Rewards Move Credit Unions Top of Mind and Top of Wallet

The largest banks and their smaller brethren — particularly credit unions — are and always have been locked in a pitched battle for customers, for deposits and long-lived relationships.

The playing field’s leveling a bit, especially amid the great digital shift, where mobile and digital conduits offer customers a range of always-on, easily accessible financial products and services.

In joint research conducted between PYMNTS Intelligence and Velera, and as depicted in the report “Roadmap to 2030: The Seven Strategic Planks for Credit Unions to Capture Top of Mind,” we found that traditionally, the proximity of credit unions (CUs) to their members’ daily lives, near work, school or in town, has been a key feature of engagement. But as so much of life is lived online, financial institutions (FIs) have had to reexamine their digital presence. Forward-thinking CUs have been paving roadmaps for the end of the decade, with a focus on using technology and personalization to cement relationships with individuals and businesses, particularly younger customers, that will prove to have the longest customer lifecycles.

The overarching push is one that seeks to keep current members engaged but also grow their rosters.

Our Innovation Readiness Index has been designed to help shape those aforementioned roadmaps, as CUs fine-tune their products and features.

What the Index Tells Us

At a high level are top-performing CUs, firms that match members’ expectations 77% of the time (translating to a score of 77). On the other side of the equation lie the bottom performers, at a reading of 29. There’s also disparity where, to put it bluntly, size doesn’t seem to matter much. Credit unions with less than $1 billion in assets have an average score of 53, and those with more than $5 billion in assets have an average score of 54.

However, the writing’s on the wall, as 64% of CUs recognize that their customers want to see more digital innovation from their credit unions. A majority of them, 55%, have said that they are planning to boost self-service and digital efforts, including mobile banking and onboarding.

Listening is key: Top performers are likelier than the average CU to have specific processes for taking member innovation suggestions and testing innovations with staff and members. Processes that encourage member engagement play a pivotal role, with 49% of top performers implementing procedures to gather member suggestions versus 38% for lower-performing echelons.

A total of 64% of credit unions are engaged in providing biometric ID and security for members. Among younger consumers, particularly in Gen Z, 21% cite mobile and credit card management apps as a top priority, and 17% want biometric codes. As the top “factor” in choosing cards, roughly 50% of Gen X, 40% of millennials and 33% of Gen Z say that economic incentives tied to rewards are key to helping them decide which card to use.

Overall, loyalty and rewards programs are near the top of priorities for consumers, and yet, as we’ve found, only 17% of credit unions have been innovating along those lines — which means CUs would do well to make some renewed efforts in those card and account features.