By Ray Birch
LOMBARD, Ill.—Are credit unions the frog in a slowly boiling pot of water when it comes to their attention to service?
One analyst believes that may just be the case following a recent study that shows credit union service has fallen below that of banks. It’s a study that offers some “fascinating”—if not concerning—findings that deserve attention by CUs, the same analyst said.
“I liken this to the frog in the pot of cold water and then you turn on the heat to get a very slow boil and the frog never realizes it's boiling,” said Bill Handel, VP of research at Raddon. “Sometimes things happen at a slow enough pace that we say, ‘All right, this is something for us to watch but let's not be concerned about it.’ But over a period of time it then becomes a serious concern.”
As CUToday.info reported, for the first time in the history of the American Customer Satisfaction Index (ACSI), banks have been given a higher customer satisfaction score than credit unions. In the wake of this report, questions and issues around what’s taking place in member service at credit unions are being highlighted in a series by CUToday.info. As part of the series, consultant and data analyst Ann Legg also has a special offer for CUToday.info readers here.
The study shows banks surpassed credit unions in the survey conducted by the University of Michigan as satisfaction with all types of financial institutions declined. Bank scores were down 1.2% to an ACSI score of 80, while credit unions were down 2.5% to 79.
‘Pay Attention’
“I think we have to pay attention to this study as an industry, and I think the report is telling us something really clearly—that we're not paying attention enough to making processes better for consumers and to how they want to be dealt with, especially with the emerging generations,” said Handel.
Handel contends banks with their deeper pockets are more focused on streamlining their processes and digital delivery than are CUs.
“What I find fascinating from the ACSI study is credit union scores dropped from 2018 to 2019 consistently in every single service category in the report with one exception—the reliability of the mobile app,” noted Handel. “That was the only category that wasn't down, and in some of the categories credit unions were down significantly. And two categories that were down significantly were ease of adding or making changes to the account and call center satisfaction. I thought that was really interesting.”
Changing Demographics
Handel believes changing service expectations driven changing demographics is a big reason for credit unions’ decline in service ratings.
“As the consumer population begins to get younger, Millennials are coming of age now and you’ve got the Gen Zs, I think their service expectations are higher than previous generations,” suggested Handel. “I think that's what we're up against. I think the fact that we're seeing more demanding generations come up…I think the older generations kind of grew up in the atmosphere where we're OK as consumers do business in the timeframe of our financial institutions, based on their locations and normal business hours. But with these younger generations it's more about ‘I expect you to be with me 24/7. I expect the process to be simple, fast and easy.’”
Handel said the ACSI findings are a sign credit unions are not transforming quickly enough.
“I bet if we broke out this ACSI data by demographic group we’d find this trend to be driven at least to some extent by demographic shifts that are happening,” he said.
Not Jumping to Conclusions
Handel warned credit unions not to jump to the conclusion the report suggests they only need to get better with digital delivery. Instead he emphasized the shift in service ratings toward banks is happening because credit union processes need improving.
“The younger generations are not going to use just mobile,” Handel reminded. “In our own studies here at Raddon, we have asked Gen Zers and Millennials how they prefer to conduct everyday banking activities, and responses have largely been mobile. But when we asked how do they want to open and close accounts and get advice, more than half said they want to go into a branch. So, this is not just about mobile; it's about process, and this is a lesson we really have to take the heart.”
If there is good news in the ASCI study, Handel said it’s that credit union service scores generally beat the national banks. The bad news: CUs lost consistently to community banks in the study.
Bill Handel
Falling Behind
Moreover, credit unions in the ACSI study fell behind banks in a couple of other key areas, noted Handel. He said it was no surprise CUs lagged with branch and ATM accessibility, but it is concerning that CUs fell behind with ease of adding accounts or making changes to accounts.
“I think this gets at ease of doing business with credit unions, and also ease of understanding information about accounts,” said Handel, adding the changes that need to happen are not just based in process and technology. “It also comes down to putting things in common language—language that is understandable. I know there is certain verbiage we have to use to be compliant. But how do we simplify things, and how do we simplify talking about things? Why, for example, do we have to call something a certificate of deposit in our advertising? Yes, we have to do that to some extent legally, but we have to find ways to speak the language of younger generations. That is the other issue.”
‘Eye Opening Report’
Handel said the ACSI report should be “eye opening” for credit unions.
“We're probably not doing enough to meet the needs of consumers, especially the younger generations,” he said. “We've got to really up our game around how we deliver service more effectively—so that’s ease of doing business, speed, technology and process.”