Credit Unions Press Their Online Advantage

CU360
May 7, 2010 | COMMENTS

Before, during, and after the recession, credit unions continue to take on the competition, gathering deposits and investing in already-superior online capabilities, reports Bank Systems & Technology.

Not only are credit unions winning market share from banks, they already offer advanced online banking services to their members and are rapidly improving those services, according to a new study from research firm Aite Group.

In a survey of 54 credit union executives, Aite Group found that credit unions are surging ahead of banks in the online channel:

• More than 80% of the credit unions that participated in the study already offer an expedited online bill-pay service.
• More than half are increasing their online channel budgets this year by at least 5%.
• More than half have Facebook pages, while nearly half have a Twitter presence through which they interact with members.

Credit unions plan to do even more online next year, especially in the realm of social media:

• About 77% of respondents are very likely or somewhat likely to develop Facebook pages in the next 12 to 18 months.
• And 74% are likely to add a “member review” feature to their Web sites,
• About 56% are likely to add member services via Twitter.

Meanwhile, credit unions are rapidly building additional banking capabilities into their Web sites. About 42% already allow members to apply for mortgages online, one in four let members open savings accounts online, and 23% let members open checking accounts online.

Among credit unions that don't offer these online functions, 83% are likely to develop an online savings account and/or online checking account opening features, and 52% are likely to offer their members a way to apply for mortgages online.

The Aite research found a particularly wide gap between bank and credit union payments offerings:

• While 80% of credit unions offer expedited bill payment (payments to participating merchants scheduled and posted on the same day), only 25% of the top 100 banks offer this service.
• Credit unions also outstrip banks at offering debit card bill pay (34% versus 5%), credit card bill pay (23% versus 20%), and outbound ACH transfers.
• On the other hand, more banks than credit unions offer electronic bills and in-bound ACH transfers.

Room for improvement

One area of online banking where credit unions lag banks is automated online customer service:

• Although 83% of credit unions offer check ordering online and 68% offer account alerts via e-mail, only 40% offer the ability to change an address online.
• Less than one in four credit unions offer online chat or online fee dispute resolution, and only 11% offer co-browsing capabilities.

But credit unions are working to remedy some of these shortcomings: 88% are likely to implement account alerts via e-mail in the next 12 to 18 months, and 69% are likely to provide a change-of-address feature online in that same timeframe.

Despite the fact that credit unions have set the overall online-banking bar a bit higher than banks, many credit unions lack a coherent online channel strategy, according to Aite analyst Ron Shevlin.

"While many credit unions say their investment in their online channel is designed to improve the member experience, not all credit unions have planned investments in line with these objectives," Shevlin says.

This article was orginally published online by CU360, an online portal for benchmarking tools, market insights, industry data, and analytical information at cu360.cuna.org. Reprinted with permission.