Ask Millennials and Gen Z’s the last time they set foot in a physical credit union, and prepare yourself for the blank stares. “You mean an actual bank?” they ask with confusion. “Not an app?”
In today’s world, banking is clearly changing. Gone are the days of needing to set foot in a brick-and-mortar location for all banking needs. Here to stay are new tools to make managing money more convenient, more time efficient, and more mobile. Today’s consumers are more loyal to cards than banks, and more committed to apps than tellers. Easy ATM access, free mobile checking accounts, robust card reward programs, and easy to navigate apps are now becoming priorities for many consumers. And, with competition between card issuers, new and better benefits are sure to follow.
These radical shifts are having a significant impact on credit unions – and not always in a positive way. Many credit unions have fallen behind in adapting to new consumer habits and trends, especially in the context of using new technology to strengthen customer relationships. Rather than embracing changing consumer preferences and switching to new systems, some credit unions have maintained an outdated status quo. Old habits, it seems, really do die hard.
There is an even bigger problem. If a credit union decides to offer card service but doesn’t have the bandwidth to provide service on the card, they often cede control of the customer relationship to the card issuer, usually a large bank, or directly with a credit card company. It’s easy to spot the problem and the danger. Credit unions who do not provide card member service, are giving away control of the customer relationship, a relationship that is increasingly tied to card use, to an outside company. The corollary would be to put the name of your credit union on a branch, then hiring someone unfamiliar with banking to work behind the teller window.
And make no mistake. No consumer in 2018 will put up with bad customer service. They will churn, and then they are lost forever. The situation isn’t fair. Credit unions are often blamed for poor customer service provided by credit card companies or big banks, even if they aren’t the ones in control of the card. Not fair, to be sure, but absolutely a reality in 2018.
Clearly, the stakes are high. Revenue is on the line. Industry competitiveness is on the line.
But credit unions shouldn’t despair. They have an inherent advantage.
Credit unions are designed to help and serve communities. Customer service is baked into the very DNA of credit unions. It’s the primary reason credit union membership has been on the increase since the 2008 collapse of the banking industry and the move of millennials into the business world. What needs to happen now is to apply that passion for great customer service into card service. It’s difficult but vital.
It all comes down to a shift in priorities. A new focus on providing exceptional customer service in card services that is both personalized and efficient will give credit unions opportunities to distinguish themselves from big banks by showing that they truly value customer loyalty. At the end of the day, consumers just want their questions and concerns addressed in a kind, timely manner. In providing top notch service, credit unions will amass repeat customers and will gain a competitive advantage over big banks. Service providers and supporting tools that help credit unions manage their customer service will be invaluable here.
Additionally, credit unions need to take advantage of their mandate to enrich their communities and design card reward programs tailored to each community. For example, offering reward programs that members can use to donate to cherished local non-profits of their choice as a way to deepen the member’s connection to the credit union.
In the past, credit unions have been slow to adopt new card related technologies. They have been ‘fast followers.’ This needs to end. Once new technologies are available, they must be implemented quickly. It’s the expectation of new generations that new technologies quickly become old technologies. Fast following is over. Again, seek out vendors and partners that will help close the technology gap.
With these simple adjustments, credit unions will become competitive once again. They will connect with the next generation by embracing new forms of technology and money management. They will improve their customer service, by taking back control from big banks and delivering results that will please customers and make them loyal to the credit union. And last but not least, they will increase profitability.
Behold, a win-win scenario.