(From Credit Union Journal) – Big Tech’s entry into the financial services space and changes in consumer behavior patterns could push credit unions away from some of the world’s largest media platforms and onto new mediums.
Google’s recent foray into retail banking – in partnership with Citigroup and Stanford Federal Credit Union – is the latest in a laundry list of technology firms edging their way into the banking space. Facebook also announced plans earlier this year to launch its own cryptocurrency, but lawmakers and regulators – already wary of Facebook’s influence – have thrown up plenty of skepticism surrounding those plans.
As more tech giants dip their toes into financial services, credit unions will have to navigate a unique relationship where they’re competing with these tech institutions for consumers, while also using the platforms from companies that have become their competitors.
But could that drive some credit unions away?
“I can see where some credit unions could say tech companies “are going to compete with me, so I’m not going to compete with them, but that may be more emotionally driven than the market aspect,” said A. Stewart Rose, President of Truebridge, a content marketing firm geared toward financial institutions.
Facebook currently has 2.45 billion users worldwide, but at least one study shows its userbase is shrinking. A study from Edison Research earlier this year showed 15 million Americans – many of them younger consumers – have stopped using Facebook since 2017. On the other hand, Edison found, use of Instagram and Snapchat – both highly visual mediums – is on the rise, particularly among younger demographics.
Some credit unions have pulled back on their Facebook usage. As reported, Tennessee-based Old Hickory Credit Union stopped using Facebook nearly three years ago following shifts in how consumers use the service. Some users have also distanced themselves from Facebook following the Cambridge Analytica scandal. Still, Facebook’s ad revenue has also nearly doubled since the first quarter of 2017, indicating plenty of businesses still see the site as a viable place for marketing.
As backlash against Facebook has widened and the social media landscape has diversified, many CUs have also similarly diversified their outreach efforts, broadening their reach to include Twitter, Instagram, YouTube and more. This strategy allows for additional opportunities to engage with consumers and promote products and services, but some analysts have historically cautioned that CUs who don’t utilize a social platform well may be doing themselves more harm than they would by staying off that platform entirely.
San Diego County Credit Union has over 121,000 across Facebook and Twitter, but the $8.4 billion-asset shop is focusing on growing its reach via other platforms. Nathan Schmidt, EVP of Brand Strategy and Digital Channels, said SDCCU is currently emphasizing YouTube and Instagram rather than the original big two sites.
SDCCU is essentially following in consumers’ footsteps, gravitating away from traditional social platforms toward more visual outlets. The credit union’s most popular YouTube video is a minute-long demonstration of its mobile wallet, which has garnered 364,000 views. Despite shifting away from old-school sites, Schmidt said San Diego County isn’t abandoning Facebook and would only “consider leaving a social media platform if it is no longer a relevant tool to engage with current and potential members.”
With 2.45 billion users, Facebook dominates the social media environment and is the largest social network worldwide. Meredith Olmstead, CEO and Founder of FI GROW SOLUTIONS, suggested credit unions should also remember who really benefits from businesses using social media sites.
“Facebook has always owned Facebook and Twitter owns Twitter, so you have very little control over their policies and procedures and they can change those rules and regulations if they want to,” she said.
In line with that, Facebook recently changed its advertising terms, rejecting some ads from financial institutions in the wake of a legal settlement following allegations advertisers were violating fair lending regulations. Twitter made a similar move in 2014.
Facebook’s updated policies affect how credit unions and other financial institutions may target specific individuals on Facebook since they are no longer able to target consumers based on specific zip codes, gender, or age restrictions.
At the end of the day, Olmstead said, credit unions are likely to gravitate to the same platforms as their members. One new option may be TikTok, she said, a video service that launched in 2017 and now has more than 1 billion users. “It’s definitely a platform in the future that might be relevant because it’s where younger people are spending their time online,” Olmstead said.
Credit unions such as McLean, Va.-based Pentagon Federal Credit Union and San Jose, Calif.-based Meriwest Credit Union have not only created accounts on TikTok, but also have begun posting videos. PenFed Credit Union beefed up their engagement side of the organization by adding a new digital division earlier in the year.
“If online behavior shifts, the credit union’s approach and strategy need to shift along with it,” Olmstead said.