The good, the bad and the best for 2021
This year may have started with a little more enthusiasm than expected. But no matter how it started, he’s here and you might as well make the most of it. 2021 looks set to include the good, the bad, and the best.
The good: nowhere to go but at the top
According to the Conference Board, the US economy has nowhere to go except to increase in 2021 based on three economic scenarios it has proposed. And as the country struggles to recover from the largest quarterly economic contraction in 75 years, the rise is the most desirable direction. From the consumers / members perspective, high levels of unemployment will affect their much-needed spending. .
here’s how credit unions can use their data to help members:
Understand the member
This year, members act differently from the previous year. Their spending has increased online and, quite possibly, has shifted to different retailers. In addition, the online capabilities and consumer expectations of this channel have also changed significantly. According to The Economist, in 2020, more than 47% of Americans over the age of 55 started shopping online. In 2021, click-and-collect sales are expected to increase by 10% to 60%.
If members have school-aged children, they have been trying to work and teach for almost a year – the burden of that effort falling on mothers’ shoulders. With one and five unemployed adult workers, the financial situation of some members has also changed dramatically.
The worst: vaccination, unemployment and defaults
Although the COVID vaccine has hit the market, the rate at which it enters the human body is slower than expected. In March, the United States will reach the milestone of one year since the start of the pandemic. It’s longer than expected, and the economic outlook is lukewarm at best until death rates decline and vaccination rates rise. Markets will not be able to move faster until the pandemic can be brought under control.
This, of course, leads to an increase in unemployment, and when that happens, defaults increase as well.
Here’s how credit unions can use their data to help members:
Take advantage of member spending insights
One of the small benefits of 2020 was the increase in data that became available due to online shopping behavior. Member transaction data contains a gold mine of member spending behavior and cash flow information, to name a few. By understanding members’ spending behavior, you’ll discover ways to engage them through credit card usage, loan opportunities, and a host of other relationship building and engagement information. Understanding deposit and cash flow trends is a bit like having digital coffee with each of your members.
Leverage transaction data to understand members’ spending behavior today and when it’s changing. Members’ spending behavior can contain signs of economic pressure from members and raise awareness that the credit union should see if the member needs help. Helping a member with their finances early is essential in preventing them from defaulting and increasing their confidence.
The best: telephone banking and car loans
One pandemic trend that has been predicted as here to stay is telemedicine. Telemedicine has always been the wave of the future; the COVID pandemic has only accelerated its arrival. As hospitals remain inundated with coronavirus patients, many medical centers have switched to virtual experiments. Credit unions have also moved to virtual banking. Many credit unions have started serving their members by video calling and ideally this trend will continue.
Automakers are expected to enjoy some relief from pent-up demand in 2021. New and used car sales will accelerate by about 15% this year, according to a recent Fortune article. This means auto and home sales will return to pre-pandemic rates, potentially generating 6% loan growth for credit unions. In addition, the Federal Reserve is expected to keep interest rates on short-term deposits around zero until the end of 2023.
Here’s how credit unions can use their data to help members:
Continually reduce member friction in tele-banking and lending experiences
Friction between members refers to the friction members experience when dealing with the credit union. With the expected increase in auto loans and the continued trends in video banking, credit unions can more easily identify frictions in the member experience and take steps to reduce them. Here are four steps a credit union can take to achieve this:
1. Get data (survey). Gather the perceived data on the current state of member experience. Solicit this contribution from the leaders as well as those close to the member. A good place to start is to identify the external frictions of end users (limbs) and then identify the internal frictions (the frictions that business units encounter when interacting with each other.) This provides a perceived friction landscape. to start.
2: Map the MUX. This can be accomplished with software or a simple process card. The key actions consist of identifying the critical phases of the limb’s journey and identifying the points of friction.
You will also want to add any data available for each phase that supports or disproves the perceptions.
Taking the example of a car buying journey, the common frictions would be:
- Low level of knowledge of the financing of credit unions in the channels used by members;
- Little or no assessment tools provided by credit unions;
- Difficulty in signing up for the loan online, forcing the consumer to go to a physical office;
- Little or no engagement with the member after purchase;
- Few channels are provided for advocacy; and
- Redemption efforts that suffer due to the application process.
3. Analyze your conclusions. A list of frictions will appear and they must be prioritized. The best way to prioritize them is to figure out what will have a significant impact on the member with minimal effort. The “friction list” can be divided into short and long term projects.
4: Create a friction roadmap. Build the roadmap by viewing it as a timeline with workflows that include people, products, and processes. Understanding your limb friction should be a strategic goal; if not, do one now.
While this has not been an easy year, members are looking to their credit union for help, and the best thing credit unions can do to help is check their data.
Anne Legg is the founder of THRIVE Strategic Services, a San Diego, Calif., Based company that assists credit unions in data transformation, and author of “Big Data / Big Climb,” a co-op playbook. credit for data transformation.