In “Credit Union Tracker®”, Canvas Credit Union’s Damian Jakubczyk discusses how in-branch member service must be maintained while evolving to also deliver personalized digital offerings, to acquire and retain a new generation of banking consumers .
Digital banking has become such an important part of how consumers do business that for some it has nearly eliminated the need for banks and credit unions to have a physical presence.
Financial apps and the mobile devices they run on are so ubiquitous that many young consumers have never set foot in front of a teller to make a deposit or apply for a loan. Credit unions should maintain face-to-face banking services for members accustomed to the traditional and personalized services they offer. Still, UCs need to balance this with adopting more advanced digital services that meet the needs of customers who prefer not to walk into a financial institution.
“Millennials and Gen Z are looking for instant gratification, so using the services they signed up for should be on the fly,” Damian Jakubczyk, vice president of digital innovation for Denver Canvas credit union, said PYMNTS in a recent interview. “At the other end of the spectrum, more mature generations focus on ease of use, so the experience of these apps should be almost self-explanatory.”
Credit unions have been particularly under pressure to compete with large financial institutions (FIs) as well as more nimble FinTechs. As nonprofit institutions, UCs must balance fees, interest rates, personal services, and profits. Consequently, this can often lead to having less capital to invest in digital transformation than their profit-minded counterparts.
“Credit unions need to improve on multiple fronts to serve the members that FinTech specializes in and is trying to capture,” he said. “Seamless experiences continue to be top of mind, as well as using the rich data we have and putting it to good use to create that personalized member experience.”
The unique digital needs of different generations
Jakubczyk said the historic identity of credit unions is that of small, local, street-corner banks that older members have enjoyed because of the personal interactions offered — and CUs should work to continue enjoying the physical presence. . At the same time, young consumers are accustomed to instant and remote services to open accounts, apply for loans or purchase cryptocurrencies with little friction.
While more mature generations have embraced technology to make their digital banking more convenient, many are still not comfortable using it. Jakubczyk believes UCs can act as educators to help clients understand how to use digital tools to their advantage. He said Canvas representatives, for example, are available to meet with members and walk them through the steps of using digital tools, whether on their phones or other devices, to help them make transactions.
“When it comes to trying not to alienate our members, especially our older generations, we stand shoulder to shoulder with members who need extra help,” he said. “The key is that we’re not preaching to the member, but really having a two-way dialogue. We teach the member while leaving space to learn and meeting their specific needs.
Credit unions and the future of digital technology
Financial technology and what members expect from it is changing rapidly, and Jakubczyk said credit unions need to be aware of what they can and cannot offer immediately. For example, while providing digital functionality such as bill payment, instant transfers, and no-wait account opening is crucial, technologies that enable transactions using cryptocurrency may have to wait a while.
“Bitcoin and the blockchain behind it is a technology that has disrupted or at least challenged the payments industry. We have to recognize that the new standards set by these technologies compete with some traditional payment rails that exist today” , did he declare.
Another issue that he says will hamper cryptocurrencies is liability. NCUA regulations insure most credit union deposits, for example. Since cryptocurrency is highly speculative, what if a member loses that money? Is the credit union responsible, and what will it do to the reputation of the organization?
The future of UCs competing with traditional FIs, Jakubczyk said, may lie in their ability to partner with FinTechs that have the same mindset and culture of serving members. Such partnerships can provide the technology infrastructure that meets members’ needs without requiring large capital investments. In the meantime, UCs should continue to serve memberships as they always have, but with an eye on improving the digital member experience.
We are always looking for partnership opportunities with innovators and disruptors.