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Credit unions must accelerate their adoption of technology platforms that provide end-users with experiences on par with those offered by Big Tech, with consumers across all generations now expecting digital experiences that are personalized, fast and frictionless.
That's according to a new report from Alkami, a Plano, Texas-based digital banking solutions provider for U.S. banks and credit unions. The report, "Digital Banking Market Pulse: Big Tech's Influence on Digital Banking," was based on a June 2021 survey of 795 consumers, who represented customers and members of a range of institutions including credit unions, and 150 regional and community financial institutions.
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Alkami found that regardless of age, consumers want digital banking experiences that rival those offered by Big Tech companies such as Amazon, Google and Apple, and 40% of respondents said they believe the "bank" of the future will primarily identify as a tech company. Community financial institutions such as credit unions will be challenged to deliver Big Tech experiences on their own, given they require major investments and a multitude of workers, therefore they must collaborate with regional peers they previously considered competitors and tech companies to up their digital banking experience ante – as long as the collaborators are eager to and capable of keeping pace with Big Tech, the report advised.
"Today's consumers expect the advanced digital experience provided by Big Tech, and this expectation is extending to all digital aspects of their lives, including daily banking transactions," Alkami Chief Marketing Officer Allison Cerra stated. "To keep pace and remain competitive, FIs must recognize what customers and members most want, and leverage modern digital banking platforms to achieve those goals."
One area where consumer digital banking preferences differ according to generation is the use of artificial intelligence in apps, with 38% of Gen Zers (ages 18-24) stating they prefer AI/machine learning recommendations as they aren't as likely to be biased or push unwanted products, compared to 25% of boomer respondents. However, no generation is completely turned off by a lack of privacy or pinging notifications – 73% of respondents said they prefer an app that understands their needs and priorities and shares relevant information over one that respects privacy and doesn't push offers.
The report also revealed that 41% of financial institution respondents cited the changing technology landscape as their greatest risk, 26% of consumer respondents would consider switching from their primary financial institution to a major tech company in general, and 44% of consumer respondents would be open to switching if the tech company offered services similar to those offered by their financial institution. In addition, 79% of respondents said they would consider opening a checking or savings account with a Big Tech company, fintech or neobank. However, only 21% of financial institution respondents said they consider major tech companies competitors.
"Though Big Tech companies are the least likely to be considered a competitor by regional and community banks and credit unions today, perhaps FIs are missing the pervasive influence of these companies over consumer preferences in general. Even if the competition is not overtly direct from these Goliaths, the indirect threat they pose in notching up consumer expectations over time is perhaps more insidious," the report warned.
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Natasha Chilingerian
Natasha Chilingerian has been immersed in the credit union industry for over a decade. She first joined CU Times in 2011 as a freelance writer, and following a two-year hiatus from 2013-2015, during which time she served as a communications specialist for Xceed Financial Credit Union (now Kinecta Federal Credit Union), she re-joined the CU Times team full-time as managing editor. She was promoted to executive editor in 2019. In the earlier days of her career, Chilingerian focused on news and lifestyle journalism, serving as a writer and editor for numerous regional publications in Oregon, Louisiana, South Carolina and the San Francisco Bay Area. In addition, she holds experience in marketing copywriting for companies in the finance and technology space. At CU Times, she covers People and Community news, cybersecurity, fintech partnerships, marketing, workplace culture, leadership, DEI, branch strategies, digital banking and more. She currently works remotely and splits her time between Southern California and Portland, Ore.
