Digital Only Banks Rising

Digital only banks vs credit unions from cu 2.0

New research out of Juniper smacks most credit union leaders in the face. That’s because 50% of us now say we would consider switching to a digital-only bank. Indeed, many households already are actively contemplating a move to a digital-only bank.

Face this reality: Very soon it will be one whole year in which many of us have not set foot in a branch. And you know what? We have satisfactorily done our banking despite that abstinence.

Many, the Juniper survey says, now believe there are no compelling reasons to want to go back to in-branch banking when the pandemic threat passes—which, by the way, won’t be until year-end 2021 (and maybe, if the variants prove hardy, longer than that). Some have deluded themselves in thinking that a day is coming, and soon, when, click, a switch is thrown and suddenly, as in a Twilight Zone-style slice of life, we are thrust back into our 2019 lifestyle… which for many credit union executives means in-branch. It ain’t happening that way.

First off, the throwing of the switch is a long time away and, secondly, in the many months we have coped with the pandemic, we have learned new habits and we like many of them. It’s not just digital banking. Many—myself included—think much business travel will never come back. Digital, contactless ways of doing many things just are better, cheaper, faster and we will stick with them even when we are no longer under the threat of a deadly virus.


When Members Will Switch and What They Want

TechRadar sums up what will persuade a consumer to switch: “Consumers expect digital banks to offer all the tech trimmings such as dependable online access, user-friendly finance apps, and lots of useful tools for everyday banking. However, the public also wants traditional ‘best buy’ features including sign-up benefits and good rates according to the [Juniper] study results.”

Can you match the offerings of, say, Capital One 360—where the motto is no minimums, no fees, no worries? Or Ally, where the promise is “We’re making banking smarter and simpler while serving our communities. We value and encourage the mantra of working better together”?


Can You Match T-Mobile’s Banking Perks?

And then there is the T-Mobile banking services suite, covered at length in the CU 2.0 blog in January. Their offer is FDIC insured through Customers Bank in Phoenixville, PA and it offers:

  • 4% Annual Percentage Yield paid on checking balances.
  • No account fees.
  • 55k fee-free ATMs (the Allpoint network).

Of course, there’s fine print. The 4% only applies to the first $3000. It’s 1% after that. But what do you pay on share draft accounts?


The Fight Is Now

The game is on and the survival of many credit unions is at stake. How to stay in the game? Listen to what members say they want. Good digital banking, Good remote customer service (via multiple channels). Good rates on both deposits and loans.

Look, my primary financial institution is Affinity Federal Credit Union (with over 20 branches). Can you guess how many branches I have been in and when the last visit was? The correct answers are none and never.

And yet I am pleased with Affinity as (in effect) a digital-only financial institution that is 2,300 miles removed from where I live.

The distance doesn’t bother me. What matters is that I can do what I want to do digitally (and, rarely, via voice telephony).

Can your members say likewise?

If they cannot, you are in trouble. Big trouble.

Digital banks are circling your members and more of them like what they are hearing. Fight back.

Or surrender.

Either way, digital banking is winning. Either yours or a digital-only bank. That much is known.

What you do not know is if you are in the winner’s circle. Or not.

The answer hinges on the actions you take now.


Resources for Credit Unions

Want to see how you can transform your credit union? Take it from legacy systems to a digital powerhouse?

Check out our new Checking 2.0 Guide. It outlines the limitations of current share draft accounts and provides a pathway toward a better, subscription-based future.

Or check out our free ebooks, white papers, and reports on our growing CU Resource Hub!

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