For years, credit union members, on average, have been measurably happier than bank customers. The credit union system is known for friendly, personalized service and strong community ties, which have historically ensured high levels of member satisfaction. But with the rise of online and mobile banking, credit unions have found their advantage slipping away. The 2018 American Customer Satisfaction Index Finance and Insurance Report found that the Net Promoter Score (NPS) average for banks has improved while the credit union average has fallen, so that the two are now even. It is difficult to convey the warmth of an in-person encounter through an online transaction, and credit unions risk becoming just another financial institution.
Recent innovations in service industries may offer hope. New practices may hold the key to delivering superior service, boosting member satisfaction, and making the online experience feel personal and distinctive. But are credit union leaders aware of these practices? Are their organizations testing or implementing them? Do they find them to be effective tools for increasing member satisfaction and loyalty? In this third and final report of our series on improving the credit union member experience, we asked credit union leaders to share their insights and lessons learned.
What Is the Research About?
Member compatibility is the strategy of focusing on a core group of members and choosing to compete on attributes that those members value. Crucially, it also entails choosing not to compete on attributes that are less important to those members. Some credit unions are already pursuing this strategy and finding it to be an effective way to guide their resource allocation, shape product and service design, and maintain high member satisfaction. Leaders caution that there are trade-offs to this strategy: it can make the credit union less attractive to some potential members, stir dissatisfaction in current members whose needs differ from those of the core, and require the organization to forgo certain products or services or invest in product offerings tailored to the core member. However, choosing not to focus on a core member has its own trade-offs: it can be expensive, and in trying to satisfy too many disparate groups, a credit union may wind up satisfying no one.
Tracking member experience (MX) metrics is a popular way to drive improvement. Most credit unions are tracking some MX metrics, but there is a lot of variance in terms of which ones, how often they are measured, how they are analyzed, and how they are used. Interviewees report that MX metrics are often used to identify pain points, map the member journey, prevent detractors from creating negative word of mouth, and drive changes to products, services, and operations. Some credit unions also use MX metrics to inform high-level strategy development by including them in their institutional scorecard and regularly reporting them to senior leadership.
Operational transparency, the practice of showing members the effort that takes place in order to bring them outstanding service, is not yet a familiar concept to many credit union leaders. As a practice, it holds exciting opportunities for transforming the online banking experience, and leaders were able to pinpoint specific processes they felt would benefit from increased operational transparency. However, credit unions will need to overcome obstacles to execution, which include technological limitations and the need to provide the right level of detail at the right time so as not to confuse members.
What are the credit union implications?
Credit unions should consider the opportunities that these and other emerging practices may offer for improving the member experience. Since individual credit unions vary widely in terms of size, location, and field of membership, it will be up to their leaders to determine whether, when, and how it might be appropriate to implement these strategies to meet each organization’s specific needs.
- Focus your strategy on serving your core member and align your products and services specifically to them. Focusing on core members and taking the time to understand who they are can lead to a more nuanced understanding of those members’ specific needs. This, in turn, can shape product and service offerings in innovative ways.
- Be strategic about the trade-offs you make. As you focus, eliminate products and services or other aspects of your business that do not serve your core. As you focus on delivering a better experience to core members, choose carefully where to invest resources and where to cut. Examples of trade-offs are choosing not to offer certain products, choosing to offer less competitive rates, or choosing to invest in technology to satisfy members’ expectations. Or spending more on hiring practices, staff training, or staffing needs.
- Measure your member experience and work with the data you collect to reflect on where improvements are needed. Interviewees consistently told us that measuring the member experience is critical for improving it, as metrics can help identify pain points and provide feedback on changes your organization makes. Combining metrics can provide a clearer picture than just one metric. Spend time evaluating what your organization needs to measure to understand how you can best serve your core member.
- Find the right balance of operational transparency and implement aspects into your operations. Showing the work that goes on behind the scenes can increase your members’ perceptions of the value of your organization—whether it is a tracking bar to show members where they are in the mortgage application process, or how soon a new debit card will arrive. Find a way to help your members see how hard your organization works to serve them.
There is no one-size-fits-all approach to improving member experience. But a strong theme emerging from conversations with credit union leaders is the desire to distinguish credit unions from their competition. We encourage leaders to discuss these practices with their planning teams, with each other, and with Filene. Ultimately, if creating a world-class member experience enables credit unions to stand out from the pack of financial service providers and fintechs, the whole industry will benefit.