Will credit unions benefit from the robo-advice and fintech wave?

Technology is disrupting financial services in more and more new ways every day. Given the choice, would you rather have financial investing advice from an in-person financial adviser or an online firm that leverages automation and algorithms to manage portfolios? Would it surprise you to know that almost 50% of people state that they’d be comfortable getting robo-advice in the future?

If you’ve used a retirement planning tool, college planning calculator, or even a mortgage payment calculator, then the idea of robo-advice probably doesn’t sound far-fetched. Furthermore, many financial advisers are basing their recommendations on teams of corporate analysts using algorithms to predict the best investments. Is it possible that we’ve been relying on something that resembles robo-advice all along?

Changes in the financial landscape reflect trends that consumers expect more and more out of the financial services industry. Accenture’s 2016 North America Consumer Banking Study articulated consumer needs and expectations as follows:

Banking consumers in North America want it all— deals and discounts, convenience, relevance and banking customer experiences that combine the latest in digital banking with human interaction. Consumers will share personal data to get what they want and switch banks if they do not.

Numerous hurdles have been associated with switching financial institutions. Barriers such as changing payroll deposits, re-entering payee information and having the appropriate balance in each account. This inertia poses challenges for credit unions, which often lack the resources big banks, lenders and investment firms carry.

Today, many credit unions aren’t in the position of being the primary financial institution. Additionally, many credit unions aren’t in a financial position to compete effectively on innovation. Not all credit unions have the dollars available for investments such as robo- technology. Credit unions however do potentially have benefits such as higher savings rates, lower lending rates, and favorable fee structures. Additionally, credit unions that have strong online and mobile interfaces are well positioned. Accenture’s research study demonstrates consumers are becoming increasingly comfortable with internet-based investment and money management.

With that in mind, the following chronicles a program for Alliant Credit Union, one of the largest credit unions in the nation. Alliant started as United Airlines’ credit union, but today partners with numerous organizations, yielding over 335,000 customers (members).

Credit unions are often synonymous with an employee benefit. Once a company decides to offer credit union membership as an employee benefit, Alliant resumes marketing responsibility to convert the employee base to active members.

The acquisition marketing program had an ultimate goal of generating new members, with a secondary focus on the following goals:

  • Overcome inherent market inertia members have in switching their banking relationships
  • Determine the best type of initial account to serve as an entry point for already banked customers
  • Leverage the most favorable account to begin the customer relationship, and then employ a lifecycle marketing program to cross-sell multiple accounts and deepen relationships
  • Communicate the differences between a bank and credit union, and the key benefits of credit unions
  • Architect creative based on the key insight that while there is market reluctance to moving the entire banking relationship, consumers might consider making a simple change

Campaign approach

A multi-channel marketing communications program was put in place to drive prospects online to set-up their initial account. Savings-oriented accounts were highlighted as the featured product. This allowed the communications to highlight that credit unions typically offer higher savings rates than the average bank. Additionally, savings account have fewer barriers to entry, and it’s not uncommon for consumers to have savings-related accounts with more than one institution.

The creative approach was built on the idea of savings for the future, not only selling the higher interest rate, but also promoting the concept of “savings”. The “savings” message also piggybacks off the marketplace noise on topics such as robo-advice, online banks, fintech and the increase of internet-based investment tools.

Strong performance

This acquisition program performed significantly better than previous efforts. The campaign brought in 6 times more new accounts versus the average campaign. Emails proved to be particularly effective, which was logical since the sign-up process is primarily online. The open rate was 4 times greater and the click-through rate was 6 times better than previous campaigns.

Sheera Eby partnered with Alliant’s marketing leadership to construct the program strategy and oversaw the agency team that executed the multi-channel program.

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