Reduce Member Friction | Credit union time
If there was only one thing – one action you could take right now in your credit union that would have a significant impact and does not require additional resources, it is this: Reduce member friction.
Your members have only four problems they want your credit union to help solve. They are:
1. Transportation. The member needs transportation to accomplish their basic needs. It should not be confused with a car loan. The crate should see itself as the conduit to transportation.
3. Travel and play. The member wishes to travel and/or play. They need a financial partner to help them achieve these goals within their current financial means.
4. Rainy day and retreat. The member needs a financial partner who will help him build up short-term and long-term deposits.
The challenge for members of credit unions is the friction they encounter from the credit union while resolving these issues. Members may experience friction throughout their journey of experience with the credit union. Business friction falls into three categories: product, process and people.
Product friction is a lack of knowledge of the product by the user. Common product frictions at a financial institution include not understanding how a skip payment affects the terms of a loan, and how a check hold works and affects available funds.
Process friction refers to common barriers encountered in the purchase journey. An example is the loan purchase journey. The loan process begins when the member first identifies the need for the loan. This is often called discovery. Next, the member will evaluate their options for the loan and then purchase. Once the loan is open, the next phase is access/use. This is followed by the final recommendation or redemption step. This process contains many potential sticking points.
Other common process frictions include:
- The credit union is not open when the member needs it.
- Phone and drive-thru wait times have reached record highs.
friction of people
When nearly 600 credit union leaders were asked to describe the frictions the member has in doing business with the credit union, the most popular response was surprising. That was the word lack – more specifically, a lack of data literacy. Data contains a lot of information. It’s hidden in 60 to 100 credit union data systems. The ability to connect data and create insights is part of the solution. The other is for credit union talent to have the ability to consume data and make iterative changes.
Above are two global clouds of friction generated by over 40 different credit unions. The first was collected in February 2021 and the second a year later in 2022. Both friction word clouds indicate that online access and experience is a significant source of friction for members. In the 2022 global cloud, 117 frictions were identified, 44 more than the previous year and a 60% increase.
There has been a general increase in overall digital processes (account openings/loan applications) fraught with obstacles, leading to abandoned carts. But the impact of the current war on talent has also been significant. Here are statements from credit union leaders about staffing frictions:
- “100 new member-facing employees since June 2021 in our member-facing channels.”
- “We have a lot of vacancies – shortage of staff”
- “Lobby closed in a branch due to lack of staff”
A credit union can take four steps to reduce member friction: get data, map the MUX, analyze your results, and create a friction roadmap. Details on these four actions can be found in a previously published article CU time article in this series.
Understanding and identifying business frictions is a great exercise to include in annual strategic planning, leadership team meetings, and departmental meetings. When a list of member frictions has been compiled, prioritize it based on two criteria: which friction, when resolved, will have the most comprehensive impact on the member; and what your credit union can solve with the time and talent available now – not in the future, but now.
Anne Legg is the founder of THRIVE Strategic Services, a San Diego, Calif.-based company that assists credit unions with data transformation, and author of “Big Data/Big Climb,” a credit union handbook for data transformation.