Many businesses went through rapid changes in 2020, responding to the unexpected challenges created by the global pandemic. Banks and credit unions were no exception. As storefronts shuttered their buildings and sent employees to work from home, banks and credit unions were forced to pivot quickly to stay in business. As the year comes to a close and we look forward to 2021, let’s take a look back at some of the top challenges and a look forward at opportunities and solutions.
Challenges for Banks & Credit Unions in 2020
The year 2020 was already going to be full of challenges for banks and credit unions. And then the global pandemic hit. Local banks and credit unions needed to quickly adapt and find ways to serve customers when in-person interactions were no longer an option. Besides pivoting actual operations, banks needed to navigate the new realities for many customers, including applying for the Personal Protection Program (PPP), modifying loans, and finding ways to stay afloat in the middle of the crisis.
In addition to finding solutions for continued daily operations, banks and credit unions have needed to find ways to maintain the local bank feel that draws their customer base in the first place. Without the in-person interactions, many of the same services can be accessed online at competitors. Banks have had to contend with this new reality.
FinTechs have also quickly made headway into the banking industry, specializing in particular areas in a more technology-forward way that appeals to many customers. Banks and credit unions are known for their wide range of services, which can be both a benefit and a challenge. It’s harder to be good at all things, and easier to perfect one area of the business.
There are additional factors, unrelated to the ongoing pandemic, that have forced banks and credit unions to recognize areas for advancement. Throughout 2018 and 2019, credit unions faced some reputational challenges that they’re still trying to overcome.
The encroachment of big banks and FinTechs and the unexpected pandemic have left banks and credit unions an uphill battle. Despite the challenges ahead, there are several opportunities to overcome these challenges and utilize these unprecedented times to put your bank or credit union in a better position for 2021.
Solutions and Opportunities
Local banks and credit unions are known for their community-first reputation and their focus on person-to-person interactions. Local branches are meant to feel part of the community, and distinct from big corporations. Much of that feeling was provided by the in-person experiences at local branches. When COVID-19 hit, banks could no longer safely provide those experiences to customers.
Cue the opportunities!
As more customers rely on their phones to handle daily tasks, businesses across industries are turning to mobile. Banks are no exception. Online banking is an important way to support customers, wherever they are, quickly and efficiently. It is key, not only during the pandemic, but also in the technology climate moving forward.
Customers expect a seamless experience and the ability to handle all of their needs online, whether through a website or on mobile. They want to be able to communicate with their bank in the way most efficient for them.
Banks and credit unions have the opportunity to implement asynchronous omnichannel solutions. Through email, webchat, SMS, and voice technology, banks are able to reach their customers where they are and maintain a threaded view of conversations in order to create a seamless experience.
Local banks and credit unions are able to differentiate themselves through personal interactions. Omnichannel solutions allow for this personalization to continue. Agents can follow all touch points with the customer through one platform and can pick up where a previous agent left off. This allows for a much more authentic experience and maintains the personal feel.
According to a McKinsey report, 65% of customers are already interacting with their credit unions on multiple channels. By unifying those channels, banks and credit unions can optimize their services.
Going digital also opens the door to a geographically larger customer base. As banks move services online, the physical store location is no longer a prohibitive factor for customers.
2020 has been a challenging year for banks and credit unions, and they have had to rethink business models and operating procedures in order to survive. While certainly difficult, it has also provided massive opportunities for these institutions to recognize gaps and weaknesses, and start to implement improvements that will provide long-term stability and success.