As consumers interact with dynamic brands like Apple, Google, Amazon, and Southwest, their experiences with traditional financial institutions may seem lackluster. Now, businesses outside of financial institutions are taking advantage of the industry’s sluggishness in innovation.
“Traditionally, financial institutions innovated to try and solve their own problems and then pushed that solution on the consumer,” says Shawn Budd, cofounder and chief risk officer for the payday loan alternative ZestCash. He was a speaker at the 2012 Bank Innovation conference in San Francisco in March. “Today, real innovation is coming from non-banks.”
The price of falling behind these new peers is increasingly clear. The average consumer has 12-14 financial accounts of various types, but only two-thirds of them are with a financial institution, says Eric Conners, senior vice president of personal financial management (PFM) company Yodlee, another speaker.
Credit unions can efficiently improve member experiences and exceed benchmarks set within and outside of the financial industry by streamlining interaction, making online interactions count, and joining forces with retailers.
Integrate Channels, Streamline Interaction
Consumers know they can get a consistent experience across any channel with services like Netflix, from an Apple computer to a Android phone, but can they say the same for financial delivery channels? Channel integration is considered the most beneficial financial service for consumers, though other priorities like mobile banking take up more of institutions’ available spending, a Bank Innovation survey revealed.
True channel integration means getting delivery channels to speak to each other, remember previous interactions, and use that information to affect future behaviors across all contact points. “The goal is a true ‘I Know You’ experience for the consumer, no matter where they are,” says panelist Brian Pearce, senior vice president and head of retail mobile channel for Wells Fargo.
Consumers prefer that features like language selection, withdrawal preferences, common online actions, and relevant product or service information can be set and saved through all contact points or fine-tuned by channel. Financial processes started in one channel should also be available for completion in another.
“Customers online don’t want to go through four or five clicks and hunt for what they need,” says Philip Jenkins, chief operating officer of Strands Finance, a San Francisco-based PFM company.
Experience with other businesses has also created a expectation that institutions will detect and track subpar experiences as they occur and make rapid amends for them using online channels, says Geoff Knapp, vice president of online banking channels for financial technology provider Fiserv. Retailers and airlines use this strategy when a flight is missed or a product is determined to be out of stock. But for credit unions, potential triggers could include an abandoned online application, a declined application, an above average branch wait time, or a data breach.
The rise of mobile also means today’s consumers expect to use multiple channels at the same time, so wise companies allow their various contacts points to compliment each other. For example, retailers use GPS capabilities to deliver targeted ads to mobile phones depending upon what part of the store a shopper is in. Credit unions could use the same technology to send a text thanking members for their business as soon as they walk out the door. In the branch, institutions could invite members to scan interactive product pamphlets (via MS Tag or QR code) off signage or displays to take home and read later on.
Make Online Interactions Count
Consumers have a hard time letting go of branches interactions because they can’t hold someone accountable if things go wrong online, says Budd. To mitigate this fear, his company ZestCash does not use an anonymous no-reply email. Instead, every customer has an assigned account representative that they know how to contact and deal with.
This model is not be scalable for larger credit unions, but dedicating specific departments and individuals as the assigned face of online services, and making those human resources readily available, will delegitimize any concerns from your remaining mobile/online holdouts.
“When it comes to social channels, institutions shouldn’t limit their interactions to being a virtual help desk,” says Josh Reich, CEO of Simple, a third-party company that seeks to replace consumers banking relationships through an emphasis on the user experience. “It’s about building communities that help you attract new users and co-create with them.”
Rather than Simple developing its own ideas of what the banking experience could be, the company sent more than 20,000 personal emails to consumers asking them what a banking experience should be. The emails garnered a 40% response rate, and those early recipients also shared the information with others online for a plume of feedback that shaped the ultimate direction of the company.
In the past, Wells Fargo met resistance when it tried to hold its customer feedback sessions online, says Kimarie Matthews, the bank’s vice president of social media. But instead of giving up, the bank held the sessions in-person, filmed them and put them online as a faux reality TV show to drum up additional discussion and participation.
Join Forces With Retailers
One of the fastest ways to align your brand with an excellent member experience may be to join forces with a business that is already known for it.
“Consumers have over 2 billion loyalty memberships today, but only 18 out of every 25 banks are connecting with retailers to offer branded deals or discounts,” says Brian Rigney, vice president and general manager of business solutions for CashStar, an eGiftcard company.
The group deal phenomenon has soured many retailers to one-off promotions, but a majority are still open to the idea of adopting a loyalty program to let buyers earn points or get other value add from the issuer.
“Bank data lets them target those they don’t already know, and it’s scalable, with the potential to impact millions of consumers through the power of issuers,” says panelist Marc Caltabiano, vice president of marketing and commerce for Catera Commerce, which creates card-linked marketing programs.
Different institutions may need to approach the issue of retailer partnerships in different ways, according to their values. Credit unions in particular should be wary of pitching items to members who don’t want or need them and communicate early and often to assuage any concerns about member trust and privacy. One way to peacefully breach the waters may be to focus on existing SEG groups or those retailers your members already spend money with, increasing the likelihood they will find a potential partnerships beneficial.
There’s nothing wrong with being cautious around unproven ideas, but as new consumer patterns and standards for good business emerge, credit unions must stake out a place at the table of innovation or risk losing their seat altogether.