Coming out of the pandemic, no doubt there will be a big adjustment to society and the economy as a whole, and there’s a healthy debate about what's transitory and what's not, and how to reactivate the economy without overheating it.
That being said, what are the greatest customer needs and opportunities for financial institutions to focus on right now? Here's a recap of industry-wide trends we're following and some insights we've received from our customers.
Callahan & Associates’ 1Q21 Trendwatch webinar is one of our trusted sources of CU-specific data. Here's a summary of it.
What Credit Unions reported for Q1
- Deposits, assets and shares have grown, due to stimulus checks, tax refunds, and less spending.
- Loan originations (mostly consumer loans) are trending upward. But not enough as deposits (so loan-to-share ratio is down), and not as fast as loans are being paid off (consumers are paying their debts faster due to the availability of funds).
- The delinquency rate didn’t rise as anticipated. Instead, asset quality has increased as members are paying off their debt instead of spending.
- Membership has grown almost 4% and the indicators of relationship-building (balances, penetration of checking accounts, etc.) have grown.
- In terms of products, CUs are seeing growth in checking, savings, and money market accounts. In terms of loans, first mortgages are also seeing an uptick.
- Return on asset (ROA) is up, but revenues are flat despite all these good things because of low-interest rates.
It seems like we're entering a phase of great possibilities for CUs. In addition to rising interest rates being a more beneficial environment for the banking industry as a whole, CUs have a great challenge and opportunity ahead, which is to retain and captivate their new members.
Anecdotal trends our customers are seeing
To add some color and insights to industry-wide trends, here are some anecdotes our customers, banks and credit unions ranging from $250M to $65B in assets, have heard from their own customers.
- A large institution in California is seeing demand for loans in some segments. Stories behind them are used car loans for those going back to the office and wanting to avoid public transportation, homeowners renovating and finding lumber prices rising, families driving instead of flying this summer and needing a newer and bigger van.
- Financial education workshops have been a great relationship builder during the pandemic, and customers remain interested in them. Because fraud is up, anything related to it is well-received by customers. Investing and retirement workshops are getting more attendance than ever, which could indicate a possible mindset shift.
- One large CU in Colorado seeing low credit card balances decided to focus on checking accounts with great results. Now they're trying to find new, differentiating benefits that resonate with people.
- While lobbies are now open, some institutions are still requiring appointments. They're seeing that while people are less afraid today to come into the branch than they were 6-12 months ago, many more are opting to go digital with account opening and other services like car and home loans.
The importance of listening
One thing’s for sure - we’re in a period of transition right now—not at the final destination.
So, how do we navigate this present moment and make the best of it? In this current context, should your financial institution go back to business as usual or try to tap into new customer behaviors?
There’s only one way to know, and that’s through listening.
Conversations at the teller used to be key to understanding customer behavior, building relationships through friendly conversation and even just plain-and-simple eye contact! Effortlessly, they presented upsell and cross-sell opportunities.
During the pandemic, with visits to the branches cut down to the minimum and digital channels optimized for transactions, these conversations were really missed. But the plus side of it is that we had to find an alternative, which was to use and turn to data for insights.
To create opportunities for listening to what it is that people want and need most, banks and credit unions must tap into data and qualitative insights.
Capabilities to leverage during transition periods
Because nobody has a crystal ball, we believe one capability that can give your financial institution an edge during transition periods is the ability to create unique messages, based on the data you have.
For example, what if you could go beyond A/B testing and personalize what each person sees when they log into your digital channels? Using the data you have on them, you could create different segments who will see different images in their banner ads. Homeowners might see something related to home improvement, millennials might see traveling, and so on.
Another capability relates to being able to track which campaign is getting traction and prioritize it. For example, one of our large credit union customers in California noticed that their loan modification offer was getting a better response than refinancing (it was actually called "modify rather than refi"). This prompted them to increase this ad's priority using Prisma's prioritization feature, which will check if they qualify for it (they need to have a mortgage in good standing) and if so, make this the first ad members will see when they log into their online banking.
By listening and leveraging their data, this CU was able to figure out which offer was resonating most with their members, prioritize this campaign for those who qualified, and in their own words, "it went crazy".
This isn’t the final destination
With all this uncertainty, one thing is still for sure: and that’s that we’re in a transition moment.
It's hard to be sure about where we are going, and you’re going to have to make choices without having the complete picture. Based on what we’re seeing, it’s more important than ever to listen and pay attention. So, don’t waste any opportunities to communicate, and certainly don’t show offers that aren’t relevant to your customers. It's a great time to help those who need a car loan to get back to work. And to identify who is ready to travel and wants a personal loan for that. Then, segment your offers, as appropriate.
Interested in learning more about how Prisma Campaigns can track individual customer journeys and overall campaign performance in real-time across multiple touchpoints from one centralized dashboard? Let’s chat!
Image credits: Adobe Stock