Credit unions must evolve in the wake of the coronavirus

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Larry Nichols, MDT

What will COVID-19’s long-term impact be? This question is top of mind for everyone, including those in the credit union industry. While no one can predict exactly what the future holds, what does seem certain is that things won’t simply revert back to how they were pre-pandemic. As the country inches toward reopening, ramifications from the crisis are expected to linger.

Shelter-in-place orders have shifted the way members conduct their everyday lives, including how they manage their finances. Digital has been propelled forward as a primary channel more quickly and broadly than anticipated. In addition to member channel preferences, social distancing has also significantly affected employees’ working conditions. The unexpected (and quick) transition to working from home wasn’t easy or seamless for all.

The changes in member behavior and internal challenges revealed during the crisis will shape credit unions’ priorities over the next several months. Savvy institutions will focus on reevaluating their digital service and support strategies and strengthening their business continuity and disaster recovery plans throughout the end of the year (and possibly beyond).

The deepening importance of digital

While the industry has buzzed about the heightening role of digital for years, COVID-19 has accelerated the timeline for when digital transformation must occur. Branch closures have caused a widespread spike in digital usage over recent months. According to studies released by J.D. Power, during the height of the COVID-19 pandemic, 37% of retail bank customers said they were using their bank’s mobile app more frequently than ever before.

Even as shelter-in-place orders lift, it will likely be a while before members feel comfortable returning to the branch, a place with many people and shared surfaces. Even if and when health concerns diminish, the digital increase might very well remain. Members who weren’t necessarily comfortable with digital pre-pandemic and those who preferred visiting the branch have now been forced to learn and leverage the digital channel. These consumers and businesses are being introduced to the conveniences and efficiencies of digital banking, many for the first time, and at least a portion will not want to go back – at least not as often or for as many tasks as before. Time is up; credit unions must truly embrace digital and provide members with a seamless, intuitive digital experience if they want to maintain relationships and their relevance.

A significant component of an excellent digital experience is personalization. Although credit unions have a wealth member data at their fingertips – details that would make even Amazon jealous – most don’t know how to properly leverage this information in meaningful ways. Determining how to organize and analyze data to anticipate member needs and personalize the experience is critical for credit unions to differentiate themselves and better serve members. This will be especially important as member interactions increasingly move from in-branch conversations to within the digital channel.

For example, credit unions should be delivering personalized service to their small business members that are struggling in the pandemic’s wake. This can be done most effectively by analyzing the data available to them. For example, if an employee can see that a small business member applied for a PPP loan and has missed one or more recent payments, this could serve as a reason to reach out and check in, proactively sharing budgeting advice and information about refinancing programs. Using data to offer targeted guidance and tools can help members during times of need and strengthen overall relationships.

Prioritizing pandemic preparedness

Not only will credit unions be challenged to offer more comprehensive and modern digital services to a wider range of members in the coming months, but many will tackle adjusting their business continuity and disaster recovery plans as well. Health crises and physical isolation weren’t conditions that many organizations had accounted for, causing several roadblocks during COVID-19. Examples of these issues included scarce availability of laptops and hardware, network bandwidth limitations and an uptick in fraudulent activity. Credit unions’ plans must be extended to outline protocols and procedures for a greater variety of situations, including a pandemic. This is also expected to become an area more closely examined by regulators.

Completing tabletop exercises with participation from staff across all departments – including HR, legal, lending, the C-suite and beyond – can help broaden the scope of the situations institutions are prepared for. These discussions should involve brainstorming around other potential scenarios to plan for as well as an analysis of the credit union’s response to COVID-19, such as their successes and what can be done better next time.

Technology partners’ pandemic preparedness must also be evaluated. How vendors responded to COVID-19 – noting if they were able to maintain operations without causing any service or member disruptions – might be an important factor to consider when making contract decisions moving forward. Taking the time to enhance business continuity and disaster recovery planning will ultimately translate into better employee and member experiences.

Even though semi-normalcy is slowly returning, the pandemic will continue to impact member service models and internal planning and procedures throughout the rest of the year. On the member service front, it’s time to prioritize digital transformation, finding ways to make the digital experience easier, faster and more personal for members. And, the way institutions approach business continuity planning deserves equal attention, as the pandemic demonstrated that anything can happen. The crisis introduced a level of uncertainty, but one thing remains constant – credit unions are dedicated to serving their communities. Those that adapt to the new normal will be well-positioned to provide exceptional, reliable member service now and in the future, regardless of what situations might arise.

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Digital banking Coronavirus Growth strategies Mobile banking