By Ray Birch
SCOTTSDALE, Ariz.–2020 condensed four years’ worth of financial services delivery change into one year, one analyst is asserting. And that has presented a challenge credit unions need to meet.
Cornerstone Advisors’ Senior Director Sam Kilmer is warning that if credit unions solve the challenge for how to effectively deliver personal service via remote channels, and simply just get better at digital delivery, a slide in how consumers perceive service provided through credit unions could continue.
As CUToday.info reported, credit unions for the second year in a row have fallen behind banks when it comes to consumer satisfaction, they also now sit at a “historic low” in one respected national survey.
Credit unions fell 2.5% to a score of 77 on a 100-point scale in the 2020 American Consumer Satisfaction Index (ACSI) conducted by the University of Michigan in conjunction with the American Society for Quality in Milwaukee and CFI Group in Ann Arbor, Mich. The nation’s banks achieved a score of 78.
A key driver in that falling score was perception of e-services at CUs.
That trendline comes at the same time the nation’s biggest banks have poured money into digital delivery in the past two years, putting them well ahead of many credit unions when it comes to the new definition of service to consumers—speed and efficiency.
What concerns Kilmer most is ACSI data that show member satisfaction with credit unions significantly weakened during the COVID-19 pandemic—a phenomenon has not affected banks to the same degree. For the six-month interview period from April to September 2020, satisfaction with credit unions is significantly lower (75) compared to the previous six months (77).
“Perhaps more so than bank customers, credit union members may be missing the personal touch that their institutions could more easily achieve prior to the constraints of the pandemic,” the report stated.
The ‘Real Story’
Sam Kilmer
“The real story started about a decade ago, say 2011-2014, when there had been a fairly consistent five-to-nine-point gap between CU’s being higher than banks in service ratings,” said Kilmer. “What has clearly changed since then is the role of digital—particularly mobile—delivery technology as the primary delivery method vs. delivery with the personal touch.”
Kilmer stressed that any financial institution more reliant upon in-person branch delivery to differentiate their service is at a disadvantage, especially under COVID-19.
“2020 has been like condensing four years’ worth of delivery change into one year,” Kilmer explained. “The good news is there are credit unions out there that are not reliant upon in-person to differentiate. Therefore, CUs looking to improve have many peers within their ranks from which to learn best practices.”
Yet, it’s a tough transition for many credit unions that became accustomed to defining community as mainly geographic proximity to a branch—vs. a group of members with common interests other than geography—and promoting the in-person “come and see us” model, said Kilmer.
Dangerous Narrative
“There is still a dangerous false narrative perpetuating the industry—among both CUs and community banks—that consumers and businesses want to use digital self-service mainly for transactions but prefer dealing in-person for complex advisory needs and buying,” Kilmer said. “Look no further than the successes of Intuit with TurboTax or Rocket with mortgages. Their speedy digital self-service is now the preferred way to deal with most people’s most complex financial situations—taxes and the home.”
One way a credit union can transform is to focus on measurable improvements in digital delivery and other efficiencies that free up more resources for improvements, and make sure the leaders of the organization are heavily involved on a daily basis, said Kilmer.
“One of the best ways to do this is through the use of interactive dashboards that get leaders involved in setting and achieving targets, and actively managing and measuring them,” Kilmer said.
Kilmer said if a credit union's management team is not engaged with performance metrics and if they don’t have a plan around how the effort fits strategically into the future of the CU, they will fall behind other FIs.
A Good Example
Kilmer said the $4.4-billion Baxter CU in Vernon Hills, Ill., is a good example of a credit union taking the right approach.
“Baxter is very solid in digital banking. They are not waiting for people to walk into a branch,” Kilmer said. “Baxter has a very deliberate strategy to go out and get business from members and reach out to them. At a credit union that is doing a good job with digital delivery, you should be able to ask any leader where each segment of their business is coming from, what the percentage is, and how they are trying to grow that number—and each one should know.”