By Carrie Stapp, VP of Integrated Marketing and Commercialization
The once inextricable link between trust and long-term relationships may be fading. That certainly seems to be the case when we consider the unprecedented trust consumers are placing in the youngest of financial firms. Between 2021 and 2022, PayPal grew its primary financial relationships by a factor of five.
While PayPal isn’t exactly an infant in the world of finance, consider Robinhood and Chime. Robinhood grew its PFRs by a factor of 4, Chime by a whopping factor of 18. Neither has been around longer than 10 years.
Increasingly, it seems, consumers trust utility over tenure. In the minds of many, an elegant digital experience now tops the former tenants of trust – things like privacy, data security and people-over-profits. Deliver an experience on an app that knows its user by name, offers personalized advice and completes daily financial tasks in seconds, and PFR dominance is yours.
Choosing Optimism and Action through Member-Centric Strategy
If this sounds discouraging, chin up. The great news for credit unions is that delivering the elegant, digital experience financial consumers want is completely doable. And, because that experience will layer over existing credit union competencies around privacy, data security and people-over-profits, you will have the competitive advantage.
Earning trust through digital experiences starts by first understanding the daily active engagements of contributing members. And then, patching the holes that exist between those moments of engagement and the credit union’s ability to make them happen.
Many will recognize this strategy as member-centricity; others will recognize it as life-centricity. It’s a strategy Accenture predicts will generate annual growth rates nine percentage points higher for the organizations that deploy it.
Payments are the Path to Trust and PFR
Member-centricity, executed through daily digital engagement, leads to constancy. The traditional products credit unions were built on – like car loans, mortgages, savings accounts – certainly fill a need. However, they are not the products members think about every day. Instead, they think about real-time transfers to a kid at college, mobile orders from the grocery, and getting to the bottom of an odd transaction on their debit card.
These are the right-now lifestyle moments credit unions absolutely must be there for, in real-time and in whatever channel the member prefers. They are the moments that allow members to move through their busy days and live their fullest lives. Whichever provider can make those moments work fastest and smoothest wins that member’s PFR. Its why we say around our shop, “Payments are the path to PFR.”
Payments not only provide daily, trust-inducing touchpoints for members; they also provide the data and insights credit unions need to set and execute against member-centric strategy. This data is perhaps the main reason fintechs are using payments to take over the market.
More credit unions are rightly choosing to focus less on the passive products consumers now see as set-it-and-forget-it (i.e., auto payments to a car loan). Instead, this strategic planning season, more credit unions will devote unprecedented energy to payments, making daily, active engagements a priority within their aggressive growth plans.
Connecting with Brands that Connect with a Purpose
A second set of good news for credit unions is that the trust equity they have built is powerful. If they act fast, credit unions will not lose the loyalty they have earned over the years from long-time members. The same may not be true for the newest members who are comparing their credit union experience to the experiences they have across their lives, from Amazon to Door Dash, Mint to Rocket Mortgage.
Young people want to connect with brands that connect to a purpose, a cause or a community larger than themselves. There is no better brand than the credit union brand for fulfilling that want. By layering digital elegance over purpose-driven banking, credit unions will not only maintain the trust of loyal, contributing members, they will earn it from young, prospective members, as well.
A Credit Union Blueprint for Member-Centricity
The time to act is now. In our latest research, Co-op Solutions, EY and Filene found that 78 percent of members don’t expect their credit union to have the digital payment products that are right for them.
Using that same research as a backdrop, Co-op developed a set of seven practical steps credit unions can take to start patching digital-experience holes with member-centricity, earning the new style of trust along the way. Each of the seven is explored in the white paper, “Building the New Member Centricity. A Blueprint for Credit Union Leaders.”
- Build a foundation of service
- Modernize technology infrastructure
- Optimize data
- Redefine financial wellness
- Establish payments as the path to growth
- Protect against future risk
- Develop talent for the future
The CU Sense of Urgency is Justified
Credit union leaders who are witnessing the evolution of trust may be feeling a sense of urgency to reengineer their cooperative’s approach to loyalty. They are right. The financial health of millions is on the line.
For many consumers, particularly the youngest among us, their financial health now lies in the hands of a patchwork of digital-native companies that may or may not be talking with one another (and may or may not prioritize financial wellness). What lies ahead for many of these young people is a financially unwell, disaggregated relationship to their own money.
Credit unions must intervene to preserve not only the member relationship but the member’s overall financial well-being. Payments are the right way forward. Developing sound strategy within these daily, active touchpoints is a first step toward earning and maintaining trust, the modern credit union’s most valuable asset.
For a deeper dive into Co-op’s research on the importance of driving member-centric growth through payments and active primary relationships, visit the Co-op Research Hub to view the white paper, an interactive research report and other resources to help your credit union navigate this new era.