The annual J. D. Power U.S. Retail Banking Satisfaction Survey is out, and most years that is an occasion for a big yawn among credit union executives. Why? Because the report usually is a scorecard of how the big six banks are faring. And who else cares about that?
But this year is different. This year is the era of Covid-19. It’s a time when, suddenly, across the nation, many financial institutions have shuttered their branches and they are pointing customers and members to digital banking, meaning mobile and online.
J.D. Power sets up the battle line that this shift draws: “Now, as the COVID-19 pandemic places constraints on in-person retail banking and forces customers to increase reliance on digital service channels, banks are facing an important test. According to the J.D. Power 2020 U.S. Retail Banking Satisfaction Study… 52% of retail bank customers classified as branch dependent before the COVID-19 pandemic, and successfully transitioning them to digital—without compromising customer experience—will be critical in the weeks and months ahead.”
“With fewer customers visiting branches, it will be important for retail banks to replace the in-person service they would have provided with personalized services delivered instead through digital channels,” added Paul McAdam, senior director, banking intelligence at J.D. Power.
Read that again. McAdam is in effect saying, go digital or perish.
How is your credit union doing?
The Future Is Digital Transformation
Suddenly, a branch visit may be seen as jeopardizing one’s health—and at some institutions, it just isn’t possible, because they have shuttered all or many of their branches. That has accelerated digital transformation in financial services.
By J. D. Power’s count, 30% of retail banking customers are digital only and don’t use branches. 10% exclusively use branches. 52% use a little of both digital and branch.
Understand, pre-Covid-19, probably your institution was not doing that well with digital and that’s because, per J. D. Power, “Big banks lead midsize and regional banks on digital engagement… Prior to the pandemic, 49% of big bank customers had high levels of digital engagement, compared with 41% of regional bank customers and 36% of midsize bank customers.”
The vast majority of credit unions count as mid-sized or smaller by this measure. Meaning maybe one-third of members at a typical credit union have high levels of digital engagement.
That’s left credit unions to scramble.
The news worsens. In a recent CU 2.0 podcast with Celent analyst Bob Meara, he chided credit unions for putting too much emphasis on face to face, in-branch contact as their primary institutional glue. Furthermore, he predicted that Covid-19 very well may effect lasting changes on how we conduct our financial lives and, for most of us, our interaction with branches could diminish permanently.
The pandemic will end, eventually. Our increased use of digital banking tools won’t.
Your digital offers are becoming the institution’s face.
Does Your Credit Union Prioritize Digital Channels?
How good are your digital offerings? And know that anything less than a B grade probably is not good enough as more members seek to convert more of their banking to digital. Rate yourself honestly and commit to improving wherever needed because less just won’t work now. Or ever again.
Hold your tech vendors accountable and demand quality. Don’t settle. Your members won’t. And trust me, the mega banks have dazzling tech. You need to be competitive or risk losing members to the big institutions.
While you are at this, ask yourself a tough question: do you have online account opening tools—and do they work? Or is the prospective member frequently directed to come to a branch to complete the transaction? And how many ever do? Meara observed in the podcast that a handful of years ago, functional and affordable online account origination tools were in fact not readily available. If you tried and failed, it’s understandable.
But he said today there are plenty of tools, so that’s no longer an excuse.
Now know that J. D. Power’s report offers a fast track to raising members’ digital satisfaction: offer P2P payments. J. D. Power elaborated: “Satisfaction is significantly higher among customers who have linked their bank accounts to digital payment services (e.g., Zelle, Apple Pay, PayPal, Venmo) than among those who have not. Among P2P (person to person) payment providers, direct integration with Zelle generates the highest boost in bank customer satisfaction.”
Sure, Zelle and Apple Pay generally do not work directly with credit unions, but both welcome credit unions that work through designated third parties. In Zelle’s case that includes CO-OP, Fiserv, FIS, and Jack Henry among other resellers.
Similar offer Apple Pay.
How easy is this?
Understand, digital has shifted—abruptly but undeniably—from “nice to have” to “must have” for credit unions. How good your digital banking is now will decide which institutions are standing when the pandemic ends.
In January, many credit union leaders would have scoffed at that statement. Now the savvy ones are asking just one question: how do we get better at digital?
But don’t just ask. Act. That’s a certain path to success in an era of uncertainties.