When it comes to innovation, credit unions may just be the most innovative of all, while banks big and small fail to keep up with their pace – but they’ve still got a long way to go.
According to data inside the latest Innovation Readiness Playbook, credit unions are, on average, doing a better job of developing innovative new financial products and features than their community or commercial bank counterparts. More than 13 percent of CUs surveyed rank among the top-performing FIs, nearly twice the percentage of commercial banks and five times the percentage of community banks.
Nonetheless, CUs have a long way to go to catch up with the top performers. Most CUs, along with 80 percent of FIs of all kinds, find themselves stuck in the middle of the pack when it comes to debuting new innovations. And while that may mean they aren’t falling behind their existing competition, it also means that there’s still plenty of room for FIs to improve.
According to PYMNTS research, the most innovative FIs plan carefully for the future. They focus on innovative new features, define their strategies for the next three years and turn those priorities into action by dedicating at least half of their payments budget to innovation. Top performers also have IT infrastructure and core processing systems that make innovation as easy as possible.
In fact, IT infrastructure was cited as the top challenge for both community and commercial banks, and a major challenge for top performers as well, while CUs pointed to their budget as the biggest hurdle to clear. FIs also cited organization and culture as their top concerns.
Other key takeaways from the latest Innovation Readiness playbook:
- Top performers emphasize new features over new products – 80 percent said their priorities for the next three years focus mostly on new features for existing products, compared to 40 percent of community banks, 38.9 percent of credit unions and 37 percent of commercial banks.
- The most innovative FIs make sure to vet their innovations. Eighty percent of top performers test their innovations with employees, and 73 percent test innovations with customers.
- Top-performing FIs, on average, can move an innovation from development to market in roughly 5.9 months. Middle performers are slightly slower, however, rolling out new products in 7.5 months.
To find more news and insights, including 190+ data points, check out the new Playbook by filling out the form below:
About the Playbook
The Innovation Readiness Playbook, in collaboration with payments and commerce solutions provider i2c Inc., gauges where banks are on the road to becoming innovators. The findings in this Playbook are based on survey responses of 214 FIs in the U.S. (excluding the largest 25 banks), and institutions are scored from zero to 100 in terms of innovation readiness.