Canadians are opting against banks in favor of other financial institutions, such as credit unions. Credit unions are cooperative-based fiscal institutions that are actually owned by their members. These institutions rely on a shared interest model, with members taking a more active role in their operations. While they still operate to earn returns, they are not as profit-based as traditional banking institutions. Many people consider them as an ideal alternative to banks due to the personalized approach to finance.
How do credit unions differ from banks?
Credit unions offer better priced financial products than banks because they are not entirely profit-driven. They charge lower interest rates on loans, mortgages and credit cards. Whereas you only need to open an account and deposit a minimum balance to join a bank, there are more stringent membership requirements for credit unions in place.
They usually require members to own a share account whereby they deposit some money in return for a stake in the institution. Many of these institutions are members of the Canadian credit union, although some may be regulated provincially.
How are credit unions embracing personalized banking?
A 2018 report by Baker Tilly, involving research on 3 credit unions, identifies personalized banking as a major factor in the spike of the popularity of these financial institutions. These institutions have improved their personalized banking approach through a number of efforts.
The use of e-mail and text messaging, as well as other modern integrations, has enabled them to keep in correspondence with their members. Instead of waiting for days to engage with their financial partners, members have been exposed to rapid and relevant responses across their medium of choice. The high rate of response, which is carried out quickly and efficiently, has enabled members to build positive relationships with these institutions. Channel integration, achieved by ensuring a seamless transition between platforms, has also increased the rate of member engagement.
The use of third-party data has also enabled credit unions to provide a more personalized experience. Instead of limiting their knowledge on members to just their names and locations, credit unions have followed up on their interests and affiliations. This has enabled the financial service providers to ensure personalized communication and financial guidance for their members. For many traditional banks, the large user database could potentially be a limiting factor.
Credit unions have also increased their relevance to members by providing more than just basic financial services. They have sought to improve their expertise and member trust levels by providing personalized financial advice, which is tailored to meet the needs of each individual. By crafting members’ personas and understanding their specific goals, credit unions have been able to build a strong personal relationship with their followers.
There is still a need for more personalization efforts for optimal performance of these institutions. Some credit unions still fall behind in terms of the integration of new technology. Instead of being limited by legacy tech, these players could attract even more members and build long-lasting relationships by embracing the latest trends in fintech. They may also consider other avenues of interaction, such as the popular social media front.