Physical + Digital = Phygital

digital credit union

Phygital, it is a thing. And, it can be a very important concept in furthering the relevance of a credit union with an increasingly digitally savvy member base. As we walk down this digital transformation path as an industry, we overlook the physical aspect to competing digitally. Now, if you are of the mindset that financial institutions should have columns and vaults and project physical security, this may not be the best article you read today. However, if you are pouring money into competing digitally, this will interest to you because a bottomline message is that even in a 21st century digital world the physical still matters.

A lot.

Some AHA! moments to consider. Have you flown lately? What is your impression when you get on an older United plane with no in-seat video, no Wi-Fi, or no personal device entertainment? Now, what is your impression when you get on a newer United plane? Or a Virgin America plane? It goes beyond them simply having Wi-Fi or PDE. It is the physical appearance of the cabin as well. What does the lighting look like? Is it industrial white lights? Or, is it lights with color, tone, ambiance? You are taking the same flight from LAX to DFW, but it is a completely different experience when the physical appearance of the plane is combined with the digital amenities you need.

Think about first impressions. I tend to make snap judgements when I walk into any type of business. From coffee shops to credit unions to fintech startups, when I enter a building for the first time I immediately decide if this business is tech savvy. And it has a lot to do with the physical appearance. Is the furniture older than I am? Little things too, like the keyboard. Think about that, does your keyboard look the same as it did 20 years ago? No, it does not. It is rounded, cordless, and smaller. Even something as innocuous as a phone can send the wrong message. What does that phone look like? There are a ton of millennials out there buying homes and cars and having kids. These people  don’t even know what a dial tone is, or a busy signal. Many of them have never used a traditional phone. Telling them to dial 9 to get out is a completely foreign concept.

Now, think about your credit union. What do the branches look like? You may have the greatest mobile banking, internet banking, and digital marketing solutions around, but if your branches look like 1982 or 72 or 62 or even 1992, it might be time to update them. Have some secret shopping done. Hire a millennial to walk into your branches and provide feedback. It can be as simple as digital displays and as complex as selling older buildings off and starting over in new branches. For example, do you still have paper brochures in a display for members to grab? Is that really what people are looking for? Does your staff roam freely in the branch or are they confined to a desk with a computer? Enabling the staff to be mobile and digital is a big piece to the Phygital transformation. You cannot expect the members to adopt digital technology if the staff cannot adopt the technology. Each staff member could have a tablet with the capability to teach each member how to use the technology, email or text the member information, open accounts or perform transactions from the entire branch. Telling a member they have to go sit with Suzy Loan Officer or Tommy Teller to do a specific transaction is not exactly confidence inspiring. However, having a staff member with nothing more than a tablet being able to walk the member through every possible thing they could do in the branch is a confidence inspiring  approach.

Have you ever watched an Apple product introduction? Here’s one.  Apple wants to be seen as the digital company.  But it also projects a sleek but appealing physical image. Everything is sleek, contemporary, inviting and if you think anything you see is there by accident, think again.

Nobody is saying that your credit union has to look like an Apple video. But take a lesson from Apple and know that appearances do matter. So do first impressions. It’s a phygital world.

 

Want to know more about digital transformation?

Consumers Say Boo To Your Digital Banking Products – Now What Do You Do?

Wrestling with Your Digital Talent Gap

 

Consumers Say Boo To Your Digital Banking Products – Now What Do You Do? 

By Robert McGarvey 

For Credit Union 2.0 

The press release headline had me at go: “D3 Banking Technology Survey Finds More than Two-Thirds of American Digital Banking Users are Frust.” 

Nah, I didn’t know what “frust” means either.  The Internet tells me a secondary slang meaning is frustrated.   

And, you bet, I too am frustrated with credit union mobile and online banking – and I’m not alone, per D3, and that should definitely worry credit union execs. 

I have accounts at two credit unions. Digital products at both are inferior to Chase, where I also have an account.  If I could have only one account – and if I weren’t a big believer in the credit union movement – it would be with Chase.  I hate to say that. But it’s true and, thankfully, I am not limited to just one account. 

Chase is forever improving its digital products. My credit unions aren’t (and, yes, I know they are locked into their vendors’ upgrade cycles – but why accept that?).   

