NAFCU Services Blog

It’s been over a year since the collapse of Silicon Valley Bank when it was shut down by federal regulators in March 2023. The collapse left the banking industry on edge and banking customers concerned for their own investments, leaving the banking industry at the bottom of a slippery slope to improve their processes and public image. But what does that look like 12+ months later? According to J.D Power 2024 U.S. Retail Banking Satisfaction Study, bank customers’ trust is down significantly due to factors such as news reports about bad banking practices, delayed availability of deposited funds, and unexpected fees, to name a few. This decline is also affecting bank customers’ loyalty with only 46% of bank customers saying they are certain they will remain with their current bank in the next year.  

Now is the time for credit unions to shine. 

You don’t have to kick banks while they are down, instead seize this opportunity to reintroduce yourself and what your credit union stands for. Especially with younger Millennials and Generation Z who are more likely to lean towards humanity and environmental causes compared to previous generations, but are also more open to jumping ship on products and services that aren’t meeting their standards. By focusing on a few key areas, such as innovation & technology and keeping your members first — credit unions can use the increasing dissatisfaction towards banks to catapult themselves ahead.  

But What Does It Mean? 

The term innovation doesn’t necessarily mean technology (although the two are closely related) but is, instead, finding new ways to do things. Ten years ago, being technologically advanced meant having your own app. Fast-forward to today and the landscape is vastly different with tomorrow bringing even more changes as technology continues to evolve rapidly. As the digitally native generations grow, so must your institution. The ability to bank digitally (including opening an account) is a top priority for these digital-savvy generations.  

The financial industry is undergoing a profound transformation driven by technology and, more specifically, artificial intelligence (AI). AI can learn and automate basic to advanced tasks, reducing the errors, inefficiencies, and delays that come with manual, human-run processes. As employees are busier than ever and organizations are understaffed, automation reduces distractions and lets your employees focus on their role priorities. Moving forward, as you consider digital strategies for your credit union, ask yourself, “What digital moves can we make so we are less dependent on the human factor?”  Prepare to embrace an innovative mindset now because digital innovation is not a passing fad.

However, one noteworthy challenge for credit unions when it comes to innovation is their limited budgets, which hinders their ability to compete with larger banks. Partnerships with tech-focused credit union service organizations (CUSOs), which collectively invest millions annually in technology, provide a solution. While this investment pales in comparison to what fintechs and big banks spend, it gives credit unions access to innovation and technology that would otherwise be unattainable. 

Give Them What They Want (What They Really, Really Want)! 

Brand trust is the greatest asset your credit union has — your brand is invaluable. Take the time to invest in your own staff. Educating and empowering your employees gives them the tools they need to handle difficult situations, educate members, and build quality relationships. Connect with your members by meeting them where they are as well, whether that is on social media, their mobile devices, or even in your physical branch. Understanding your members’ needs and building your strategy around delivering those desires will reinforce your dedication to your members.  

It’s time to take advantage of the banking industry’s run with bad luck. By embracing innovation and technology, forming strategic partnerships, and focusing on what is most important (your members), credit unions can take banking’s lemons and make lemonade.