Last week we covered ten of the 21 things credit unions need to be thinking about in the coming years. This week, we’ll be discussing those last 11 items and a few ways to start getting ahead of the competition. So, without further ado…
11. Change in lifestyles
Member lifestyles used to follow a very typical pattern: school, college, car, marriage, house, kids, vacation/savings, retirement, etc. Credit unions could market to these members and offer services based on age and stage of life these members were in. However, younger generations aren’t following these strict guidelines anymore. Many are waiting to get married, delaying having kids, renting instead of buying, and spending more money on vacations and experiences than diamond rings or houses.
Many financial institutions are now offering new products to serve these members. For example, some have renter’s loans, for those members that aren’t ready or wanting to buy and own a home. Don’t expect future generations to change their lifestyle to fit your services, adapt your services to fit their needs.
12. Auto lending
The process of buying a car is changing. Going to a dealer, finding a car, negotiating price, and submitting loan paperwork isn’t quite standard anymore. With the internet and online retailers, the dealer comes to members now. Cars can be bought from dealers across the country and shipped to them before they even see it in person. Facebook Marketplace offers cars from private sellers and dealers alike.
Credit unions need to start teaming up with these companies and services to make getting auto loans even easier for their members. If you’re making it a hassle for members to get a loan through any means other than walking into a dealership, they’re going to turn elsewhere.
13. The future of branches
With contactless and self services now the norm, most members now only go to branches for a specific need, not regular transactions. This means that credit unions need to find ways to innovate with their branches. Don’t waste space on huge empty lobbies made to hold long lines and dozens of members waiting for a teller.
Renovate your space. Offer Interactive Teller Machines (ITMs) to promote self service or think outside the box. Some credit unions have a cube that can be put inside other facilities and is easily expandable. Another credit union put a bakery, coffee shops, and other food and retailers in their lobby. Others just have ITMs in a pod, etc. Standard branches are going out the door and empty lobbies are just wasting space, they don’t offer anything to the member (remember, it’s about the experience).
14. Think about your staff
We’ve talked a lot about members so far, but don’t forget about your employees. Have you checked in on your staff? How are they doing? Statistics show that more than 60% of credit union employees are struggling financially, how are you caring for them? If credit unions don’t support their employees, members may doubt they’re going to care for them. Furthermore, employees may feel less motivated if they don’t feel like their employer is invested in them.
Take the time to show your staff your genuinely interested in their well being. For example, Spokane Teachers Credit Union made headlines by closing all their locations and opening later in the day to give staff members a break. They used the time to meet with their employees, discuss how they were doing, and show they care. Have you taken time since the start of the pandemic to meet with your staff and check in?
15. Holes in business continuity plans
The pandemic exposed how weak some credit union’s business continuity plans were, especially in terms of having boiler plate plans and with handling vendor relationships. No one expected the pandemic to happen, so credit unions thought they could skate by with basic plans that hadn’t been practiced or well-detailed. If anything, let the pandemic be a reminder that disasters are rarely planned for and expected. Get to making a well organized and practiced business continuity plan.
As technology trends such as contactless payments, online banking, and self-service grow, we may see members who want to use voice apps to interact with their credit unions and make payments. Amazon already offers consumers the option of purchasing goods via Alexa, and other standard transactions, such as making bill payments, sending money to friends, and checking account balances is already in use with Google Home, Siri, and Alexa, etc.
If your credit union isn’t discussing this in the next year, you’re already falling behind banks and other institutions in terms of member service, contactless payments, and overall experience. Having this technology right now may not be critical, but don’t want till it’s commonplace and your members start to feel like their lacking services by banking with you to finally catch up.
17. Returning to the workplace
So far, we’ve discussed your members’ desire to doing banking digitally and virtually, but don’t assume that’s exclusive to them, your employees will want it too. The last year has proven that working remotely, even for credit unions, can be done well and successfully. While it may not be feasible to keep that up forever, as people go back into the office they are going to want a hybrid environment. Some employees are even leaving their companies as they try to migrate them back to the office, charmed with the work from home lifestyle.
Remote work is not a rare commodity anymore, it’s here to stay and will be a standard expectation from now on. Future employees may turn your down in favor of places that offer it, and allowing employees that hybrid environment is another way to expand on #14 and show you care. However, it needs to be well planned and constructed. What’s your current remote plan? Do you have one in place?
18. Checking is no longer the bedrock
According to Brian Turner, credit unions and other financial institutions should not depend on checking accounts as these will not pay interest. Turner predicts that in the coming years, financial institutions will “maintain the rock-bottom rates or do away with the account altogether.” Credit unions can continue to add and expand services for these accounts such as turning debit cards on/off through the app, but experts argue that this is a wasted effort, attempting to modernize a service on the brink of extinction.
Forbes notes that “the successor to the checking account will have: 1. universal payments (B2C, P2P, bill pay) capability; 2. rewards optimization; 3. account-to-account money movement; 4. receipt management; and 5. value-added service provisioning.” Currently, no financial institution offers these all in one bundle, but experts are sure this is the future. Don’t get content with your checking accounts, now is the time to try something new.
19. Buy now, pay later
Consumers love online shopping, especially with free two day shipping or even same day delivery. Why get off the couch when you can get what you need with one click? Going along with the online trend, a new form of payment called Buy Now, Pay Later offers consumers the opportunity to buy the product they want and pay it back in small amounts over a few months. This is an increasingly popular system of payment, but it can be dangerous to members. Credit unions don’t get interchange interest or a report, so you’re unaware if members are going into debt with these types of payments.
Consider reaching out to you members about this. Send an email letting them know about the potential risks of these types of payments or offer services that can help. Remind them you’re working for their financial success and if they’re getting behind on payments, you’re here to help.
20. How to plan for the future? You can’t.
We’re all guilty of trying to plan for the future. We stare at the data and try to use it to predict how the next five to ten year will go. However, chances are it won’t turn out how you plan it. Take the pandemic for instance, as we mentioned in the beginning, it triggered changes and developments in the industry we didn’t predict for another decade.
Realistically, you should only be 150 days to a year out in your planning. Developed detailed and specific plans and work on them everyday, it will serve you much better than hoping something you predicted seven years from now will pay off. Data looks backwards, not towards the future, so take it with a grain of salt.
21. Get local
Finally, it’s time for credit unions to get back to their roots and the seven cooperative principles. Build local relationships and be active participants in your communities. Sponsor high school events, offer first responder loans, or high school graduation events. During the pandemic, one credit union rented out a local drive in theater, which sold out immediately. Another gave back PPP loan fees and let the members decide what charity to donate them to. Others offered money back for eating locally and supporting restaurants during the pandemic.
Don’t let your concern for community be a marketing ploy. Take the time and effort to be active and involved, and your members will know you care and trust your credit union more.
One step at a time
Overall, Diekmann stressed that credit unions should pay more attention to creating experiences for their members, not services. They also shouldn’t assume they have the loyalty of their members and that they will default to their credit union. FinTechs are growing and offering easy and appealing apps, and as numbers six and seven pointed out, banks are overtaking us in the member service department. If the credit union experience is not transparent and easy, members will leave. It’s time to up our game (and our services).
Maybe after reading all of these, you’re feeling a bit overwhelmed. After all, what you once had a decade to catch up on seems to be happening now or in the near future. Go through Diekmann’s list and determine what you’ve done, what you’re working on, and what you haven’t even thought about yet. Make them goals for your credit union in the coming years and develop detailed plans to achieve these goals. If you’re waiting until their all on your doorstep to begin changing, you’ll be even more overwhelmed and fall behind the competition.