Five years ago just having mobile banking was good enough.  20 years ago just having online banking, however feeble, was cause for a celebratory press release. In 2018 that definitely is not enough. 

Not even close. 

D3 proves that with its Harris poll that surveyed 1600 digital banking users (who had used it in the past 12 months) and they were quick to vent. Two in three – 68% – expressed frustration with their digital banking experience. 

Count me among them. Yesterday I logged in to change the PIN of my debit card.  No can do in my credit union’s mobile banking app.  I eventually called an automated line and accomplished the task and how 1985 is that? 

Why can’t I do a simple, mechanical task like changing a PIN on a mobile phone – and, really, do you think call centers do a better job of screening out fraudsters? Ask Microsoft co-founder Paul Allen about that.   

Nor is there evidence to suggest doing this via online or mobile banking is inherently riskier than via a telephone call. 

So why can’t I do it? 

A bottomline reality is that in 2018 an increasing number of consumers want – indeed demand – that their mobile banking app and online banking let them do anything they could do in a branch visit. 

D3/Harris did find that there are age differences in expectations about mobile banking – but the differences aren’t as big as you might have hoped for. Said D3: “The survey revealed that digital banking users ages 18-34 are more likely than those ages 55+ to be frustrated with their digital banking experience, as 73% of the younger group indicated that they have been frustrated with their digital banking experience over the past year, compared to only 61% of adults ages 55+.” 

Even tho credit union members skew older, it is safe to assume 6 in 10 of them are dissatisfied with their mobile banking experience. 

For sure, too, members demand a feature rich digital banking experience: “The survey also found that more than half of digital banking users feel it is important for financial institutions to provide mobile deposit (70%), P2P services (66%) and mobile account opening (51%) as part of their digital banking offerings,” relayed D3. 

Here’s the frightening kicker: “32% of digital banking users report that they are willing to leave their current bank or credit union for a better digital experience.” 

That is blunt: one in three members who use digital services say they just may shift financial institutions to get better services. 

Mark Vipond, CEO of D3, observed that that’s the real issue here is “the number of American digital banking users – 32 percent as found in our survey – who are willing to leave their current banking relationship for a better digital experience. As new types of technology continue to be introduced, financial institutions are going to need a strategy built on technology that allows them to innovate and introduce new features and functionality faster than they have to date.” 

That’s the reality. Today consumers benchmark your app and website against Amazon, Netflix, Google and the other top digital services – and, sadly, at all but a handful of financial institutions the digital products are mediocre at best. 

What’s the solution: commit, today, to improving your digital offerings just about daily, certainly weekly.  Word of advice: smart credit unions are committing to continuous improvement of their digital offerings.  The era of a once or twice a year update is over.   

The path to credit union extinction is paved with complacency. 

Particularly with Millennials, credit unions have key positive attributes – they are local, they are community-minded, they generally are intimate scale, and they aren’t “big business.” All good. But will Millennials suffer a poor digital experience to do business with a credit union with bad online and mobile offerings? 

Most credit unions seem to be betting that indeed Millennials will. 

I don’t think they will. 

Do you? 

Mobile Banking Rules – and Where You Still Stumble 

By Robert McGarvey 

For CU 2.0  

New research out of Javelin, sponsored by identity specialist Jumio, makes plain multiple facts and the central one is that digital banking rules and it does so across generations.  It’s not just a Millennial thing anymore. 

Another key takeaway: most financial institutions – eyes on you – stumble in many key places, particularly in deploying mobile banking. This is eroding member loyalty: they will sometimes simply flee to another institution. 

And security concerns continue to be a bother for many users, according to the Javelin research. Despite the fact that generally a mobile banking session over a cellular network is much more secure than one over an online network.  No matter. A lot of users remain very worried about safety and digital banking and the smart institutions are addressing these fears. 

What all this means is that mobile banking – increasingly the channel that matters in banking – is where credit unions have to double down on efforts to compete with the money center banks and the fintechs that continue to nibble at the user base of smaller, legacy institutions (talking about you, Amazon).   

Al Pascual, SVP, Research Director and Head of Fraud & Security at Javelin Research elaborated: “To capitalize on the growing demand for mobile banking as millennials grow in spending power, financial institutions must simplify user experience and address ongoing concerns around security and fraud.” 

