Digital Tools Unlock New Markets for Credit Unions

Credit unions (CUs) historically have been known for their service — the tellers who know you by name and the call-center staffers who will take the time to make sure your questions are answered.

As they extend their services to other channels, it can be a challenge for credit unions to recreate those interactions during a digital engagement.


“I think it takes thoughtfulness and purpose around the type of experience credit unions want their members to have, regardless of the channel,” Denise Stevens, senior vice president and chief product and digital officer at PSCU, told PYMNTS. “That’s still a credit union’s challenge — they have to recreate this in every channel, regardless of if it’s digital, a branch, an ATM or a call center.”

Leveraging the Right Tools to Create Personalized Engagements

Taking a digital experience and completely personalizing it is no longer just nice to have, Stevens said.

Members accustomed to dealing with Amazon, Netflix and Spotify demand it. These and other tech giants have achieved high engagement in digital even though they’ve probably never even spoken to the customer.

“They’re leveraging the right tools, particularly in data, to create personalized engagements — and consumers are loving it,” Stevens said.

CUs, too, have always used data. When direct mail was the primary way they communicated with potential members, CUs were using data to figure out the best offer and the kind of card the recipient qualified for.

Now, it’s not just about a target audience, it’s about a personalized experience. To achieve that, companies are using not just credit bureau data or a FICO score, but information about a potential member’s personal habits, their affinities and the stages of life they’re at.

“So, really, it’s about finding a partner that can provide the momentum and the tools that credit unions will need to have, because going at it individually is much more difficult,” Stevens said.

Read more: Credit Unions Partner With FinTechs to Compete Like One

Understanding Members’ Needs

PYMNTS’ research has found that about half of CU members also bank with other financial institutions, even though many would prefer to bank with a single institution.

Stevens said members look elsewhere because of cost, convenience and specialized services. For example, these members might want a lower interest rate or a specific option such as buy now, pay later (BNPL), so it’s important for CUs to survey customers to understand their needs.

“So, I think it really is for credit unions to take a look at what are their high-performing financial products comparative to their membership need,” Stevens said.

Because CUs are community-focused, they do a good job of reaching all the members in their community. With the acceleration of digital, they’ve also been able to reach people who were unreachable before.

Having the right products and services available in all channels is important, because it provides options to those who can’t come into a branch or are uncomfortable using an ATM.

“So, really, it’s about, ‘How do I offer products and services in every channel to meet all the opportunity that’s out there, to meet their needs?’” Stevens said.

Taking Credit Unions’ Strengths Into New Markets

CUs are well-positioned to serve the small businesses too, though banks have historically had a hold on that segment.

“I think it could be a real game-changer for credit unions if they approach it right,” Stevens said.

Digital will remain a critical priority for CUs for a long time, advancing further into the spaces of artificial intelligence, data and payments. As they work to understand the types of products that drive engagement, trust and convenience, CUs should make sure their boards and their employees are both well-equipped to have conversations with members.

“I think that just allows them to take that trusted advisory role that so many of them have with their members,” Stevens said. “If they’re not ready for certain types of new financial services that might be on the risky side or just so new, help educate until they’re ready. I think that’s a huge opportunity for them.”

See also: Convenience Driving Consumers to Open Banking