“Customer engagement is a strong predictor of—and driver of—relationship strength.”
That’s the conclusion reached by Cornerstone Advisors after doing a comprehensive study of credit unions. Unfortunately, Cornerstone also reached the conclusion that credit unions often struggle with engagement in ways that impede member acquisition.
For instance, 15 percent of checking account applications in 2019 were submitted to credit unions. Big banks, by contrast, received 55 percent of applications that year, and the percentage topped 60 percent in 2020. Regional, community, and digital banks comprised the remaining 30 percent.
Why are big banks doing so much better at getting people to open their first checking account or a secondary account? It’s largely because of digital engagement efforts. Simply put, big banks have a larger digital footprint, which they leverage to acquire new customers and expand their relationships with existing customers. Typically, the credit union digital footprint is smaller, and it results in a lower share of new acquisitions.
Unfortunately, this disparity will get worse: digital applications for checking accounts exceeded in-person applications for the first time in mid-2019, and the gap has continued to widen since then. By Q2 of 2020, nearly two-thirds of all applications came from an online or mobile source, and close to three-fourths of all secondary checking applications (an important indicator of member engagement) arrived through digital channels. Without question, the pandemic kept many customers out of the branch, but surveys show they prefer the digital and mobile experience irrespective of any public health concerns.
Today’s consumers expect a seamless digital experience as the centerpiece of engagement from every industry, including financial services. Credit unions must acknowledge and act upon this fact – and use it to their advantage.
The keys to customer engagement already exist at credit unions
The first step for credit unions is also the easiest: offer digital experiences. Many credit unions have a small digital footprint, in part because they’ve historically been more inclined to emphasize the in-branch experience. They need to overcome that line of thinking before fully engaging the imperative to deliver digital experiences competitive with the big banks.
This isn’t to say that credit unions should imitate what big banks offer in terms of digital tools or attempt to engage consumers in the same way. Arguably, it’s a doomed strategy to compete directly against the financial services’ heavyweights because credit unions have so much ground to make up. But credit unions can compete in another way: by offering something uniquely valuable and consistent with the credit union mission to grow the member’s ability to manage their financial well-being.
Credit unions distinguish themselves with superior interest rates, generous rewards programs, and personalized financial management advice and tools. They can continue to stand apart from big banks by leveraging the massive amounts of data at their disposal, to the mutual benefit of both members and the credit union.
Credit unions know how their members spend, borrow, and engage with banking services, among countless other insights about their financial lives. What separates the credit union from banks is their willingness to share these insights with members. Those insights are invaluable to engagement because they reveal how people in 2021 actually use their money and, by extension, how credit unions fit into those patterns of behavior. As credit unions search for novel ways to offer digital banking services, from mobile checking account creation to specialized perks programs, data will animate the entire effort.
Or at least it should. When credit unions devise ways to engage new members and re-engage existing ones, they can guess at what measures to take or, more likely, they will rely on data-driven insights to guide their strategy. It’s an easy choice, especially when so much depends on making the right moves quickly so that big banks don’t consolidate even more members into their ecosystems. The opportunity to deliver a superior digital experience then follows by sharing those insights with members.
ibi, a TIBCO company, helps credit unions turn data into the fuel for member engagement, first by integrating all data sources and ensuring its integrity, then by applying powerful analytics that return accessible, actionable ideas. Big banks may have a size advantage, but the right data-driven approach evens the playing field.
What ideas are waiting for your attention inside the member data you already have? Work with ibi to find out. Request a demo today.