Compliance. Regulations. Dodd Frank. CFPB. UDAP. The list of governing bodies and legal text that govern the financial services space post the 2007-2009 financial crisis goes on and on. While the underlying intention is to ultimately hold financial services organizations accountable for their products and promotional messaging, the side effect is an almost paralyzing fear to innovate in the social space.
Credit unions face even more barriers to entry in social than bigger banks. But as it becomes clear that financial institutions can’t afford to ignore – and indeed must invite – customer conversations, how can the smaller players break that paralysis?
The social state of the credit union
First, it’s necessary to give some background on social in the financial space. The big players have it a little easier as they can devote significant legal and marketing resources to their customer facing digital and social properties. The smaller players, namely credit unions, are a bit less fortunate. That is in part due to a constraint around resources – and the fact that the big regulating bodies are just now slowly shifting their attention to the credit union space.
As a result, these institutions are in a dilemma – their members are pushing the credit unions to innovate and be on par with the big banks and credit card issuers. However, not knowing what regulations, laws, and requirements may lay ahead makes it very difficult for credit unions to decide what technology and media to invest in. Imagine being a $400-900 million per year credit union with an annual marketing budget of $2-3 million dollars, and feeling pressure to invest 10-15% of your total annual marketing budget in a social platform that pending regulation may prohibit or severely limit you from using – what would you do?
User-generated content is too valuable to ignore
This challenge is only exacerbated by the never-ending flood of research that proves over and over again that social validation, hearing from “customers like me,” is a growing no-brainer feature in finserv. Loan service LendingTree, for example, finds that site visitors who engage with reviews start the loan process 83% more often. Banking customers demand and expect in all aspects of their lives – from toiletries over travel all the way to their trusted credit union around the block.
Nearly a third (29%) of Millennials won’t apply for a credit card without first reading customer reviews. And while Millennials demand reviews and testimonials in on- and offline channels, older generations are not far behind. A full 84% of Millenials say that consumer-generated content plays a role in their purchase decision – and an astounding 70% of Boomers agree. Brand promise, legacy relationships, and a history of great value and tradition are still important to these consumers – and now, so are testimonials and reviews written by people from all walks of life that confirm that legacy.
Moderation is the key to scalable compliance
Still the question remains: How to participate in and invite these conversations while staying compliant? And without the resources of big banks, how to do it at scale? – With moderators well versed in the financial services industry.
Navy Federal Credit Union has been a bold leader in the user-generated content space. In 2010, the largest credit union in the US began inviting customer and reviews for their credit cards, checking accounts, and auto loans. NFCU recognized the need to provide their active duty and civilian members with as much unbiased information as possible, straight from the mouths of customers. These features have helped countless military families make educated financial decisions – even if the husband or wife is deployed and unable to walk into a branch and have a good ol’ conversation with the credit union staff.
The credit union has a rigorous set of moderation rules for these reviews – weeding out fraudulent comments as well as those that are deemed non-compliant. NFCU thus keeps up with all regulatory changes while providing the conversations customers seek when partnering with a credit union.
Customer conversations are too important in customers’ financial services decisions for credit unions to ignore. Limited resources needn’t be a deterrent from jumping into social with the big banks. Through moderation, credit unions can capture the benefits of testimonials from satisfied members – and once they do, they may find their smaller size a benefit, rather than a hindrance.