How credit unions can overcome their biggest threat

Why do business with a credit union? NerdWallet and U.S. News proclaim that credit unions deliver superior service and interest rates.

Unfortunately, younger generations define winning service as leading technology. But credit unions cannot compete with large banks that have multibillion-dollar technology budgets. It is no wonder that the University of Michigan Consumer Satisfaction Index has ranked banks ahead of credit unions for the last two years. Moreover, historically low interest rates prevent credit unions from offering a compellingly differentiated rate. 

With their competitive differentiators neutralized, credit unions face an existential crisis. But they need not panic. There is a winning strategy that builds upon credit unions’ strength in deeper relationships and better service. 

That strategy requires credit unions to execute their mission of supporting member financial success, which credit unions are better positioned to do than banks. Not-for-profit credit unions exist to serve their members while banks face unrelenting profit pressure. 

Credit unions can support member financial goal attainment without busting their budgets by leveraging the latest technologies, a member segmentation, and the unique capabilities of each channel.

• Priority segments in branches. Credit unions can exploit their member relationship advantage by delivering ongoing in-person guidance to their priority member segments (e.g., affluent). Staff turnover, compliance risks, and the complexity of financial guidance has made this difficult to execute – until now. AI-powered solutions, such as eGain’s Sales Advisor, enable a credit union branch specialist to execute a flawless financial check-up. The AI guides the specialist, based on member CRM data and check-up answers, to ask the next best question. The result is a succinct, yet holistic assessment where the AI recommends the next best financial action or product to help that member achieve their financial goal. Equally beneficial, the solution ensures that all specialists execute like top performers.
• Virtual advisor for digital sales. The traditional digital channel sales strategy is to create brochureware and require consumers to read all the copy and determine the best product for themselves. AI solutions from eGain offer a better experience. The same tool that guides the branch staff can serve members as their digital channel Virtual Advisor, delivering financial check-ups and next best product recommendations.
• Financial guidance via Virtual Coach. AI-powered solutions such as eGain’s Virtual Financial Coach enable firms to meet this challenge by delivering guidance on building credit, reducing debt, and increasing savings. This low-cost and quick-to-implement technology provides coaching from GreenPath Financial Wellness that is personalized, ongoing, and compliant (bots never go off script). Will people use a Virtual Coach? Yes! An Aite Group consumer survey found that 58% are interested in using such a tool. 

The environment has never been more threatening to credit unions. The good news is that they can use their strategic disadvantage as a case for action to move to a more defensible strategy—one where the credit unions use AI solutions to deliver the advice people need to achieve their long-term financial goals. 

EVAN SIEGEL is vice president of financial services AI at eGain Corporation.