Financial fragmentation is a major issue facing many individuals and families today. It refers to the feeling of being overwhelmed by financial responsibilities, and struggling to keep up with bills, debts, and other financial obligations. This can lead to stress, anxiety, and even depression for those affected.
Fortunately, credit unions can play a key role in combatting financial fragmentation. With their commitment to community-based banking practices and personalized customer service, CUs are uniquely positioned to help people take control of their finances and achieve greater stability in their lives. In this article, we’ll explore some ways that CUs can help combat financial fragmentation for their members – from offering financial education programs to providing affordable loans and other valuable services.
The History and Impact of Financial Fragmentation
For what feels like forever, people have used banks and credit unions to do the majority of their financial business. Loans, withdrawals, and deposits, savings, and checking accounts – your banking provider did it all, and there was less room for expansion.
But now, your members can choose between hundreds of payment, savings, loan, and financial advice providers. From cryptocurrency to fintech, PayPal to digital wallets, store credit cards, gaming apps, and more, the personal and business finance routes have become increasingly fragmented.
In the past 10 years or so, we’ve seen a huge uptick in the adoption and use of non-traditional financial institutions. During the pandemic, banks and credit unions received much more business thanks to stimulus and PPP initiatives. This created record growth in savings and loan volumes.
But the interest rate hikes in 2022 effectively stymied that growth and even reversed it in many arenas by creating a market that had many worried it would turn into a full-blown financial crisis. This means that fewer deposits have been coming through your credit union’s digital and physical doors.
So, what can we do about it in these fluctuating financial times? Here are a few ideas to help promote financial integration at your credit unions.
Use Your CU Data
Data is the gold hidden in the rivers, mountains, and mines of your credit union servers, and it can help you combat financial fragmentation. When it comes to fighting fragmentation (the average American has more than a dozen financial providers – and Gen Z and Millennial couples commonly do business with more than 30!), the first place to look for opportunities for improvement is your own data.
While some of your members may come into your CU branches and tell you exactly what they need, more often it’s up to you to recognize the patterns and pitfalls within your own cache of member data.
Are there processes with high abandonment rates? Services that your customer service associates are constantly getting calls about? Are there services your members use incorrectly, over and over? All of this data is nothing short of a goldmine – it’s giving you clues that can help you decipher what products and services should be included (and excluded) to make your members more satisfied.
Customize, Customize, Customize
Rising costs – both for business and personal financial wellness – are creating tighter and tighter spaces that your members are having to work through. According to the Financial Health Network’s latest Pulse report, 70% of Americans are not financially healthy.
But just like physical health, financial health may have some common veins (no pun intended) running through it that can increase overall wellness, there’s no such thing as a one-size-fits-all solution for creating a better financial outlook for an individual, family, or business.
And these rising costs often see people reaching for small, convenient, and cheaper options to help them where they need it most. And this creates a lot of personal financial fragmentation: many of these tools offer a portion of what consumers need, without really solving the whole spectrum of issues real people are trying to combat.
To encourage your members and prospective members to come in from the cold caused by fragmentation, you should lean into customization.
The whole point of a credit union’s ability to specialize in certain industries, regions, and account types is to offer the best member experience for each and every person who opens an account with you. And while digital solutions and automation should help your CU, they shouldn’t take away the most important differentiator for your members: you, and your staff.
Credit union associates, leaders, and support staff can make the difference between a happy member and a former member. By helping to create and foster financial wellness, you can heal that fragmentation right along with your members’ finances.
Banish Financial Fragmentation with Technology like IMSI’s CU Solutions
There is a lot of temptation out there, your members are faced with fragmentation at every turn – certain businesses and services only accept certain forms of payment, and if your credit union’s offerings don’t match up, it encourages further segmentation. Banks and CUs can’t just cater their offerings to a specific type of member – they have to anticipate their needs and create integrated and convenient solutions before members wish for them.
One of the best ways to fight fragmentation and increase the convenience of your services for your members is through the intelligent use of technology like the software and digital solutions IMSI offers, which have been created specifically for use in credit unions.
IMSI is here to help you provide elegant member-facing solutions that banish financial fragmentation and help your members as they make their way to full financial wellness.
Save time and money with Make A Statement and Trial Balance solutions that can show your members just how quick and convenient your CU’s services can be.
