3 key insights for connecting with consumers

Prepare for rising competition and shifting consumer behaviors.

November 1, 2021

Credit unions are at a crossroads. Competition is on the rise from players both old and new, and consumer behaviors are shifting quickly.

In response to these changes, the 2021 Banking Impact Report considers the role that credit unions and other community financial institutions (FIs) play in the financial system—and how forward-thinking leaders can navigate what’s next.

This article focuses on the consumer side of the story, examining what people really want from their credit unions and how credit unions can meet members exactly where and how they want to be met.

Here are three key insights from the report.

1. Digital transformation is a baseline expectation.

Consumer adoption of digital banking tools was on the rise long before March 2020. The pandemic simply accelerated that trend, with 35% of consumers increasing their online banking usage during the COVID-19 crisis.

Now, a clear majority of respondents not only prefer to bank with digital channels but expect to have access to a broad range of features, including mobile check deposits, fraud notifications, and online account opening (OAO).

Yet there’s a clear gap between expectation and reality. While 58% of consumers say that OAO is a must-have, only 57% of community institutions offer it. And if community FIs don’t deliver, then megabanks and neobanks will step in to fill the gap.

2. Community FIs lead the way on rates, service, and local impact—but not convenience.

Consumers prize many of the core value propositions of credit unions: low fees, superior customer service, and community involvement. There is, however, one major area where community institutions appear to be lagging: convenience.

This reflects an emerging reality of consumer expectations in the digital age: If you’re not at people’s fingertips, you’re too far away. For example, during the pandemic—when digital convenience was at an unprecedented premium—consumers flocked to the largest FIs, with community FIs ranking last in consumer preferences.

These findings point toward an unavoidable conclusion. In an uncertain economic landscape, credit unions must close the convenience gap or risk obsolescence.

3. Consumers are wary of neobanks (for now).

The 2021 Banking Impact Report found that consumers want the option to bank with digital channels—but their enthusiasm for digital appears to have its limits.

Despite the massive valuations and media attention given to neobanks, only 7% of consumers trust digital-only banks more than traditional institutions. Even so, 47% still said they were “somewhat or very likely” to open an account at a digital-only FI in the next 12 months.

This window signals a major opportunity for credit unions to capitalize on consumers’ hesitation. Now is the time to recapture their loyalty with digital offerings that rival the convenience of neobanks and deliver on a solid foundation of institutional trust.

Digital transformation with a human connection

By meeting consumers where and how they want to be met, credit unions can provide an optimal experience while maintaining a deep connection to both people and place. Only then will your credit union be in a unique position to adapt and thrive in the face of unprecedented competition.

RAJ PATEL is chief operating officer and chief financial officer at MANTL.