Reassure Your Members & Make Wise Decisions About Fintech

A research event recap from Filene's Centers for Emerging Technology and Consumer Decision Making

Increasingly, consumer decisions are being driven by anxiety about the present moment. Technology – from smartphones to interactive teller machines to AI – has the power to intensify and ease those anxieties, perhaps simultaneously. Against a backdrop of accelerating technological development and rising global instability, how can credit unions reassure their members, fight to protect their communities, and make wise decisions about fintech and machine learning?

Event RecapPHOTO ALBUM

Forget the Future – This Week Seems a Little Iffy

Credit union leaders look to the future to predict upcoming trends, challenges, and opportunities, notes Filene Fellow Bill Maurer – but they would be wise to also pay attention to the trends generating insecurity among their members right now. “Things are… changing around what we understand to be not just the future, but the present of money,” he explains. For example, on a global scale, young people are hoarding cash, perhaps because of economic uncertainties or the ease of overspending through fintech. Some governments are encouraging citizens to keep extra cash on hand in case of emergencies, while monetary designers have proposed storage-ready cash solutions like hard polymer plastic banknotes.

Even with interest rates below zero, the European economy remains sluggish. Quoting economist Massimo Amato, Maurer points out that if positive interest rates suggest a future that is more uncertain than the present, then “…the advent of negative interest rates would then imply that the present has become more uncertain than the future.”

"With conditions that are coming about to real estate based on climate change, we have to start thinking about things like whether the 30-year mortgage makes sense anymore."

Bill Maurer
Filene Fellow
University of California-Irvine

Current insecurities extend beyond money, says Maurer: people worldwide are worried about the impacts of climate change and are making financial decisions accordingly. “With conditions that are coming about to real estate based on climate change,” he says, “we have to start thinking about things like whether the 30-year mortgage makes sense anymore.” He notes that this is an ongoing topic of conversation among realtors and lenders, with some underwriters practicing what’s being called “blue-lining,” an unwillingness to back mortgages for properties that are likely to be affected in the short term by climate change. Already, Maurer notes, the city of Long Beach, CA has prepared a map of projected sea level rise for use by city planners, and some residents are already selling their flood-threatened homes and moving inland.

In academia, Maurer says, shifts in the knowledge economy have prompted a movement toward re-skilling. “Universities are trying to adapt to this new future world of rapid de- and re-skilling,” he explains, “by offering – alongside traditional majors – little short courses, micro-credentials, so you can earn a digital badge proving that you have skills in machine learning, or healthcare analytics.” In the midst of worker displacement by artificial intelligence and algorithmic discrimination in hiring, Maurer says, students are hungry for opportunities to boost their prospects and gain transportable skills. However, he notes, these micro-credentialing courses come with a catch: many are not credit-bearing, which means they’re ineligible for financial aid. At thousands of dollars per course, cash-strapped students have no choice but to charge that tuition to a credit card.

Click to hear Bill Maurer, University of California - Irvine and Filene Fellow, encourage credit unions to be bold and draw on their unique strengths.

Coastal Credit Union’s Ericka Hewitt joined Maurer and Filene’s Taylor C. Nelms for a discussion of the credit union impact of Maurer’s work. “You know, we’ve been talking as a system… about the implications of the future,” Hewitt says. “Obviously, the future is now. There are some really urgent items that are facing us. And they’re not fringe items… these are broad-based issues.” 

Nelms points out that these insecurity-driven trends line up with critical business lines for credit unions: non-interest income, mortgages, unsecured credit. He asks: how can credit unions adjust their operating models to address members’ insecurity? For starters, Maurer says, talk to your members to better understand what’s behind their fear. For example, could cash-hoarding be a need for higher-yield products, or is it a question of consumers not trusting themselves to save otherwise?

Maurer adds that he is intrigued by the development opportunities presented by the need for climate retrofitting, as well as what he hopes is the increasing normalization of multi-family households in areas where single-family homeownership is becoming financially inaccessible for many. He also suggests that credit unions partner with universities to help finance micro-credentialing, noting that many students in these courses are established professionals who will benefit from re-skilling. Finally, Hewitt encourages leaders to view these challenges through the lens of the credit union difference: “I see [these insecurities] as a huge opportunity for us to really demonstrate that we mean it, that we are here to improve the well-being of our members.”

