By Mica Moseley, Chief Revenue Officer of Arroweye Solutions
Credit unions have long known that standing out in the crowded financial services market isn’t about being everything to everybody. It’s about owning your niche. Being member-centric is a credit union staple, but as members’ lifestyles – and the competition – continue to change, success is about more than keeping up.
CUNA’s latest forecast projects credit union’s margins to be tight over the next two years. On the bright side, credit unions are still seeing a healthy 3.1% growth with a total membership of 126.6 million. While earnings are forecasted to be down in the short term, credit union leaders have made moves to recognize the value in the fintech market, and are proactively deploying more emerging technology.
For example, industry data indicates that in 2021, a majority (53%) of credit unions had already deployed APIs, with a similar amount (51%) reporting they have invested in cloud computing. These technologies are pivotal in competing in a fintech-focused financial services market. Increasingly, credit union leaders are pivoting their offerings to remain relevant.
Credit unions are already customizing and modernizing offerings to stay on pace with fintechs and neobanks. Being able to tailor modern solutions to fit your members’ needs is a niche opportunity that allows credit unions to lean into their strengths. To help you serve your members better, here are three key ways your credit union can stand out.
1. Own Your Market
Credit unions are built to be community-minded, regardless of size. Double down on this asset and find new ways to tap into local passions that are important to members’ lives. From schools and teams to events to key local industries, connect your marketing, and your services to these affinities. You may be able deliver personalized or segmented messaging, offers, payment card artwork, or digital features that tie back to local businesses or events.
Small fish in a big pond? These connections don’t have to be seven-figure sports sponsorships. Don’t underestimate the value of smaller events and organizations. Home in on specific neighborhoods, market segments or industries and let your members do your marketing for you.
2. Build and Maintain Trust in Good and Bad Times
Differentiating in today’s market is also about earning trust. You can enhance your reputation as a trusted community-member because of your local connections. By being a “first responder” to help members adapt to sudden economic or market changes, you build and maintain trust.
The pandemic has provided a strong use case for financial institutions that have leaned into the promise of true member success. Distributing billions in Paycheck Protection Program funds is just one way that the traditional financial services market, credit unions included, have differentiated themselves through their financial rails to get payments to SMBs faster.
One California credit union made headlines for helping consumers build a credit profile to better access mainstream financial products. Serving the unbanked and underbanked is one void the credit union sector can fill with products and services that help people bring people into the traditional financial fold. This includes products like on-demand debit cards that can act as a lifeline for getting COVID-relief payments. Or, in the case of the California credit union, they launched a “check-less” checking account that eliminated things like overdraft and monthly fees.
Jaqueline Ramsay, a spokeswoman for the National Association of Federally-Insured Credit Unions captures the concept well “If you look back at any natural disaster, government shutdown and now during coronavirus, credit unions have always been there for their people — even before the government or the Fed asks them to be. They don’t wait for a regulatory policy or a call from a Congressperson on the Hill to say, ‘Hey, I need you to help the people.’ They already have plans in place.”
Lean into that reputation by taking advantage of solutions like on-demand credit or debit card personalization when you need to get payment cards into members’ hands quickly. Being a resource makes a credit union invaluable in times when your members need you most. Serving as a trusted advisor is one core way credit unions have shown the value of traditional financial institutions in the ever-competitive payments ecosystem.
3. Customize Existing Products for Segmented Markets
2020 taught everyone to do more with less. All financial institutions are adapting by analyzing which areas of their business are performing best, and which should be left in the past. Credit unions and fintechs already have this in common – both know that the “everything to everybody” approach doesn’t work.
But how do you take your targeted approach even further in a cost-effective manner? By taking a nimble approach to payments card technology. This means only producing credit and debit cards when you need them, never in advance. Many organizations learned the hard way that contactless or dual-interface payment cards are no longer a nice to have. COVID-19 accelerated consumers’ desire to tap and go, and now it’s more of a norm than ever before. But if you’re sitting on 6-12 months of EMV inventory, you’re stuck.
This just-in-time approach also plays perfectly into your other local marketing strategies. Whether you produce cards to capitalize on a big local news milestone or for a specific organization, you never have to worry about being stuck with inventory that expires or becomes dated.
Despite 2020’s turmoil, this year is filled with opportunity to keep up momentum and embrace a market that is allowing credit unions to be nimble and adaptive to their member’s needs. Building out customized solutions, establishing and maintaining trust and being a community leader are all simple ways to remind your members that you are here to be their financial resource during the ups and downs of 2021 and beyond.