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Consumer interest in digital banks has risen in recent years, especially among younger generations. As the use of remote services and business operations increases, individuals across age groups are becoming more comfortable with the idea of fully digital, as opposed to in-person, financial services. Up to 91% of consumers prioritize mobile and online access in choosing where to bank, in addition to security and fraud protection, according to Motley Fool Money's 2024 Digital Banking Trends and Consumer Priorities survey. However, consumers still place high value on quality customer experiences.
Credit unions’ historical willingness to embrace innovation in financial services strategically positions them with the perfect opportunity to capitalize on the growing demand for digital experiences. Simultaneously, in-person support at physical branch locations enables credit unions to provide a level of customer service and elevated experiences that cannot be offered by fully digital banks.
Compounding Consumer Demands for Modern Banking
Digital-first banking has significantly adjusted what consumers demand from their financial institutions. As digital and remote services become more prevalent in day-to-day experiences, consumers expect the same level of efficiency and convenience to extend to their financial transactions and support. Round-the-clock accessibility, along with fast, seamless transactions, are non-negotiable for today’s digital natives, as well as other generations who have become accustomed to regularly interacting with digital vendors and processes.
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Trust in traditional branch banking models and large financial institutions is also declining, driving 13% of consumers across generations to claim they plan to switch banks, according to J.D. Power. Doubts around large corporate banks’ abilities to serve consumers’ best interests has caused account holders, especially younger people who have lived through frequent and significant economic downturns, to flock to emerging and regional financial institutions.
On top of increasing demands for convenience, security and trust, 91% of consumers cite quality customer service as a top requirement for their bank of choice, the Motley Fool Money survey found. Credit unions with in-person branches and modern digital transaction services are perfectly positioned at the confluence of these demands to facilitate elevated member experiences and attract younger generations to their member base.
Credit Unions' Advantages Depend on Modern Transaction Technologies
Unlike traditional retail banks, credit unions have always valued the satisfaction of their members over pleasing shareholders. This emphasis on building trusting relationships, paired with credit unions’ regional or local footprint, creates a connection to community that engenders trust and establishes the foundation for heightened member experiences. However, to truly take advantage of shifting consumer demands, credit unions must also offer convenient and secure digital experiences.
Digital Payment Solutions
Consumers’ daily activities using digital payment methods have led them to expect the same convenience from their financial institutions. Younger individuals tend to prefer to use mobile apps for banking transactions. Digital wallets are also increasing in popularity due to their convenience, broad acceptability by many vendors and services, as well as the additional security provided by tokenization. Text-to pay allows members to submit payments quickly and is especially beneficial for those in areas with limited internet connectivity.
Digital payment tools also enable credit unions to provide members with features that further increase convenience and improved experiences, such as automated recurring payments. Scheduling recurring payments eliminates the risk of late fees for transactions like monthly loan installments. Payment automation also increases trust between the member and their credit union, as both parties trust that financial obligations will be met.
Secure Payment Processing
Digitally executing financial operations can concern consumers when it comes to protecting sensitive information, especially those who have come to expect the assurances provided by physical bank branch security systems and protocols. That said, digital payments and transactions aren’t inherently riskier than physical processes – they are simply vulnerable to different threat types.
Data breaches are a constant threat in the digital realm and must be defended against with the use of robust security protocols offered by proven payment technology solutions. That said, protective measures shouldn’t impede a smooth user experience. If members are overly inconvenienced by security measures, such as excessive multi-factor authentication or repetitive identity validation measures, their experience can be compromised. A healthy balance must be struck between digital transaction security and convenience to consumers.
Artificial Intelligence and Machine Learning
Digital payment technology automatically tracks and logs transaction data, which can be leveraged for AI analysis to identify opportunities to enhance both operational efficiencies and member services. Gaining a greater understanding of members’ historic behaviors, payment preferences and transaction patterns can help credit unions offer personalized payment solutions and proactively address member needs. AI can also analyze transactions with the purpose of identifying suspicious activity, further protecting members without introducing frustrating elements to the user experience.
Trust Meets Technology: The Path Forward for Credit Union Success
Modernizing the experience, by deploying digital technology that not only makes transactions more convenient but also protects members from digital threats and fraud, will enable credit unions to attract consumers who are reconsidering their relationships with traditional investor-oriented banks. These tools also offer an opportunity to improve trust between credit unions and their members by mutually benefitting both parties.
Digital payment technology is much more than a simple transactional tool. It’s essential to growing the membership of credit unions, increasing operational efficiency and ensuring elevated member satisfaction.
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