The PYMNTS Intelligence report “Credit Union Innovation Readiness: The Smallest Step It Up” found that the smallest credit unions are accelerating their digital journeys to meet members’ evolving expectations.
Once often perceived as cautious followers of traditional banks, credit unions are now taking steps forward, evidenced by a plunge in the share of those lagging on innovation, falling to 15% from 55% in a single year.
What’s particularly revealing is that small credit unions are sharpening their innovation focus, while large institutions are adopting a more measured approach. Among credit unions with less than $500 million in assets, the share falling behind on innovation plummeted by 40 percentage points from a year ago.
Alternative and Mobile Payments Drive Digital Transformation
An area of focus for credit unions of all sizes has been the expansion of product offerings to meet evolving member expectations, particularly in the realm of offering a broader range of payments.
Across all asset sizes, real-time payments emerged as the most common addition to product portfolios between November 2023 and November 2024.
This underscores the demand for speed and convenience in modern financial transactions. Credit unions with less than $500 million in assets increased their real-time payment offerings by 71%, while those between $500 million and $1 billion saw an 83% increase.
The push for faster transactions also extends to same-day ACH transactions, which have been adopted by the smallest and largest credit unions.
Beyond speed, credit unions are investing in diverse payment technologies. The smallest institutions have prioritized the addition of contactless debit and credit cards, increasing their offerings by 61% and 58%, respectively.
Expanding Alternative Credit Options
Credit unions are also diversifying their credit offerings to cater to evolving member needs and attract new demographics. Among credit unions with assets exceeding $5 billion, there was a 50% increase in the share offering buy now, pay later (BNPL) products in the 12 months leading up to November 2024. This adoption reflects a move to provide alternative, flexible credit solutions that align with modern consumer spending habits. The smallest credit unions, on the other hand, prioritized the addition of student loans, with a 28% increase in their offerings.
Looking Forward
The findings underscore that credit union success no longer hinges on institutional size, but rather on making timely, strategic moves that align technology goals with member expectations.
While the smallest credit unions are enhancing mobile payment and card app offerings, the largest institutions are using their scale to introduce advanced features such as artificial intelligence-powered chat/customer support (a 57% increase for those over $5 billion) and financial planning/budgeting tools (a 72% increase for the largest players).
Meanwhile, open banking has emerged as the most-added feature for all but the largest credit unions, enabling new forms of data sharing and service integration.
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