Dive deeper into the report and the results can surprise.  For instance, although 76% of Millennials now regularly use digital banking, 77% of Boomers do – and, yep, that says Boomers have greater acceptance of the channel. 

But Millennials are way ahead with mobile banking. 62% use it monthly, compared to 34% of Boomers.  Also, claimed Jumio, “millennials report stronger satisfaction with nearly all aspects of mobile banking, compared to Generation X and Baby Boomers.”  

Millennials definitely have fewer gripes about mobile banking.  25% of them express concerns with the channel, compared to 33% of Gen X and 35% of Boomers. What kinds of concerns? 28% grumble about “hidden fees,” while 53% complain about ease of use. 

The study uncovered valuable findings when it focused on abandonment issues – why do we just close out when midway into a task in a digital banking session?  36% said they did so because “the process [was] taking too long.”  20% complained about authentication “being too time consuming.” 

Waste a consumer’s time – and the consumer is the judge of this, not a cautious credit union manager – and they will blow you off.  Just that fast. 

Here’s the kick in the head: “One-third of consumers respond negatively to their FI after abandoning a mobile banking activity,” reported Jumio. Understand: 7% decided to open an account at another financial institution.  And 13% shared their grumble about the experience with family and friends. 

That’s word of mouth you don’t need. 

In this regard, the Javelin research shows that account opening tools must cater to Millennials, mainly because they are the leading cohort when it comes to adding new accounts and services. Their chief complaint: it takes too long.  The antidote: speed it up. 

And make it easy to complete the tasks on a mobile device. That is becoming a crucial battleground. 

When it comes to authentication, Millennials in particular prefer biometrics, especially eye scans and facial recognition, according to the Javelin data.  Farther down the list are legacy modes such as QR codes.  Very probably institutions that want to stay on the cutting edge of Millennial acceptance need to roll out multiple biometric modalities. 

Another, key piece of advice from the research is: “Put security first (and make sure your customers know it).”   

“But… weave security into the customer experience in smooth, fast, intuitive ways.” 

Don’t make security into hurdles members have to jump – how many routinely forget passwords? – but do let members know that security protocols are always there, always protecting them. They want that reassurance even if they don’t want the hassles of dealing with in your face security challenges (what street did your father live on at age 6?).   

Sift through the Javelin findings and there is much to cheer credit union leaders. There is no way they can compete with money center banks in terms of branches – but they don’t need to.  What a credit union needs is top grade digital experiences, online and mobile, that include easy account opening and build in seamless security that will protect members. 

None of that is easy. 

But it all is doable at credit unions that embrace the digital mandate. 

Wrestling with Your Digital Talent Gap

By Robert McGarvey

For CU 2.0

 

Wake up to a frightening reality: very probably your credit union is falling behind in the race for digital talent and that just may be a sound of impending doom.

Consulting firm CapGemini, working with LinkedIn, recently issued a report on The Digital Talent Gap and the takeaways for credit union executives have to be frightening.

According to CapGemini, six in ten banking executives acknowledge they face a widening talent gap. The report pinpoints banking as a sector where the gap is especially high.

The money center banks, almost certainly, are not pointing to themselves. They are busily hiring top digital talent as they chart their paths into a 21st century where digital is seen at the core of banking.  They see that future and they are preparing for it.

Down a checklist, CapGemini sees less skill than is needed in a range of digital activities that are central to banking today. Included on the list are cybersecurity, mobile apps (where a big skill deficit is cited), data science, and big data (another huge gap).

A lot of what has become core in delivering financial services is now emerging as areas where many, many credit unions and community banks are just not keeping up because they don’t have the talent to stay in the game.

Employees know these realities. According to the survey data, 30% of banking employees believe their skills will be redundant in one to two years. 44% believe their skills will be redundant in four or five years.

That suggests a frightened, anxious workforce.

Employees also express dissatisfaction with trainings offered them by their organization.  45% say they are not helping them attain new skills.  42% say the trainings they attend are “useless and boring.”

Ouch.

Question: does your credit union leadership know their own employees fear their institution is lagging in the race for digital competence – and that they despair over the viability of their own skills?

It gets worse. You just may lose the digital talent you presently have. The CapGemini survey found that “over half of digital talent (55%) say they are willing to move to another organization if they feel their digital skills are stagnating.”

The good news: CapGemini offered concrete suggestions about what organizations need to do to remain players in the race for digital talent.

