Using Online Technology to Increase Member Loyalty

The competitive advantage for credit unions has always centered on the strong personal relationship, loyalty and high member satisfaction rates. Increasingly, in order to maintain high levels of member satisfaction, credit unions are implementing more online-based financial services.

Reach Out and Get Face to Face

While this is in line with the move of many business services to the online channel, it unfortunately decreases the time that members spend in the branch face-to-face with your staff developing deeper relationships. To compensate, credit unions need to "reach out and get face-to-face" "to members online. If done correctly, this will be a powerful way to improve services and strengthen member relationships even further than traditional communication allows.

Increase Member Loyalty

Web-based business services can increase member loyalty by offering new touch points while encouraging multiple relationships and giving members the same level of attention that they would receive at a branch only now with new convenience. For example, the ability to open an account online can increase customer member satisfaction, improve security and compliance by automating processes and lead to additional servicing with cross-selling opportunities; all while a helping credit unions improve margins or free up resources to pay more attention to members by decreasing the costs associated with brick and mortar branches and maximizing efficiency. Additionally, offering this technology helps credit unions reach out to new members by providing an easy on-boarding process that can be completed anytime and from the convenience of the home or office.

A More Competitive Environment

The ongoing growth in Internet use and adoption of online banking has created a more competitive environment between financial institutions as geographic barriers are eliminated. The credit unions that are limited to a few select SEGs or geography are starting to feel the pressures of neighboring and far out institutions. This makes it critical for credit unions to have the ability to automatically "switch" accounts from other financial institutions to them both quickly and easily. Users can switch any direct deposits, transfer any payments that are automatically deducted from their accounts, pay off loan accounts and close other financial accounts. A value-added service such as this enables a credit union to engage members on a more active level, and it also makes it easier for the credit union to become the primary financial institution.

Communicating With Members

Once a credit union has invested in the technology it needs to leverage the Internet, the new online financial services offerings must be effectively marketed to members. For example, Tyndall Federal Credit Union has done an excellent job of communicating about its one-stop-shop online to all members. The credit union offers almost all the same services that members can perform in the branch from the comfort of their own PC, including the online account opening and funding of checking accounts, savings accounts, money markets, CD's and loans, as well as home banking. Working in conjunction with its brick and mortar branches, Tyndall member service representatives collect e-mail addresses for future follow-up while also leveraging the cost benefits and effectiveness of online marketing to promote this new channel. Tyndall has also initiated a stronger focus on Gen X and Gen Y by marketing on its Facebook page and advertising on YouTube videos.

Cost-Efficient Advantages

"Our business strategy is to give back to the member and new online banking services provide a cost-efficient way for us to offer rates more competitively as well as other advantages, like refunds on ATM charges," explained Debbi Dial, Senior Vice President and CIO at Tyndall FCU. "Banking online actually strengthens our member relationships. All credit unions will eventually have to leverage Web banking to help serve members that are too busy to visit branches; and, as a bonus, it drives down expenses."

A Clear Return

The returns of Tyndall's online strategy are clear: 35% of its business comes through online lending ($6 million was approved in April 2009) and the e-checking accounts that it introduced less than two years ago have already produced 8,000 accounts with a balance of approximately $35 million. What is more interesting to note is that 3,000 of the accounts, representing $10 million, are from new members.

Online Members More Satisfied

According to an Online Financial Services Study recently released by ForeSee Results and Forbes.com, online members of credit unions are "substantially more satisfied than online customers of large, national banks and small, regional banks." The score for credit unions was 86 on a 100-point scale, compared to 82 for banks. These results indicate that credit unions are implementing online banking services more efficiently, which enables them to better retain members and attract new ones. Since individuals 19 to 30 years of age make up the highest percentage of Internet users, credit unions can use this opportunity to strengthen their appeal to younger generations, to onboard new younger members and retain these members through all of their financial life cycle. Additionally, no matter what the age of the member, convenience and time savings appeals to everyone. Long before web banking was even imagined, financial institutions knew that the more accounts a member had further increased their loyalty. Offering new accounts, online funding, switching and ongoing money transfer services as a part of full-range of banking options from the comfort of your member's home produces a delightful member experience earns their loyalty that pays handsome dividends.

Dinesh Sheth is the Founder and CEO of Memphis-based uMonitor, an innovative financial solutions provider for credit union member acquisition and retention. He may be reached at dsheth@umonitor.com.


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