Time to Transform the 'Face' of CUs

CUs must align their mission with the evolving needs of members and potential members.

October 1, 2012

The community-minded, member-focused approach that’s the hallmark of credit unions has long been a differentiator in the marketplace. Consumers who seek to be “part of something” or to be recognized for a characteristic they have in common with others have been drawn to credit unions founded around like principles.

With positive credit union growth during the past five consecutive quarters—during a time of great uncertainty for financial institutions and the U.S. economy at large—it’s clear the altruistic nature of credit unions is giving them an edge.

The competitive forces in the financial marketplace, however, are signi­ficant. Credit unions are being chal­lenged by community banks, check-cashing outlets, and even entities such as Google, PayPal, and Walmart.

Credit unions’ tradition of building community—through both a high level of member service and deep support of their home markets—is only one of many factors in members’ selection or retention of their credit unions. Equally important are innovation, access to a broad portfolio of services, and the ability to interact using the same technologies that have become pervasive in their relationships with other businesses and organizations.

How can credit unions leverage their strengths to compete in today’s marketplace and continue to thrive in the future? The key is to provide a mix of services and interfaces that appeal to members and prospective members across all generations.

For many credit unions, achieving this kind of mix will mean thinking differently about how they integrate delivery channels and partner with service providers. It also will mean a renewed focus on delivering on credit unions’ mission and core values.

Historically, that mission has centered around service. And while credit unions’ traditional approach to service will continue to appeal to consumers, the way members and potential members of the future define service likely will be a departure from the expectations that have shaped today’s institutions.

Consumers have grown accustomed to speedy delivery of information and access to transactions via powerful platforms with extensive functionality.

Today’s consumers can purchase from retailers online and pick up purchased items from brick-and-mortar locations at their convenience. Those same consumers can reserve tables at restaurants and even “get in line” for haircuts through simple mobile applications. Consumers are beginning to demand the same types of access and flexibility from all aspects of their lives, including their banking.

One of the biggest challenges facing credit unions today is balancing this demand for anytime/anywhere service with a continuing need for the branch environment. This dichotomy of consumers today is unprecedented, and their personal and generational preferences are as diverse as they’ve ever been.

While baby boomers currently are the most significant member base for many credit unions, the future is coming—and fast. Millennials or Generation Y—young consumers ages 18 to 32—are becoming an increasingly influential consumer market segment. Experts predict that by 2017, millennials will have
the most spending power of all the generations.

How can credit unions meet the challenge of serving these diverse consumer segments and remain viable in the future? By preparing to align their mission of service with the expectations of members they’ll serve tomorrow.

During the past several months, Diebold has visited with credit unions around the country to help them begin to articulate their strategies for transforming their branches and delivery channels—so they can continue their mission of service.

At the same time that the charge to meet the needs of diverse consumer groups is weighing heavily on our credit union partners, they’re also focused on continuing to deliver value to existing members—by providing in-demand banking products and competitive rates. Not surprisingly, they feel pressure to increase revenue while driving down expenses.

The good news: A focus on transforming branch channels can enable credit unions to simultaneously address changing member dynamics and create a more efficient operation to help drive value.

Channel transformation must be personalized to meet the needs of each credit union. Regardless of a credit union’s specific needs, how­ever, the philosophy remains the same. It’s about:

Molding branch and channel design and operations to best enhance the member experience, drive efficiencies, strengthen security, and improve sales effectiveness; and

►Offering transactions in the places and formats members most want to access them, while providing delivery channel variety and service excellence to meet the needs of diverse groups of consumers.

Banking channels, themselves, must be compatible with each other, as well. Where new technology, products, and services appear, institutions need to overcome complexity and demonstrate ease of use—or adapt processes to ensure usability. As consumers recognize the benefits and compatibilities of new channel options, they’ll increase acceptance and use of those options.

Here are five critical steps in transforming any branch to align the credit union service mission with the dynamic and changing needs of members:

1. Define a strategy for determining how each branch fits into the multichannel approach integral to future success. Within this strategy, consider how your credit union will leverage delivery channels to provide the optimal member experience.

2. Assess your performance among specific member demographics, in terms of delivery to meet member expectations and to ensure efficient operations.

3. Develop a roadmap that will help optimize transaction migration to shifting delivery channels, mitigate risk, enhance member experiences, and increase sales effectiveness.

4. Implement solutions that will create a bridge between the members of today and the members of the future.

5. Monitor improvement in meeting both your credit union’s business goals and members’ needs.

The challenges facing today’s credit unions can seem daunting. Fortunate­ly, you don’t have to meet those challenges alone. Partners,
vendors, and fellow credit unions can assist in your credit union’s growth and success.

Continued success, however, will require better leverage of not only your credit union’s strengths, but also those of your partners. Strong partnerships with service and technology providers can help your credit union gain valuable insight into members and prospective members.

Work with trusted partners to:

Provide services that expand credit union resources; and

Find innovative ways to invest in and implement new technologies.

Looking to the future, collaboration—among delivery channels and between credit unions and members—will be critical to ensuring your credit union remains competitive.

Credit unions have a long and storied tradition of service—a tradition that will continue to form the foundation for success well into the future.

Credit unions can continue to thrive for generations to come by aligning their mission with consumers’ evolving needs, while maintaining a focus on building value for members.

JOHN DEIGNAN is vice president/chief marketing officer of Diebold Inc.