Over the past several months, I must have received over a dozen phone calls from credit unions trying to better understand how to define a payment strategy. A strong payment strategy can provide a blueprint for all the elements of your business that touch payments. This strategy must be a comprehensive, holistic plan outlining goals and major initiatives. It’s important to remember that there’s no “one size fits all” approach – a strategy will be driven by a credit union’s unique requirements and member needs.
The ability for credit unions to compete successfully in this rapidly-evolving world of digital payments is often first determined by identifying a presence of any shortcomings. These can include a lack of an existing formalized payment strategy, complicated governance approaches to payments, or failure to adopt new technologies or establish partnerships with Fintechs that offer new services delivering to members’ desires.
The same challenges are also creating opportunities for credit unions of all sizes. Significant changes to long-held policies and procedures are now being required in the realm of capital investments and technology. There is now opportunity to explore new technologies and applications, enabling credit unions to formulate an appropriate response to the seismic generational shift in member attitudes, behaviors, and expectations.
The question remains – how should a credit union decipher all the options and identify which payment option to offer to its members?
Simply put, a credit union must first define what constitutes a payment. It may include all or a few of the following product lines: credit, debit, PIN, EFT, bill pay, ACH, checks, prepaid. The list is quite extensive, and in many instances, these product lines are managed across or within several departments.
Once payment types have been established, leaders should then identify the areas that fall within the “payment strategy” umbrella. Depending on the strategy, it may make sense to have all payment services bundled together. Another approach is to manage them in separate departments, but establish a point person to lead the payment strategy for the organization. Either option can help the credit union establish the necessary foundation for a seamless payment experience.
The reality is it’s more than just a solid payment product. Today’s member expects banking interactions to be simple, intuitive, and seamless. Here are a few ways your credit union can work toward a providing a more ideal experience:
- Focus on the journeys and sub-journeys that matter the most. Simply offering a home-banking platform does not help your credit union if the sub-journey, such as activating a card or setting up travel notifications, is not included or if the experience is cumbersome. Optimize the member experience by identifying pain points in the member journey and sub-journeys. Journey-mapping is an excellent way to get a 360-degree view of successes and areas of improvement from the member and organization perspective. These insights can provide the ability to prioritize, revise, and implement positive improvements to the experience and ultimately increase the use of your payment product/service.
- Change the way you engage with members. New entrants in the digital banking world, such as N26, “expect to reach more than 50 million customers in the coming years”, said Valentin Stalf, CEO of N26. Financial institutions that provide simple, intuitive banking experience growth at an increased rate due in large part to enhanced engagement and functionality. Your credit union can improve engagement and remain competitive by delivering speed, simplicity, and ease. Examples include providing immediate verification of transactions and postings, simple ways to track and manage spending, and ease in sending money and splitting bills.
- Understand your members. Regardless of the product or service, acquiring a deep understanding of your member base is critical to your credit union’s success. There’s an increased demand for personalized, one-to-one engagement, and when it comes to payments, there’s no exception. Members expect their credit union to know their wants, needs, and preferences. Generational segmentation is also an important layer to consider. For instance, an aging member base often requires a different communication style or banking approach as compared to digitally reliant millennials. Understanding your members’ financial needs, lifestyles, and preferences will open opportunities to offer them more timely, relevant products and communications in the manner they prefer.
When it comes to payment strategy, the foundation of a credit union’s vision should be to offer its members a fast, easy-to-use, safe and seamless experience. The understanding of requirements and limitations partnered with member wants, needs, and preferences will offer a strategic advantage, ultimately resulting in increased engagement, satisfaction, and growth.