The past 22 months have been a whirlwind. The pandemic has brought about various changes in how consumers bank and what their preferences are. If there’s anything credit unions have learned during this time of change, it’s the importance of being nimble and pivoting to better meet the changing needs of members. To keep pace in 2022, institutions need to consider a few key trends.
1. Credit unions should carefully outline their cryptocurrency strategies. Gemini research has shown that more than 20% of people with investable assets are already investing in crypto, and that number is expected to grow. Those who invest usually do so through a cryptocurrency exchange. Moreover, more than 60% of these people would prefer to negotiate with their trusted financial institution. The cryptocurrency space will continue to gain momentum and credit unions need to keep pace. The NCUA has just released guidelines paving the way for federally chartered credit unions to work with third parties on crypto products and services. Institutions must have a thorough understanding of cryptocurrency and decentralized finance use cases, market capitalization, and circulation in order to be able to ensure that quality cryptocurrencies are available to members.
2. Payment preferences change. We continue to see growth and development in payments outside of traditional channels. Although many credit unions have incorporated non-traditional offerings, these payments differ from typical point-of-sale card payments and present their own kind of fraud. The pandemic has also accelerated the adoption of contactless transactions, and issuers have scrambled to provide these types of cards to cardholders. However, supply chain issues have affected credit and debit cards nationwide. The shortage of silicon chips should be on every credit union’s radar, given the importance of keeping members equipped with active payment cards. Issuers who plan for this effectively can minimize the potential impact on their organizations.
3. Automation is back on credit union roadmaps after a two-year hiatus. During the pandemic, many institutions have delayed conversations about automation (robotic process automation, artificial intelligence, loan decision) to free up IT bandwidth for short-term imperatives. Now many institutions are reigniting these conversations. Although large technology projects are usually the focus of large institutions, many smaller credit unions have realized that the time has come for them to take on these projects. In 2022, more credit unions will leverage aspects of conversational AI to support call centers. Additionally, smaller institutions are resisting the urge to customize, and we’re starting to see better APIs available to help with this. Credit unions need to realize they need to do a quick RPA or full onboarding.
4. Credit unions will need to be creative to increase loan growth. Institutions are still drowning in deposits, new household formation has been halved from pre-pandemic numbers, and online account openings are not where they should be. Credit unions need to carefully define member acquisition strategies for 2022, focus more on digital marketing, and improve the online account opening experience. Additionally, we are seeing instances of institutions buying lenders who typically sell loans to keep more earning assets on their balance sheets.
5. Digital versus branch remains a battle. While branch traffic is unlikely to return to pre-pandemic levels, many still yearn for human interaction and still prefer to have in-person interactions. Credit unions should carefully consider their members’ preferences and determine their plan based on their branch footprint.
Over the past 22 months, there has been a lot of change, including the increased use of digital banking, innovations in the payments landscape, and the need to provide exceptional member experiences both in person and digitally. . The financial services industry will continue to grow more mature and crowded, so credit unions that want to maintain their market position must keep pace with these new technologies and services and do what it takes to stay competitive.
Ben Mrva is Executive Vice President of SRM (Strategic Resource Management), an independent consulting firm based in Memphis, Tennessee, serving financial institutions.