Retaining UC members through digital innovations
Credit unions (CUs) are the underdogs in the constant competitive battle between financial institutions (FIs). Established banks can leverage far more resources, and digital-native FinTechs have a head start with innovative digital solutions that customers crave. UCs’ traditional advantage over their counterparts – member loyalty – can quickly erode if they don’t scale up their digital service offerings.
Much of this change can be attributed to the global shift to branchless banking amid the ongoing pandemic. Branch visits are becoming rarer and the time spent in person with FI employees, used to build member loyalty, is rapidly decreasing. They are being replaced by digital services that members can access from the comfort of their own homes. These capabilities are rapidly expanding beyond withdrawals, deposits, and other basic functions that digital banking has traditionally included. FI customers can now access a wide range of banking features, including loan applications, mortgages and new account openings from anywhere, and the FIs with the most seamless functions are the ones taking in advance.
However, UC leaders are aware of this lack of capacity and are doing everything possible to ensure that their institutions can maintain their numerical advantage. Credit Union Innovation: Product Innovation as the Key to Membership Growtha PYMNTS and PSCU collaboration, outlines CU executives’ long-term innovation plans, how they intend to use new digital services to strengthen their appeal to younger generations, and the steps they will take to overcome key barriers to innovation. We surveyed more than 4,832 U.S. consumers, 101 CU executives, and 51 FinTech executives to find out where CUs are falling behind with digital services, what members need to maintain loyalty, and what digital innovations can have the most of impact to maintain the competitiveness of the CUs with their larger ones. or more agile counterparts.
Key findings from this study include:
• Changing demographics are putting pressure on CUs and other FIs, with younger generations putting more emphasis on digital services. Fifteen percent of Gen Z consumers said they were dissatisfied or only slightly satisfied with their current FIs, the highest share of any generation surveyed. These consumers have various reasons for their dissatisfaction: 40% cite high costs, 21% complain about the poor quality of mobile banking services and 21% say that it is difficult to use bill payment services.
• CUs are increasingly aware of the causes of member dissatisfaction and are becoming more aggressive when it comes to developing and introducing new products. Nineteen percent of CUs are now categorized as “early launchers,” defined as institutions that innovate new products before their competitors. The proportion of early launch UC was only 12% last year, an increase of 58%. Another 36% of UCs are classified as “fast trackers”, up from 28% of CUs in 2018. The combination of first movers and fast trackers now accounts for half of all CUs, indicating an industry shift in early development and launch of new digital products. banking products.
• Real-time payments are of particular interest to key UC demographics: Millennials and Gateway Millennials. Sixty-one percent of millennials and 59% of bridge millennials are very interested in real-time payments for a variety of reasons. Twenty-three percent of consumers said real-time payments are easy to use and convenient, and 22% said they liked the instant availability of funds. 14% said real-time payments could help them keep track of their financial situation.
To learn more about how UC is developing new digital services to drive retention, To download the playbook.