A current oxymoron: becoming a community bank, accessible from anywhere

With far-reaching lockdowns seeming the only way to curb the spread of Covid-19, countries, companies and individuals are all having to adapt quickly to the ‘new normal’.

Radical changes to day-to-day life have meant it has been critical for financial services to continue with as little disruption as possible. A smooth transition in this space will mean the wider economy in turn stands a better chance of successfully adjusting to its new circumstances.

Two factors will determine how successful banking services are in this.

First, trust is vital. Research has found that a fifth of us still use the first bank accounts we ever opened, and that the average account is open for 17 years. There are several reasons for this, but continuity and reliability underpin them all – your first account you opened as a youngster may no longer be your primary account, but it is comforting to know it is still there.

Similarly, the ability to place trust in an organisation is critical in these turbulent times. With so much of the economy and everyday life in uproar, it’s logical that many people will want to turn to the reassuring and familiar. Credit unions are potential beneficiaries of this lower risk appetite and, like banks and building societies, offer the added peace of mind and protection of the Financial Services Compensation Scheme (FSCS).

Their ‘people power’ ethos, where they are set up and managed according to the needs of both their members and the wider community, strikes a chord with the compassionate spirit of the times. This level of trust is invaluable, and is almost impossible for challengers or disruptors to emulate.

That’s why we at ClearBank see credit unions as the future of community banking in the UK. Their collaborative, community-based ethos and the trust this engenders in their members means their impact is potentially huge, and with our partners like FinTech firm incuto we want to do our bit in realising their potential.

However, the second factor in determining banking success is where credit unions have traditionally fallen short. Digital strategy was already one of the key determinants of success, and Covid-19 is going to only add to its importance.

Even before the pandemic struck, consumer demand for remote account management and 24/7 instant payments was growing. Physical branches were important for some market segments, but under the present circumstances alternatives are going to become ever more critical. A seamless move from a physical experience to virtual banking will ensure that credit union’s high levels of customer satisfaction will endure.

How to manage this at a time when whole industries are having to suddenly adjust to their entire staff working remotely, with a tech stack that is unlikely to have been prepared or optimised for such an abrupt shift? The answer is not less digital – it’s more.

Digital core banking, loan decisioning tools, sign-up processes, payment initiation and more would not only improve credit unions’ internal processes, but comprehensively enhance their members’ experiences. That’s why we have partnered with incuto to provide a holistic service that will both benefit current credit union members and attract new joiners.

Our platform empowers credit unions to do what they do best: supporting their members and their community. We help them up their game by broadening and developing their offer, delivering real benefits than in turn can be passed on to the user. For example, offering current accounts with debit cards would, at present, be impossible manually.

Together with our partners, we are working towards a digital solution for just this problem, and we are looking forward to sharing more in the coming months on our cheque clearing solution. We’re hugely excited to see how credit unions can build on the priceless trust placed in them using new digital tools and technologies. As we all grow used to our new reality, we are confident that credit unions will rise to meet the challenge of the times.

I hope everyone stays safe and well, with the end of lockdown hopefully not too far away now.

Jonathan Boon

Relationship Manager, ClearBank