A new report by the Digital Growth Institute finds that while 54 percent of credit unions and banks claim to have a documented digital growth plan, only 15 percent of respondents are actively implementing a digital growth strategy.
“Credit unions are looking for digital growth, but they are doing so without a defined plan,” said Digital Growth Institute’s CEO James Robert Lay, referring to his firm’s 2017 State of Digital Growth for Financial Institution’s report.
Lay explained the reason there is a discrepancy in what financial institutions “claim” is its digital growth plan compared to what its “actual” growth plan is due to self-reporting bias.
“By the way they answered the questions throughout the survey it was clear that they didn’t have a growth strategy,” said Lay who added that the average digital growth score was 27 percent. “So when you self-adjust for the self-reporting bias you find that financial institutions have a bunch of tactics in place but not a plan, which isn’t bad, but they just don’t have a long-term vision.”
In total, there were 262 survey respondents, 71 percent of which were credit unions, including the $238 million Eatontown, N.J.-based First Atlantic Federal Credit Union.
“We are currently enrolled in the Digital Growth Institute’s six-month training program and part of the process is taking the Digital Growth survey,” said Candice Nigro, First Atlantic Federal CU’s VP of marketing. “It was a very eye-opening process for me and my team.”
Back in 2012, the technology research firm Gartner predicted that by the end of 2017 a financial institution’s chief marketing officer will spend more on IT than its chief information officer. From Lay’s perspective, Gartner was holding a crystal ball.
“We are really seeing that prediction come to fruition as we consult with credit unions, particularly on the marketing side,” Lay told Credit Union Journal. “Marketing technology expenses are increasing and we are starting to see conflicts between the CIO and the CMO.”
Nigro explained that First Atlantic FCU “tends to focus” on digital marketing efforts, such as email, social media, editorial content and search engine marketing (SEM).
“What we are finding out from the Digital Growth Institute’s program is that the process of digital marketing needs to focused on bringing together all of the components into a single strategy,” said Nigro. “Currently, I would say that our digital marketing has been disjointed, and this program and the survey have shed light on ways that we can create a cohesive digital marketing strategy instead of individual efforts.”
The 2017 State of Digital Growth for Financial Institution report also found that only 12 percent of respondents have budgeted for digital growth and suggested that these institutions, on average, should allocate 30 percent of its total marketing budget for digital marketing.
First Atlantic FCU’s in-house marketing team consists of three employees, including Nigro, and two employees who work directly for its e-branch. In total, the credit union supports a staff of 60 people.
“The e-branch is part of the digital strategy of the credit union,” said Nigro who added the CU has four traditional branches. “It isn’t just about marketing digitally, but creating a digital experience for members and non-members alike.”
The website quandary
According to Digital Growth Institute’s report, a website that “sells” is the central component of a digital growth engine. However, the report found discrepancies in how financial institutions are investing in respective websites.
On average, it costs between $2.5 million and $5 million to build a new branch and $250,000 to $500,000 to per year to operate it, the report notes. Conversely, the average cost to build a website is $32,174. And, only 13 percent of respondents invested more than $80,000 to build a website.
“Financial institutions must invest in their websites to transform them beyond glorified online brochures and into websites that sell,” noted Lay.
Lay added that 53 percent of respondents have redeveloped their website in the last two years, but only 29 percent reported undergoing qualitative and quantitative user/member testing of their websites.
“Last year we updated our website and used feedback from a panel of college-aged students to build it out,” said Nigro. She added that of the CU’s approximate 20,000 members, 10,000 members are active online bankers.
“We are currently thinking of doing some updating again now that we have had the new site for a year or so,” said Nigro. “We are in the early stages discussing what changes need to be made, but I see it on the horizon for 2018.”