Tuesday, June 11, 2013

Online Banking Key To Satisfaction and Growth at Credit Unions

According to recently released research, credit unions continue to score higher than banks in six key areas that have been found to drive customer satisfaction.

Interestingly, however, while lower rates and fees are still a significant component of a positive member experience, the impact of improvements in the online/mobile channel delivery will have the greatest impact on increased customer satisfaction in the future.

CFI Group, a customer satisfaction technology and analytics firm, in an inaugural study entitled "2013 Credit Union Satisfaction Index," measured six primary drivers of customer satisfaction on a 0-100 point scale and found that credit unions consistently scored high in all categories, with each driver scoring in excess of 80 points. This score was higher than many other industries including retail banking. 

CUSI Satisfaction Driver Scores

Of the six drivers of satisfaction measured, however, the 2013 CUSI found that only four play a significant role in driving member satisfaction and, therefore, should be the focus of the industry. At the top of the list for primary drivers that could impact future satisfaction were "online banking," "branch staff," "branch convenience," and "information/communications." 

The chart below illustrates the contribution of each primary driver towards increasing member satisfaction. The two missing drivers of satisfaction ("rates and fees," and 'products and services") have already 'maxed out' as a driver of additional satisfaction according to the study, thereby limiting any the impact that an improvement in these two drivers would have on future member growth.

Driver Contribution to Increasing Satisfaction
When viewed in terms of the "impact" of each satisfaction driver, the study also provides quantification of each driver's potential to improve the overall satisfaction score. For instance, for each point of improvement in the driver score (left side of chart), the overall satisfaction would increase by the value of the impact (right side of chart). Again, there is nominal impact for any improvement in either "products and services" or "rates and fees".

It should be noted that the impacts of each driver can also go either way, so a decrease in any score on the left will have a negative impact on satisfaction by the multiplier on the right.

This research supports several other industry studies that highlight the importance of a strong online and mobile banking offering. While once used by only early adapters, online and mobile banking are now 'table stakes' in the competition for members and deposits, and are becoming a point of differentiation for many organizations as they continue to roll out innovations (mobile check capture, photo bill pay, ATM locators, etc.).

Because of the importance, credit unions need to be in a position to at least keep pace with the leaders in the marketplace (including major banks), and potentially find solution partners that can provide differentiated applications for online, mobile and tablet service delivery.

In addition, at a time when financial institution branch and employee consolidation is inevitable, credit unions should be sensitive to the potential risk and opportunity for following the consolidation trend. With "branch staff" being the second most important driver of member satisfaction, the potential for cost savings through consolidation should be evaluated against the backdrop of the importance of the front office team to the perception of credit unions as being more consumer focused than their banking counterparts. 

“CUSI is an important tool for benchmarking and tracking its competitive differentiators," said CFI Group CEO Sheri Petras. "CFI Group is proud to have worked so closely with the industry to apply the proven ACSI methodology to evaluate current customer satisfaction, and how that satisfaction level will impact the ongoing success of its financial institutions."

Impact on Future Behavior

The CUSI model also measured the impact of each driver on potential future behaviors using the American Customer Satisfaction Index (ACSI) methodology. By using multiple questions around the importance of each driver and applying optimal weightings, the study was able to determine how the current overall satisfaction within the credit union industry could impact growth opportunities for the industry.

As shown below, all potential outcomes were strong, with retention of a member being most likely and the recommendation to a friend also being strong. While the score for using an additional service was also rated high, it is up to each credit union to take advantage of this future opportunity.

Relationship Growth Opportunities

In addition to analyzing member satisfaction, the CUSI research also determined product and service penetration among those surveyed. Similar to most financial institutions, the penetration of primary financial services (checking, savings, debit card) by credit unions was high across all age categories. For other product types, the penetration was lower than in the banking industry, and differs significantly across age groups (mostly caused by lifecycle needs).

Credit Union Product Penetration

Product Penetration by Age

Of more importance than product penetration, however is the purchase intent of the 400 random credit union members surveyed. Consistent with many other studies conducted for the banking industry, auto purchases are on the horizon for many households in the coming months. What may be somewhat unique to the credit union industry may be the high percentage of households that indicated a CD opening was in their future plans, possibly reflecting the older demographic mix at many credit unions.

Purchase Intent
What is important to note is that 'purchase intent' does not perfectly reflect reality, since people's financial plans and the reality of the economy, etc. can impact new account openings.

In addition, in light of the primary findings in this study, the potential for effective cross-selling can be significantly impacted by households doing more of their transactional banking through online and mobile channels. As online banking grows, interaction with branch staff will decrease.

This phenomenon will make it even more important that branch staff continue to have a strong interest in member’s well being, making sure that they (the members) are well aware of the additional products availability and the benefits of obtaining them through the credit union.

In addition to an increasing level of importance of the branch staff and all direct customer contact personnel, credit union marketers will need to find new ways to connect with members and to present product offers to members at the right stage of their buying cycle. This will require new technology tools and potentially new systems to better understand your customers and their needs.

Additional Resources

2013 Credit Union Satisfaction Index - CFI Group (May 2013)

Subscribe to Bank Marketing Strategy Via Email

1 comment:

  1. To echo your thoughts, and go beyond "online banking" as a "digital transaction", Razorfish consumer research notes that, "Digital experiences create customers. The overwhelming majority of consumers who actively engage with a brand in digital fashion are much more inclined to purchase products and recommend the brand to others. 65% of consumers say that a digital experience, either positive or negative, changed their opinion of a brand. Of those, 97% said that their experience influenced whether they eventually purchased from the brand."

    Research from Forrester notes when building loyalty, people respond more to the experience they have than their perception of price. The study reports that for banks and credit unions, customer experience accounts for 55% of loyalty.

    A credit union’s digital channels consist of numerous different tools from a website, online banking, mobile site, PFM, bill pay, loan applications and more. What experience are they providing? (an experience being nothing more than well-defined and refined processes)/systems?

    Map the digital member journey to engage members to generate leads for loans and new accounts: http://www.ptpnewmedia.com/video-digital-member-journey.php