Many consumers in the United States were confident in their financial stability at the end of 2019, but this came to an abrupt halt by the end of 2020’s first quarter when COVID-19 was declared a pandemic.
Businesses closed and millions of consumers found themselves unemployed or lacking the financial stability they once enjoyed. Many began scrimping and saving to survive, with U.S. consumers’ collective expenditure decreasing by $2.7 billion between January and April.
These sudden and wide-reaching changes not only put many consumers in dire financial straits, but also forced their financial institutions (FIs) to rethink how they could tailor their products and services to meet their customers’ rapidly changing needs. This was especially crucial for credit unions (CUs) as many of their member bases were built around geographic and professional communities that were disproportionately impacted by the pandemic’s fallout.
So, how are CUs changing their card innovation plans to match their current members’ demands and attract new potential members?
This is just one of many questions PYMNTS, in collaboration with PSCU, set out to answer in the Credit Union Innovation Playbook: Card Trends Edition. We surveyed 3,098 consumers, 100 CU decision-makers and 50 FinTech executives from across the U.S. to get their take on which technologies they believe should be the focus of innovation, as well as their plans for product development in the next three years, with our latest analysis focusing on the rapidly changing demand for new credit and debit card products in the face of the pandemic.
Our research shows that many CUs expected to be developing more credit than debit card products before the pandemic began, with 47 percent having believed that credit innovation would become more common that debit innovation within the next three years. Moreover, 89.4 percent of CUs that expected to be developing more credit products believed this would improve their financial performance.
The pandemic has forced CUs to rethink their card innovation strategies, however, particularly as the total amount of credit being issued to consumers dropped 9.5 percent between February and May. Many CUs are therefore shifting their focus to credit extension and financial assistance for members who have been financially impacted by the crisis. Texas-based Border Federal Credit Union has trained its staff to help process Paycheck Protection Program (PPP) applications, for example, while California Coast Credit Union has implemented automatic loan deferrals to help provide a financial cushion for cash-strapped members. Yet, these changes only begin to scratch the surface of all the ways in which CUs have improvised to adapt to the mid-pandemic financial ecosystem.
To learn more about how CUs’ card innovation priorities are changing in the wake of the pandemic, download the Playbook.