Credit unions and other smaller brick-and-mortar financial institutions have historically lagged behind on mobile tech—money is often more easily spent on traditional services than on functions customers aren’t asking for. It’s easy to overlook customers’ desires to start the loan application process through a mobile app when they are still coming in the door to begin the process. But how many customers are looking for the option to start their loan online or manage their budget through an app but aren’t asking?
People are looking for an end-to-end digital loan process, and mobile devices are an important element, especially when comparing products and calculating payments. A study by PricewaterhouseCoopers (PwC) found that the majority of millennials, Gen Xers and baby boomers prefer to start each step of the loan process online, such as researching a loan, filling out an application, signing documents and submitting it all. Only those aged 73–83 still prefer to apply for a loan via traditional methods.
This means that while a broad solution is still desired to capture the entire spectrum, lenders targeting a younger generation must focus on digital avenues, at the forefront of which are mobile apps. However, younger consumers also demand a gamut of functionality from their financial mobile apps, such as the ability to calculate loan amounts they can afford, check on the status of their application or compare different loans. Millennials, in particular, desire a variety of tools, especially in mobile wallets, or their attention will shift elsewhere. Very few apps on the marketplace currently meet all expectations.
One factor that is working in the favor of traditional financial institutions is the issue of trust. Generally speaking, banks still enjoy a very good reputation with their customers, and credit unions even more so. This is even true with millennials. Although they’re not afraid to try out non-traditional providers, they have retained a trust of financial institutions.
Millennials generally value digital, do-it-yourself financial advice over the traditional personal advisor. Telestra Global found that 67 percent of millennials prefer to receive financial advice on a digital platform. The study says this is due to a perception that self-serve platforms offer greater flexibility, independence and a faster response. This can translate to a big opportunity for credit unions currently investigating voice technology, as many millennials would rather receive financial advice from a voiced chatbot (think Siri) than from a finance professional.
Overall, consumers prefer lenders or financial services that offer advice, either through self-service channels or with a human consultant.
Financial management tools add value and increase consumer affinity with brands. Simple tools such as calculators, budget trackers and payment reminders can go a long way in keeping an app in use. Some features appeal to all generations, such as the ability to calculate loan amounts that the borrower can afford, or the ability to comparing products and loan rates, possibly even with a competitor.
With younger consumers who veer more toward self-service functionality as opposed to high-touch services (such as financial advisers), it’s important to keep tools easy to use. This group looks to technology to simplify and reduce the day-to-day management of their personal funds. This explains the rise of budgeting apps such as Mint, which give millennials a quick and easy way to manage their finances right on their mobile device.
Other mobile budgeting tools like YNAB (You Need a Budget) resonate with millennials because of their ease of use and the ability to bypass the spreadsheet and view info at a glance. The wide variety of tools available on a single app means that millennials will continue to use the app beyond just simple budgeting. Additionally, apps like YNAB gamify personal finance and users feel accomplished when reaching certain financial milestones, such as paying off a loan, lowering monthly expenses or saving up rainy day funds. It’s addictive and keeps the app in use.
To stay relevant and competitive in a mobile world, credit unions, no matter the size, need to offer simple, yet comprehensive, mobile apps to their members. They’re looking for one-stop solutions for their financial needs; if they’re going to check the balance of their account, they should be able to see their weekly budget and the status of a loan application as well. They want these capabilities—even if they haven’t asked for them.