How financial institutions can provide consumers with peace of mind in times of uncertainty
U.S. consumer confidence fell again in May as concerns over inflation, jobs, and the debt ceiling soured the economic outlook for many Americans. Despite this, spending remains relatively steady, with the number of people planning to purchase cars and other big-ticket items increasing from April. To address recent spending and saving trends, we conducted a nationally-representative survey of over 1,000 Americans to assess consumer sentiment and spending trends. These findings help provide credit unions with the data they need to best reach and support their clientele during these fluctuating months.
MeridianLink’s survey found that more than half of Americans (52%) are concerned about their current debt, with a third worried about credit card debt and nearly 20% concerned about their mortgage. However, consumers are still spending money; nearly a third (31%) of respondents reported spending more money than usual in the last six months, while 39% reported saving less than usual in the same time period. These findings highlight the financial strain that some Americans are experiencing during the current economic situation.
In times of economic headwinds, consumers rely heavily on their financial institutions. To effectively provide that support, financial organizations must provide personalized solutions that help meet each consumer’s unique needs. Data from our survey confirmed that financial circumstances must be approached on an individual basis. The two most sought-after kinds of support are help in avoiding fees (46%) and receiving personalized account alerts (36%). Troublingly, one fifth of respondents (20%) did not believe they received this support when it was most needed.
When financial situations get challenging, consumers need to feel supported by their institutions or these organizations may face a reduction in membership. Credit unions that are willing to provide this assistance for their consumers are likely to enjoy improved member loyalty and accelerated growth. Based on the survey findings, here are three recommendations for financial institutions striving to best support their consumers now and in the future:
Be proactive with consumer outreach
Despite the desire for support from their credit union, many consumers are unaware of available offers that could benefit their financial situation. Therefore, institutions need to be proactive about reaching out to consumers with account and credit offers that could be helpful for them, especially when confidence in the economy is low. Marketing automation solutions, which allow credit unions to automatically send relevant, tailored offers to existing consumers who would most benefit from them, are one way to achieve that proactivity. Financial institutions need to find the right tools that streamline the marketing process, promote cross-sell opportunities, and facilitate additional touch points with members. Coupled with competitive products, marketing automation solutions can be a major benefit for both consumers and institutions.
Lean into digital processes
When consumers are interacting with their credit union, efficiency and convenience are king. In fact, research suggests that if applications for an account or loan product take more than five minutes to complete, the likelihood that the consumer abandons the application increases by 60% or more. With Millennials and Gen Zers making up a larger portion of the banking customer base than ever before, financial institutions need to lean into digital processes that minimize friction and maximize ease of use. To that end, credit unions need to invest in technology that allows them to offer simple, efficient, and entirely online application processes that can be completed anywhere. These integrated digital application experiences allow financial institutions to reach more potential members online and begin supporting those members more quickly once they’ve applied for a deposit product or loan.
Refine the delinquency management process
It’s important for financial institutions to consider consumers who are dealing with delinquent accounts. This can be a challenging and delicate situation for both parties, so it is critical that the process for delinquency management is well-defined. Credit unions should invest in partners and products that streamline internal processes, administer payment plans and other collections agreements, monitor for relevant regulatory changes, and provide deeper insight into member accounts through automated reporting capabilities. Strategic investments into these capabilities will empower institutions to spend more time supporting consumers and less time worrying about administrative responsibilities.
No matter the economic situation, consumers expect support from their financial institutions, and credit unions must be equipped to provide the services that meet the unique needs of their members. By leaning into this consumer support role and leveraging the appropriate tools to succeed in those efforts, organizations are likely to enjoy a number of benefits as a result of improving internal processes and promoting consumer confidence at the same time.
