Credit Unions Capitalize on Consumer Trust to Boost Growth

For all financial institutions — and especially for credit unions — primary accounts are critical for the growth of the business.

Primary accounts are the mainstays of banking, as they are the accounts where savings and checking activity are concentrated. The data accompanying the inflows of paychecks (in the case of individual banking clients), customer payments, and supplier payments (in the case of commercial activity) can be used by credit unions to craft new products and services.

These accounts also give banks the capital that they need to lend out into the community at large, with a multiplier effect that improves the financial standing of stakeholders well beyond the confines of the bank itself.

Fine-Tuning Digital Initiatives

In the PYMNTS Intelligence report done in collaboration with Velera, “The Credit Union Advantage: Seven Trends Driving Future Growth” we found that credit unions have been fine-tuning their approaches to digital innovation, which in turn attracts both consumers — especially younger consumers.

Those consumers are also business owners and entrepreneurs, so the potential is there for the bank to establish a duality of primary account: for both the individual’s personal financial holdings and for the business accounts themselves.

There’s particular promise in engaging digitally with microbusinesses, which are the smallest corporate banking customers and which have the potential to grow into larger businesses, given access to capital and to the digital tools that help them manage their financial lives in real time (including with commercial cards).

More CUs are forging ahead with mobile-centric rewards tied to those cards, digital payments and budgeting and transaction management offerings. The share of CUs with 10 or fewer branches taking a “laggard’s” approach to innovation decreased significantly to just 11% in 2024 from 47% two years earlier.

We mentioned that consumers are also business owners: CUs have a 64% conversion rate of memberships to primary accounts among consumers, which indicates success in garnering the loyalty and dollars of those individuals.

But only 7.7% of small businesses use CUs for their primary accounts, and 82% have never had contact with a credit union — so this is a greenfield opportunity, as another 7.7% of smaller firms (we surveyed 2,000 of them) have at least some relationship with a CU.

The familiarity, combined with digital innovation, can conceivably get these smaller companies to switch their primary accounts to CUs. Twelve percent of the smallest firms, with $250,000 or less in annual revenues, opt to house their primary accounts within CUs — but 80% of them have never had accounts with credit unions.

What SMBs Want

Some 55% of CUs plan to innovate self-service digital solutions, such as mobile banking and digital onboarding, within three years, so there’s likely to be more digital innovation on the horizon.

The data shows that top-performing CUs invest an average of 5.6% of their assets in innovation and have a member churn rate of 1.7%, compared to 3.1% investment and 3.3% churn among bottom performers. The less churn there is, the more likely it is that getting customers to move toward “primary account status.”

The small businesses themselves offer up a roadmap: PYMNTS Intelligence and Velera found that 23.7% of smaller firms have conveyed that “must have” features must include robust security offerings and 22% have said they want self-service solutions.