New Digital Experiences Keep Credit Unions Relevant – And Then Some

Like their cousins in banking, credit unions (CUs) long enjoyed a relaxed pace of technological change. It was all on their timetable. Consumers waited on financial institutions (FIs) to innovate in an odd relationship that put business needs before customers’ needs.

Not anymore. Customers are calling the tune now – and FIs had better dance to it.

PYMNTS’ December Credit Union Tracker®, done in collaboration with PSCU, looks back at a year of breakthroughs in the CU space, noting that “digital-first approaches are … expected to remain a staple of credit unions’ operations as they craft their innovation strategies for the next year and beyond, especially as 88 percent of CUs surveyed in early 2020 said that they intended to focus more on technologies than they had during the previous year.”

Those sentiments are echoed in PYMNTS’ Credit Union Innovation Playbook: New Payment Flows Edition, which found that 55 percent of CUs surveyed earlier in 2020 were looking to dive into peer-to-peer (P2P) technologies in the next three years, with three-quarters (66 percent) espousing interest in voice and connected commerce approaches in the same timeframe.

It all points to an agility that’s taken hold in the CU space as these players get very serious about competing in a post-pandemic landscape that could be quite fertile for CU services.

An SMB Focus Emerges

Digging into the December Tracker, more is revealed about the plans of competing FIs as they vie for a banking population that’s more willing than ever to switch to get what they want.

For this reason, the Tracker notes that “many CUs are focusing on entering the small business banking market and are looking to snag some of the $500 billion that small to mid-sized businesses (SMBs) are spending on bookkeeping, invoicing, payments and related services. They must confront one major obstacle in doing so, however: big banks. Arizona-based FI consulting firm Cornerstone Advisors noted that just three major banks have 47 percent of the accounting and payment services sector’s $11 billion.”

That’s okay, because CUs have been prepping for a while – and some are now taking on big bank rivals with technical acumen and deep personalization. That second point (deep personalization) has always been a superpower of credit unions. And the smart ones are using it.

Dean Young, EVP and chief experience officer at PSCU, told PYMNTS that the company’s suite of digital solutions — now including digital issuance — “…has enabled our owner credit unions to effectively compete with big banks while maintaining the personal touch that sets credit unions apart from other financial institutions. This digital suite is connected to our best-in-class fraud detection systems, which utilize aggregated data from nearly 33 million members to better identify and stop fraudulent activity while enabling members to transact seamlessly.”

CUs Are Going Next-Gen

Declaring that “digital transformation is emerging as the backbone for CUs providing the innovations their members seek, and implementing new technologies is becoming ever more critical to credit unions’ bottom lines,” the latest Credit Union Tracker notes that 82 percent of consumers surveyed by The American Bankers Association favored digital over physical locations before the pandemic. We all know what’s transpired since.

A separate study found that 88 percent of credit unions surveyed in early 2020 planned to invest more in such technologies than they had over the previous year. That’s the shape of things as technologies from biometrics to artificial intelligence (AI) become commonplace.

“The deployment of AI within our contact centers has helped our agents be more efficient and deliver an enhanced experience for members,” PSCU’s Dean Young told PYMNTS. “Collectively, these solutions and tools have helped our owner credit unions navigate the rapidly changing landscape while adapting to the evolving needs of their members.”

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