A suggestion not on the list is blunt: credit unions often will need to find their digital talent through third party vendors and CUSOs.  No shame in that.  At a certain institutional size, the savvy survival strategy is to know where to go outside to help chart the credit union’s digital path.  There still needs be digital skills internally – especially a sharp sensitivity to what matters digitally inside the c-suite.  But a lot of the digital heavy lifting can and should happen through third parties at all but the very largest credit unions.

But even the biggest credit unions need to be sure they are nurturing internal digital talent. And smaller institutions need to know what they can do with the talent they have and they also need to stay watchful of their third party vendors and their talent development efforts.

Just because a CUSO was spot on technologically in 2010 doesn’t mean it has a clue today. Things move very fast in this world.

That’s where the CapGemini suggestions about how to develop digital talent come in.

And step one is Attract Digital Talent where CapGemini points a finger at the institution’s leadership.  Specifically: “Align leadership on a talent strategy and the unique needs of digital talent.”

How does your credit union measure up there?

Does your leadership see the ultimate importance of digital in charting the institution’s future?

The next steps are no easier: “create an environment that prioritizes and rewards learning” and “align leadership on a talent strategy and the unique needs of digital talent.”

Digital warriors go where they are loved and wanted.  It’s that simple.

One more step: “Give digital talent the power to implement change.”

This doesn’t sound easy?

Nope. It all is very hard, especially for small and mid size credit unions.

But the alternative just may be planning to go out of business.

That makes the choice easy.

Rating the Mobile Banking Apps: How Do Credit Unions Fare? 

By Robert McGarvey 

For Credit Union 2.0  

 

The good news for credit unions in this year’s MagnifyMoney survey of mobile banking apps: Many do very, very well, even against money center bank competition. 

The bad news: Mobile banking apps, suggests MagnifyMoney, “have reached middle age.” That means, per MagnifyMoney, “overall, apps haven’t appreciably improved.” They have entered an era of complacency – and, listen up, that may well not be good enough. 

A point not in the MagnifyMoney survey is this: non banks keep buffing their apps, benchmarking themselves not against financial institutions but best in class apps such as Uber, Airbnb, Amazon, and Venmo.  Before patting yourself on the back with congratulations about the quality of your mobile banking app, ask yourself how you stack up against the really good consumer apps that many people spend hours daily using. 

Back to the MagnifyMoney data and the good news for credit unions: according to its survey, “in general, people still rate credit unions apps higher.  Probably unsurprising, as most CU users report a better experience in general. But traditional banks are catching up. 3 of the ten best overall apps are banks or direct banking apps. Last year all but 1 were CUs.” 

Not all is cheery news in the survey. Chew on this: of the 10 worst mobile banking apps, per MagnifyMoney, four are credit unions. On the dishonor roll are VyStar Credit Union, Patelco, Northwest Federal Credit Union, and Tinker Federal Credit Union. 

That means credit unions as a group can only get so giddy about their performance. Some appear to be in the same league as the worst banks. 

But credit unions do score high in the round up of most improved apps.  Among the top 10 are Teachers Federal Credit Union, CEFCU, America First Credit Union, Schoolsfirst, Alliant, and DFCU.  That’s six of ten. 

Among the top 10 most deteriorated apps are three credit unions: Desert Schools, Suncoast, and SECU of Maryland. 

As for the 10 best overall, credit unions on this honor roll include Eastman Credit Union, ESL, Redstone, SEFCU, Wright Patt, and Delta Community, Visions. 

The others in the top 10 are Discover, BBVA Compass, and Capital One. 

How reliable are these ratings? Probably not very but at least this is a start. The issue is that the MagnifyMoney ratings start by sorting out the 50 biggest banks and 50 biggest credit unions, then looking at user ratings for the apps in the two big apps stores (iOS and Android).  As far as that goes, it makes sense but let me ask: how many apps have you reviewed in the apps stores? 

Not many right. 

I scratch my head in trying to remember the last time I reviewed an app in an app store. And whatever it was it was because the app was just terrible.  Or I was angry for other reasons with the provider. 

So I’m unconvinced that app store ratings are the end-all when it comes to deciding the best and worst mobile banking apps. Nonetheless, my advice is to look hard at the top rated credit union apps – and by all means scroll through the actual user comments in the app stores. 

