Is Digital Arms Race Causing Lack of Focus on Members?

Michael Carter

March 29, 2022

The 2022 Digital Maturity (download report here) revealed that 80% of CUs believe digital is essential to their competitive strategy. In other words, an overwhelming majority of credit unions believe digital is the key to retaining their current members and attracting new ones.

Yet, in the same survey, 75% of credit unions indicated that they are not in a position to fully utilize digital as a differentiator. The area where CUs were the least prepared to leverage digital was related to their focus on the member.

"Only 17% of credit unions completely agreed 
that their credit union prioritized 
organizational structure or technology decisions 
based on member experience."

On the one hand, it seems strange that credit unions, with their focus on delivering value to members instead of shareholders, would find themselves in this position. On the other hand, when seen as part of the challenge of creating a branch experience in the digital channel, the struggle is better understood.

Nonetheless, the credit unions that can meet this challenge will enjoy a competitive advantage that differentiates them from the herd. But how does a credit union move toward that goal? This question is answered best by considering what members as consumers of financial services what from their relationship with their credit union.

Our industry has overused phrases like “Amazon-like” and variations of the word “personalization.” Unfortunately, this overuse of these terms has compromised their usefulness. But it is worth considering how these words might inform our understanding of the challenge credit unions face when creating a branch-like digital experience. Because when these terms are directional signs that point toward the most critical element necessary to create a relationship with a member, being “known.”

Amazon uses big data, past purchases, and artificial intelligence in its famous recommendation engine to dynamically present relevant offers to customers; they send a message to the shopper that they understand their needs. And by doing so, Amazon fulfilled a need digitally that was no longer available in the age of big-box retailing creating a brand that serves an enviable number of households with well above average incomes with its Amazon Prime service.

Granted, credit unions deal with more than their members’ consumptive preferences and interests. But the approach used by Amazon to deepen its relationships with existing customers while attracting new ones deserves further consideration. Amazon applied technology to create a relational environment digitally. This achievement enhanced the “transactional” value of each customer and created a level of loyalty – i.e., repeat business – that extends this value over time. Is there a similar path for credit unions, i.e., a recommendation engine wired and tuned for proactively addressing members’ needs?

Yes, there is. But are credit unions so caught up in the digital arms race that they have lost sight of what can be done to change the game when it comes to retaining their members and attracting new ones? What difference would it make if each time a member visited their credit union website or logged into their accounts, they were presented with content that spoke to their reason for being there? What if a prospective member visited a credit union website, and that website could dynamically push content to them that offered the car loan that met their needs?  

Such things are possible, and for a lot less than the hundreds of millions of dollars Amazon invested in its approach. See for yourself.

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