If you want dedicated members, you'll need to get them onboard with digital banking.

That's the conclusion from a new Fiserv study, which found that "digital bankers" are financial institutions' most valuable players. After digital enrollment, the study revealed, product adoption rates for digital versus non-digital bankers were 58.4% to just .04%.

"A robust onboarding and digital banking adoption program for new members is essential," said Deva Annamalai, director of innovation and insights for the Brookfield, Wisc.-based Fiserv. "Educating members on the various timesaving features of digital banking will engage customers from the get go."

The referenced Fiserv research report, "Quantifying the Value of Digital Engagement," surveyed 412,000 Bank of West customers over a two-year period (August 2013 to August 2015). Among areas of study were millennials and Gen Xers (ages 18 to 55 years old). Banked consumers in this age span engaged in high ACH activity and had a high frequency of transactions offline, online and via mobile.

Annamalai explained that Fiserv is currently in the process of administering the same survey to a large credit union, but that statistics were not yet ready to share. He stressed, however, that credit unions shouldn't look at digital offerings merely from an age perspective.

"While Millennials and Gen-X members are more likely to be digital banking users, digital banking adoption drove increased ROI across all age demographics," said Annamalai. "It may seem intuitive to focus digital banking marketing efforts on younger members, but these services can benefit all members."

Ron Shevlin, director of research for the Scottsdale, Ariz.-based Cornerstone Advisors, said that tech-forward credit unions looking to gain younger members shouldn't be overly concerned with losing technology troglodytes as long as non-digital channels are still offered.

"If you're not a digital channel user, how would know if your credit union was catering to digital banking customers or not?" He questioned. "The only reason I can think of to explain why less tech-interfacing members would care what their CU does with digital channels is if the CU was closing branches or making it harder to transact and interact through non-digital channels."

While Shevlin agreed that the trend at branches throughout the industry is removing physical tellers and replacing them with virtual teller machines and video conferencing, members, he said, have historically assimilated to new operations and methodologies.

"In a study I'm currently doing, not one of the credit unions I've spoken to said they have experienced any problems with getting members to change their behavior," he said. "The credit union experience, to date, has basically been built to serve the less tech-interfacing members." He continued. "Building out new digital capabilities for a new generation of members – and for the changing behaviors of the older members – is not happening at the expense of non-digital delivery."

Adopting Digital

While it may be debatable to determine the impact tech-forward initiatives at credit unions are having on non-digital members, statistics related to digital banking customers at Bank of West demonstrate clear advantages.

The report found that after digital enrollment, revenue growth for digital customers was 10.7% compared to 4.5% for non-digital customers. Product adoption rates for digital versus non-digital were more extreme at 58.4% to just .04%. And if the argument is that traditional banking customers are more loyal, the customer attrition rate after digital enrollment was 8.9% compared to 13.8% for non-digital customers.

"When members set up direct deposit, encourage them to set up payments as well. Enroll them into bill pay and show them how to set up a payee, demonstrate P2P and account-to-account transfer features along with mobile remote deposit capture," said Annamalai. "These features build loyalty."

Whereas there is a "digital-first" movement in the financial services industry, Shevlin said he has not yet seen a credit union that has transitioned from a branch-first platform to a digital-first platform.

"There are credit unions that are digital-first because they've always been digital-first or at least not branch-first. Alliant Credit Union is a great example," he said. "They have a geographically dispersed set of members, many of whom are traveling all the time. A branch-centric or branch-first approach has never been its strategy."

In Shevlin's estimation, credit unions with a community charter and a geographically bounded footprint should not consider a digital-first ethos. He explained that these CUs aren't "branch-first" or "digital-first," but likely have members who are one or the other.

"Over time, it seems pretty likely that more and more members will be digital-first, and maybe at some point, some of those credit unions will decide to focus primarily on digital-first, or even digital-only members," said Shevlin, but he added a digital-first cautionary clause. "If a credit union positions itself as helping its members manage their financial health, but doesn't provide solid PFM tools and advice through digital channels, it's not delivering on its strategy."

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