Turn Technology Hold-Outs into Adopters

New delivery systems can complement traditional channels.

August 19, 2014
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Was your credit union on the forefront of technology adoption, building out mobile capabilities before the demand was there and accepting deposits via remote data capture or in your ATMs?

Did you recognize early on that these technology-based solutions could complement your traditional channels, including branches and your contact center?

Or perhaps your institution took a more cautious approach, watching others test the waters first before dipping your toe in.

Either way, if you now offer members technology-based alternative delivery services—including online banking, mobile/text banking, mobile deposits, online bill pay, etc.—those who have taken advantage of them likely love them, and you have realized significant growth as a result.

Now that all of the early adopters are on board, however, are your growth rates leveling off, and is your cost per user of alternative delivery services holding steady or slightly increasing as compliance costs have skyrocketed? How can you address this?

Eliminating these services is not an option. Charging your members for them is tenuous at best, given their expectations and the competitive environment. So what can you do?

First, it’s important to recognize that encouraging further member adoption of alternative delivery offerings doesn’t suggest that your credit union should reduce staffing and/or close branches as a result of increased adoption.

In fact, with alternative delivery simplifying low value-add transactions like paper statements and branch deposits, for example, credit unions will be better able to devote resources toward hiring, developing, and rewarding better employees who can add more value to the member relationship.

According to “Evolving Models of Retail Banking Distribution” from the Deloitte Center for Banking Solutions, “As transactions begin to take place via other channels, banks will increasingly behave like traditional retailers, focusing more on sales and complex service opportunities.

Meanwhile, technological advances can enhance the ability for direct channels to fulfill their potential as a source of banking sales and service with higher convenience at lower costs.”

When used in conjunction, traditional channels enable credit unions to deliver better service and alternative delivery solutions allow institutions to get low-value transactions out of manual processes and into automated channels—while giving members the convenience they desire.

Together, they allow credit unions to enhance relationships, reduce expenses, and increase efficiencies for both members and the organization.

Next, you need to increase adoption to leverage your fixed costs and reduce your per-member cost to serve. How can you achieve this?

You likely have members who are just not ready to embrace the benefits of alternative delivery. Perhaps they are resistant to change or the idea of leveraging technology when it comes to interacting with you.

How can you persuade them to alter their behaviors?

The key is to develop a keen understanding of how your holdouts are behaving. Do they still prefer to receive paper statements over e-statements? Have they signed up for online banking but are not using it—or have they not signed up at all?

Once you have the insights into how these members conduct business with your credit union, you will then be able to offer them relevant reasons to act differently.

Let’s look at e-statements as an example. Industry estimates suggest that e-statements save an institution $0.50 per account per month, sometimes more, as a result of reduced printing and postage costs and improved internal efficiencies. Additional soft dollar costs of re-mailing statements and servicing are reduced or eliminated.

Once you have identified which members still receive paper statements you can provide personalized communications offering reasons for switching to e-statements. Points to consider highlighting include:

  • The convenience of being able to see the history of all transactions in one place from multiple locations and devices;
  • The safety of e-statements, given that emails are provided in a secure, encrypted environment; and
  • Speed of delivery. Statements frequently are available the day after a member’s statement processes, while paper statements can take up to a week to arrive in the mail.

It’s also important to make the enrollment process as simple as possible, removing any barriers to adoption (e.g., easy online registration). In addition to touting the ease and benefits of adoption, offering a low-cost incentive to make the switch to e-statements can provide the extra nudge holdouts need. A $5 reward often does the trick.

Providing motivation to reduce paper statements—or check volumes, branch deposits; whatever your credit union’s needs may be—will rapidly increase account holder adoption, allowing your institution to realize operational savings and efficiencies.

And for new members, start them on e-statements at the outset before they even receive a paper statement from you. You can always give them the option to opt out and receive paper statements if they wish.

Research from Gartner notes that by 2020, customers will manage 85% of their business relationships without human interaction.

Don’t sit back and wait for that to happen—your competitors aren’t.

Through understanding what motivates your members and incenting them for desired behaviors, credit unions can encourage their members to embrace alternative delivery channels.

This, in turn, will help reduce costs, increase efficiencies, and save the face-to-face communications for where they matter most—further reinforcing member relationships.

DEAN NOLAN is vice president and DAN MOULTRIE is banker in residence at Saylent.

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