Avoid Competitive Thunderdome | Credit union time

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Member engagement has never been more critical, especially as we head into an uncertain economy. Lending and consumer spending are slowing, and credit unions could soon find themselves in a post-apocalyptic Thunderdome, battling big banks and digital disruptors to keep and attract members. (Welcome to the Thunderdome.)

OK, there may be no steel cage matches, but credit unions need to reinvent their current mobile banking apps — and that starts with understanding what members really want.

Mobile banking is nothing new

It’s hard to believe, but the idea of ​​mobile banking has been around since 1981 (before some of you were born), when financial institutions started offering consumers access to their accounts through their personal phones. . With the emergence of the internet and smartphones, it has evolved over the past 40 years, but it’s still not drastically different. Back then, consumers mainly checked account balances. Guess what they mainly do now?

Yes, mobile and online adoption has increased. But the functionality of these platforms is not really interesting. Even for consumers, the most used features, according to an Ipsos-Forbes Advisor US weekly consumer confidence survey, are mobile check deposit (35%), view account balances (33%) and transfer funds between accounts (31%). So it’s no surprise that mobile banking apps have some of the lowest engagement ratings compared to other mobile apps.

Unfortunately, too many financial institutions are focused on growing demand for mobile banking (it’s always been the case – it’s nothing new) and less on engaging their offerings. If more members download their app, that’s a success and that’s enough for them, right? However, it’s not good enough for the limbs, so no one should be back patting yet.

Member engagement is key

Consumers are increasingly abandoning brands that don’t understand them or personalize the experience. Worse still, today it is easier to break up with a financial institution. Credit unions must therefore move from a transactional mindset to an engagement mindset if they are to gain members and retain existing ones.

According to research by McKinsey, 71% of consumers expect companies to provide personalized engagement and 76% are frustrated when this level of engagement does not occur.

Meanwhile, greater engagement leads to better numbers. A Gallup study found that when companies successfully engaged with customers, they reported a 63% drop in customer churn, a 55% higher share of wallet, and overall better performance. 23% higher than those of their competitors. According to NTT Data, improved engagement and personalized experiences also lead to three to 10 times more cross-sell and up-sell opportunities compared to pure prospecting.

Personal well-being and financial literacy

Like mobile banking, personal wellness isn’t new, but it’s evolving. Estimated at a $1.5 trillion market driven by consumer interest, wellness branches out into many areas, one of them being financial wellness.

According to another recent survey, consumers are not very financially savvy – and they know it. More than a third of consumers give themselves a C or worse for knowledge. As a result, many Americans lack sufficient emergency funds or savings. This problem can even get worse if the economy slips into a recession.

Currently, most young consumers are turning to digital for financial advice. The good news is that they are aware of what they don’t know and are willing to do their homework. The bad news is that the sources they chose might not be the best. Social media platforms, like Instagram or TikTok (15%), blogs/vlogs (7%), podcasts (10%) and other online sources (27%) are gaining ground.

Think like a fitness app

As consumer interest in financial literacy grows, credit unions need to consider how this fits into their mobile banking offering. Providing traditional GFPs is no longer enough, as they simply provide updates on consumer spending. It’s not always helpful, and it’s certainly not engaging. That’s why personalized financial advice is a game-changer when it comes to financial health.

In addition, applications must be encouraging. Rather than reporting what the consumer should have done, they should reward and encourage positive habits. For example, what if a fitness app tracked and reported the number of cheeseburgers you ate rather than the number of steps you took? This is a difference between shame and encouragement. Which app would you engage with?

For financial well-being, the same rules apply. Instead of shaming you for eating out too many times in a week, the app should reward you for hitting a certain savings goal or milestone. If consumers are discouraged, they will avoid declines in application and engagement.

Gamification: the last piece of the puzzle

Finally, engagement is higher through the use of gamification. It’s one thing to add financial wellness functionality into a mobile app. It’s another to keep members coming back to the app.

Consider how video games affect the brain. If there are rewards or levels to beat, the game triggers the release of dopamine, a chemical that reinforces behavior and keeps consumers engaged. This same concept can be applied to a financial wellness app, helping consumers adopt healthy financial habits.

Credit unions must combine the desire for financial guidance with a personalized and playful digital approach, such as a financial health level, focused on improving a member’s financial life. By combining the importance of financial wellness with the fun of gamification, members have a fun, interactive, and engaging way to improve their financial health.

To ensure the experience is highly personalized, credit unions should also have a rating system based entirely on each member’s financial lifestyle. Simply showing how much they have saved is not helpful. It helps to personalize and personalize to show how close they are to a six-month emergency fund based specifically on their income and debts.

As member engagement becomes more critical, credit unions need to carefully consider what their members need and want, and then respond to them. Financial well-being is likely to become a priority for many, especially in the wake of inflation and rising rates.

Although we don’t see Thunderdomes or Fury Road cars, credit unions can differentiate themselves from their competitors while deepening their relationships with their members. It will be necessary to combine mobile, financial well-being, gamification and personalization.

Parker Graham Parker Graham

Parker Graham is founder and CEO of Finotta, a fintech based in Overland Park, Kan.

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