{"id":5256,"date":"2024-08-16T13:18:19","date_gmt":"2024-08-16T18:18:19","guid":{"rendered":"https:\/\/www.ncultheaffiliate.com\/?p=5256"},"modified":"2024-08-16T13:18:20","modified_gmt":"2024-08-16T18:18:20","slug":"how-many-members-can-you-afford-to-lose","status":"publish","type":"post","link":"https:\/\/www.ncultheaffiliate.com\/?p=5256","title":{"rendered":"How Many Members Can You Afford to Lose?"},"content":{"rendered":"

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Kathy Feringa, Vice President, Alloya Corporate, Member Product Support<\/em><\/p>\n

Do you remember \u201cthe tube\u201d? The one that suctioned your cash or check and \"\"deposit slip from the drive-thru to the teller behind the glass? For those of us who lived through the \u201880s, you know what I\u2019m talking about. For those wondering \u201cwhat tube?\u201d, give it a Google.<\/p>\n

There was a time when the pneumatic tube system was considered cutting-edge technology, and while it\u2019s by no means extinct, as it\u2019s still widely used in settings like hospitals and pharmacies, and even at some credit unions, it\u2019s certainly seen declining popularity within the financial services space. Payments have become so digitized, there\u2019s understandably less demand for short-distance transport of checks or cash from one\u2019s vehicle to a live representative just a few feet away.<\/p>\n

From Nice-to-Have to Must-Have<\/strong><\/p>\n

As new financial technologies emerge and go mainstream, higher consumer expectations will emerge as well. I often think back to the rise of online banking. At one point, that was a nice-to-have convenience. Now, it\u2019s widely considered a non-negotiable service. So, what technology of today is a nice-to-have now, yet likely a must-have later?<\/p>\n

I predict, alongside many of my colleagues at Alloya and experts throughout the payments industry, that real-time payments are that next must-have thing. The scary part? As a behind-the-scenes service without a consumer-facing brand, members are not likely to waltz into their financial institution and ask for real-time payments, instant payments, FedNow\u00ae payments or anything along those lines. They\u2019ll simply know what experience they\u2019re looking for, identify when that need is not being met and shop around until they find it.<\/p>\n

Loyalty May Not Be Enough<\/strong><\/p>\n

If your credit union has historically hung its hat on member loyalty, consider the adjective a recent CUToday<\/em> article<\/a> ascribed to the latest generation of consumers: fickle. Citing a recent report from PYMNTS and Velera, CUToday<\/em> shared, \u201cOver the past year, 42% of Gen Z CU members switched their primary financial institution.\u201d Compared to their Gen X counterparts, Gen Zers are more than twice as likely to switch. According to research conducted by The Financial Brand<\/em>, 44% of consumers indicate they are likely to leave their financial institution for digital banking that is similar to the online shopping experience. While 56% of consumers say they would prefer to bank with a community financial institution, they say their digital offerings do not meet their needs. So, it\u2019s unsurprising that 57% of consumers would consider banking with Apple, Amazon or another non-traditional financial institution to get their needs met.<\/p>\n

In other words, there will come a point where access<\/em><\/strong> is more highly valued than loyalty<\/em><\/strong>. Consumers know what they want, and they\u2019ll do what it takes to get it. So, if your members aren\u2019t asking for real-time or instant payments by name, make no mistake, it\u2019s not for lack of interest. Not asking is not the same as not wanting. In fact, if your members have to ask, it’s likely already too late.<\/p>\n

Tyler Lange, Director of Payments at Consumers Credit Union in Lake Forest, IL says, \u201cThis is something your members are not going to ask for. Your members will feel a difference in a product or service offered by another financial institution or fintech but won\u2019t know what\u2019s behind that difference. At their core, real-time payments are another tool financial institutions can use to improve member experience. Most members probably won\u2019t need it [yet], but they\u2019ll want it.\u201d<\/p>\n

Real-Time Adoption Steadily Climbing<\/strong><\/p>\n

Consumers Credit Union was one of the Federal Reserve\u2019s early adopters of the FedNow Service. At the time Consumers went live, there were a mere 30 institutions connected. Now, adoption is north of 800 and growing steadily every day. Similarly, The Clearing House\u2019s RTP\u00ae network has over 650 participants and is seeing steady growth, too.<\/p>\n

What types of transactions are flowing through real-time rails? At Consumers Credit Union, Lange indicated the bulk of their members\u2019 real-time transactions are earned wages and account-to-account. At Alloya, we\u2019re seeing instant payment activity tied to organizations like Plaid, Grubhub, Robinhood and sports betting facilities. In fact, Grubhub drivers have the ability to do an \u201cInstant Cashout\u201d of their earnings, that is, if their financial institution supports it. Soon, the U.S. Department of Treasury is expected to connect to the FedNow Service for social security disbursements, tax refunds and more.<\/p>\n

What Questions Are Your Members Asking Elsewhere?<\/strong><\/p>\n

This has people talking. On the social media platform Reddit, for example, users have shared the following comments and questions.<\/p>\n