot first so they know what the situation is before they ask for help.”
What Big Banks Aren’t Doing
Before concluding, Maurer returned to his theme that credit unions have a level of trust with consumers that is every bit as valuable, if not more so, than the investments larger competitors are making in technology.
The key is to bake all of that into the strategic plan.
“I think as all the professors (at big.bright.minds) have said in one way or another, things need to start from strategy,” said Maurer. “What is it that you're actually trying to do? What are you trying to accomplish? How are you trying to build the brand or differentiate? And then, how can certain kinds of technology align with those priorities? What are the priorities? You've heard all of us talk about innovation and priorities around diversity, equity and inclusion; priorities around community, building the kinds of things that you don't always hear the big banks talk about.
“Again, that's part of the way that credit unions can do something different and leverage their position in the community and build a new kind of digital culture in their own organizations, but also among the members.”