Four out of 10 Americans have not visited a bank or credit union branch in six months according to U.S. News Money's "10 Banking Trends for 2016." Bankrate's Financial Security Index survey says this number is rising. To better serve member-customers and attract new members, progressive credit unions are looking to add more convenient online banking options, as well as other services that speed members' access to financing and funds.
One major area for growth is among millennials, who represent more than a quarter of the U.S. population. With 83 million born between 1982 and 2000, millennials now outnumber the 73 million baby boomers, according to the U.S. Census Bureau.
Engaging millennials who are tethered to their smartphones requires a mobile-first strategy. As Credit Union Journal reported (What do Millennials Want from Banks? Everything. Nothing. Whatever), a recent CCG Catalyst survey of 450 consumers aged 18 to 34 found that 90 percent have a relationship with a traditional financial institution. The majority in that age range (68%) use online banking, with 44% comfortable sending money digitally and 39% using mobile remote deposit capture.
Based on our own internal survey data of more than 1,000 people ages 18 to 34, 92% report currently using a bank, and nearly half, or 45%, say they have also used non-banking services including prepaid cards, check cashing, pawn shops and payday loans. This presents an interesting opportunity for credit unions to capture a new market segment or augment service offerings for existing members.
Today, most CUs that offer short-term cash advances require these loans to be originated in person at a branch. Waiting to visit a branch during normal business hours is not convenient or practical for borrowers who need emergency funds. If CUs have the ability to originate and service these loans online, they could ease members' burdens, leading to more satisfied and loyal members and position themselves as an attractive banking option for new members. This type of emergency funding opens the door to cross-sell other products that can help borrowers save and improve money management. In fact, credit unions can grow their membership base by offering short-term loans with greater convenience, speed and security.
For CUs that lack the technology and infrastructure to support these quick turnaround loans and other digital transactions, there are new fintech solutions available. By partnering with a fintech company, credit unions don't need to make tremendous investments in new technology or hire specialists to manage the latest advancements. Fintech solutions providers can supply computing power and protocols for credit unions to develop and manage a robust online presence.
Many fintech providers offer a comprehensive suite of solutions that will allow credit unions to make the transition to digital banking in a methodical manner, adding online products over time. Fintech companies can also deliver customer service training and support other credit union team members as they upgrade their systems and processes. In addition, the fintech solutions provider can support credit unions in harmonizing the digital and branch experience so that members can conduct business in the manner that is best for them—whether it be in person or online, or perhaps both depending on the transaction.
How can credit unions choose the right fintech partner? Credit unions should look for a solutions provider that not only stays ahead of the technology curve, but also understands economic cycles. Ask whether the fintech company has been around during times of high consumer confidence, as well as during times of market volatility. The appropriate fintech partner will offer a full suite of solutions to propel credit unions to modernize and upgrade services.
Credit unions are challenged with strict regulations and higher capital requirements. To better serve existing members and attract new ones, they must adopt new technology and offer secure, user-friendly digital experiences that allow greater convenience and access for their members. Partnering with fintech experts is an excellent way to add new services quickly and affordably.
Martin Wong is CEO of Think Finance, a fintech firm specializing in lending, located in Addison, Texas.
