Using your website to build financial skills and increase savings
A recent survey of more than 10,650 online credit union members conducted by Callahan's Internet Strategy Consortium revealed that credit unions have a significant opportunity to position themselves as providing solutions and assistance to consumers during this time of economic uncertainty. The credit union's ability to be a trusted resource will be a key advantage in providing education and services to members and your online channel is an ideal way to provide needed financial information and tools for members to manage their finances better.
Time to Reinforce the Issue of Savings and Better Financial Management
Member feedback shows that members want to improve their financial management skills.
The top four financial goals for online members in 2008 are
1.Reducing credit card balances (29%)
2.Saving more money in general (27%)
3.Increasing income (24%)
4.Reducing debt (23%)
Many also have concerns about their ability to save, refinance loans, and obtain credit in the future. However, while members acknowledge that these are important issues, they have not taken the right steps to increase savings. Barriers include both lack of knowledge regarding ways to budget and save, as well as a lack of personal discipline. Therefore, members are interested in a wide range of online tools combined with savings product features to make saving as easy for them as possible.
Top Website Features Members Want to Help them Save
Members are interested in having both interactive tools and basic educational information on the credit union website. Four in ten members want online tools to track expenses and/or budgeting tools. About one-third are interested in accounts named for specific goals and tools to automatically save a portion of their paycheck.
5 Recommendations to Help Members Save
1. Add A "Debt Management" Section to Your Site
Your credit union website provides an anonymous way that members can investigate their options before making a more direct request for financial counseling assistance. Yet financial content related to debt is often obscured behind several layers and links. Therefore, consider putting budgeting, debt management and counseling information front and center on your site. There should be an easily identifiable area accessible from the main resource page, as well as a single page listing all resources available.
Focus on two areas:
Help Members Understand What Loan Types and Amounts They Qualify For
Recent media headlines about a credit crisis may cause some members to mistakenly believe they will not be able to qualify for loans at their credit union. Offering online loan pre-approvals and ways for members to investigate their creditworthiness online may help calm these fears.
Explain Credit Worthiness and FICO Scores
Members who are denied a loan often do not understand why, with the result that they are even less likely to apply for a loan with the credit union in the future or broaden their relationship in other ways. The problem is two-fold, not only do members not understand the loan denial reasons, but they do not know how to increase their creditworthiness so they can be approved in the future. A lack of understanding may result in members taking steps that could negatively affect their credit scores.
Members poorly versed in financial knowledge are vulnerable to unscrupulous businesses offering foreclosure advice or credit score improvements. Both online and offline resources should be provided to help improve their chances of improving their financial position.
2. Provide Online Tools for Managing and Opening New Savings Accounts
Another area where some credit unions are providing more innovative savings features include more flexible share certificate options. Some credit unions offering single penalty-free withdrawal can help lessen this concern. Others are offering products such as "bump-up certificates", which may help attract higher income members who may be concerned that they will miss out when interest rates increase, and position them as a viable alternative to high yield online only savings account. Enabling members to electronically change their CD options can streamline operations and provide greater flexibility for members.
Another area to consider is the ease of opening new savings accounts. Credit unions should allow existing members to open new accounts online or within online banking. Enabling easy online account opening removes the barrier of having to plan a branch visit, which is critical for online members who may infrequently visit branches.
"Ability to save money into IRA directly from checking/savings without having to jump through paperwork hoops."
"Being able to open all types of CDs online , including add-on CDs"
3. Permit Personalization of Account Names
A seemingly minor, but potentially highly motivating, feature you can add to your home banking suite is the ability for members to name their accounts. Members were very interested in the idea of being able to name their own savings account or being able to divide a single savings account into a number of separate goals. Members feel this will enable them to save more and track their progress better. Products such as vacation clubs and Christmas clubs can successfully help members save, particularly when combined with promotions, incentives and features that discourage early removal of funds. However, these products need to be flexible to counteract potential member concerns regarding emergencies.
"I'd like an account where I could store my six months of living expenses, and have them earn interest, but not have it locked away in a CD. If I need it, I need it. But out of sight, out of mind. I'd like to put it in an IMMA, but have another IMMA where I would save for a car, and other non-emergency only use."
Allowing more flexibility in naming accounts (in addition to automated savings) can help increase usage of the credit union for a primary transaction accounts. Automated savings may make it easier for members to save in general, as many mentioned difficulties in bothering to set money aside.
4. Repackage Tools and Information for Tracking Finances
Many times, credit unions are offering tools that will help members track their finances, they just are not "packaged" or marketed as such. Given the high level of interest around this area, credit unions should develop an "Increase Your Savings" section, which provides a summary of available account options, online tools, and educational resources. Ensure that information is cross-referenced and linked in different areas of the website and encourage members to:
- Use e-alerts to track progress towards goals and remind them to keep saving
- Use automatically sweeps to put money in savings and sub-accounts for goals
- Consider higher-interest rate savings vehicles when they hit a certain account balance (such as $1,000). Use online marketing tools to target and remind members.
- Use online banking and bill pay to track payments and monitor accounts to reduce fees
- Use calculators to understand the benefits of different savings options
5. Create a Community around Debt/Financial Management
Personal finance blogs are growing in popularity because people want to feel that they are not the only ones facing this issue. Sites such as geezeo.com and wesabe.com provide a forum for sharing experiences, obtaining advice and some provide budgeting and tracking tools. There is definitely an opportunity for credit unions to provide similar tools, with the benefit of being a more trusted advisor and strict online security.
Beyond just an outlet for sharing experiences, credit unions could add a Q & A section where members can post questions and credit union experts can provide answers. Blogs dealing with a specific issue, such as a first-time home buyers or newly retired persons, can also bring a personal touch to the credit union and help people see the steps others have taken.