Thriving Post Pandemic: 5 Strategic Moves for Credit Unions

In a very short time frame, credit unions have been forced to do things differently, and act at a whirlwind pace. COVID-19 has created an imperative for credit unions to challenge the status quo, add more value for services, and find ways new ways to positively impact both members and the bottom line.

In challenging times organizations are forced to question the accepted reality because things are not going according to expectations or are changing at such a rapid pace. Being agile is no longer considered nice to have, but rather it is a must have.  Financial Services will need to look for ways to create ecosystems that will add more value to members and move members away from the pure physical task of banking transactions. Creating seamless systems will be paramount to future success.

At Satori, we have been watching the situation unfold from the sidelines and have marveled at how each credit union has handled the pandemic situation differently. However, there have been 5 common requests from our clients that we thought we would share with you. One thing we know for sure is that the future will not look like the past. Taking a proactive approach to change will be instrumental in creating the next normal in banking and financial services.

  1. Strategic Agility a Structural Break
  2. Offsetting the Margin Squeeze
  3. Right Sizing Chequing Fees
  4. Member Retention
  5. Branch Optimization

1. Strategic Agility in a Structural Break

The pandemic has created a structural break in the economy. When structural breaks happen, such as the financial meltdown in 2008, it is imperative that organizations take a step back and review their strategic plan to ensure that there is a cohesive response to the challenge. A break is the best time to be strategically agile and by this we mean an developing an overall approach to the challenge based on a thorough diagnosis of the challenge and the probability of outcomes. Many of our clients, inside and outside the financial services industry, are taking the time to review their current strategy against high probability outcomes due to the pandemic and making changes to minimize the short-term impact and to ensure long-term success. Satori has been running mini-strategic planning check-ins with boards and management teams to review strategic priorities and goals against probable outcomes. This approach is ensuring that old ways of doing business are being challenged and that new and approaches are being entertained, thereby educating boards, realigning management priorities and ensure that the business not only survives but thrives.

Contact us today

2. Offsetting the Margin Squeeze

 

Whether we are officially in a recession or on the slippery slide into one, interest rates continue to be at an all time low. In theory this is good stimulus for the economy, but for financial service organizations it compresses margins even more. Margin compression makes things more difficult and forces institutions to look for ways to make money elsewhere. Focusing on increasing wealth members is one way to offset the squeeze. According to IPSOS the sudden jolt into the digital space will change the nature of advisor meetings going forward. No longer will members want to come into a branch when then can do the same interaction on-line or by Zoom. IPSOS has also stated that trading accounts are on the rise and the Generation Z folks are driving on-line investing.  The time is now for financial organizations to rethink value, accessibility and advisor language.

 

To aid in the identification of future wealth prospects, Satori has developed a wealth model that is based on the behaviour of many wealth members and their banking habits. The model has the ability to identify members within a credit union who do not hold wealth products with you, but are highly likely to need it or have it elsewhere. Less than 10% of a credit union’s retail members also have a credit union wealth product. The opportunity to accelerate capability and change behaviour is huge. Our propriety predictive wealth model called AXYMTM Wealth, is helping credit unions focus their energy on the right members to help grow their off-balance sheet assets and add value, thereby deepening relationships with existing members.

Contact us today

3. Right Sizing Chequing Fees

Consumer spending habits are changing with layoffs, more time at home, and less opportunity to spend, consumers are taking an active look at where their money is going. With this in mind, many credit unions are taking the time to review pre-covid member service charge spending against the package that individual members are in. They are looking for ways to save members money by putting members in the right package. We recognize that service charge revenue is important to credit unions. Therefore, the individual member review is being done in tandem with a package audit to ensure that the packages offered are priced right and competitive, and that they fit how members are behaving. The benefits are two-fold. First, it is a positive outreach advising a member that you are going to save them money. Second, taking a good look at your offering and ensuring competitiveness is another way to add value and minimize member attrition.

Contact us today

4. Member Retention

When times are good it is important to have a strategy that focuses on acquisition, growth and retention. When times are tough, new member acquisition may not be as easy and therefore it may be less of an important strategic focus. However, retention and growth are critically important. With the average credit union having close to a 1:1 new to closed member ratio, if members aren’t joining, but members are leaving, it stands to reason that the outcome is not going to be good. Many clients are upping their game by implementing a proactive attrition calling program to engage with members who are behaving like they are going to leave. We have been building credit union specific, predictive attrition models for credit unions for many years. Our proprietary AXYMTM Attrition program models members based on their behaviour and will provides an accuracy rate of up to 85% of members who are slowly leaving. We know that members don’t just leave, they leak until the last account is closed.  Add value by reaching out to these members and rebuild the relationship.  Nailing the backdoor shut has never been so easy.

Contact us today

5. Branch Optimization

The final area that credit unions are reviewing is their branch structure. The pandemic has forced credit unions to change hours, go cashless, and in some cases close branches. 20% of the branches of the 5 major banks are closed, and it is projected that, in the medium term, they will be closed for good. The consumer sentiment is that they intend to keep on-line banking and reduce cash use. In fact, the younger generations already see cash as an abstract, so it stands to reason that branches in their traditional form will not stand the test of time. But which branches are the right ones to close? Satori can step in and provide assistance as we have been providing credit unions with branch audits, transactional reviews, and member journey mapping since 2004. We analyze the data that is unique to your organization and provide non-biased recommendations. These services, along with many others, are designed to make your organization more efficient, as capturing this data allows you to drive change, which will yield positive results for your credit union.

As many would say, life is a journey, and perhaps this is just one part of an ongoing chapter. So whether your goal is to review strategy, nurture member relationships, or focus in on your member’s current spending habits, Satori can help. Inquire today and let us help you stabilize and grow during this crazy time.

Contact us today

About Satori Consulting inc.

Satori Consulting inc. is a leading Canadian owned management consulting and leadership development firm, based in Burlington Ontario. Being based in Burlington Ontario supports our geographically close service areas of Hamilton, Oakville, Mississauga, Cambridge, Waterloo, Toronto and the GTA, but we are also national and global in scope providing management consulting services from coast to coast.

We bring a unique, cross-disciplinary approach to clients’ challenges, ensuring the right balance of expertise, real world experience and best practices across business strategy, governance, organizational performance and executive & talent development.

Providing expertise in credit union consulting, insurance industry knowledge, academia (coaching and teaching), general business management solutions, family business solutions, leadership development and team building – Satori Consulting inc. is passionate about management consulting and partnering with clients that want change.