Your members’ financial values are shifting – Here’s how to respond

For several months, my colleagues and I have been pouring over spending transaction data to get inside the minds of members. Doing so allows us to better advise our credit union partners who are anxious to help members in meaningful ways as they navigate the pandemic’s twists and turns. 

Week after week, the data told oddly familiar stories. How could that be, I wondered, given these uncharted times? It wasn’t until I saw July’s report that I was able to put my finger on it: the financial behaviors we’ve been studying are almost identical to those I witnessed as a child. Let me show you what I mean. 

In CO-OP’s July credit/debit spending analysis, we found the following:

  • Credit union members spent nearly 40 percent more on frozen meat lockers this year than last. Growing up, the families in my neighborhood all had freezers stocked with meals. It was how they planned for the inevitable snowstorm or weather emergency that would prevent the weekly grocery run.
  • And speaking of that weekly grocery run of the past, similar patterns are emerging during COVID-19. Whereas food-store transactions were much more frequent and in smaller dollar amounts at this time last year, credit union members are now visiting grocery stores much less often and spending more while they are there (22 percent more, to be exact).
  • The do-it-yourself mentality of yesteryear is also experiencing a resurgence as families invest in making their homes more enjoyable places to live. Expansions to accommodate children returning from college and elderly parents who need more care are on the increase as well. Evidence of these trends can be seen in the nearly 45-percent year-over-year increases in hardware and home improvement store spending.
  • Although not entirely unique to July’s report, there has been a resurgence of just-the-essentials-style spending. Members are holding back on nights out (movie spending is off by 98%, restaurants by 23%, beauty by 26% and clothing by 9%). As for travel, airline spending is down 70% and hotel spending by 43%. While we know these behaviors are mainly due to business closures and stay-at-home orders, we need to consider the long tail outcomes. Will families make permanent shifts in their budgets once they realize the savings that come from buying just the essentials? Nielsen reports consumers say they’ll largely keep up habits of cooking and entertaining at home once the threat of COVID-19 has passed. 1

While members may be adopting old-school financial management mentalities, they are doing so with a significant twist. A digital twist. Online and mobile commerce numbers are through the roof. Contactless transactions have achieved new highs. P2P money movement is climbing exponentially closer to ubiquity.

So, how can credit unions support members’ adherence to traditional financial values within a digital-first lifestyle? CO-OP’s SmartGrowth team sees three easily deployable solutions:

  1. Provide contactless pay options. 

For credit unions, maintaining top-of-wallet status during the pandemic is less about revenue and more about giving members a financially (and physically) healthier way to pay. Pandemic-era shoppers have found contactless payment to be one of the simpler solutions to navigating a socially distanced day. Many credit unions had already planned, pre-COVID-19, to migrate to RFID contactless plastics through a natural reissuance approach. Some are sticking with that plan. Others have accelerated deployment with mass reissuance. CO-OP is ready to support credit unions in either scenario or through hybrid approaches across different portfolios. 

  1. Optimize the mobile experience. 

As members pay closer attention to how they are spending, credit unions can empower financially healthy choices by offering crystal-clear, real-time card account information. Mobile apps, like CardNav by CO-OP, give members a single view of both their credit and debit cards. Add self-selected spending limits on top and credit union members feel a greater sense of control over their day-to-day and long-term finances. 

  1. Enable P2P Payments. 

Another throw-back value that has reappeared in recent months is a strong reliance on local community. Students are running errands for elderly neighbors; nannies are filling the shoes of babysitting grandparents; working people are sending money to furloughed friends. In these circumstances and so many others, paying (and repaying) with cash and check have gone from merely inconvenient to nearly impossible. P2P payment channels have become a saving grace in the pandemic. Enabling P2P, while historically wrought with competitive concerns, is now easier than ever for credit unions thanks to the availability of Zelle®. CO-OP partners need only have CO-OP account-based technology in place and have the ability to offer Zelle within their mobile banking solution to get started. 

Members are confronting challenges they could have never predicted, many of which are unearthing the tried-and-true financial principles of yesterday. Credit unions were built on the principles of financial wellness, and arguably no institution knows them better. While members today are ardently seeking financial wellness through time-tested practices like saving and budgeting, they are also ushering in a new era of payments, one that revolves around digital platforms and experiences.

The pandemic has brought with it many silver-lining opportunities. Developing stronger ties to members is one of them. Simple solutions like the three above not only help members safely and conveniently navigate the here and now; they also put your credit union in a position to earn the Primary Financial Relationships (PFRs) you need to continue providing support for many years to come.

John Patton

John Patton

John Patton is the Senior Payments Advisor for CO-OP Financial Services (www.co-opfs.org), a provider of payments and financial technology to credit unions. Web: https://WWW.CO-OPFS.ORG Details

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