Insecurity is Contextual

Climate change, a shifting job market, and economic uncertainty are only a few of the drivers of insecurity among consumers. Here are several others that credit unions should keep in mind:

  • Filene Fellow Hope Schau warns that, while Americans like to think they can plan for everything: “…we also have to be reactive because the world does some crazy stuff we did not anticipate.” She suggests that credit unions consider a wide range of possibilities for how their communities may be navigating insecurities like access to healthcare or nutritious food, being underbanked, and the unique needs of military service members and veterans. For more on these issues, click on tabs Tech Creates Insecurity and Tech Alleviates Insecurity.
  • The University of California Irvine’s Mehrsa Baradaran notes that the wealth gap between Black Americans and their white counterparts has not meaningfully shrunk since Reconstruction, largely because of discriminatory housing and financial systems that have prevented homeownership and created obstacles for Black banking. Even without personal bias, she stresses, the segregated lending economy continues to prevent Black consumers from building wealth and financial stability. For more on this, click on the tab Unfair Systems.
  • Noelle Stout of Apple University explains that high mortgage foreclosure levels in the height of the financial crisis led to marital stress, a lack of safety for families, and even the formation of tent cities. While the federal government promised modification plans to struggling families, the algorithms that lenders used to determine eligibility were so opaque that homeowners battled confusing processes only to be overwhelmingly denied. For more on this, click on the tab Unfair Systems.
  • About one in three Americans has some kind of criminal arrest or conviction record, notes the University of California Irvine’s Naomi Sugie, and they experience discrimination when applying for jobs (the penalty is especially heavy for Black and Latino applicants). She explains that post-incarceration, finding work is an alienating and destabilizing experience, which is exacerbated by the burden of criminal justice debt. For more on this, click on the tab Unfair Systems.

Report No. 502 03/20

While it can be the result of personal biases, discrimination is more likely to stem from biased systems, which are difficult to dismantle and can have devastating consequences. Discrimination based on race, ethnicity, zip code, or a criminal record is a source of insecurity for many Americans.

Segregated Lending Systems are Crushing Black Wealth

The average white family in the United States has more than ten times the accumulated wealth of the average Black family, explains the University of California Irvine’s Mehrsa Baradaran. This racial wealth gap has remained essentially unchanged since Reconstruction, she notes, and is rooted in a history of segregated credit, financial, and banking markets, which “perpetuate this racial wealth gap, even without added inputs.”

During Reconstruction, Baradaran explains, even as sharecropping forced freedmen back into cotton production, Congress created the Freedman’s Bank, an institution “unlike anything before or after it.” The bank was immediately successful, she notes, and with Black tellers and authoritative-looking money, it felt accessible and safe. But when its white manager drove the bank into the ground, customers lost everything – including their trust, not just in government, but in the banking industry. This led to “drastic racial disparities” in terms of who is underbanked and unbanked.

The late nineteenth century was “the heyday of Black banking,” says Baradaran, with hundreds of Black banks, cooperatives, and thrifts founded. But these banks mostly dealt in small deposits and had high overhead. Black families who took out mortgages paid a premium for housing in white neighborhoods, and white flight drove their home values sharply down.

"I think it’s important to know that you actually get the outcomes now without racial discrimination."

Mehrsa Baradaran
University of California, Irvine

As part of the New Deal, Americans could access mortgage loans insured by the Federal Housing Administration (FHA) – but not all Americans. The Home Owners’ Loan Corporation coded all Black neighborhoods as too risky for FHA loans, and this red-lining cemented existing segregation and “subsidized the heavy mortgage flow into white communities,” Baradaran says. Because subsidiary credit markets also relied on HOLC risk maps, Black communities could only access installment credit, essentially creating two segregated credit markets and blocking Black communities from building wealth.

