Credit Unions: The opportunity to thrive at the nexus of warmth, competency, and convenience

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Guest blogger Kurt Schroeder, Principal of Growth Strategies for Baker Tilly Virchow Krause LLP, tells us the importance of credit unions focusing on drivers for member loyalty:

A study on “Social Cognition” conducted by Susan T. Fiske, Amy J.C. Cuddy, and Peter Glick concluded that when a person or organization is perceived as warm and competent they have the greatest level of admiration from others. This becomes apparent when interacting with your members—when your member service reps are warm and authentic the connection that members make to the credit union is noticeable. I argue that there as an additional attribute when the theory is applied to credit unions: convenience.

The more research we conduct, including ethnographic research, the more we consistently see the same themes emerge from members or prospective members when they discuss their interactions with a credit union:

  • The warmth shown to them by credit union staff is memorable
  • Competency in helping the member with their needs is a nice surprise
  • The credit union is convenient for the member

By focusing on these three drivers of member loyalty and satisfaction, credit unions can thrive in a world where consumers are more demanding, have less time, and are distracted by new entrants into the financial services space.

It is unsurprising that, in an increasingly digital world, more and more consumers are turning towards digital resources to help make managing their finances easier. For example, SoFi, an American online personal finance company that provides student loan refinancing, mortgages and personal loans, provides a comprehensive investing 101 center on its website where consumers can find all the latest investment news and tips to make investing that little bit easier.

That being said, it could be argued that warmth has been lost in most interactions that consumers have. Consistently, consumers are being pushed to cheaper, digital channels and although there is cost-to-serve savings, the communication of warmth is lost. Genuine and authentic warmth in an interaction never goes out of style. Although consumers very rarely rate it high in what they want in projecting an experience, when they receive warmth they rave about it after the experience. Our hypothesis is that consumers are more concerned about competency when thinking about an upcoming interaction, but are delighted when a genuine level of warmth is provided.

A competent interaction or transaction is tougher to deliver in the complexities of today’s high-tech, rapid fire, and regulatory oppressive environments. Many times consumers have come to expect incompetence as the norm, so when they have a competent experience they are delighted. In some follow up research to the study on Social Cognition, various professionals were rated on a scale of warmth and competence. Doctors and nurses scored high in both warmth and competence, while “bankers” scored below average in warmth and about average in competence. Credit unions have an opportunity to illustrate that competence is something that consumers should expect in their financial services relationships.

Convenience is an attribute of “ease of doing business.” Convenience is making it frictionless, accessible, and close to the consumer or member at the time of need. Convenience can be measured in a number of ways: the speed of how a member is serviced, the accessibility of services (albeit online, mobile, or branch), etc. However, convenience is not a proxy for warmth and competence. Many of the large banks have opted to emphasize convenience and have ignored warmth and competence. The challenge for credit unions will be to continue to expand the convenience of their services, products, and offerings while at the same time provide the warmth and competence that attracts and retains members.

Competing for today’s consumer is as difficult as ever. However, the desires of the consumers are pretty simple. Do you actually care for me or am I just another transaction that you need to get done? Are you good at what you do and should I trust you with my personal finances? Are you easy for me to access and interact with? These are the questions that credit unions are poised to answer through an outstanding member experience. Warmth, competence, and convenience—the winning trifecta for credit unions.