By Ray Birch
LAKEWOOD, Colo.–Credit unions were quick to move to digital banking when the health crisis hit in 2019, but where they stand today with e-services may not be good enough to carry them into the future, according to the findings of one analysis.
A new study by Aux, a CUSO that provides back-office support solutions, reveals credit unions are—not surprisingly--evaluating their digital banking platforms, exploring where they need to make improvements to e-solutions often put in place as quick patchwork efforts to navigate through the pandemic.
What many CUs feel they need today, explained Aux President and CEO Doug Burke, are stronger solutions that can carry the credit union forward into a new era of digital banking.
The hasty responses and investments are coming as numerous pieces of research and surveys find consumers’ satisfaction with their primary financial services provider is increasingly driven by e-channels.
“Credit unions say they are continuing to shore up their technology,” said Burke, referring to the results from its quarterly survey on credit union growth. “They were thrown into the pandemic and said, ‘Oh, we’ve got to enhance home banking and we have to do this now’.”
Not Long-Term Solutions
But Burke said many of those solutions weren’t intended to be long-term solutions and are instead “temporary patches.”
“That’s why I think you're seeing credit unions say now that we have a little more time we can come up with a more well-thought-out strategy,” Burke explained. “Maybe we need to make some conversions. There is now a lot of thinking around a longer-term digital strategy—where do we need to make bigger investments.”
Funds to make those investments are more available than many credit unions had projected after the pandemic didn’t lead to the kinds of fiscal challenges many had feared when the pandemic began to become a reality in March of 2020, Burke said.
Doug Burke
“The loan losses and overall negative effect from the health crisis was not as big as most credit unions thought more than a year ago,” said Burke, reminding that many credit unions had reserved far more capital than they ended up needing, funds that have been flowing back to the bottom line in 2021.
Still Investing in Bricks & Mortar
The emphasis on digital banking, however, has not come at the expense of branch expansion plans, noted Burke.
“In the study we never got the feeling at all that credit unions plan to start ditching branches—they didn’t say anything like that,” said Burke. “I was surprised that more credit unions didn't put a pause on that. There were some who said they might pause, maybe about 25% planned to pause construction, but a lot of them said they are still moving forward with branch building. One of our largest credit union clients in Colorado is building branches left and right.”
Burke said what has changed related to branches as a result of the pandemic has been interior design.
“Credit unions are remodeling, getting rid of the traditional teller lines. But, for the most part, I’d say at least two-thirds of credit unions are bullish on branches right now, and the ones that are closing branches are often offices that were performing poorly before the pandemic and did not do well during the health crisis,” said Burke. “I don’t think credit unions are ready yet to make the big leap to all-digital, like Alliant Credit Union (Chicago).”
Salaries on the Increase
Turning to employee salaries, the Aux survey also found 80% of credit unions reported that have raised wages.
Burke said he believes a lot of the increases are focused on front-line workers who now have greater work options.
“One credit union in the southwest is paying tellers $20 an hour as a starting salary,” said Burke. “Those kinds of moves are going to have ramifications across credit unions, because those are the workers who can be the most mobile. These are the workers who have a lot of job opportunities—in retail, in restaurants. These are the workers the credit union could most easily lose.”
Burke acknowledged that credit unions are having to navigate through unchartered waters today.
“We keep getting hit with things which we've never dealt with as an industry before—the pandemic, the big shift to digital banking, and now the Great Resignation,” said Burke. “These are interesting times.”
For more results from the Aux study, click here.