This ongoing financial segregation sowed the seeds of the Civil Rights movement, Baradaran says, noting that Malcolm X and Martin Luther King, Jr. both focused on economic rights as a high priority. When riots broke out in cities across the U.S. after the passage of the Civil Rights laws, President Johnson’s Kerner commission reported that: “White society is deeply implicated in the ghetto. White institutions created it, white institutions maintain it, and white society condones it.” William Proxmire’s Senate Committee on Banking, Housing, and Urban Affairs found that the riots were sparked by communities’ frustration at paying more money for less value, but also that lenders weren’t actually profiting from the high prices they charged because lending to low-wealth, high-risk communities was costly.

Mehrsa Baradaran explains that the system itself is racist

As president, Richard Nixon’s answer to the problem of Black financial segregation was to co-opt the language of Black Power. Announcing that it was “time to push past the old civil rights,” Nixon argued for Black capitalism and the promotion of minority business enterprise. His language, Baradaran says, still prevails in national politics, with both parties employing it: “The Black enterprise system that Nixon set up,” she explains, “is basically what we're still living with."

But Baradaran says there are no easy solutions. “Once you have a segregated housing economy, once you have those dual credit markets operating in different ways,” she notes, “it’s really hard to disrupt them with just normal market forces.” And she stresses that it shouldn’t be the financial industry’s problem to fix – but adds that the issue isn’t being solved at a policy level. What can the credit union sector do to help? Baradaran points out that Black banks are undercapitalized, largely because Black communities lack wealth. How can credit unions help to infuse capital into communities of color? Or support minority communities in the midst of gentrification with building equity so they can benefit from development instead of simply being forced out? Ultimately, she says, “the payoff here is to understand what doesn’t work and to search for programs that do.”

Blame Foreclosure on the Algorithm

In 2009, when Congress created the Home Affordable Modification Program (HAMP) to address the growing financial crisis, many struggling homeowners felt optimistic that the program could help them. But their hopes were extinguished, explains Apple University’s Noelle Stout, by an opaque, frustrating, and inconsistent application process. Driven by an algorithm that neither homeowners nor lending employees understood, she says, the program shattered trust between homeowners and banks, and between banks and their employees.

"Dispossession appeared in daily life, not as a dramatic moment of eviction, but rather these grinding bureaucratic tragedies of calls placed on hold, misinformation, and nonsensical outcomes."

Noelle Stout
Apple University

Take, for example, a couple that Stout encountered during her research; she calls them Susan and Rick. They found themselves in trouble, Stout shares, when Susan lost her teaching job, Rick’s slower-than-usual workload, and a child’s medical bills made it difficult to keep up with mortgage payments. In the process of applying for a modification plan, Susan made dozens of phone calls, compiled and faxed hundreds of pages of documents (from a Kinkos, with her children in tow) multiple times, and was given misleading, conflicting, or false information every time she managed to get through to a bank representative. After months of exasperation, the couple was approved for a trial modification plan. But after seven months of making modified payments as instructed, they were denied assistance under HAMP. Fed up, Susan and Rick decided to stop making payments entirely while staying in their home as a form of protest – a “morally justified response to the mistreatment that they had received at the hands of [their bank],” Stout explains.

Susan and Rick weren’t alone. Seventy percent of HAMP applicants were denied modifications to their mortgages, Stout says – which means over nine million Americans who wanted to keep paying off their mortgage were forced into default. In a 2008 survey of California housing counselors, 88% reported that lenders nearly always lost documents, reported misinformation, and delayed responses. Lenders also commonly dual-tracked mortgages, an illegal practice. "Dispossession appeared in daily life,” Stout says, “not as a dramatic moment of eviction, but rather these grinding bureaucratic tragedies of calls placed on hold, misinformation, and nonsensical outcomes."

