Why CUs will succeed despite the ‘disruptors’

In 2017, a wide array of organizations solicit credit union members with alternative access to financial services, from social networks to technology start-ups and retailers.

It seems like everyone is jumping on the “fintech revolution” with disruptive technology. Some observers have even predicted the demise of traditional providers as new players enter the space for payments, lending, and deposit accounts.

While these predictions may appear bleak for credit unions and other financial institutions, consumer behavior actually reveals a far more positive climate.

Recently released research from Fiserv, “Expectations & Experiences: Channels and New Entrants,” shows that most consumers trust and prefer financial institutions like credit unions as their primary financial institution (PFI). The survey of more than 3,000 U.S. banking consumers was conducted online by Harris Poll in 2016.

The survey revealed that digital and mobile engagement are growing, but branches and legacy channels are still widely used, even by millennials.

And true to the value of a robust multi-channel experience, empowered consumers often choose channels of engagement based on the type of transaction needed.

The branch remains resilient

The “on demand” automated economy has affected numerous industries, and financial services providers are not immune. As a result, consumers are increasingly demanding access to financial services on their terms.

Many people expect 24/7 access to services through digital and mobile channels, but the branch remains surprisingly resilient in terms of consumer preference.

According to the survey, 53% of consumers prefer online or mobile banking for standard daily transactions. Forty-four percent said they preferred a traditional branch while, 2% chose a fully automated branch with no personnel on site.

When asked about which channels they’ve accessed in the last month, 80% of consumers say they have logged into their PFI’s online banking site, while 61% have visited their PFI’s branch.

Those who logged into the banking site did so an average of 11.2 times in the prior month, and those who visited the branch did so an average of 2.9 times in the same period.

Clearly, digital engagement results in far more monthly interactions—and opportunities to nurture stronger relationships with members.

Transactions drive engagement

Fiserv research shows that 68% of those who visited their PFI’s branch in the past month did so to deposit checks, while 51% withdrew cash and 22% spoke with branch staff.

Seventy-nine percent of those who used online banking at their PFI in the past month checked balances, 47% paid bills, and 41% transferred money to an account at the same organization.

Even as digital engagement matures with services like mobile check deposit, we’ve all experienced scenarios in which branch interaction is required, such as depositing a check that exceeds mobile deposit limits or dealing with a service issue related to a transaction.

Older generations are more likely than their younger counterparts to have visited a branch in the past month. Consumers indicated they visited a branch in the last month as follows:

• Seniors (age 70+): 79%
• Late baby boomers (age 62-69): 68%
• Early boomers (age 51-61): 67%
• Gen X (age 36-50): 53%
• Late millennials (age 25-35): 55%
• Early millennials (age 18-24): 38%

With this in mind, targeted marketing efforts toward specific age groups can help maximize branch engagement overall.

CUs rank high in satisfaction

It should come as no surprise that 86% of members who have a credit union as their PFI reported they are satisfied with their credit union. This figure surpasses satisfaction levels with other types of financial institutions and highlights the strong value delivered to consumers through credit union relationships.

Based on these strong metrics, credit union leaders should look to the future with optimism and an understanding of why a robust multi-channel member experience is necessary for long-term growth and success.

Fiserv research clearly indicates that having the right mix of digital and branch services can help credit unions engage members from all ages and walks of life—even as the speed of life progresses like never before.

Also important to recognize is the level of consumer antipathy towards “disruptors” that are also known as nontraditional providers.

Nearly half of consumers (48%) said they would not be comfortable conducting any type of transaction with a nontraditional provider, and the levels of comfort for everyday transactions with nontraditional providers are quite low across the board.

Only 25% of consumers would be comfortable transferring money to another person through a nontraditional provider, while 12% would be comfortable depositing a check and 7% would be comfortable taking out a loan from such a provider.

Think about these numbers versus the rate of satisfaction with credit unions, and you can understand why the credit union movement will be successful for many years to come.

STEVE SHAW is vice president, strategic marketing, Digital Banking Group, Fiserv.