The pandemic may still be forcing financial institutions (FIs) to confront the new digital reality — but opportunities abound for credit unions to engage with members who are, just now, growing a bit more positive about spending money again.
In an interview with PYMNTS, Scott Young, VP of Innovation at PSCU, noted that in the changing consumer environment, digital and mobile banking are “table stakes,” but credit unions (CUs) must be conscious of how member payment preferences are evolving.
Many CUs, he said, have seen that members’ spending activity had, until recently, trended toward using debit cards, as the pandemic has heightened fears of financial uncertainty.
“We’re now starting to see credit usage rebound to pre-pandemic levels — and slightly above in some cases,” Young said. He noted that credit card payment volume growth rates have remained positive through the last several weeks, at mid-single-digit levels of growth. There is room for CUs to grow their business here, as many big banks have not (necessarily) been focusing on credit card growth at the moment.
Stepping Up On Credit
“Credit unions can step up and fill that need in the market,” Young said, as consumers show a renewed appetite to use credit cards for transactions tied to at-home purchases spanning entertainment, exercise equipment and even home improvement projects.
In addition, recent credit union data done in collaboration between PYMNTS and PSCU has shown that credit unions are offering cards sporting APRs in the 7 percent to 13 percent range, lower than has been seen at banks. That’s the type of competitive advantage CUs should leverage, he noted.
The pandemic has also opened up avenues for CUs to promote cards as part of the “safer way to pay” in an environment where contactless transactions (and mobile wallets) are gaining favor across all use cases. PSCU, he said, is on track to deliver three million contactless cards this year for its Owner CUs. And that opens the door, wider still, to introduce other products and services that keep relationships sticky.
More Comfort Online
“Consumers have an initial level of comfort in these online channels,” said Young, who added, “I think it’s the perfect time to let these members know what else can they do outside of just paying bills or checking balances.” They can gain insight into different redemption options tied to their rewards cards, for example, or be educated by the CU on how to turn their cards on and off (remotely) or control spend.
In one nod toward building exclusivity, he said CUs can craft rewards programs that apply regardless of payment choice — which also builds value for merchants.
“We can build a reward strategy around specific merchant IDs and, by doing so, the credit union is building extra value above and beyond what other FIs are willing to do right now. When you look at the economics of this, this is a very inexpensive and easy way to build exclusivity and return value to the membership,” he said.
For payment types other than credit, one common theme dominates 2020: The culture of immediacy. That expectation carries over to payments, he said.
“Increasingly, speed is not just a preference. It’s really quickly becoming the expectation … I think there will always be a home for credit, but in some instances we’ll probably see the evolution from ACH to real-time payment take shape, which may really have some impact on future debit card spend for merchants.”
That move to faster payments comes as PSCU has seen 70 percent increases for debit and 50 percent increases for credit in mobile wallet spending — growth rates that will accelerate with new use cases (and new card features such as push provisioning, buy-now and pay-later and payment plans at the point of sale).
For CUs, he said, “these offerings create competitive advantage, because ultimately the member doesn’t have to do anything at the point of sale.”