Digital payments continue to evolve.
In the age of the COVID-19 pandemic, digital interaction has become a focal point of contact – and sometimes the only point of contact – between credit unions and members. In a survey from FIS, 45% of respondents reported a change in the way they interact with their financial institution due to the pandemic. This rapid adoption of the digital channel appears to have grown into a preference for some with 30% of respondents from the same survey noting their plans to continue using online and mobile banking channels in the future.
This is not unique to the credit union space. Other industries such as retail and food and beverage have experienced an increase in the utilization of digital services such as Instacart, DoorDash and others. Even with the reopening of physical stores in the retail space, the numbers still do not mirror those of the year prior – and this is with the pent-up demand of not having access to physical stores for months. This retail example highlights what we are witnessing in the credit union industry: The accelerated adoption of digital has changed the way members will utilize the credit union and evaluate credit union services. In other words, members and prospects will judge the credit union much more aggressively when it comes to its digital services.
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A New Credit Union Experience
Member expectations of digital will be informed by experiences in other industries. As Warren Tomlin once stated, "a person's last experience is their new expectation." No matter the industry, a great digital experience sets the standard for all others.
In understanding the digital desires of members, credit union leaders should look to other industries and see what solutions can foster these types of experiences for their members. Additionally, it is important to shift preexisting viewpoints of digital services being primarily designed with millennial or even Gen Z members in mind. It is quite the contrary now. With the average credit union member being 47 years of age, and utilizing the digital channels, credit union leaders must ensure that these digital services offer all of the services a member needs, and are in line with expectations that enable the member to have a seamless experience.
The Role of Payments
Providing a personalized digital payments experience is key for members and will continue to be in the future. The earlier FIS survey cited that consumers are flocking to mobile wallets and contactless payments to avoid the virus risks that come with physical currency. As of May 2020, 45% reported using a mobile wallet, 16% reported a drop in cash use and 31% plan to stay this way post-pandemic. JD Power also cited that P2P has proved to be not only popular among consumers during this time, but those using P2P payments have a higher rate of satisfaction as well.
Why Digital Payments?
Digital payments alleviate the need for cash or checks, and bill pay is easier when managed all in one place – and there is no better place than the credit union. Members value this convenience today for health and safety considerations and will continue to value it in the future for its ease-of-use. New technology advances in artificial intelligence, or AI, takes digital payments one step further with its ability to personalize the payment experience, thus mirroring the personalization of an in-branch experience and keeping members happier with their digital experience.
To state that the COVID-19 pandemic has changed the world is an understatement. Not only has it disrupted business as usual, but it has changed how business will operate moving forward. Moving much of the global work force to working from home placed a greater importance on digital payments and having the right infrastructure in place is critical.
Credit union members are no different. They truly value the ease of digital payments, will continue to look to digital in the future and most likely will not return to traditional practices in large numbers. For credit union leaders, now more than ever is the time to examine the digital experiences that your credit union provides to members in order to further ensure your credit union is ready to deliver upon and respond to the paradigm shift that is the "now normal."
Mickey Goldwasser Mickey Goldwasser is the Vice President of Marketing and Chief of Staff at Payrailz, a digital payments company based in Glastonbury, Conn.
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