Lending & Credit Risk

Is Your Credit Union Losing Ground with Members? Here’s How to Gain it Back

Kylee Wooten

January 3, 2020

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Key Takeaways

Member satisfaction dropped for credit unions in 2019, and customer satisfaction at banks has surpassed credit unions for the first time.
Technology can help credit unions improve gaps in member satisfaction, including speed, stronger relationships, and an expanded footprint
Ensure your credit union is taking the necessary steps to get the most out of your tech investment.

This year, banks surpassed credit unions in customer/member satisfaction, with a score of 80 and 79, respectfully, according to the American Satisfaction Index (ACSI). Banks have been closing the gap with credit unions in recent years, tying credit unions’ satisfaction score at 81 in 2018. This is the first time in the history of the survey that banks had a higher satisfaction score than credit unions.

This year’s drop also marks the first time that credit union satisfaction has dropped out of the 80s – a significant dip from its peak score of 87 in 2011. So, why are credit unions losing ground with members? Some point to technology. “Customers want mobile options…As technology improves, so does customer satisfaction,” said David VanAmburg, managing director at the ACSI.

To change the satisfaction trajectory in 2020, improve the member experience, and grow the institution, many credit unions are looking towards technology. There are several key areas credit unions can focus on in order to close the satisfaction gap.

Improve speed through technology

Credit unions once held the advantage of speedy financial transactions; however, it slipped in 2019, now matching banks, which held steady year-over-year. As VanAmberg noted, technology has been a big driver for customer satisfaction. Thanks to digital-only financial technology companies, such as Kabbage and SoFi, that promise loans in as little as 10 minutes, customer expectations of loan turnaround time has dramatically shifted. Today’s technology affords institutions of all sizes to operate with speed and efficiency to deliver a faster decision.

Loan origination can be a long, frustrating process – for both the lender and the member. However, automating the life of the loan enables your credit union to improve speed and efficiency throughout every step of the lending process – from application, through credit analysis, decisioning, onboarding, and renewals. In fact, Neill LeCorgne, former President and Chief Operating Officer at Regent Bank in South Florida, estimates that technology can transform the lending process from one that consumes 35 labor hours to one that takes 16 labors hours (and an even smaller fraction for simpler loans). Automating areas of lending, such as online loan applications, help to reduce friction and bottlenecks and allow members to secure funds faster, improving the borrower experience.

Strengthen relationships using technology

Personalized service has been a hallmark of credit unions. Although it fell from 2018, credit unions maintained their advantage over banks in the area of courtesy and helpfulness of staff. Most likely, your credit union is committed to making strong connections with members to cultivate customer satisfaction. While some may feel that technology weakens personal relationships, savvy financial institutions have found that technology can actually strengthen their banking relationships. It does this in two ways. First, technology frees up staff members’ time by automating time-intensive, onerous tasks so that they are able to focus on building and nurturing member relationships. Second, technology enables a more transparent, seamless banking and lending process, giving more insight into member relationships and reducing stall time and bottlenecks that drive member frustration.

By turning to automation, staff can focus more on customer-facing activities, rather than duplicative data entry and tracking down components of an application. As noted earlier, automating the life of the loan can save staff nearly 20 labor hours. The additional time once used tediously keying in tax return information or tracking down signatures can now be used to provide better customer service to members.

In addition to having more time for member relationships, technology also allows for richer member data, giving you a better understanding of their relationship with the credit union and their needs, thus creating a better member experience. For example, a credit union may leverage a relationship manager solution, giving staff access to members’ ongoing financial activities, full banking history, and profitability, providing immediate insight into lending opportunities. Relationship manager software aggregates all of this information into one centralized location, giving credit unions a 360-degree view of each member and enabling staff to provide high-quality service to members. In addition to having better insight into each member’s relationship with the credit union, technology like relationship manager and workflow notifies staff where loans are in process and prompts next steps to reduce stall time and bottlenecks.

Resolve to make quicker loan decisions in 2020.

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Build a "digital branch" with technology

One of the biggest areas for customer satisfaction improvement, according to the ACSI survey, is the number and location of branches. Having the right technology in place, however, could help curb the need for a physical branch and improve member satisfaction. Credit unions and other financial institutions are leveraging technology to provide the same services members and customers seek when visiting a physical branch, such as depositing checks, opening a new checking account, and applying for a loan.

With an online loan application, for example, you can turn your credit union’s website into a digital branch that is efficient for both members and staff. Loan applications require a significant amount of documentation and signatures and having to visit a physical branch to deliver these items can be a huge headache, especially if there are multiple people involved and the branch is difficult to get to. By implementing an online loan application, your credit union can significantly reduce the back-and-forth with members by allowing members to apply online at their convenience.

Get the most out of your investment

There are many ways to leverage technology to improve the member experience and overcome the gaps in satisfaction. But it’s also important to be diligent about getting the most out of your tech investment in order to accomplish those goals and maximize the value of the investment.

To learn how to reach the full potential of your technology investment, how to measure success, and motivate end users, join Steven Martin from Marcato Advisors, for a complimentary webinar, “Return on Investment – Measuring and Achieving Value from Fintech,” on January 23, 2020.

Regardless of the strategy your financial institution chooses to take in the new year, the underlying goal to grow the bank or credit union will likely be to become more efficient to stay competitive with larger financial institutions. To grow your financial institution, it must become more agile, more accurate, and more customer-centric. The banking landscape has changed dramatically this decade due to new and emerging technologies. Will your financial institution leverage these technologies to adapt and grow in 2020?