By Ray Birch
ST. PETERSBURG, Fla.—Credit unions still have at least one “sweet spot” they can leverage in the era of digital relationships, says one expert.
Jeremiah Lotz, managing vice president, digital and data at PSCU, stressed that credit unions have done well with building trusted relationships with members, more so than banks.
“But with the pandemic moving members away from a lot of face-to-face transactions, credit unions now must look to use these digital channels to continue to create those trusted relationships—that's the hook consumers are looking for,” said Lotz. “I think that's where credit unions still have a sweet spot.”
Lotz spoke with CUToday.info as part of a series in launched in response to research showing credit unions have, for the third year in a row, finished behind banks in a national survey of American consumers when it comes to “satisfaction.” As CUToday.info was first to report, in the most recent American Customer Satisfaction Index (ACSI), credit unions even hit a “historic low” when it comes to consumer “satisfaction” with their financial institutions.
The objective of this CUToday.info series is to deliver more actionable strategies to credit unions so they may more effectively respond.
The Bank Strategy
Lotz said while the answers to how credit unions will build the same trust through digital as they have with face-to-face service may not be readily apparent, he believes they will come. He added, though, that banks have a very distinct strategy with digital services, and it’s working.
“Where banks are getting good right now is they are focusing on very specific areas that they know drive customer satisfaction,” he said. “We know that customer satisfaction is driven by a personalized experience, and an innovative experience and a good payment experience. Banks are going heavy and deep into those kind of key areas. The challenger banks are doing the same things. They are going very heavy on the personalized experience. Frankly, this is where I think credit unions’ opportunities lie.”
Lotz suggested credit unions “take a step back” and ask, “Where are the areas now in which we know we are driving member behaviors, and areas that really drive member experience?” One identified, CU need to put both their efforts and dollars behind those efforts, he said..
“Let's go heavier in those places, and that may mean engaging with fintechs or through another mutual partnership,” Lotz said.
Simple Solution
Lotz said a good example of an area that today truly effects member experience is payments.
Jeremiah Lotz
“The solution here is probably simpler than what you'd expect,” Lotz said. “If you have a new credit card with a bank, they want you to use that card immediately. They don't say to new cardholders, ‘Great, we appreciate you doing business with us. Let us know if you need anything.’ They want you to use that card. So, you get very specific messages from the bank saying things like, ‘I see you have an iPhone, based on your card. Click here and go push that new card into your digital wallet.’ And then, ‘Oh, it looks like you put your card into that digital wallet. Let me remind you how you use that digital card when you drive to McDonald's.’ Or, ‘Let me reward you to use it more.’”
It isn’t just the frequency of the messages, but the fact they are personalized, Lotz added.
“Credit unions, through their digital channels, need to do more things like this,” he said.
The effort really starts with understanding members very well, which means relying on the rich data CUs already have, said Lotz.
“Really understand your member base and their expectations,” he said.
The Opportunity
That means knowing where members are in their life stages, and what some of their life goals are—and then leveraging predictive analytics.
“There is opportunity for more credit unions to capitalize on what they have been good at over the years, but now doing it through different channels—continuing to evolve with the way consumer service expectations are evolving,” concluded Lotz. “Credit unions’ secret sauce has been those personal relationships. Now, they have the same opportunity to create those personal relationships through digital channels. And, frankly, I don't think people expect this of large banks.
“Bringing forward innovative solutions here—credit unions are not in this alone,” continued Lotz. “This is where they leverage partnerships with fintechs and with CUSOs.”