Credit unions and community banks have historically prided themselves on excellent customer service. They built a reputation on homegrown, tight-knit personalization and were often regarded as integral parts of their communities. And while credit unions were often considered alternatives to multinational banks, that difference is all but diminishing.
Credit unions can no longer get by on goodwill alone. Because many financial technology (fintech) companies are built around a specific customer concern, the personal touch of credit unions no longer carries the same weight it once did. As fintech companies continue to occupy more and more market share, many traditional lenders are left scrambling.
Digital technology has become pervasive across the financial services industry. As competition increases, credit unions and smaller community banks must evolve to preserve their business.
This does not mean shuttering physical locations.
While many transactional services have migrated to digital channels, a 2019 report found that seven out of ten executives consider physical branches an essential component of survival. The report claims that branches help establish identity, influence customer engagement, and provide competitive advantages. Branches are also a critical sales channel.
While many fintech companies are predicated on the notion that consumers want technology to replace financial service providers, this is untrue, according to the report. While apps positively impact customer attraction and retention, so do services like personalized, in-person mortgage and investment advice.
So, where does this leave credit unions? First off, it’s obvious that these financial organizations must grow sustainably to survive. However, rather than completely realign their focus, it’s possible to supplement existing operations. Here’s how credit unions and other regional banks can incorporate features from the most successful tech companies into their business model.
Building financial technology around customers.
Fintech companies generally identify a specific shortcoming of the traditional banking industry and build tools to address this gap. Fintech apps are often built around the end user and help customers accomplish a specific goal. And many use gamification tactics to display consumers’ financial wellbeing and progress. For example, SoFi takes a customer-centric approach to student loan refinancing and wealth management. Coinbase and other bitcoin platforms were created to remove the third-party intermediaries required to conduct traditional money transfers.
You can argue that, by nature, credit unions are also designed to help customers improve their financial health. Like fintech companies, these organizations offer packages of products to help consumers accomplish specific goals. While credit unions may share similar goals, services, and benefits of fintech startups, they’re often harder to understand—and sometimes even more difficult to find.
Part of delivering your consumers the right products and services rests in your ability to reach the right types of people. Because technology like mobile and voice search has all but created a new, fragmented customer journey, it’s important to reach consumers needs the moment they occur. Data-driven marketing can target consumers who fit specific profiles, predict user behavior and intent—and deliver products around important life events. Ultimately, this helps ensure you’re offering your consumers the right services based on their unique needs.
Learn how paid search can help you target consumers.
Using digital marketing to help customers access information.
Whereas fintech companies are often marketed as Silicone startups—replete with bright brand colors and quirky advertisements—many credit unions can be interpreted as more no-frills, true blue entities. We’d argue that this is perfectly normal! Your consumers may not be concerned about your brand identity. In fact, according to a 2019 survey, nearly half of consumers say their primary concern for credit unions centers on loyalty and reward innovation.
However, credit unions can borrow a trick or two from fintech companies—and learn how to better resonate with their customers. While brand identity influences how consumers interact with your credit union, you can also pay attention to your website design and organization.
Ensuring that your site is optimized around end users means that prospects know exactly where to find the information they need. It also means optimizing your site around search engines, so that users can find it in the first place. For example, an optimized website can better deliver your consumers important information about loyalty and reward programs. In turn, this sets the foundation for a fruitful consumer-bank relationship.
Need more information on optimizing your credit union website? Unsure where to begin?