Call to action for CUs: digital payments key

Credit union members are digitally engaged consumers of financial services. But that engagement doesn't necessarily extend to their credit unions. To win the hearts and wallets of their members, credit unions need to refine their focus on payments. That's the upshot of new research conducted by the global consultancy EY.

The research, commissioned by CO-OP Financial Services, a payments and technology company serving credit unions, found that PayPal is the most trusted brand among 25 percent of credit union members; credit unions were runner up, ranked as most trusted by 21 percent. The top three drivers of trust, the research found, are: data protection and privacy, respect, and caring about customer needs.

Here are some additional highlights from the research:

• 35 percent of credit union members have contactless payments capabilities provided by their credit unions, while 45 percent are using contactless payments offered by financial technology firms.
• 31 percent use P2P payments provided by their credit unions, while 44 percent use P2P payments supported by fintechs.
• 29 percent use their credit union's mobile wallet compared with 43 percent who use a fintech mobile wallet service.
• 94 percent of fintech users consider "seamless integration" to be very important.
• 45 percent of fintech users currently can view all they financial products in one place.
• 25 percent of fintech users interact with their financial apps on a daily basis.

"Nearly nine in 10 credit union members are now completely comfortable meeting their financial needs via digital channels, and notably, with non-traditional providers," said Nikhil Lele, financial services and digital growth leader at EY Americas. "A lot of this is due to COVID-era insistence on remote, contactless and friction-free financial services. Consumers saw how quickly businesses can pivot to digital when they're motivated. The resulting expectation for rapid, on-demand innovation is here to stay."

It's a lifestyle thing

The EY research is the basis of a new report from CO-OP, CU Payments Outlook: How active member relationships drive long-term growth.

"Growth-oriented credit unions face a daunting set of challenges in expanding the primary financial relationships the have with their current members, as well as reaching new financial consumers," researchers stated. "[C]redit unions must evolve to offer their members comprehensive 'lifestyle' financial products and services, with a particular emphasis on 'active' solutions over traditional 'passive' offerings like deposit accounts and event-based loans. Payments and digital solutions are the key to both meeting the needs of today's members and establishing or strengthening primary financial relationships (PFR)."

The report further noted, "Payments have evolved to become the most important touchpoints between members and their PFR, because the facilitate everyday financial tasks and thus serve as the center of their financial lives."

But all is not lost. Credit unions have many advantages over upstart fintechs, including long-standing reputations for exceptional service, trusted advice and data security. "Clearly, credit unions are winning the personal side of the equation, while fintechs are winning the digital side. The time has come for credit unions to flip the script," the white paper counseled.

One way to achieve this flip is through deployment of innovative digital technology and solutions. The EY research revealed that by investing in lifestyle banking products, credit unions can gain significant market share both among members (a gain of 16 percent) and prospects (13 percent). "Conversely, their current lead with members can be lost if they don't invest at all," the report cautioned.

CO-OP advised credit unions to leverage their "in-person service supremacy," while also adding "superior digital services, especially in payments." Going it alone may not be an option, however. "The key is in envisioning a new partnership model, which may include collaborating with different solution providers to offer a range of desired services to members, based on the specific life stage and lifestyle needs of particular segments," researchers advised.

The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.