Noelle Stout shares how an automated process changed homeowners’ view of their responsibilities

On the other side of the desk, Stout explains, lending employees who processed HAMP applications were equally frustrated. Many were used to being able to work with bank customers to help them qualify for loans or at least explain why they didn’t. But as modification specialists, their rigid, antiquated technology made it difficult to work with homeowners to qualify them for HAMP, and employees didn’t understand and couldn’t explain the proprietary qualification algorithm. They did know that it relied heavily on Net Present Value (NPV), but many felt that it was unfair to deny assistance to homeowners based on how much the bank could recoup from foreclosure – especially since homeowners didn’t realize this and were essentially being set up to fail. Without the ability to work the system to help homeowners in need, Stout shares, many modification specialists told her that they felt burned out and depressed; some even made career shifts away from the financial industry.

African-American and Latino homeowners were more likely to be denied assistance under HAMP, Stout shares, and were also more likely to have their trial modification plans cancelled. Several banks, she added, later acknowledged that some denials were made because of computer errors, leading to hundreds of unnecessary foreclosures.

“So this outcome, that Black and Latino homeowners are disproportionately denied mortgage assistance, is discriminatory. But when the black box of modeling makes the call, no one is held responsible. The algorithms exist in a universe beyond appeal, even when there’s cause to question the data that’s fueling their decisions.” 
Noelle Stout, Apple University

Ultimately, Stout says, credit unions must factor in the social costs of destabilizing trends into their algorithmic models, test those algorithms rigorously for bias – both inputs and outcomes – and prioritize explainability, so that employees can share with members how and why a decision was made. It is essential, she argues, to understand that the design process is “riddled with human assumptions and biases.” The absence of accountability and face-to-face contact during HAMP processing dismantled the social contract, she says – credit unions should consider where and how artificial intelligence can and should be used. If data privacy is a human right, Stout argues, then there is a need for good regulatory policy around financial services and AI.

Criminal Record? Apply Elsewhere

Around one third of U.S. adults have a criminal arrest or conviction record, notes the University of California Irvine’s Naomi Sugie, and the prevalence is much higher in African-American communities, where a man is more likely to go to prison than a white man who committed the same crime. This is a “new normal,” she says – over the past 40 years, the U.S. incarceration rate has risen by more than 500% and America has become the international leader in incarceration. Unlike other countries, Sugie adds, criminal records in the U.S. are rarely sealed, so the deep social stigma attached to the record can follow a person throughout their life.

That stigma, she notes, can extend to the family members of people with criminal records, and is a barrier to accessing housing and jobs. Sugie’s research has found that employers are hesitant to hire applicants with criminal records partly out of concern for risk, but largely due to the stigma of the record itself. A criminal conviction, she points out, can also lead to what scholars call “civil death” – the loss of access to rights like voting, jury service, occupational licenses, food stamps, and over 45,000 others, depending upon location.

“Criminal records are not neutral filters of behavior. They are shaped by where you live, by what race and ethnicity you are, by whether you’re a young person or an old person, and – importantly – whether you are rich or poor.”
Naomi Sugie, University of California, Irvine

Post-incarceration, Sugie shares, people have an especially difficult time finding work. Her research found that less than one fifth of those recently released from prison were able to find five days of consecutive work at any point in a three-month period. Only half had found even two days of consecutive work. Most were doing any kind of task they could get, scrambling to bring in enough money to pay for necessities, an experience that Sugie describes as destabilizing and alienating. “Work is a different thing for people coming out of prison than what we typically think of as work,” she notes.

"Criminal records are not neutral filters of behavior. They are shaped by where you live, by what race and ethnicity you are, by whether you’re a young person or an old person, and – importantly – whether you are rich or poor.”

Naomi Sugie
University of California, Irvine

This instability is exacerbated by criminal justice debts – restitution, fines, and fees, Sugie says. Fees, in particular, are not well understood by researchers or even by judges – a person who is court-ordered to attend anger management classes, for example, must pay for those classes. Fees can be assessed for ankle monitors, public defenders, and the supervision of a parole officer. They can be reported to credit bureaus, and failure to pay them can result in reincarceration.

