The events of the past two years have forever changed the financial services landscape. While advancements and operational efficiencies are always a constant, credit unions must operate in a faster-paced environment with member demands and expectations continuously evolving, technology enhancements becoming more necessary, and initiatives like data-driven loan growth and cryptocurrency integration increasing in importance.
These changes have forced credit unions to be nimbler and have heightened the need to pivot to better serve members’ evolving needs. To remain competitive in 2022 and beyond, credit unions must strategize and act on these trends.
Creative Options Required to Make More Loans
Credit unions continue to have unprecedented liquidity. At the same time, new household formation has been cut in half from pre-pandemic levels, and online account openings are not what they should be. Credit unions need innovative member acquisition strategies, especially those that rely more on digital marketing techniques and powerful data points. They will also need to confront technological challenges to improve the online account opening experience.
Credit Unions Need Cryptocurrency Strategies
Research shows more than 20% of people with investable assets already invest in crypto, which is expected to grow. These consumers typically use a cryptocurrency exchange. However, more than 60% of those investors would prefer to trade with their trusted financial institution. As the cryptocurrency space grows, credit unions must stay on top of new developments. Strategy starts with education, making it critical for credit unions to gain a baseline understanding of cryptocurrency and decentralized finance (DeFi) use cases, deposit outflows, market caps, and circulation, with an end goal of creating quality products to meet member demand and retain deposits that might otherwise be lost.
Automation Returns to the Budgeting Process
Many credit unions are revisiting discussions on automation investment, particularly in Robotic Process Automation (RPA), AI, and advanced loan decisioning. Financial institutions are expected to rely more on conversational AI, given the pressure the pandemic placed on support call centers. Also, smaller credit unions are learning to minimize customization, which is reflected in streamlined APIs.
The Digital vs. Branches Debate Continues
Branch traffic is unlikely to return to what it was pre-pandemic. However, many members still long for human connection and interaction with their credit union. Credit unions need to consider their members’ preferences and find ways to meet both in-person and digital demands. Determining plans for existing and future branch footprints will remain a priority for the industry.
Payments Preferences are Shifting
Nontraditional payments channels are growing and evolving. Though many financial institutions have onboarded new and innovative offerings, these payments differ from the typical point-of-sale transactions and bring about their own forms of fraud. The pandemic accelerated the adoption of contactless transactions, and issuers have worked to provide these cards to cardholders. However, supply chain issues have affected credit and debit cards nationwide. The shortage of silicon chips should be on the radar of every credit union, given the importance of keeping members equipped with active and secure payment cards. With effective planning, issuers can minimize the potential impact on their organizations.
What It All Means
While we’ve certainly seen a lot of changes since the onset of the pandemic – and with more transformation inevitably on the horizon – credit unions that understand the depth and breadth of these changes and can pivot appropriately will be the ones to gain a competitive advantage in this challenging environment.