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Strategies for serving members in uncertain times

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Even before the COVID-19 pandemic hit the United States – and despite a strong economy and record-low unemployment – consumers’ financial outlook has actually been deteriorating.

According to a J.D. Power survey conducted in late 2019, 43% of consumers ranked their overall financial knowledge as weak. Three-quarters felt stressed about their current financial situation and 52% were spending as much as they were earning or more. Most alarmingly, more than six in ten did not have enough cash available to cover a $500 emergency.

Sean Desmond is chief customer success officer at nCino.
Sean Desmond is chief customer success officer at nCino.

Adding to these feelings of stress and worry was consumers’ dissatisfaction with their current banking relationship. More than half (52%) of those surveyed ranked their bank as “poor” in helping them make better financial decisions.

A challenging situation, indeed. And then the coronavirus began spreading widely.

COVID-19 dumped kerosene on a burning house

By the end of March, three-quarters of Americans were under some form of lockdown, with schools, restaurants, bars, retailers and most other “non-essential” businesses shuttered across the country. The nation saw a record 6.9 million unemployment filings in less than two weeks. By most measures, the country has already entered a sharp recession.

When J.D. Power ran its financial climate survey again in late March 2020, the indicators of poor consumer financial health had only intensified: 90% were now somewhat or very worried coronavirus will hurt their financial situation, eight in 10 were worried their family will lose income due to workplace closure or reduced hours, and 84% were somewhat or very stressed about their overall financial situation.

How credit unions can help dampen the flames

Credit unions are in a unique position to both help their members during this challenging time and solidify their status as their members’ trusted financial resource for the future. Here are three actions you should take today:

1. Address your members’ immediate needs: According to J.D. Power, consumers are looking for specific measures of relief from their FIs. Almost four in 10 are seeking fee waivers and 22% are asking their bank or credit union to offer mortgage payment relief. Others simply want information about what their FI is doing to prevent service disruptions or how to access their accounts via mobile or online banking.

Based on the movement’s longtime “people helping people” philosophy, credit unions are already leading the way in helping consumers navigate this unprecedented crisis. According to a March 26 survey from the Credit Union National Association, 95% of CUs are offering loan modifications to their members, 80% have created new loan products and 85% are waiving fees. Nearly two-thirds are offering debt consolidation services and/or financial counseling, and three in 10 have made donations or provided other aid to community organizations.

2. Offer financial education and advice: Your members are seeking solid, trusted advice during these uncertain times. Proactively contact them to set up virtual or phone counseling appointments. Listen to their concerns and provide a roadmap for their financial future. As their primary financial institution, you are in the perfect position to help guide them toward achieving their short- and long-term financial goals.

Also, with a majority of schools out of session across the country and parents working from home, it’s the perfect time to ramp up your financial education program. Introduce online and video-based resources to teach budgeting, saving and credit skills. Consider launching a kid-friendly e-newsletter or facilitating a life skills simulation webinar.

Financial education isn’t only for students — consider hosting virtual financial literacy webinars for adults. Start by focusing on topics related to the current crisis. Longer-term, you can expand the program to offer seminars on evergreen topics like budgeting, retirement investing, taxes, home- and car-buying, and insurance.

3. Prioritize digital access: In the past few years, the big banks have widened the satisfaction gap with small to midsize institutions, especially among younger consumers. A major reason is their significant investments in easy to use, seamless digital technology.

In the midst of the pandemic, members see online and mobile access to their finances as a necessity, not a luxury. Credit unions must make the member experience relevant and personalized, using AI-driven insights, reminders and prompts to help guide their members toward the right solutions to meet their critical financial needs.

Whereas yesterday a member service representative or loan officer could take a loan request or membership application in person, today that member must be able to quickly and easily complete it online or on their smartphone, with minimal guidance.

To achieve this, you must establish complete and seamless continuity across all of your member channels, whether online, mobile, through the call center or in-branch.

Prepare now for a long recovery

This crisis will not last forever, so use it as an opportunity to reimagine your service delivery model. The pandemic has accelerated the long-running migration from a branch-based membership experience to a largely digital experience. There is no turning back now. It is time to truly consider, without prejudice, the role of the digital branch in your credit union’s future.

If you have already begun your digital transformation, accelerate it now. The remote channel must become a core part of your member service and growth strategy, not simply an afterthought. Make it easy for your members to do business with you anywhere and anytime. This means facilitating all member onboarding, loan applications, closing and funding, as well as transactional activities like deposits, withdrawals, transfers and payments consistently and transparently in the digital universe.

By embracing their digital future, credit unions will successfully compete with the big banks, grow market share and continue to provide their members with the best service in the world.

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