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Reducing Member Friction

Originally published 4.15.22 in the CU Times

If there was only one thing – just one action you could take right now at your credit union that would have significant impact and not require additional resources, it is this: Reduce member friction.

Your members have only four problems they want your credit union to help them solve.

They are:

1. Transportation. The member needs transportation to accomplish basic needs. This should not be confused with an auto loan. The credit union should consider itself as the conduit to transportation.

2. Shelter. The member needs a place to call home as a basic need. This should not be confused with a mortgage. The credit union is the conduit to shelter.

3. Travel and play. The member desires either travel and/or play. They need a financial partner to help them achieve these goals within their current financial means.

4. Rainy day and retirement. The member needs a financial partner that will help them set up short-term and long-term deposits.

The challenge for credit union members is the friction they encounter from the credit union while getting these problems resolved. Members may encounter friction along their experience journey with the credit union. Enterprise friction falls into three categories: product, process and people.

Product friction is a lack of product knowledge by the user. Common product frictions at a financial institution include not understanding how a skip-a-payment affects a loan’s terms, and how a check hold works and affects available funds.

Process friction refers to obstacles commonly found in the purchase journey. An example is the loan purchase journey. The loan process starts when the member first identifies the need for the loan. This is often called discovery. Next, the member will evaluate their options for the loan and then purchase. Once the loan has been opened, the next phase is access/use. This is followed by the final step of either recommend or repurchase. This process holds many potential friction points. Other common process frictions include:

The credit union is not open when the member needs it.

Hold times on the phone and in the drive-thru have escalated to record highs.

People Friction

When nearly 600 credit union leaders were asked to describe the friction the member has while doing business with the credit union, the most popular answer was surprising. It was the word lack — specifically, a lack of a data culture. Data holds many insights. It is hidden in a credit union’s 60 to 100 data systems. The ability to connect the data and create insights is part one of the solution. The other is for credit union talent to have the capability to consume data and make iterative changes.

Above are two member friction world clouds generated from over 40 different credit unions. The first one was gathered in February 2021 and the second a year later in 2022. Both friction word clouds indicate that online access and experience are a significant source of member friction. In the 2022 world cloud, there were 117 frictions identified – 44 more than the year prior and a 60% increase.

There was a general increase in overall digital processes (account openings/loan applications) being obstacle-filled, resulting in abandoned carts. But also significant was the impact of the current war on talent. The following were statements from credit union leaders on employee staffing friction:

“100 new member-facing employees since June 2021 in our member-facing channels.”

“We have a lot of open positions-staffing shortage”

“Lobby closed in a branch due to staffing shortage”

There are four actions a credit union can take to reduce member friction – get data, map the MUX, analyze your findings and create a friction roadmap.

Here are four actions a financial institution can take to leverage friction:

Action 1: Get data (survey)

Gather perceived data on the member experience's current state. Seek this input from leaders as well as those close to the member. A great starting point is identifying external end-user friction (member/ customer) and then Identifying internal friction (the friction business units have interacting with each other.) This provides a perceived friction landscape to use as a starting point.

Action 2: Map the MUX

This can be accomplished with software or a simple process map. The key points are identifying critical phases in the member journey and identifying the friction points.

Add any data available to each phase that either supports or refutes the perceptions.

Member/Customer Friction examples

Members may encounter friction along the journey. In this auto purchase example, common frictions are 1) low awareness of credit union financing in channels they use. 2 ) few or nonexistent evaluation tools provided by credit unions, 3) challenging to engage online for the loan, must come to a physical office. 4) little or no engagement with the member post-purchase. 5) few channels are provided for advocacy. 6) repurchase efforts suffer from the application process.

Action 3. Analyze your findings.

A list of frictions will appear, and they need to be prioritized. The best lens to prioritize friction is what will have the most significant impact on the member with minimal effort. The "friction list" can be divided into short and long-term projects.

Action 4: Friction Roadmap

Build out the road map looking at it from the timeline with work streams that include people, products, and processes.

Understanding and identifying enterprise friction is an excellent exercise to include in annual strategic planning, leadership team meetings and department meetings. When a member friction list has been compiled, prioritize it based on two criteria: What friction, when solved, will have the most comprehensive impact on the member; and what your credit union can solve with the time and talent that is available currently – not in the future, but now.


What students are saying about the 7-Class Data Education Series

"The Data Transformation Class Series was transformational for me! I have wanted to develop a formal data program at my credit union for a long time but wasn’t quite sure how to do it. Anne taught us why we should do it, how to get started and what a good program looks like. Through practical exercises, we put in place the necessary building blocks culminating in a data transformation roadmap. I walked away confident I could now effectively leverage the data at my credit union to fulfill our mission to serve our members. I appreciated Anne’s enthusiasm and knowledge. It was a great experience!" CFO at $600 million asset credit union

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