Do likewise for the worst rated. 

Now ask yourself the really hard question: what are we doing right now to keep our app fresh and relevant for a new generation of credit union members? 

What can we do? 

How can we press our vendors to really upgrade the app to help us better serve our membership? 

What do our members really want that they are not presently getting from the mobile app? Ask them if you don’t already know. 

There’s no rest for the weary. This just came in from Bank of America in an email blast to media about upgrades to its mobile banking app: “Express checking account application — With nearly one-quarter of all accounts opened digitally, Bank of America has introduced a new streamlined process for customers to apply for a checking account securely within the app. The enhanced, single-page design populates customer information into the application, simplifying the process.” 

Can you match that? 

What can you do to get there? 

What can you do to stay ready for the next wave of upgrades? 

The process just doesn’t end and, at many credit unions, there’s resistance to the idea that continuous improvement is a must with mobile apps. 

But give it up. Resistance is futile. With mobile banking, it has become improve or perish. 

What’s Not In Your Members’ Mobile Wallets

By Robert McGarvey for Credit Union 2.0

Two stats jump out of a PSCU and Javelin report entitled “The Credit Union Guide to Opportunities in IoT, Biometrics and E-commerce.”  Credit union members love their smartphones -80.9% own one. That’s roughly comparable to big bank customers – 88.4% of them own a smartphone. 

Where credit union members falter however is in mobile wallet usage. 46.3% of big bank customers have used a mobile wallet – such as Apple Pay – in the past 90 days. But just 10.8% of credit union members have. 

In the past week 3.7% of members have used a mobile wallet. 19.3% of big bank customers have. 

Those stats have to scare you. Credit union members have smartphones. They just aren’t using them to pay. Big bank customers are 4x more likely to pay by phone. 

Why are credit union members so slow to adopt mobile wallets? It’s all the more puzzling when so many big retailers have embraced Apple Pay and that typically also means Android Pay and Samsung Pay too. It’s now easy to go a day without ever using plastic cards, from coffee in the a.m. at Starbucks using its app through stocking up on dinner groceries at Trader Joe’s or Whole Foods with Apple or Android Pay. 

But there just aren’t many inside credit unions. 

Mobile wallet adoption is also fueled by an increasing number of online and in app merchants that have begun to accept Apple Pay or PayPal. That means a wary consumer doesn’t have to input credit card info and for some of us it’s a plus to just pay with Apple Pay.  

PSCU and Javelin said that the relatively low credit union usage of mobile wallets compared to big bank customers leaves credit unions “vulnerable.” 

So it is worrisome that comparatively few credit union members use mobile wallets. 

Partly this anemic usage is because credit union members skew older and the demographics that have most jumped on mobile wallets are younger 

Another factor: few credit unions have actively marketed mobile wallets to their members. Initially, when Apple Pay debuted, as credit unions rolled out the tools they blew trumpets to announce they had the latest technology. But now many are silent. Plainly they would rather tout other products to their members, in part because mobile wallets such as Apple Pay cost a credit union money while many other products – such as a credit union’s own credit cards – make the institution money. 

That’s understandable but also short-sighted. Mobile wallets are the future of payments and an institution that plans to hang around needs to be at the forefront of surging consumer usage. 

Look again at how much more mobile wallet usage there is at the big banks. The disparity with credit unions is frightening. 

At least some big banks have further fueled mobile wallet usage by doling out perks to customers who use them. Chase for instance has promoted mobile wallet usage with a promotion that adds a bonus point for every dollar spent with mobile wallets on some credit cards.  

Wells Fargo also has offered sweeteners to mobile wallet users. 

What’s a credit union to do? Definitely, think about offering promotional bonuses to encourage usage. 

But there are free tactics too. Start by reminding members of the wallets supported by your institution. Make it easy for a member to find this out. DCU in Massachusetts does this well. Study its pages 

Navy Federal, the first credit union to offer Apple Pay, is another to study 

Then do as PSCU and Javelin advise: “The key challenge for credit unions will be persuading their members to load their mobile wallets with the credit union’s debit and credit cards instead of those from another banking institution.” 

How to get there? Ask – and keep asking. 

It’s not easy to get a member to change a credit card preference that has been entered into a mobile wallet. Many have a faint memory of what card is associated with Apple Pay. 

Ask and ask again.