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30Jun

It’s Time for the Accelerator- NOT the Brake!

It’s entirely understandable for credit union leaders to feel overwhelmed these days. Consider the list of challenges they’ve had to overcome in real time, with little to no advance warning:

  • A decade-long economic expansion shifted into an unprecedented reversalSet Article Author
  • Branches, still a primary source of member engagement for most CUs (for better or worse), had to be shuttered
  • Call center member support processes required rapid retooling to accommodate remote working models
  • Drive-thru teller lanes experienced massive traffic spikes
  • Financially strapped borrowers began calling in huge numbers, requesting payment “holidays” and other assistance  
  • An unprecedented stimulus bill delivered ACH and check payments to most members, providing relief but leading to still more inbound questions
  • The Paycheck Protection Program provided a valuable lifeline to small business, but consumed a huge amount of bandwidth from CUs serving such members

Credit unions have weathered the storm quite impressively so far, but there’s hardly time to rest. As branches reopen, leaders need to sort through the security ramifications of a lobby filled with mask-wearing customers- a notion that would have been laughable three months ago. And sadly, with all signs pointing to a protracted recovery the loan delinquency and default challenges are likely just beginning.

With so many must-dos on their plates, CU leaders can be forgiven for a temptation to hunker down and focus on “the basics.” With interest margins squeezed, card revenue suppressed by lower spending and higher bad debt provisions all but inevitable, a variety of budgeted projects are likely to be in jeopardy. In the IT shop, this could put planned digital enhancements at risk.

Here’s the thing- digital is the one area where credit unions should be accelerating their initiatives, not succumbing to the short-term budget allure of scaling them back.

The logic is quite compelling: COVID-19 quarantines have created a dramatic forward jolt to digital banking adoption, particularly among the older cohorts typically viewed as digital laggards. Will some of these new adopters revert to old habits once branches reopen? Sure- but we’re not going all the way back, especially given the wider group now trained on these digital tools, with early research showing little dissatisfaction.

But here’s the real kicker- credit union member bases tend to skew older. This is also the group most susceptible to COVID-19, and therefore less likely to return to the branch anytime soon. At the same time, the younger demographics CUs need to attract cite digital capabilities as a key factor in FI selection. Whether it’s perception or reality (probably some of both), digital tools are considered a major gap between credit unions and the largest US banks consistently gaining market share.

If your credit union got ahead of the curve in offering state of the art mobile and online capabilities, congratulations- hopefully you’ve successfully communicated these enhancements to members and are realizing the benefits. Our digital endgame isn’t much different from the one envisioned pre-COVID; we’re merely now on track to get there faster. Credit unions cannot afford to arrive late to the finish line- if the pit crew is already juggling too many projects, don’t let digital be the one sacrificed.  Emerging from the pit at half speed won’t lead to victory.

 

Looking for an open exchange of credit union best practices for navigating COVID-19 issues? Check out BIG’s Digital Town Halls, held live each Wednesday. See https://www.big-fintech.com/CU-Digital-Town-Hall for more info and to access past recordings.         

    

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