How can credit unions help? There are several types of ongoing efforts, Sugie shares. Some organizations work with individuals to prepare them for the formal labor market and increase their chances of success, like the Georgetown University Pivot program. Sugie herself is hoping to conduct research on an online platform designed to coordinate the job search and increase job seekers’ persistence. Some employers – like Ben & Jerry’s – have branded themselves as “fair chance” businesses that hire people with criminal records. Finally, there are policies at the state and federal level that can help create a more level playing field for job seekers with records, like “Ban the box” legislation, sealing non-violent convictions after a certain period of time, getting rid of mandatory minimum sentencing, and requiring that background checks weight convictions above arrests.

Credit unions may want to consider that people often pay criminal fees and sanctions by drawing on friends and family, Sugie explains, thus taxing communities that may already be struggling. She adds that people exiting prison will have had extremely limited access to technology, and many apply for jobs on older smartphones, so they need entry points to the job market that are tailored to those phones.

Final Thoughts: We Need More Ethical AI

Filene’s Taylor C. Nelms encourages credit unions to ensure that teams building your artificial intelligence are diverse – and that applies to fintech partners, too. Don’t be afraid to ask partners: who is on your team? Who do you work with in your community? Where and how do you get your data? Artificial intelligence should not be allowed to police itself, Nelms says; can credit unions take on an advocacy role for the nascent field of “Explainable AI?”

Report No. 502 03/20

The Right – and Wrong – Tools for the Job

We are living in a ‘post-truth’ world, argues Filene Fellow Hope Schau, in which technology spreads false information, making us all feel less secure. Insecurity is contextual, she notes, and can take a variety of forms: food insecurity, the unique needs of active duty military service members, a lack of access to healthcare, safe housing, or financing, among others. However, while “we think insecurity is [always] a bad thing,” she says, sometimes the ability to accept what you don’t know and can’t plan for is a strength. In spite of the best plans, she notes, actions can and will have unintentional consequences – think of the ‘butterfly effect,’ in which concentric ripples of change make it difficult to trace the consequences of a single action.

Click here to hear Hope Schau, University of Arizona and Filene Fellow, discuss technology as a tool.

In a complex and uncertain world, “we imagine that technology's going to solve a lot of problems, right?” Schau says. But unfortunately, “tools are only as useful as they are at certain problems. A hammer... is not that helpful when we need to screw something in or wrench something out." Technology can both magnify and mitigate insecurities, Schau explains – often both at once.

How can technology magnify insecurities? Think of an internet-connected house where a guest can unwittingly order hundreds of espresso pods just by rummaging through the coffee drawer. Or think of how that smart house is transmitting data to a series of corporations, and the house’s occupants may not actually know where their data is going, who owns it, or who benefits from it. The ubiquity of drones in the skies overhead, the digital circulation of agricultural data, facial recognition technology – these all have potential benefits, but create huge vulnerabilities for private citizens, industries, and countries, Schau explains. So it’s up to credit unions, she argues, to “be that handy partner, that technology that's right here at the decision points, and we also want to make sure we're not part of magnifying the insecurities that [members] have.”

Avoid Magnifying Member Insecurities 

First, Schau says, they should listen to members, identify member touchpoints, and map member journeys, remembering that each of those journeys is unique. She wonders if credit unions can inspire: “reflexivity, which just means, ‘Can I spark in you the time when you used to remember this?’” – think of college reunions, which are moments when people remember their past fondly. 

“We need to think about technology that increases certain confidences and decreases certain stresses. And we need to be really clear about the fact that it’s going to do a little bit of both.” 

Hope Schau
Filene Fellow
University of Arizona

Schau asks: “How can credit unions say, ‘I remember when I was part of initiating this loan for your house. A year later, tell me how you feel about your house!’” Additionally, she notes, credit unions should be very careful about how and where they are using these reflexive moments.

Finally, when considering disruptive technology, credit unions need to be mindful of how and when it mitigates or magnifies insecurity. “We need to think about technology that increases certain confidences and decreases certain stresses,” she notes. “And we need to be really clear about the fact that it’s going to do a little bit of both.”

For Military Members, Technology Creates Vulnerabilities

“I firmly believe that virtually every credit union in the United States has at least one military-connected member,” says Anthony Hernandez of the Defense Credit Union Council. He asserts that credit unions, even without a military field of membership, should pay attention to the unique concerns – from economic insecurity to privacy, physical safety, and identity theft – of military service members and veterans.

