Consumers are looking for answers as they navigate turbulent macroeconomic seas.
Brian Scott, chief growth officer at PSCU, told PYMNTS that credit unions have a prime opportunity to open up a dialogue about new payment options and services that can help them make better financial decisions.
As he noted: Financial wellness is more important than ever.
Jobs may be plentiful, and unemployment low. But the Fed is boosting interest rates, and inflation remains stubbornly high.
“People are worried about whether or not they are going to be OK — and they are concerned about their financial health,” he said. “They’re looking to credit unions for advice.”
For credit unions, he said, it’s imperative to meet members across mobile channels and on their devices — in short, to meet them where they want to be met.
The digital conduits, he said, are key avenues through which the credit union (CU) can help educate members about how to embrace and adopt payment options such as buy now, pay later (BNPL) — and how to do so responsibly.
“Providing a way to manage this [BNPL], to understand it, and for CUs to provide advice around it — well, this couldn’t be timelier,” he said.
The great digital shift is fully in evidence, he said, which offers CUs a chance to engage with their members, cement loyalty and augment their revenue streams too. Younger individuals, particularly those in the millennial and Generation Z cohorts, are proving especially comfortable with online commerce and online banking. However, older demographics are quickly “catching up” in terms of using technology to get things done.
“Venmo has become a verb,” he said, “and when you’ve become a verb, then you’ve really hit it big,” said Scott. A majority of consumers have noted that they use payment apps and digital wallets on a regular basis. For CUs and issuers, having their digitally issued cards on the “top” of digital wallets can be a competitive advantage.
Asked by PYMNTS which payments choices are currently most in favor, Scott observed that “debit continues to be the number one payment form — and it’s been that way for four consecutive years.” Credit, however, is growing too, especially for larger ticket items. Cash still has a place, but tends to be used for transactions below $10.
“Cash is just one of those things that refuses to die,” said Scott.
But as digital issuance of cards — especially debit cards — continues to grow and as more cards are provisioned into mobile wallets, consumers will opt to handle bills and coins less frequently, especially as debit rewards programs continue to gain popularity.
“Once you’re number one in that member’s wallet,” he said, “it’s hard to get ‘out’ — and debit will start to push cash out of those smaller dollar transactions.”
Looking out into the rest of 2023 and beyond, Scott said that real-time payments remains the fastest-growing segment of payments overall, and most immediately, CUs have the opportunity to serve small businesses who want to take advantage of the cash flow visibility tied to immediate settlement. PSCU, he noted, recently acquired Juniper Payments, which enables FI connectivity to The Clearing House and to the central bank’s upcoming FedNow Service.
Regardless of the payment methods consumers choose now — or in the future — Scott maintained that CUs can offer an optimal experience through “mass personalization.” He offered up the example where, on a recent airline trip, he took his seat only to be greeted by the TV screen that welcomed him by name and suggested a favorite drink.
“The airline knew what seat I was in, and they knew what I wanted to drink — because they had been tracking that information through their systems,” he said.
Those same principles can carry over to financial services — suggesting the right product or service at the right time, not to make a sale, but to boost the members’ experience.
That’s possible only if CUs continue to invest in innovation. As has been noted in joint PSCU/PYMNTS research, CUs have been taking a conservative approach to spending on new, innovative technologies. But that conservative approach, he said, is at odds with what consumers want, and a significant number of users — more than a quarter of them — say they’d switch financial institutions (FIs) for better technologies.
“That’s a dangerous trend,” he said, “and for the CU that does not want to be a laggard in the marketplace, and that certainly should continue taking a more progressive stance on innovation … now’s the time to do it.”
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