Credit Unions Bank on Personal Relationships as Foundation for Payments Innovation

Consumers today have a growing number of ways to re-tool their financial health.

But in a landscape where options abound, employing a personal touch can go a long way toward helping consumers achieve their desired financial lifestyle.

“From a credit union perspective, one of our areas of focus is on the post-purchase scenarios associated to buy now, pay later (BNPL) … leaning into the fact that credit unions own that relationship,” Nelson Fisher, product development director at PSCU/Co-op Solutions, told PYMNTS.

Fisher said that 360 million consumers have engaged with BNPL solutions in their commercial lives, underscoring the mainstream acceptance of the solution.

The total value of BNPL loans grew by more than 1,000% from 2019 to 2021, and 80% of BNPL users are between ages 25 and 34, he added.

That’s why PSCU/Co-op Solutions on Tuesday (Feb. 6) unveiled a new BNPL solution for credit card issuers across the legacy Co-op payments ecosystem that allows cardholders to enjoy greater flexibility and convenience when making purchases.

But rather than focus on integrating point-of-sale solutions offered by FinTech startups, PSCU/Co-op Solutions sees post-purchase scenarios tailored for credit union members as a crucial way to support those members’ long-term financial goals within the context of their lifestyles.

“Credit unions have established the initial vetting of these members and have gone through a lot of that rigor already. They own that relationship. They have that relationship. They’re looking to extend that relationship,” Fisher said.

Meeting Credit Union Members’ Needs With Flexible Financing

By extending BNPL services after a credit card purchase, credit unions can proactively engage with members, offering them the option to convert their transaction into a buy now, pay later arrangement.

“This is another tool in a member’s repertoire to be able to continue to further their financial futures,” Fisher said. “[Credit unions] want to be the primary financial relationship that members have.”

Credit unions can use the BNPL tool to meet members where they are. Additionally, the solution addresses cash positioning and helps members achieve their financial goals, establishing credit unions as forward-thinking financial institutions, he said.

Of course, a solution without a use case is no solution at all, and Fisher said that the BNPL solution is perfect for scenarios where credit unions can reach out to members after specific purchases, such as a significant home improvement expense or a special event purchase. The flexibility of the solution allows credit unions to tailor eligibility criteria based on different card products and member cohorts, enhancing the overall value proposition for members.

“This is a place, BNPL, where members and young consumers are participating. It’s where a lot of growth is, especially among the millennial and Gen Z group — [BNPL] is an expectation that they have. The market is ready, we’re here to provide the tooling,” Fisher said.

Credit Unions’ Commitment to Digital Innovation

The BNPL solution is seen as a valuable tool for credit unions to stay competitive in the evolving lending landscape, while also polishing their digital innovation bonafides.

Discussing the downstream impact, Fisher said he is excited about launching a solution developed with an emphasis on a member-centric experience and the incorporation of credit unions’ feedback during the development process, noting that this unique and collaborative approach sets the stage for long-term success.

“This is a means for credit unions to establish that they are continuing to innovate. They’re not the credit union that your parent or your grandparent had. They’re your credit union, and they’re providing things like mobile apps and innovations that sit in the palm of your hand,” Fisher said.

He highlighted the importance of understanding where members spend their time and financial resources as a way to future-proof offerings, pointing to the BNPL solution’s dynamic eligibility criteria as a way to service members.

“Different programs can be established by different card products,” Fisher said. “We’re in a post-purchase scenario. [The credit union has] owned the relationship. [They] know the member already. And that is an advantage that credit unions have that I’d argue that a lot of other folks don’t have.”