Anthony Hernandez, Defense Credit Union Council, led a panel discussion called Technology and Veteran Insecurity: The Good, The Bad and the Ugly.

“I firmly believe that virtually every credit union in the United States has at least one military-connected member.”

Anthony Hernandez
Defense Credit Union Council

The reality for many military credit union members, Hernandez notes, is that they may lack access to funds or financial services while deployed, and that many technologies, especially those with social components, can compromise their security. Wounded warriors may struggle to access biometric verification methods, he adds, while the internet can overshare about a service member’s or their family’s whereabouts. During deployment, military personnel need spousal access to their accounts and may have to reset passwords remotely. Credit union leaders, Hernandez says, should be asking: how many of my members are affected by these issues? What value would be added in providing additional services to these members?

For ideas about how to use technology to mitigate service member and veteran insecurity, click on the tab Tech Alleviates Insecurity.

When Fintech Feels Untrustworthy

While budgeting and investment apps hold enormous promise, they also generate technical and emotional insecurities. Melissa Wrapp of the University of California Irvine has been studying the effects of these apps and making recommendations to credit unions about best practices for implementation. Four of her research participants generously shared their feedback on the apps they used, as well as their financial management strategies and challenges.

For starters, these participants say, they don’t want to enter their social security number into a fintech app. Nor do they want to use them to invest, transfer, or store large amounts of money – the apps (even the ones they like) just don’t seem safe enough for that. One notable exception is Mint: several users say they feel inclined to trust it because of its ties to Intuit, a familiar brand with ubiquitous tax software. 

Participants in a focus group of fintech app users share their first hand use of personal finance apps.

"I mostly have a budgeting app to make sure I get a full picture of how much money I have and how much money I've spent."

Focus group participant

Another thing that users dislike: the social aspects of fintech apps, where they are encouraged to share transactions, goals, or successes with friends online. Wrapp notes that the creepy and unwanted nature of social features was a strong theme among all study participants. In fact, she adds, participants reported rarely talking about money with peers, and especially not on social media.

One issue that can quickly erode trust in fintech apps is glitchy technology or poor design, Wrapp explains. And even if a P2P (peer to peer) transfer app is well-designed, participants say that, due to peer pressure and never carrying cash, they have to use the apps their friends are using, even if they’d rather go with a method that feels more secure to them.

For more about how fintech apps can increase users’ sense of confidence and financial well-being, click on the tab Tech Alleviates Insecurity.

Report No. 502 03/20

Technology can create and exacerbate insecurities, but the right technology deployed in the right way at the right time: “increases certain confidences and decreases certain stresses,” notes Filene Fellow Hope Schau. Here are just a few examples of ways that technology can address insecurities.

Securing Those Who Serve

Enabling a high level of self-service gives a credit union the capacity to work with members who have special needs, explains Jim Hayes of Andrews Federal Credit Union, which serves a primarily military membership. Andrews invests in technology for the masses, he says, to free up branch and call center staff to help members who need it. And it also allows for the budgetary capacity to design special solutions for select groups of members – for example, an online bill-pay feature in Euros for members who live overseas.

Attendees ask panelists and experts questions on serving veterans' financial needs.

"We are really taking the opportunity to insert financial education, financial fitness, across the board as a model to be rolled out across the Air Force and military."

John Evalle
Travis Credit Union

At Frontwave Credit Union, says the organization’s Randy Rose, technological development is driven by member feedback surveys and tracking Net Promoter Score. The institution had to reconfigure their core, she says, after members complained that they couldn’t change their addresses through online banking. Rose’s colleague Chip Dykes, a former Marine, adds that, with a membership that is 80% Marines, it is essential to have a military relations team member in the room when new features are being designed. “We eat crayons and break stuff,” he jokes – which means that if Frontwave rolls out new technology without running it by Marines, it won’t have the right look or functionality.

