Focusing on SEGs to Compete with Fintechs and Digital Banks
The financial landscape is rapidly evolving, with digital banks and fintech companies gaining significant ground in the battle for consumer attention and loyalty. Traditional financial institutions, including credit unions, are finding themselves in a competitive race, striving to maintain relevance and grow their membership. One strategic advantage that credit unions can leverage in this race is their focus on select employee groups (SEGs).
Credit unions can gain a competitive edge by tapping into their existing SEG relationships. These relationships place credit unions in a unique position to offer tailored products and services that meet the demands of SEGs and their employees.
The Competitive Landscape
Credit unions are losing ground to digital banks, fintech companies, and traditional banks, particularly among younger consumers. According to a study by BAI, 65% of Gen Zers and 68% of millennials prefer large banks or nontraditional fintech platforms to credit unions.
Gen Zers and millennials, being digital natives, have a natural inclination toward digital and mobile banking services. They prefer to manage their financial affairs via a seamless, frictionless experience that can be accessed from the palm of their hand, anytime and anywhere. Traditional credit unions often lack the resources and technological capabilities to keep up with these evolving consumer demands, causing them to lag behind their larger counterparts.
Modern consumers are increasingly valuing convenience, speed, and accessibility. A 2023 report by McKinsey found that 75% of banking customers use digital channels for at least a portion of their banking activities, and more than 50% consider digital banking capabilities as a crucial factor when choosing a bank.
Cornerstone Advisors reports that year to date, 47% of all new checking accounts were opened at fintechs and digital banks. Of all the accounts opened at these digital providers, 20% were captured by Paypal and Chime alone.
Younger generations are opening second and even third accounts with digital players, using their traditional accounts as pitstops, where funds reside just long enough for direct deposits to be re-routed to other accounts.
The SEG Advantage
In the midst of this growing competition, credit unions enjoy a unique relationship with their SEGs, giving them a competitive advantage. Given their relationships, they are uniquely positioned to compete in this changing landscape by offering tailored products and services that meet the demands of SEGs and their employees.
From a marketing perspective, focusing on SEGs allows for highly targeted and effective campaigns. Financial institutions can hone their offerings based on the specific needs and preferences of their SEGs and allocate a larger share of their marketing budget towards promoting these refined offerings. This targeted approach can lead to higher engagement rates, improved customer acquisition, and ultimately, increased loyalty.
Credit unions can also leverage their close relationship with SEGs to understand these needs and develop innovative solutions that meet them. This could include help with establishing emergency funds, access to financial coaches, or other unique benefits tailored to the specific needs of the SEG. By tailoring solutions to the preferences of their SEGs, they can grow their membership and stay competitive in the digital age.
How Ovation Can Help Credit Unions Expand Membership through SEGs
Ovation (formerly known as Paperwork) provides a powerful platform designed to help credit unions meet the financial wellness needs of SEGs and their employees. With a cutting-edge, white-label financial wellness app backed by detailed analytics, Ovation offers credit unions a turnkey solution to strengthen SEG relationships and drive membership growth.
By offering Ovation to SEGs, credit unions can provide employees with personalized financial tools and resources, increasing engagement while seamlessly promoting credit union products and services. This holistic approach not only enhances employee financial well-being but also boosts workforce productivity for SEGs, positioning the credit union as a trusted financial partner and supporting long-term, sustainable growth.
Turbocharge you SEG relationships and schedule a call with us today.