By Ray Birch
RANCHO CUCAMONGA, Calif.–For obvious reasons, credit unions are focused on short-term challenges from the coronavirus pandemic.
But CU leaders who are also paying attention to the longer term can leverage a unique opportunity to grow their operations and revenue in the longer term and emerge as the “hero,” according to one person.
“Americans have never needed more help around day-to-day financial wellness than they do right now,” said Samantha Paxson, chief experience officer for CO-OP Financial Services. “As we know, credit unions are all about local, their communities…and we're certainly seeing that demonstrated now.”
Paxson was referring to credit unions’ efforts to keep consumers and small businesses afloat during the pandemic by deferring loans, waiving fees, extending Paycheck Protection Program loans, working with individuals one-on-one and more. CUToday.info has an extensive compilation of CU initiatives here.
But even with all of that member support from credit unions, Paxson said she has serious concerns over the ability of small businesses to survive the COVID-19 crisis.
“Small businesses are what makes each of our towns and communities special,” she said.
A ‘Unique Opportunity’
To help those small businesses and members, Paxson contends credit unions, despite the growing balance sheet challenges from the decline in lending and revenue reductions as assistance is provided, have a “unique opportunity” to make a difference in the day-to-day lives of members.
“Credit unions can stand as the compassionate financial alternative,” said Paxson. “From CO-OP’s perspective, this is a time for us to lean into what our members are looking for… And then how can we also look at this crisis as an opportunity to transform the new normal?”
Credit unions can help transform the new normal coming out of this crisis by focusing a great deal on payments and electronic delivery channels, she suggested.
“How can we look at our data, and in the very least how can we help members in the contactless world, in the new no-touch environment?” said Paxson. “How do we leverage contactless payments? How do we clean our physical locations, our ATMs and our branches? How do we look at ways that we can augment service in our contact centers? And how do we look into ways in which we can help members be more digital in every way we service them? There are so many things to think about now.”
Samantha Paxson
The Longer-Term
Paxson observed the coronavirus pandemic is having the obvious shorter-term or near-future effects on CU operations, but there are longer-term implications that credit union leaders must consider.
“We really have to unpack all this, look at our use cases and say in each of our areas what do we need to do to adjust new consumer behaviors and problems they have today,” said Paxson. “If we can do this, and do this well, which I know credit unions will do, and CO-OP is helping them here—I believe credit unions can be the hero coming out of this pandemic. They will be the hero that outshines banks.”
Right now, asserted Paxson, CUs need to be paying attention to payments.
“On the day-to-day transactions we're dealing with now, we really need to make it simple for members to engage with us,” said Paxson.
While recent studies indicate consumers are turning more towards debit, spending only what they have in their checking accounts, other reports indicate that soon enough credit spend will grow as people run out of money and place rent payments and other recurring obligations on their credit cards.
Pay Attention to Credit
Paxson emphasized credit unions must pay close attention to credit card spending during the pandemic.
“Your members are going to need access to credit and you don’t want them turning to someone else,” said Paxson, acknowledging there will be charge-offs. “You don’t want your members accessing credit from a financial institution that does not have their best interests at heart. So, credit unions pushing their own mission and own credit card program is the right thing to do no matter what. Giving members access to credit now is very important, along with making sure you have the digital engagement tools members are going to need to manage their financial lives. Your members will remember you for this and you will build stronger relationships.”
The new normal, much around less contact, is changing spending habits, reminded Paxson, who said rewards programs should be adjusted to meet new spending patterns.
“Maybe this is looking at rewards around delivery providers, groceries, cleaning supplies and things like that,” said Paxson, adding she’s not sure “we are ever going back to the way things were.”