The Amazon Effect is a term commonly and increasingly used to describe the effect that the entire digital marketplace has had on traditional forms of commerce. The Amazon Effect has also changed the buying habits and expectations of your members. The impact that Amazon has had on the retail sector is well documented, especially when discussing the changing landscape with a brick and mortar store. Not only has the Amazon Effect introduced consumers to a near frictionless shopping process, it has changed the mindset of consumers to expect more immediate results, not just in retail, but across many other aspects of their lives. The financial industry has certainly felt the effects and members, especially Millennials, expect a similar experience with their credit union.
Just as retail consumers want a quality experience in front of their computers as when in a shopping mall, members want the Amazon experience from their mobile banking app. They want the same member services as if they were in a branch. Immediate answers, full range of services and assistance just a click away. The more a member can get accomplished on your mobile app, the more they experience the value of mobile banking and the more loyal to the credit union they become.
Do you recall when Amazon first started? They sold books. At the time, they were thought of as a threat to big bookstores (which of course, they were). However, it didn't take long for them to realize their model could be applied across almost any retail sector, from clothing to groceries, streaming entertainment in homes to web hosting for businesses worldwide (Amazon Web Services). With the convenience of, well... everything, right at their customer's fingertips, Amazon enjoys unsurpassed brand loyalty. The Future of Retail 2018 report found that two in five consumers (42%) receive 1-2 packages from Amazon per week. That number increases to 50% for consumers ages 18-25, and 57% for consumers ages 26-35.
While it cannot be discounted that there is a true potential for Amazon to encroach on the financial services industry with their own fintech products, it is best for credit unions to not run from Amazon but learn from them, and how they, along with the entire digital marketplace, has changed the experience members expect. Consider how the user base has changed and continues to change in retail and apply the same principles to how they approach financial services.
1. The Need for Speed.
Amazon prime provides immediate viewing of movies you want to watch, and 1-2 day free shipping on most items you want to buy. According to the Walker Sands research, 54% of consumers under 25 years of age say same-day shipping is their number one purchase driver, followed by next-day shipping. Consumers want things fast, and they expect it fast. Applying speed to credit unions, members don't want to wait for an approval on a loan or come into a branch to even apply for one. When members are buying a car, they want immediate approval via their mobile app. Does your credit union offer digital lending services that allow members the convenience they have grown to expect from Amazon?
2. The Need for Control.
Amazon capitalized on the fact that consumers want to make purchases on their own time... which may be during regular business hours or it may be in the middle of the night. It may be on their desktop during work hours or on their mobile phone while binge-watching Sneaky Pete on Amazon Prime at 3 am Sunday morning. Your credit union's mobile app and online banking give you the ability to be open 24-7-365. If you limit the range of services offered in your app, you limit the loyalty member give in return.
In other words, don't assume the Amazon Effect only applies to your local bookstore closing down. Understand that it changed how people think and act. Realize it impacts what your members are expecting from you.