Understanding the Financial Service Needs of Online Members

The reality is that most members have two or more financial institutions that they consider to be “primary, but our research indicates that credit unions still have an advantage in terms of being a trusted advisor.


More than one “primary financial institution”
Although we’d like to believe that online members are only using their credit union for their financial service needs, the reality is that most of these members may have two or more financial institutions that they consider to be “primary”. Think about the product penetration rates for online members at your credit union – do more than half of your online members have a mortgage loan, auto loan, or credit card at your credit union? Considering the higher income levels of the majority of online members, you can assume that they do have a need for these products, but they are using another financial service provider.

As more and more financial institutions try to attract customers via online access capabilities and incentives such as free bill pay, they’re also encouraging these new customers to open or move their other accounts. And every time your member visits another financial service provider’s site for their account information, they’re receiving marketing for other products or services. But our research indicates that credit unions still have an advantage in terms of credibility and being a trusted advisor. While the potential for convincing online members to switch services and assets to your credit union is great, successfully accomplishing this is not guaranteed.

Understand The Reasons For Using Other Providers
Although there are a myriad of reasons why members chose to use multiple providers, some members cite inertia and the fact that their credit union hasn’t effectively made the case or even asked for more of their business. Relationship-based pricing is one way to convince members to consolidate their financial services at the credit union. But are there barriers you’re not aware of?

Callahan’s Survey Consortium (shared cost research sponsored by a group of credit unions), is currently conducting an online survey of credit union members to investigate the financial service needs and usage of online members, including their reasons for using other providers. Some of the member comments we’ve seen so far indicate that credit unions need to consider whether they’re providing the right tools and information to convince members to increase their relationship. A member comment we received just this past week illustrates this:

“I got an home equity online from Wells Fargo. Now I wish I had done this with my credit union. It's a hassle to transfer the loan to another institution but I would do it if it were easier.”

Making It Easy for Members to Increase Their Relationship
How easy is it for your members to open or fund new accounts? Credit unions should evaluate their website and procedures to consider how painless they’ve made it for their members to open new accounts. There’s a number of both online and offline ways that credit unions can streamline this process.

A recent trend is the use of “switch kits”, a tool to make it easier for members to open and fund new accounts. Switch kits provide members with the information and forms needed to complete the new account process. These kits are either offered online through a fully automated process or members can obtain them at the branch.

Another online tool is account to account transfers, whereby members can easily transfer more funds from external accounts. But credit unions shouldn’t wait to implement these more costly solutions. At a minimum, a relatively easy solution for credit unions to implement is online access to PDF files containing the necessary forms online so members can complete them before coming to the branch. Credit union websites should also provide a thorough explanation of the steps to open/fund accounts to demonstrate to members the ease of opening or switching accounts.

But do these tools go far enough in lowering the barriers? What else do online members need to help them make a switch? As you’re planning your online strategy for 2004, consider whether your credit union is effectively leveraging the online channel to help members increase their account relationship.

Do you need more information on the financial service usage of your online members? Do you want to be kept updated on the results of this survey? For more information, please complete the form below:

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Jan. 26, 2004



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