The April 2020 New Payment Flows edition of PYMNTS’ Credit Union Innovation Playbook series, a PSCU collaboration, looks into the credit union (CU) space at a pivotal moment: Many concepts, from eating to shopping to traveling and, of course, how we pay, have changed forever. We just aren’t fully aware of what that means or what it will look like.
And though staggering world events may occur, CUs have a rock-steady reputation they intend to maintain. This is one of those times when the very nature of credit unions – steadfast to the point of being almost invisible – suddenly shines. The main reason for that is a members-first mentality. CUs value innovation that benefits members. For their part, members trust CUs to manage their money with prudence and to offer the right products.
From a sample of 3,908 consumers, 100 credit union leaders and 50 FinTech executives, The Credit Union Innovation Playbook: New Payment Flows Edition is an immersion in the priorities driving decisions for CUs and their credit union service organization (CUSO) partners right now.
A Members-First Mentality
When it comes to innovation, consumers have been leading the way since smartphone apps became ubiquitous. They’re not letting up, with the latest survey of PYMNTS’ sample for this series reporting that voice assistants and other leading-edge tech are what the people want.
“Peer-to-peer (P2P) and voice assistant payment capabilities are poised to become important areas of CU innovation in the near future, with 55 percent and 66 percent of credit union executives saying they are ‘very’ or ‘extremely interested’ in focusing on them, respectively,” the report states. “Our research shows 58.3 percent of large credit unions with more than $5 billion in assets already offer P2P innovations, and that 41.7 percent are ‘very’ or ‘extremely interested in them.”
Offering this level of consumer experience is where FinTechs and CUs can either square off or pair up. Member loyalty is tested when easy apps offer convenient slivers of CU services.
“If credit unions do not act on their members' payment flow innovation demands, there is the potential for disintermediation to occur,” the report states, “with FinTechs bypassing the credit union channel to offer services directly to consumers.”
RTP, P2P and the People Who Love Them
Faster payments is one arena where members have journeyed far beyond their CUs with third-party apps. Smaller CUs in particular have been slow to integrate API functionality at the speed consumers desire, but that’s understandable considering the variance between age groups.
“Our research indicates 41.1 percent of millennials would be ‘very’ or ‘extremely’ interested in using P2P payment products if they were available, and that another 9.7 percent already use them,” the most recent poll found. “Bridge millennials – consumers in the 32-to-41 age range – are the second-most likely to use or be interested in using P2P payments, at 8.3 percent and 39.4 percent, respectively. This compares to the 21.7 percent of baby boomers and seniors interested in P2P payments and the 4.3 percent already using them.”
Perhaps the most consistent finding in the latest survey is the thoughtful approach by CUs to adopting new technologies. The larger they are, the more likely they are already innovating at a high level. And smaller CUs also express a desire to innovate, albeit appropriately.
“Meeting members’ demands is the most common motivation CU decision-makers give for wanting to innovate the products they do,” the new research found. “Eighty-seven percent of those who would like to focus on installment credit innovations report being interested because they believe their members want access to them.” And 77 percent of CU decision-makers who are keen on real-time payments felt the same. That rises to 82.4 percent for P2P payments.