The ‘golden thread’: Combine rates with convenience

Modern consumers want much more than low rates in their financial products and services, according to 2023 Co-op CU Growth Outlook research unveiled Wednesday at Co-op THINK 23 in Tucson, Ariz.

The research, conducted by Co-op Solutions, EY, and Mastercard, found that trust is the top factor driving consumers’ decisions to add a new financial relationship (42% of respondents), followed by rewards programs (36%), rates (34%), faster transactions (32%), convenience (30%), and customer service (22%).

“We still need to focus on rates, but when you can do that with convenience, you’re cooking with gas,” says Co-op Solutions Chief Experience Officer Samantha Paxson, who presented the research Wednesday at the annual growth strategy event. “That’s the way to go.”

“Price will always be important, but if I pull up at a gas station and I can’t pay at the pump, I’m going to leave,” says Co-op Solutions Vice President of Integrated Product Marketing and Commercialization Carrie Stapp. “I don’t have to lead with price when I’m there every day. I’m going to get to them before the consideration of price comes into play. You don’t have to compete on price, you’re competing now on value.”

The desire for convenience has allowed hyper-focused fintechs to draw some consumers from traditional financial institutions. Fintechs build products to satisfy a particular psychological motivation, leading consumers to spread their financial accounts across a variety of platforms.

“Credit unions have an opportunity to aggregate all that and offer a simple, more convenient and holistic offering, maybe even leveraging some of those fintechs as partners,” Co-op Solutions Senior Vice President of Experience Operations Sarah Szilagyi says.

Members desire more financial guidance, Paxson adds. “Be active in your members’ lives. We’re competing for members’ attention every day, moment by moment. You’re trying to win that next best interaction. We need to be member centric.”

The research revealed a new member-centricity model that includes three pillars for credit unions seeking to be the “golden thread” through members’ lives:

1. Engage every day and focus on micro interactions. 
2. Provide guidance on short- and long-term financial performance, and give members the tools needed to manage their financial lives.
3. Boost the member balance sheet by creating personalized value propositions. You want members to choose you and think, “Not only are you the best deal in town, you’re giving the convenience I expect.”

“Consumers now expect a highly personalized digital ecosystem of value,” Paxson says, suggesting credit unions lead with member-centric, low-cost micro interactions that lead to long-term macro-conversions. “We don’t want dormant members. We want active members engaging with us. We need to be highly relevant. We need to deepen relationships to capture long-term usage and value.”

Paxson notes that 43% of consumers report they’re “not very” or “not at all” financially secure. Credit unions, which prioritize member education and financial well-being for all, can improve this by providing tools recommending best purchase methods, monitoring spending, managing subscriptions, linking accounts, and other forms of financial guidance.

The research includes several early adopter credit unions that have seen value from this member-centric approach. Early adopters have seen 4.6% membership growth and 10% revenue growth.

“This is our opportunity to grow,” Paxson says. “We can improve the way we’re delivering and engaging. We can improve our service model and we can grow.”