John Evalle of Travis Credit Union agrees that having senior-level staff members with military credibility is crucial for earning members’ trust. He notes that the frequent transitions of military life create instability, which is an opportunity for the credit union to provide assistance with moving and mortgages. Travis Credit Union also offers financial education to all new Air Force recruits, modeling financial fitness to young airmen who may have limited access to credit and little experience navigating their finances.

For a discussion of how technology can exacerbate service member and veteran insecurity, click on the tab Tech Creates Insecurity.

Just Give the People a Spreadsheet (No, Really!)

Though her goal was to test a series of budgeting and investment apps, says the University of California Irvine’s Melissa Wrapp, one of the surprising findings of her research is that many people (even the tech savvy) track their finances using a relatively old technology: the Excel spreadsheet. "We found a lot of people were maintaining other practices of record-keeping alongside using apps or using functions from their credit union or bank,” she says. “And so a lot of people felt like, ‘Okay, you can do all these fancy things in an app but on paper, I can color-code it the way I want, and there's a kind of ritual to that that I like.’”

Fintech app testers share their reactions.

“A lot of people felt like, ‘Okay, you can do all these fancy things in an app but on paper, I can color-code it the way I want, and there's a kind of ritual to that that I like.’”

Melissa Wrapp
University of California, Irvine

Wrapp recommends that when credit unions offer budgeting features or apps, they build in the flexibility for users to maintain their own systems or personalize the apps to preserve that experience.

Good technology, Wrapp says, is friendly and designed to build user trust. One key pitfall to avoid: don’t work at cross-purposes. One popular budgeting app, she explains, inundates users with credit card offers, presenting a mismatch between expectations and purpose; users are trying to save and manage their money while the app encourages them to buy on credit. Ideally, Wrapp says, credit unions can take advantage of the trust their members place in them to offer technology that eases members’ insecurities.

For more about how fintech apps can inadvertently inspire distrust, click on Tech Creates Insecurity.

Building a Trustworthy Member Experience Online

As members increasingly move toward exclusively online and mobile banking, credit unions are left trying to replicate the high-quality in-person service of a branch through the impersonal medium of the internet. The good news, says Louise Johnson, Vice President, Client Experience, for CO-OP Financial Services, is that you don’t need to create an “outstanding” member experience at all times. Instead, she says: “Our goal is to really deliver reliable and consistent experiences. Because when we do that, what happens is the member starts to become familiar with what to expect…and that then builds a sense of trust for them.” 

There is a time and place for outstanding moments, she adds, which is “where the human aspect comes in.” This means that employee training is critical, so that the moments when members move from self-service to needing assistance can be handled skillfully. Johnson suggests that credit unions take a multi-channel approach to servicing members to create a single, frictionless member experience. "It's really on us,” she says, “to make sure that when the offline and online world meet, we're there at the right time, delivering…human interaction."

Louise Johnson from CO-OP Financial Services.

“It's really on us to make sure that when the offline and online world meet, we're there at the right time, delivering…human interaction."

Louise Johnson
CO-OP Financial Services

Since members experience a variety of insecurities around mobile banking – Johnson specifically names information security, losing cell phones, and the ‘creepiness’ of over-personalization – user experience design is essential. People in the same life cycle can have very different lifestyles and life experiences, she notes, so credit unions cannot rely on assumptions or overly shallow segmentation to drive the design process. She adds that it is incumbent on credit unions to be transparent about how they’re addressing their own data and technological insecurities and to share this proactively with members.

Johnson highly recommends conducting focus groups: “We already have a captive audience, because our members have a vested interest in making sure that the solutions that we provide are ones that they want to use.” Insights from members can be applied to testing and redesigning mobile and online options. She suggests making incremental improvements and using members to beta-test solutions before rollout. 

“Fix. Test. Validate,” she advises – and then repeat that cycle again and again, because “member experience is not a one and done.” Mobile banking technology has evolved so much, she points out, that it’s easy to offer more features (chat, education, controls) than members want or need – but an ideal online experience is one in which members are met with what they need, when they need it. To avoid annoying members when pushing out something new, she adds, make sure it will be relevant. Ultimately, Johnson says, "it's up to us to really leverage UX design, right? It's up to us to… say 'Okay, we have to build relatable solutions.”

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