Last Summer, the reputation of banks fell for the first time in 5 years. After a series of data breaches in the banking industry, customers began to distrust larger financial institutions. As a result, people began to turn to credit unions, which they viewed more positively. The big point of differentiation between credit unions and other financial institutions is the culture of trust and member service. Credit unions tend to be more involved in their community, and are able to connect with members on a personal level. These are qualities that members have begun to value a lot more and credit unions anticipate more members in 2019 to join for these very reasons.
In addition to quality member services, credit unions have been able to compete through new technologies and solutions. In 2018, credit unions took a deep dive into their core technology to see how it holds up to member demands. Many credit unions found that their core simply did not have the capacity to keep pace with their strategic goals moving forward. Consequently, a vast number of credit unions invested in new core technology which would facilitate integration with best of bread fintech providers. According to FinTech global, fintech firms raised $32.2 billion in the second quarter of 2018, which is more than triple the same quarter of the previous year.
With a new core and technologies like machine learning and mobile banking in place, credit unions have also switched gears to target new age groups such as Millennials and Gen Z. These generations look for cutting-edge technologies when choosing a financial institution, and credit unions have taken huge leaps this year to capture their attention. While both Millennials and Gen Z are captured through tech options, their needs are actually quite different. Millennials are young professionals and many of them have reached the prime home-buying age of 29, so they will be looking into options such as mortgage lending. Meanwhile, the younger Gen Z cohort is comprised mostly of students, looking for entry level bank accounts and convenient solutions such as mobile apps and integration with P2P platforms like Zelle.
Internally, credit unions have been working to diversify their staff. Bringing in diverse talent has allowed CUs to better connect with members. Even though members might not specifically look for a diverse staff in their search for a new financial institution, diversity increases the chances that members will feel connected to their credit union. People tend to build relationships with those they view as like-minded, so CU staff that is diverse in age, race, culture, gender, etc. will be able to connect and build trust with members more quickly. Furthermore, credit unions have been working toward a better a better sense of community internally. Credit unions have worked to create a comfortable and happy work environment by cultivating open conversation, empowering and supporting their staff. CUs have always been focused on member satisfaction, but in 2018 they have invested more resources in their staff as well.
2018 has been an overall successful year for credit unions but what’s on their radar for 2019? Continued investment in analytics, fintech and artificial intelligence is certainly on the horizon for CUs next year. Credit unions are also expected to remain vigilant in their efforts to maintain strong IT security and they might dabble in areas like marketing automation and the cloud-hosted services. As always, CUs will continue to invest in their members to provide the innovative solutions they want and need. In 2019 credit unions are expected to grow and build upon the success they experienced last year.