The current on-demand economy, which is driven by the wants and expectations of consumers, has completely disrupted the financial services industry. With a plethora of financial technology (fintech) options to choose from, consumers no longer need to rely on their bank or credit union to meet all their financial needs. Consumers have lots of options, and they’re using them. This means that if credit unions want to stay relevant and competitive both now and, in the future, it’s time to assemble a digital strategy that will provide the kind of seamless digital experience consumers want and expect.
Before we dive into the components of a good digital strategy, let’s remind ourselves in a little more detail what consumers want and expect. It will come as no surprise that consumers want/expect:
Ease of use. Most fintech has mastered the art of easy-to-use, intuitive user experiences. The traditional financial services marketplace needs to catch up.
Options that meet their needs. Members' needs are also constantly evolving. We’re now in a subscription-based economy (i.e., Netflix replaced Blockbuster), as well as an on-demand economy.
24/7/365 access. Convenience is king.
Trustworthiness. They want to be able to trust the technology (i.e., the automated process) they’re interacting with.
Clarity: They want to know where they are in the transaction process or when they’re opening a new account and how they’re going to move to the next step.
Self-service. And the more of it, the better. A DIY approach throughout all their interactions is preferable, not just during the onboarding process.
Information that helps them make better financial decisions. Consumers want the appropriate product and subject-matter expertise to help them reach their financial goals. We need to be consultative and strategic on the appropriate product alignment, providing them with the right solution at the right time.
Because consumers (i.e., your members) are the driving force behind the current on-demand economy, an intuitive user experience should be the ultimate goal with any digital strategy.
This might sound contradictory, but this point deserves emphasis because it’s easy to get caught up in the trending technologies and how “cool” they are. The danger is when those technologies become the primary focus. What we need to remember is that an effective digital strategy is more about responding to the user experience and meeting the consumer (i.e., the member) where they are rather than providing the latest and greatest fintech.
At the end of the day, your business strategy includes a digital strategy; any technology implemented/offered to members is there to serve the overall business goals.
Luckily for us, credit unions have always focused on providing outstanding member experiences. That means the business strategy and the focus of what the credit union is trying to accomplish is already well-decided and well underway. What we need to look at is how to meet this next generation of digital change that’s already upon us.
And since it all begins and ends with the member experience, let’s look at five ways to begin harnessing a digital strategy.
Data access
Data analytics
Omni-channel delivery
User experience
Imagination (fintech)
The first three – data access, data analytics, omni-channel delivery – are about providing the information. For example, what is the information that is required to make decisions; how do we analyze that data to make better decisions; and how do we deliver it to the end user for them to be able to make use of it?
User experience encompasses what the first three pieces are trying to bring: It’s not enough simply to deliver information, but it’s about the time and place and the nimbleness of the solution that the user/member can use to accomplish what they need to.
Imagination, which is represented by all the creative fintech solutions in the market, is the fifth fundamental. The fintech industry and the creators of its applications/solutions have really understood the member experience and what that means; they’ve been able to bypass a lot of the roadblocks that have kept consumers from accomplishing what they want to quickly and easily.
Data access
Data access is about being able to obtain the information that you require to make decisions. And these fintech solutions track a lot of valuable data. For example, if you have millennials running around the house, you’ve probably noticed that the methods of sharing dollars today are very socially oriented. Take Venmo for instance: Millennials aren’t going to the bank; they’re going to an app, and the app tells them not only how to send money but also what the people are doing with that money or where they happen to be. This type of fintech has made money movement a social experience for users; it’s not just about pushing dollars back and forth.
Having this information and being able to use that information to decide where people are, what they need, and what they’re trying to accomplish will really help your credit union better target the use of the data and the expectation of the fintech application itself.
It’s also important to remember that the data is not simply for accumulation. It’s to be used for marketing to help you answer questions like the following:
How do I target users at the point that they need to make something happen?
How do I get information in front of them that leads them to our website and, ultimately, have them become members?
What are the products and services that we need to offer that will allow the user to make use of those capabilities to get a loan, make an investment, send money for pizza back and forth, etc.?
Data analytics
Once we have the data, it’s time to analyze and make use of it. Decision-making is fueled by data, and the analytics of that data will help us to better understand our members’ needs. With effective data we find ourselves needing to identify information, making it actionable, and being able to manage effective digital solutions so that we can become an advocate for our members. A few phases of data analytics include:
Gather information, then categorize and personify your findings.
Continue to gather/monitor information about the situation and events to help you determine an effective offering.
Focus on the options for specific solutions based on the individual’s behavioral data that you’ve already observed/monitored.
Prescribe solutions based on knowledge. Member satisfaction is obtained when we are no longer simply analyzing tendencies.
Omni-channel delivery
It’s no secret that consumers are growing more and more comfortable interacting with a variety of channels and that digital convenience and access is driving that growth. A newer aspect is the “omni-digital banking” type of user. This kind of user can be “online dominant,” “mobile dominant” or a hybrid of both.
Whether you have members who want to take advantage of everything in the mobile experience or prefer a combination of human interaction and digital self-service, it’s important to realize the opportunities to leverage techniques and technology to ensure that every member is digitally engaged to the degree they decide to be.
It also bears mentioning that there can be multiple applications for every Fintech solution. Take the growth of P2P (person-to-person) payments for example. Zelle, Venmo, Square Cash, ApplePay, Facebook and more. Whether consumers are using P2P through their financial institution’s digital wallet or through a payment services app, there’s no shortage of options for consumers to choose from.
With so many channels/delivery options, it’s important to your financial institution to ask questions like the following:
How do I build additional value beyond P2P payments?
How do I leverage the data that’s being performed within that transaction to create more social engagement?
How is that going to translate to retention or growth and revenue for my financial institution?
User experience
We’ve already discussed the importance of the user experience quite a bit, so we’ll just briefly touch on one important aspect of it here: the personalization of communication. Consumers have increasing expectations for digital engagement with social collaboration and personalized interactions. And the better you know your members, the better you will be able to personalize those interactions.
If your financial institution is currently doing member/customer journey mapping, which is an exercise in identifying all the touchpoints your customers have with your institution, then you’re already focused on the behaviors, attributes, and needs of current and potential members. Building and defining that customer “persona” allows you to treat those members in a personalized fashion, and study after study reiterates the importance of this kind of communication. You’re probably already experiencing the importance of personalization within your credit union membership today.
Imagination and fintech
If we blend the words fintech and imagination, we get “finnovation.” There’s an innovative aspect to the user experience we all need to attain to garner the attention of our members and compete with the fintech community. For example, in 2017 a PricewaterhouseCoopers survey reported that, regardless of the instrument or financial service being evaluated—whether it’s payments, banking, insurance, or even asset wealth management—having ease of use and an intuitive product design is the number one factor that will drive retention in comparison to a fintech offer.
Being able to compete on a relevant basis against competitive providers means always listening to increasing member interest in solutions that are:
Easy, simple, transparent, convenient
Consistent across channels
Meeting their needs at the right time in the right place
Varied
Always delivering value
Finnovation (fintech with imagination) will create unique opportunities for credit unions. Analyze those opportunities to enhance digital services offerings to compete (or collaborate) with fintech solutions.