Like other companies, credit unions face new challenges brought on by technology.
Technological development has soared over the past decade, and COVID-19 showed that many businesses could still maintain their operations, even when most of their employees were working from home.
Throughout the numerous lockdowns and social distancing restrictions, consumers became more accustomed to being able to take care of their needs through mobile apps, chatboxes, and the internet.
Credit unions have lagged in technological development — much more so than commercial banks. While most banks have mobile apps and numerous options for performing transactions entirely online, credit unions are slower to adapt.
As a result, fewer young people opt to bank with credit unions and instead choose commercial banks. In fact, the average age of a credit union member is 47.
Credit unions have many benefits. They typically have lower fees for their banking products, and members can obtain loans with a lower APR. They also offer higher interest rates on savings accounts and CDs.
Despite these attractions, younger consumers often choose larger banks like Bank of America or J.P. Morgan Chase. While several factors may drive people to pick traditional banks over credit unions, technology likely plays a significant role.
To attract new members, credit unions need to put a high-tech foot forward and institute a few practices that millenials and their counterparts will appreciate.
Creating a mobile app that allows members to handle their online banking is step one in the process. However, the app must be fully developed.
It’s not enough to simply check the balance of an account or transfer money from checking to savings. Users should be able to pay their bills, deposit a check, and open a new account — all through the app. They should also be able to transfer money instantaneously with a button.
Other services in demand are loan applications and access to investment opportunities.
Loans are a specific area where credit unions have dawdled. Many credit unions require loan applicants to come into a branch to apply for a loan. Conversely, commercial banks can handle loan applicants entirely online.
Investing also isn’t easy to do through credit unions. Outside of savings products, many credit unions don’t have options for investing in stocks, bonds, or other investments. Their traditional banking competitors do. This can be a drawback for individuals who want to handle their banking and investments through one company.
Many traditional banks have options within their online platforms to track spending and help their customers set up financial goals. This isn’t always the case for credit unions. They may offer these services on-site, but they can’t necessarily provide them through their platforms.
Another area where technology has taken the reins is digital cards. Many banks offer digital cards that you can store on your smartphone. The availability of digital cards allows users to purchase items and withdraw money — even when they don’t have their physical card available.
The use of digital cards will likely grow astronomically and potentially replace physical cards in the next five years.
Similar to the demands that consumers place for better online banking options, credit union employees want a more digitized workplace. There is no longer a need for employees to perform all of their duties at a credit union branch. Many can be performed from the comfort of their home.
Simply closing the branch doors and declaring banking to be done from home is easier said than done. Banking and credit unions are subject to significant regulations that require a much more thorough level of security than other types of companies. They have to protect their client’s financial accounts, personal information, and money.
In some cases, the security required to protect these details isn’t conducive to employees working from home. However, applications have been developed that meet the standards of federal and state law for financial data regulation.
As more of these programs become available, credit unions may allow their staff to work partially from home. In combination with more effective mobile banking opportunities, there will be less need for tellers and other bank employees to work from their local branch.
Numerous software programs can better manage everyday employee activities such as vacation time and sick leave. Rather than sending an email to the manager, employees can apply for their holiday and have it automatically reflected in their paychecks.
A robust CRM system can help to manage meaningful relationships with customers. CRM systems can notify customers when a payment is due, when they qualify for a new financial product, or when the balance in their account is low.
Using a CRM system can significantly enhance the value that a credit union can provide for its customers without the need for face-to-face interaction.
It’s no secret that credit unions and traditional banks are subject to rigorous audits and regulatory requirements. Credit unions that have not adopted systems that improve the accuracy of their reporting will likely find themselves behind the curve.
Adopting systems designed to meet reporting needs can significantly boost compliance activities while decreasing reliance on old-school technology (which can lead to costly mistakes).
The path forward for credit unions to survive and attract new members may be arduous, but it’s not unattainable. To succeed in the new age, credit unions must appoint leadership with specialized experience who can recommend the changes required to meet the needs of their customers and workforce.
There are many great benefits to banking with credit unions, and reaching new customers to explain these advantages is crucial. Time will tell which credit unions survive and thrive in the next decade and which ones fail because they couldn’t fully adapt to change.
Our nationally renowned credit union recruiters have experience working with private, public, pre-IPO, and non-profit organizations. Clients are typically $50 million in revenue to Fortune 1000 companies or have assets between $500 million to $15 billion.
Successful placements span the entire C-Suite and include CEOs, Chief Operating Officers, Chief Financial Officers, Chief Sales Officers, Chief Marketing Officer, vice presidents sales, human resources, general counsel, and other director-level leadership roles.
Cowen Partners delivers 3X more qualified candidates than the competition. Through our proven retained executive search process, we find, vet, and deliver the top 1% of candidates for positions across the C-suite. Our process works for all initiatives (including diversity recruiting), as well as all industries, including (but not limited to) technology, healthcare, manufacturing, retail, real estate, financial service, private equity, and more.
Check out our industry-leading resources to see why Cowen Partners is a leader among the best executive search firms in New York City, Anchorage, Milwaukee, Baltimore, Richmond, Nashville, Louisville, Chicago, Seattle, Atlanta, Dallas, Las Vegas, Los Angeles, and beyond: