The future of digital banking: 5 trends shaping the member loyalty race

If you notice fewer people opening the door to your brick-and-mortar credit union branch, your eyes aren’t deceiving you. The future of banking is riding around in pockets and purses. According to a survey conducted by Forbes, over half of Americans prefer to access their accounts via a mobile app or online, and only 29% bank in branches.

This migration from face-to-face contact to taps and swipes on a mobile phone is to be expected but can’t be ignored. Traditional systems are bulky and outdated, frustrating both members and employees. The future of credit unions relies on adapting member-first, relationship-based philosophies to a mobile age, using the latest advances in digital technology.

McKinsey conducted a study that found credit union members perceive more value from their credit union. Among those whose primary financial institution is a credit union, 57 percent said they see credit unions as providing extremely good value, compared with 46 percent of customers of the biggest banks and 44 percent of customers of smaller banks. This presents a big opportunity for credit unions seeking to attract younger members. While credit unions are generally highly perceived as providing value, service, and low fees, which is a strong foundation for succeeding with all generations, younger consumers might require a more targeted approach. Additionally, credit unions will need to consider how to make the best use of their resources to compete effectively with the biggest banks, as these banks are increasingly investing in technology to attract and retain younger consumers.

Yet, simply accessing accounts is no longer sufficient. Credit unions must embrace integrated functionality. Below are five technology trends worth implementing, as demanded by your members, or risk fading into irrelevance.

AI assistance

Today’s members are looking for AI that doesn’t feel like AI. Rather than asking for help generating spreadsheets, AI is becoming a financial advisor, for better or worse. Many new budgeting apps harness historical data to create realistic budgets that suit their users’ lifestyles and financial profiles. Cleo, Pierre, and Monarch Money are just a few budgeting apps that have rushed to fill the void left by Quickens Mint, and they all have AI as their engines.

Adding an AI component to your mobile banking app can guide users to more robust savings plans and additional product offerings like CDs or investment accounts. AI-powered chatbots can also create a 24/7 branded presence that offers a lifeline until business hours begin. With intuitive UX, you can make a personalized experience that doesn’t feel like AI.

Digital wallets and mobile payment platforms

According to a survey by Forbes Advisor on digital wallets, 53% of consumers say they use digital wallets more often than traditional payment methods. For many people, cash is becoming less common, largely due to the convenience of mobile payment apps. Integrating platforms like Zelle offer users flexible ways to make transactions without compromising security. Incorporating the next generation of digital wallets can help keep member transactions within your digital platform and further solidify their loyalty to the credit union.

Biometrics

Biometric technology is rapidly becoming a key component of digital banking. According to Mordor Intelligence, biometric credit and debit cards are poised to become a $117.7 billion industry by 2029.

Biometrics uses various biomarkers to authenticate user identities, such as fingerprints, facial recognition, voice recognition, or iris scans. The most common use now is facial recognition for account access, but the industry is diversifying rapidly. This tech has the potential to cut down on fraud, create quicker and more secure transactions, and gather insightful data that can help personalize product recommendations.

Digital account opening

America’s Credit Unions (formerly CUNA) has highlighted several key reasons why digital account opening is in high demand among credit union members. According to research, the convenience and efficiency of digital account opening processes are significant factors for members who increasingly expect seamless digital experiences that allow them to open and manage accounts without the need to visit a physical branch.

America’s Credit Unions also notes that the demand for digital services has been driven by the broader trend of digital transformation across the financial industry. Credit union members, like other consumers, have become accustomed to the speed and accessibility of digital services in other areas of their lives and now expect the same from their financial institutions.

America’s Credit Unions research and reports suggest that providing robust digital services, including account opening, is crucial for credit unions to remain competitive and meet member expectations. The emphasis on digital solutions aligns with broader industry trends and the need for credit unions to innovate to enhance member satisfaction and loyalty.

Personalized and contextual banking

The key to implementing personalized and contextual banking that focuses on a unique member experience lies in the data. Using data analytics to gain insights into member behavior and preferences is not a new concept, but more credit unions are embracing this strategy to create and communicate tailored financial products and services, as well as advice based on individual needs and preferences. Contextual experiences, driven by data analytics and real-time insights, allow credit unions to deliver relevant and timely services, improving overall member engagement. This shift is crucial for credit unions to stay competitive, especially in the digital age where convenience and customization are key.

Core and digital banking suites offer modular solutions that adapt to emerging technologies. The platform provides a user-friendly experience for both credit union employees and members, with personalized functionality for various tasks, from account opening to loan applications.

This modular approach allows credit unions to choose the features most relevant to their members. Options include educational resources, mobile deposit, peer-to-peer transfers, personalized alerts, and more. All of these features are integrated into a platform designed for ease of use.

If you’re ready to join the race for member loyalty through digital transformation, read the first in our whitepaper series, “Beyond Digital First”. Learn more about VisiFI’s digital banking suite today at www.visifi.com.