By Ray Birch
MADISON, Wis.–Innovation matters at credit unions, with new research showing just how it drives loyalty and satisfaction—but innovation isn’t just about technology and processes, according to Filene. Indeed, the kinds of “innovations” that really motivate members aren’t driven by budget.
Those findings and others are from the Filene Research Institute’s Year 2 of the Credit Union Innovation Success Study.
“We know prioritizing innovation will absolutely increase loyalty and ultimately share of wallet,” said Gina Woodall, vice president and group director of Rockbridge Associates, which partnered with Filene on the study. “Credit unions are between those large big bank competitors and the fintechs. And right now, credit union innovation and social innovation are pretty average. So, there's a lot of room for growth in this area.”
Woodall said the latest study also reveals that emotional outcomes are really what has meaning to members.
“Thinking about helping members to feel like their credit union cares about them, shows them empathy, that they belong to something, that you're available when they need you…” Woodall said during the webinar. “These are emotional needs that you can address through the design of your products, through policies that you have, by differentiating and showing members that you care.”
‘Excited to Do Business With You’
Woodall stressed the importance of innovation and social innovation on consumer perceptions.
“Our research has shown that innovation is a strong driver of customer loyalty,” she explained. “We don't innovate just to innovate, we are talking about innovation that really matters, innovation that actually is noticed by members. So, in terms of how you're innovating, in terms of affecting the value proposition, how you're delivering to your members, how you treat your members--all of those things are noticed by consumers and can lead to feelings of being excited to do business with you. When members feel fulfilled and pleased with their relationship, that leads to overall brand attractiveness, which ultimately leads to loyalty.”
Nearly Two-Dozen CUs in Study
Woodall said 23 credit unions participated in the study.
“We split the 23 credit unions. We had the least innovative credit unions—seven of them in our lower tier, six in the middle tier, and then seven of the most innovative credit unions in the upper tier,” she explained.”
Woodall showed a chart (below) that outlined the business impact innovation has had on the participating CUs.
“You can see the positive trajectory here,” she said. “Credit unions that are more innovative have higher loyalty, brand attractiveness and higher Net Promoter Scores.”
Driving Sales
Innovation not only drives greater loyalty, it also leads to more sales, the research shows.
“It's not only loyalty, we also are seeing it in higher sales of additional products and services within credit unions that are more innovative,” Woodall said. “So, again, looking at that same cut of low, middle and upper tier credit unions on innovation. Obviously, with savings accounts and checking accounts you don't see a lot of difference there. Those are fairly required for membership with the credit union.
“But these other products, down the line, you can see that in money market accounts, CDs, personal loans, mortgages, credit cards, home equity loans… The incidence of those types of products among members is doubled among the more innovative credit unions. It pays to be innovative is the bottom line here.”
What’s Highly Desirable
The research also reveals features of the credit union that are considered innovative and highly desirable to members.
“These are really the differentiators on innovation. And the two that stand out are caring about members and being available when you need them,” Woodall said. “And the third is being fast and responsive.”
Woodall concluded by pointing out safety and security, anymore, are considered table stakes by consumers.
“It's something that members expect,” she said. “They desire it, but it's not considered innovative. And credit unions on average are doing very well here.”