Leveraging trust: The strategic edge for financial institutions in digital investing

Editor's Note: CUInsight is hosting a free webinar Wednesday, February 19 titled, “Building the best: Digital investing that serves you and your members". We hope you’ll join us! Register here.

The landscape of financial services is undergoing a rewarding transformation, with digital innovation opening doors to unprecedented possibilities. As member preferences continue to evolve towards online convenience, personalization, and efficiency, credit unions can leverage their inherent trustworthiness to become a pivotal asset to members. This trust, built over years of reliable service, positions credit unions uniquely in the competitive digital investing domain.

Trust is the bedrock of financial relationships, giving credit unions a strategic advantage over fintech newcomers due to their established reputations for security and reliability. This inherent trust positions them as ideal bridges to the digital investing world, providing a safe transition for members exploring new financial technologies. Leveraging this trust, they can seamlessly integrate digital investment opportunities into their reliable frameworks, enhancing member loyalty and ensuring a secure, stable financial future. This strategic use of trust not only retains the credit union’s relevance but also fortifies their leadership in a finance era that values innovation alongside safety and stability. Here’s how credit unions can capitalize and enhance this trust to meet the demands of contemporary investors and secure their place in the future of finance.

In the current financial landscape, a significant trend has emerged: a majority of modern members are gravitating towards investments, yet they predominantly engage with third-party apps for this purpose. A revealing study by InvestiFi highlights that a significant number of investors are already using popular third-party apps like Cashapp (36%), Fidelity (18%), and Robinhood (16%) to manage their investments.

This situation presents a golden opportunity for credit unions. They have the chance to recapture their members and their deposits by adopting a digital investing solution. By enabling members to seamlessly invest in securities and cryptocurrencies through the familiar and trusted online banking platforms, credit unions can capitalize on their existing member relationships. This strategic move not only brings members into a safe and secure financial ecosystem but also reinforces their reliance and confidence in their primary financial institution, thereby strengthening the bond between consumers and their credit unions.

A thoughtful approach to financial literacy and education can transform the relationship between credit unions and their members. In InvestiFi’s latest market research, it was revealed that 4 out of the top 5 educational resources investors are using are not credible. By offering clear, accessible financial education surrounding digital investing—such as workshops, online FAQs, and advisory services—credit unions can address the knowledge gap in modern investing. Positioning themselves as a primary source of financial understanding not only builds further trust but also cultivates a more informed investor base.

Digital investing platforms, through data analytics, can provide personalized investment recommendations that cater to individual goals and risk preferences, showcasing a credit union's commitment to its members’ unique financial paths. This personalization builds trust and captures those who might otherwise seek advice from independent sources due to traditional barriers like the typical $25,000 minimum investment required to access personal advisors in the United States. By offering tailored advice, potentially via robo-advisors or expert teams, and lowering entry barriers, these platforms can engage a broader audience, filling the guidance gap for those interested in investing but previously excluded

By not incorporating direct investment options within their online banking platforms, credit unions are inadvertently steering members towards third-party apps like Robinhood or Fidelity. Despite growing security concerns and occasional difficulties in fund access, these apps continue to attract a diverse investor demographic. Members are diversifying their portfolios through stocks, mutual funds, ETFs, cryptocurrencies, and more, via these external platforms.

In this climate of heightened sensitivity to online security and financial fraud, it is essential for credit unions to spotlight and fortify the safeguards in place for members' data and assets. Openly sharing information about stringent security protocols, encrypted transactions, and dedicated efforts in fraud prevention can provide members with the confidence that their financial well-being is of the utmost importance, thus instilling a sense of trust and loyalty in their digital operations.

In the path toward digital transformation, credit unions can leverage trust to stand out as top choices for investors. By offering integrated services, educational support, and personalized experiences backed by rigorous security measures, credit unions can strengthen their positions as trusted leaders in the evolving arena of digital investing. This strategic use of trust not only attracts new members but also retains existing ones, ensuring these institutions remain at the forefront of the financial industry as it shifts increasingly towards digital solutions.

The transition to digital investing represents not just a change in technology but an opportunity to redefine the essence of member relationships. Trust, the most enduring currency in the financial world, empowers institutions to navigate the digital landscape with confidence. By prioritizing trust in every initiative, banks and credit unions can assure their members that their journey into digital investing is in safe, reliable hands. In embracing this trust-centric approach, credit unions open the door to growth, loyalty, and a sustainable future in the digital age of investing.

Don’t forget to join CUInsight and InvestiFi for our free webinar titled, “Building the best: Digital investing that serves you and your members", on Wednesday, February 19. Register yourself and a colleague here.