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.
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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.
FAQs
In the intricate landscape of financial services, credit unions stand as pillars of community-focused banking. Yet, these institutions aren’t immune to the challenges faced by credit unions that are inherent in their operations. Embracing these challenges is the first step towards transforming them into opportunities for growth and innovation.
The challenges faced by credit unions often revolve around resource optimization. Smaller budgets and limited staff can strain operational efficiency. However, consider these constraints as catalysts for creativity. Embrace technology that streamlines processes, allowing your dedicated team to focus on what truly matters—delivering exceptional member experiences.
Navigating the regulatory maze is another challenge faced by credit unions. Regulations evolve and multiply, creating a complex landscape. View compliance not as a hurdle but as a testament to your commitment to financial integrity. Stay updated and invest in robust systems that simplify compliance procedures, empowering your credit union to shine as a paragon of trust.
Member engagement presents its own set of challenges. Building meaningful connections in an increasingly digital world demands personalized experiences. Treat this challenge as an opportunity to showcase your community-driven spirit. Leverage data insights to tailor interactions and foster genuine relationships that resonate with your members’ financial goals.
The challenges faced by credit unions include the need for modernization. Legacy systems might hinder agility and innovation. Rather than being daunted, view this as a chance to evolve. Embrace technology that empowers your credit union to offer seamless online experiences while retaining the warmth of personalized service.
In the dynamic landscape of financial services, credit unions are no strangers to the evolving currents of change. Anticipating and preparing for upcoming credit union challenges is pivotal to not just survival but thriving amidst uncertainty.
One of the imminent credit union challenges is technological disruption. The financial industry is experiencing a digital revolution, and credit unions must keep pace. Embrace technology not just as a tool but as an enabler of enhanced member experiences. Invest in robust online platforms, mobile apps, and digital communication channels to stay connected with members in a tech-savvy world.
Regulatory shifts are another challenge that credit unions must be poised to tackle. The regulatory landscape is a constantly shifting terrain, and staying compliant requires proactive vigilance. Adapt a culture of continuous learning and engage in industry networks to stay ahead of the curve. View compliance not as a burden but as a testament to your credit union’s commitment to ethical banking practices.
Member expectations are evolving rapidly, presenting credit union challenges around member engagement. Members seek convenience, personalization, and accessibility. Embrace these challenges as opportunities to redefine member interactions. Leverage data analytics to understand member preferences and tailor your services to their unique needs, solidifying your position as their financial partner of choice.
The evolving workforce also poses challenges for credit unions. As the demographics of both employees and members change, embracing diversity and fostering an inclusive environment becomes crucial. Navigate this challenge by championing diversity in your workforce and adapting your member engagement strategies to resonate with different age groups and backgrounds.
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