How virtual financial coaching can fuel growth at credit unions
The long-established advantages held by community financial institutions are eroding. Many younger consumers now equate good service with good technology, not people. To create sustainable differentiation, smaller institutions can embrace affordable technology that addresses a growing need among consumers: financial wellness.
Why should a person open an account or apply for a loan with a credit union or community bank? One of the most cited reasons from experts such as NerdWallet and U.S. News is that these institutions have stronger customer service. In 2021, however, the customer service differentiator is debatable.
The days where great service meant short branch lines and a staff that knew the customer’s name are gone. Today, the digitally native Millennial and Generation Z consumers — the largest demographic — define winning service as “leading technology.” Innovations such as cardless ATMs, along with Wells Fargo’s Control Tower dashboard, and Bank of America’s digital assistant Erica trump relationship banking. In fact, for younger generations, calling a customer service number or walking into a branch is “too much effort and forced person-to-person interaction.”
Community banks and credit unions face a systemic scale disadvantage in the technology acquisition race with mega and regional banks that have multibillion-dollar IT and innovation budgets. This disadvantage has fallen more heavily on credit unions. The University of Michigan American Consumer Satisfaction Index (ACSI) has ranked banks ahead of credit unions for the last two years. With branch traffic most likely permanently depressed, credit union’s member service disadvantage will only grow.
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