Five Tactics to Help Your Credit Union Thrive
By Sankar Krishnan, Global Client Engagement Head,
Banking & Financial Services, Sutherland Global Services
There is strength in numbers.
It’s a familiar adage – and one of the key lessons credit unions can glean from the financial crisis. A sizable member base is the foothold of their success. Credit unions that stayed afloat through the rough waters of the shake-up share a common bond: A solid community of loyal customers.
People are the pillar of our business. Now, more than ever before, credit unions need to focus on serving their loyal, long-time members while introducing innovative products and services that offer value to a new generation of customers.
But let’s face it; this is not your grandfather’s credit union. Perks and services that attracted members decades ago – from fee-free checking to free toasters – will not appeal to today’s mobile 20- and 30-year-olds who want the convenience of 24/7 virtual banking.
As management expert Peter Drucker says, “Quality in a service or product is not what you put into it. It is what the client or customer gets out of it.“
His advice is well-taken. Credit unions seeking to build their member community need to take a fresh, objective look at their customers and prospects needs. How can your credit union retain its traditional membership while attracting a techno-savvy generation of new customers? Here are five sure-fire tactics:
(1) Embrace Technology
Given the regional nature of credit unions, most banking relationships are built on face-to-face interaction. Retailer J.C. Penney’s motto is, “Every great business is built on friendship.” Credit unions are no different. It is not unusual for a branch manager to know every detail about a customer – from the street address on a mortgage documents to the number of children in the family whose college educations are being funded by credit union loans.
However, if all of those “nuggets” are stored in the manager’s head, knowledge transfer should be a top priority. Credit unions need to embrace technology and create information systems that capture each member’s historical profile and other pertinent facts. This “data warehouse” provides an efficient way to track, analyze, and predict customer behavior.
The task of creating a complex information system can be daunting and time-consuming. Putting in place a reliable monitoring and control system requires significant education and training of credit union executives, management, and staff. That is why a growing number of credit unions are turning to outsourcing as a cost-effective, efficient way to gain access to the best available technology and the most innovative products.
(2) Price It Right
In today’s competitive landscape, “one-price-fits-all” will not work. Flexible, scalable product pricing is necessary to attract and retain credit union members because it provides the latitude to reward customers who frequently use your products and services.
A case-in-point: Retiree Robert Smith joined the credit union over 55 years ago. He keeps a modest balance in his savings account and visits the branch once a month to make a deposit. Robert’s 28-year-old grandson, Rick, owns a small, growing company. Rick relies on the credit union and its customer service staff for all of his personal and business banking needs – from paying his mortgage online to securing a business line of credit or setting up direct deposit and payroll services.
This example illustrates the importance of Tip #1, embracing technology. A data warehouse provides the information you need to structure fees based on the quality and quantity of member interactions. Analytical tools are available to track, measure, and establish customer profiles to identify high-volume members to whom you can extend special perks and pricing.
(3) Go Mobile
In other words, think apps, not toasters. Today’s techno-savvy, on-the-go customers rarely visit a branch in person. They rely on convenient, virtual tools that can be accessed any time, anywhere. The time has come for credit unions to go mobile.
Mobile banking adoption has more than doubled in recent years. In the fourth quarter of 2010, 29.8 million Americans accessed financial services accounts via a mobile device – a 54% jump from Q4 2009.
Forrester research group predicts that one in five adults will be using mobile banking by 2015. Domestic banks are jumping on the mobile bandwagon — 54% of the top 100 US financial institutions offer some form of mobile banking, 40% offer mobile web, and 32% offer mobile apps.
For credit unions seeking to skew their membership demographic toward young professionals in their 20s and 30s, mobile is a must. A Nielsen survey shows the highest percentage of mobile banking users are 25- to 34-year olds, while 20% are under age 24. Nielsen data also indicates that mobile banking users maintain higher-than-average balances and have a higher net worth than the average or online banking customers.
Going mobile isn’t limited to cell phones and Smart phones. Think ipad, too. In April 2011, Texas Dow Employees Credit Union was listed as the 14th most popular ipad app. In the first two months after the app’s release, mobile subscribership grew 50% and the number of mobile transactions increased 30%.
(4) Service Customers
From McDonald’s to Neiman-Marcus to Walmart, there’s a paramount rule of thumb: Customer service is all about giving people what they want.
The tips suggested above – embracing technology, building data warehouses and information systems, and going mobile – are the bricks-and-mortar of customer service. But the key to “giving people what they want” is to use those tools to identify and deliver services that bring the most value to your membership community.
As the profile of the traditional credit union customer continues to change, it is the forward-thinking institutions that will thrive. Credit unions must “self-cure” in order to be secure. Self-curing” requires technology and tools, coupled with a customer-centric approach that takes into account the needs of each and every customer – from devoted members like Robert Smith and his entrepreneurial grandson, Rick, to today’s Smart-phone savvy, on-the-run 20-somethings.
Credit unions today need a single platform to accommodate multiple customer channels. For example, some members prefer to call and speak to a customer service representative, while others want to log onto the web or visit an ATM or banking kiosk. At the same time, a growing group of mobile phone users want to conduct their banking right in the palm of their hand, or use a smart wallet app to make payments or purchases.
(5) Think Outsourcing
Credit unions across the U.S. are increasingly turning to outsourcing as the most efficient, economical solution to accomplish some or all of these goals. An outsourcing partnership allows credit unions to take advantage of specialized skills and provides a valuable, objective viewpoint from a team of experienced professionals outside the organization.
Financial institutions can yield many efficiencies and financial benefits by outsourcing their non-core functions and customer service channels. For one, executives and managers can focus on strategic initiatives such as growing margins and generating revenue. Outsourcing non-core functions also allows credit unions to concentrate on building member relationships and developing new products to better serve customers.
Outsourcing not only provides access to a team of experienced professionals, it can lower personnel costs, reduce training costs, trim facilities overhead fees, shorten turnaround times, and provide the flexibility to ramp up or down based on capacity and volume.
About the Author
Sankar Krishnan is Global Client Engagement Head of Banking & Financial Services at Sutherland Global Services. Sutherland’s banking solutions are aimed at growing margins and enabling processing efficiencies for global, regional, local banks and credit unions.
Sankar has more than 20 years of banking experience across North America, Africa, Europe, South Asia, and the Middle East. He has held Key Product and Client Engagement positions at Citigroup, Standard Chartered, and Price Waterhouse. His professional expertise includes Corporate Banking, Cash and Treasury management, Supply Chain finance, Securities and Fund Services, and E-commerce ventures. Sankar is published in several professional journals and magazines, and has served as a contributor to national and international media, including the BBC and Bloomberg.
He can be reached at Sankar.Krishnan@sutherlandglobal.com or at 212-679-8610 (office) or 917-753-7892 (mobile).
Sutherland Global Services (www.sutherlandglobal.com) is a multi-national technology enabled BPO services company providing integrated platform-based and analytics-enabled business-cycle support solutions for major industry verticals and global industry leaders. Founded in 1986 and headquartered in Rochester, New York, the company combines highly trained people with state-of the-art technology and proven business methodologies. Sutherland collaborates with its clients to help them excel in their industry while maximizing their customers’ lifetime value.