How to Retain Members in Tough Economic Times

If you ask most credit union members, they’d say times are tough. As many as three out of five people believe we’re currently in a recession. Making matters worse, few Americans feel prepared to weather economic storms. Over half of the adults in the U.S. say they plan to borrow money in an emergency.

While financial institutions have little control over the state of the economy, they can change how they engage. To stand out and provide value during rough patches, credit unions can look for ways to offer more solutions to their members.

Prioritizing members’ financial well-being matters now more than ever. With pressures like inflation and economic uncertainty, consumer spending remains relatively stagnant. Total spending has risen only 0.3 percent since the end of 2023. 

Put Members First and Gain a Competitive Advantage

Focusing on financial well-being is a win-win for credit unions and their members. Members benefit by getting the tools they need to support financial health, while credit unions strengthen their reputation and minimize issues among members.

This strategy can also help to address members lost to fintechs and digital startups. Members often jump ship because they don’t find value in the relationship they have with their financial institution. 

As members struggle with disconnect, credit unions struggle to generate new streams of non-interest income. Financial institutions could stem the flow of revenue loss by centering financial wellness, yet many have been slow to do this. But it costs much less to retain a member than it does to acquire one.

Member engagement extends beyond transactions. Customers seek a deeper connection, wanting their credit union to understand and look out for their financial interests. Offering more to members can positively impact both business and bottom line. Examples include financial literacy workshops, credit-building programs, individual counseling, investment services, and insurance products.

Actionable Ways to Help Members Build a Stronger Financial Future

It takes innovation to truly support the financial health of your members. 

• Introduce more personalized products. Leveraging data makes it possible to engage with members individually. At Franklin Madison, we utilize data analytics to shape insurance product marketing messaging for our clients’ members, even tailoring messages to speak to economic changes.
• Use predictive technology. Introducing an AI-powered virtual assistant can give members insights collected from their data and activity. An AI assistant may ask members to review spending patterns, potentially alerting to overspending, and guide them through the monthly budgeting process.
• Become a one-stop shop. Today’s members want ease when buying products; they prefer to get all their insurance from convenient sources. Providing a full range of insurance products supports financial wellness by extending options for protection, while also making it easy to purchase.

In our current economic climate, many Americans have limited savings and live paycheck to paycheck. Adding supplemental insurance to products and services also offers peace of mind. Insurance like AD&D (Accidental Death & Dismemberment) provides coverage in the event of a covered accident, whereas hospital accident plan (HAP) insurance can help to relieve financial burdens during a covered hospital stay. 

Research shows that members are more likely to purchase insurance offered by their financial institution than they were three years ago. This may be related to financial uncertainty in part; members also want to buy insurance from a source they trust.

Insurance products communicate that a credit union cares about unexpected events, like disability, lost earnings, and death, that may impact its members. For members, this could provide a benefit at a crucial time, possibly making a big difference in periods of inflation. 

For credit unions, these products provide a benefit, creating a passive revenue stream that counteracts financial losses.

As the economy shifts, credit unions face fierce competition for members. Many members use multiple financial institutions instead of just one. By supporting financial well-being during difficult times, a credit union can build trust, loyalty, and income.