Beware of the cafe-style credit union trend - Member Access Processing

Catering to young adults is crucial to staying competitive for credit unions. Millennials and Generation Z are often a credit union’s newest members, and it is increasingly important for financial institutions to appeal to these populations.

Millennials are the largest generation in the U.S., surpassing even the large Baby Boomer generation. Generation Z is also referred to as the digital native generation, meaning they simply don’t remember a time when the internet wasn’t readily available and are quick to adopt new technologies. The old rules of business don’t apply to these young consumers, who are quickly becoming important audiences that financial institutions must reach in new, engaging ways.

Making credit unions more appealing

In the quest to show young adults the benefits of banking at your institution, it can be tempting to try every latest fad or adopt every highly praised practice. Some trends, like offering smartphone apps, are important to adopt sooner rather than later to keep tech-savvy consumers happy and connected. However, the ability to determine which trends are here to stay and which aren’t worth your time is important.

One trend credit unions have been adopting as of late is the cafe-style branch. Complete with fresh-ground coffee, free Wi-Fi, and comfortable sofas, these branches are anything but traditional. Payments Leader described branches that have tellers who carry out tasks on tablets, allowing them to roam the premises so they can sit and chat with customers who need assistance.

While this might be good in theory, the truth is that this atmosphere isn’t really what people are looking for when they enter a credit union branch. What they’re most likely looking for is their money, and little else.

Credit unions, not coffee shops

According to TimeTrade’s 2016 credit union consumer survey found that, for the most part, credit union members don’t care whether their financial institution has a cafe-style atmosphere; just 20 percent said it was a plus. Only 19 percent said it was something they looked for in a credit union. About half said having a cafe-like environment would have no effect on their decision to bank at one institution over another.

Bryan Clagett, the chief marketing officer at Geezeo, a personal finance market solutions company, pointed out that there’s a reason why the vibe of a coffee shop is appealing. Clagett said in a CUInsight article that a cafe is a nice place to stop and relax in between home and work. He calls it the “third place” that so many people enjoy having. Because of this, it is crucial to the average coffee shop that the sofas are plush, the Wi-Fi is free and the atmosphere is friendly.

However, as Clagett goes on to note, the average person doesn’t look for that “third place” in his or her financial institution. People rarely want to simply hang out at their credit union for no other reason than to relax, and they don’t want an atmosphere that encourages it. It’s a mix of two environments and business strategies that just don’t go well together.

The ideal credit union atmosphere

Credit unions shouldn’t be modeled after a cafe-like environment, but that doesn’t mean the look and feel of a credit union isn’t important. It’s just as essential that a credit union have the right atmosphere as it is for a coffee shop—it’s just that those two atmospheres are inherently different.

So what are members looking for in their credit unions?

  1. Personalized experience

TimeTrade found that credit union members value personalized attention during their branch visits. While just 35 percent of bank customers said this was important to them, 41 percent of credit union members indicated the same. Credit union members also expressed aversion to the idea of an entirely automated branch. Just over two-thirds said they’d rather speak with a teller.

The majority of survey respondents said they would prefer to visit their credit union in person. While online banking was a top priority for many, 68 percent of people also indicated they were willing to make an appointment with a specialist so they can ask questions and get information about certain products and services.

  1. No lines

Only 38 percent of people said they would be willing to wait 10 minutes or longer for service at their credit union. Nearly half said they wouldn’t wait more than 10 minutes, and 13 percent said five minutes would be their limit.

Like any business, there are certain times of the day when people are most likely to drop by their credit union. However, 91 percent of people said they would be willing to choose another time to stop in if there was an incentive to do so. Not only would this decrease line wait times, but it could also increase the ability for members to have a one-on-one conversation with a teller.

  1. Convenience

More than one-third of respondents said branch location was one of the most important things to them when choosing a credit union, and 24 percent said convenient hours of operation were key. Nearly three-fourths of people said they would like the ability to bank after traditional working hours.

Keeping consumers happy is important, but to do so, credit unions must understand what they really want—and what they don’t. It has become clear that most members aren’t impressed with a coffee-shop style credit union. Rather, a focus on meeting financial needs and providing excellent customer service is largely what members are looking for in their credit union. Institutions that take note of these desires, rather than passing trends, will be the ones that attract new members and retain the current ones.