The realization is growing: at credit unions there is no “return to normal.” Forevermore how business is done will be different. And, a lot more technology focused.
That is the conclusion from dozens of conversations I have had over the past weeks with credit union CEOs, consultants, and just plain members. To a person, they all had initially thought the COVID-19 triggered changes – from branch closures to huge spikes in online and mobile banking transactions – were a fleeting change.
Things are different three months into the pandemic response. “I expect a lot of the changes that were made in credit unions will remain in place. We are not going back to how things exactly were before,” said Brad Smith, a credit union expert with consulting firm Cornerstone Advisors.
Partly it’s because there is no predictable end in sight to the coronavirus pandemic – experts do not see widespread vaccination of Americans for a year or two in the best case and as for the global population, who knows? The disease will be with us for some time and that has required adjustments.
Partly, too, it’s because the biggest shift has been huge adoption and use of digital tools, especially mobile banking, said Smith. Even laggards, he said, have been using mobile.
That’s fueled by the reality that older Americans – ages 60 and higher – have profound fears about COVID-19, which has proven especially deadly in that demographic. So they are busy adopting mobile and online tools. Do not expect to see them in the branch anytime soon.
Credit union leaders tell the reality they are seeing: “We sent out a strong message from the start of the pandemic that the safest way to bank was for members to use online and mobile banking and webchat, rather than coming into the branch,” said Carma Peters, CEO of Michigan Legacy Credit Union, a $214 million institution. “While we were hopeful that members would comply, the shift to online banking has been dramatic, with 50,000 more online transactions in April than we had in March. That’s a 38% increase.”
A report from ath Power Consulting underlines the magnitude of this transformation: “Our study shows that Customers/Members are absolutely seeking additional ways to conduct business and execute transactions outside of the Branch, with 74% of our respondents saying it’s a top priority,” said E. J. Kritz, director of training and insight at ath Power Consulting.
Good online and mobile banking now are must haves. That means also person to person payments, mobile remote deposit capture, and robust tools for bill payment. Mediocrity won’t suffice, not when the digital bank emerges as the bank.
Go with the digital momentum and take the next steps – steps that in many cases the big banks have already taken. But that gap can be closed.
Experts pointed to two crucial areas that need credit union focus.
Digital account opening. Credit unions still lag here, said Cornerstone’s Smith, and that can prove fatal if – as many experts believe – the return to branches is not in the near-term future. The mega banks are leaders in this, and successes such as Rocket Mortgage show that even big ticket transactions can be closed in a digital only fashion.
The tools and technology to facilitate digital only account opening exist, said Celent expert Bob Meara. Just a few years ago, he acknowledged, the tools were not plentiful for smaller financial institutions. Now they are.
Accept that members – increasingly – want easy to use digital banking and may only rarely set foot in a branch and you are on the right 2020 path. That means members doing everything online. Absolutely everything and it starts with account opening.
Contactless Cards. Wave a contactless card at a smart terminal and, boom, it reads the cardholder data and a transaction is started.
Does your credit union offer contactless cards? Probably not. Estimates last year were that under 1% of in person transactions in the US were contactless. In many European countries that number tops 50%.
Change is coming to the US and experts point to COVID-19 as the catalyst. People just don’t want to touch a credit card terminal in a supermarket, drugstore, or at a gas station. What they want to do is wave a card and pay that way.
It’s sanitary and so 2020.
Smart institutions are onto this. Experts expect hundreds of millions of contactless cards to roll out to Americans this year.
Is your credit union ready? Do not delay. This is a trend that is cresting.
Can credit unions catch up to the big banks? Optimism among experts is plentiful. Just accept that the branch is yesterday.
Digital is the future and the future is here.