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Even as the financial services industry undergoes significant disruptions, U.S. credit unions face a two-fold problem:

1. Millennials do not understand—and hence, do not appreciate—the difference between traditional banks and credit unions. As per research, 73% of millennials do not understand that credit unions are not-for-profit, member-owned financial institutions.

In addition, 69% of millennials do not realize that because of their business model, credit unions can often offer better loan and savings rates than traditional banks. Not just this, 57% of millennials do not know that credit unions do offer the same services as banks. This can be primarily attributed to a lack of communication and awareness.

2. Fintechs, which are relatively recent entrants in the financial services industry, are wooing away customers from traditional banking channels by creating a buzz about their reach, product offerings, and ease of use by connecting with customers via modes that appeal to the latter.

A majority of customers consider their banking relationship to be transactional rather than relationship-driven. More than 80% are willing to deprioritize an old relationship with a traditional financial institution and bank with fintechs.

There are plenty of additional data points indicating that traditional financial institutions need to engage better with customers. It is all the more true for credit unions to garner greater mindshare among existing and potential customers. 

The realization is already there: 82% of credit union CEOs believe it’s important to have an expanded mobile footprint in order to engage millennials, who are changing the way financial services are consumed.

Mobile banking customers use more products than branch customers (2.3 vs. 1.3). However, mobile banking is one of the many aspects of a transaction journey.

A consumer might see an interesting savings account offer on social media, research it on the website, sign onto a web chat to get more details, and then contact the call center for help completing an application. Hence, it’s pertinent to identify and understand customer personas and their journeys in order to offer required personalization.

Omni-channel banking apps can provide a seamless and personalized customer experience. With an omni-channel strategy, credit unions can:

• Allow the flexibility for customers to interact across platforms and interfaces while maintaining consistency.
• Improve the quality and quantity of customer interactions with relationship management systems, next-best-action tools, and other digital enablers.
• Educate existing and potential customers about their unique selling points and spread awareness about product offerings.
• Explore innovative revenue streams with application program interface economy.
• Drive cost savings by eliminating the need to manage multiple vendors.

Continue reading this article on the Kony blog.

SOMNA TREHAN is senior manager, value engineering, sales operations, for Kony.