Do 'Delivery Redirect' Now

Members today place a high expectation of value on their credit unions. They want a responsive and customizable customer experience across all channels—24/7—and they have no problem changing financial institutions to get it. These new expectations are impacting not only how credit unions interact with members to deliver value, but also how credit unions establish trust and meet the expectations of new members on their terms. Delivery in the financial services arena as we know it is changing—drastically and rapidly.

In a recent study of mid-size banks conducted by Cornerstone Advisors, branch activity showed a marked decline, with the median number of transactions per teller per month dropping 24 percent between 2010 and 2013. Transactions processed per branch per month fell 14 percent in the same period. While there will continue to be physical channel niche players that focus on the branch experience, the number of branches and physical locations overall keeps shrinking (and, in some cases, disappearing). Meanwhile, the mobile channel continues to grow significantly and take on some of that branch traffic.

According to a recent Federal Reserve Board survey, 33 percent of all mobile phone owners report having used mobile banking in the past 12 months, up from 28 percent in the prior year. In addition, 38 percent of mobile bankers deposited checks using their mobile phones in 2013, a 21 percent increase over 2012. Further, 66 percent of mobile users paid bills through an online system in 2013, up from 42 percent in 2012.

It isn’t only in branches and mobile channels where we are seeing a dramatic shift in usage. Contact centers are growing in complexity, volume and staff and are performing a wide mix of functions, including servicing of inbound calls, handling of member emails and chat, home banking support, call routing within the credit union, outbound sales, loan origination, deposit origination, support for certain employee issues and member satisfaction surveys.

We don’t need a rocket scientist to tell us that a declining number of branches coupled with an increasing member dependence on mobile channels call for a new strategy in the traditional method of branding, member awareness and acquisition.

According to “Delivery Redirect: Start Now or Perish Later!”, these factors all point to a pressing need for credit unions to begin making tough choices concerning delivery resources, their sales force and organizational capabilities in preparation for the new business model of 2020.

These resources must include a credit union’s preferred mix of channels (physical and digital) as well as the internal resources the credit union will need to redirect, support and leverage its future model. The biggest issue is that digital channels are associated with service and convenience, and the branch is associated with revenue production. This is a mentality that needs to change, given that the majority of new account originations will happen outside of the branch by 2020.

For some credit unions, this might mean centralized digital tellers, or possibly groups of employees that support a particular member list or can do it all, from opening an account to making loans. For others it may mean relying on technology-equipped outbound representatives to drive sales and relationship management.

But it also means that all credit unions must start the process of casting off channels that no longer make sense, from an economic or a resource standpoint. It is impractical for credit unions to try to offer all functionality through all channels to all members. It is equally impractical for credit unions to try to please all members. Rather, leaders need to think about what is the right channel for their members and align their resources accordingly.

As credit unions change their delivery model, contact centers will be the preferred entry point for member service. In 2020, contact centers will actually be credit union employee “hubs” and will act as extensions of physical and digital channels to help drive increased product usage, revenue and customer satisfaction. These hubs will include digital tellers supporting transactions across a variety of channels—universal representatives that cross-sell services, open new accounts and advise on loans and other services, and provide social media and self-service support.

Ultimately, it’s not about transactions, but buying interactions that balance the member experience, cost and security. A buying interaction is about a member “buying” additional products and services from the credit union; it’s about upsell and cross sell vs. day-to-day transactions with existing accounts. It is time for credit unions to decide which segments will provide future growth and which deserve a handshake and hearty good-bye. These tough choices allow leaders to divest in some areas to invest in other areas that poise their credit unions for better member service and growth.

Delivery redirect is not a concept, but a “right now” call to action for credit unions. It cannot be back-loaded in the future. Credit unions need to begin planning and executing a delivery redirect strategy today.

Sam Kilmer is senior director with Cornerstone Advisors, a CUES Supplier member and strategic provider based in Scottsdale, Ariz.