Credit Unions Face Onboarding Test as 70% of Small Businesses Prefer Digital Start

Small businesses may say they value relationships, but when basic digital tasks still require a phone call or branch visit, loyalty starts to look temporary.

That was the core message of PYMNTS Intelligence’s November Credit Union Tracker, “Business at Risk: How Credit Unions Can Attract and Keep SMB Members,” produced with Velera.

The report found that most small- to medium-sized business (SMB) members are not actively planning to leave their credit unions, yet the share that is even mildly open to switching is large enough to create real exposure.

Digital convenience has become the dividing line. SMBs increasingly judge their financial institutions the way they judge the apps they use every day, and many credit unions are not meeting that standard.

The mismatch does not just affect satisfaction. It influences where SMBs take payroll, credit needs and day-to-day cash flow management. That is where churn begins.

Key findings from the report:

In the 12 months after being surveyed, 38% of SMB credit union members said they were at least “slightly” likely to leave their current institution, 22% said they were at least “somewhat” likely to go and nearly 12% said they were “very” or “extremely” likely to exit.

Among SMBs looking to leave, 75% said their next stop would likely be something other than another credit union, and roughly 60% said they were headed to a national, regional or local bank.

Digital capacity separated leaders from the pack, as 42% of middle-tier credit unions offered contactless credit and debit cards, compared with 90% of top performers.

The report also pointed to a less obvious dynamic that complicates the usual assumptions about community loyalty. Small-town SMBs were less likely than metro SMBs to say they were very likely to leave, yet they were more likely to describe themselves as slightly or somewhat open to switching.

Only 56% of small-town SMBs said they are “not at all” likely to leave, versus 66% of urban SMBs. That pattern suggests that limited local options do not necessarily equal deeper loyalty. It can mean deferred switching, where frustration builds even if the next provider is not yet clear.

What credit unions do next is not simply a product checklist. The report framed “innovation readiness” as an operating capability, shaped by systems, partners and speed to execution. Top performers leaned harder on outside expertise, with 84% citing consultants, vendors or credit union service organizations as essential to their innovation strategy, versus 64% of middle performers and 50% of bottom-tier institutions. Middle-tier institutions also reported obstacles that slow delivery, including system integration challenges (57%), core constraints (55%) and compliance burdens (59%).

For SMBs, those internal frictions show up as real-world pain points, from limited self-service to weak onboarding. When SMBs leave, 70% of switchers said they prefer online onboarding for new products.

The report revealed that closing gaps in digital onboarding, open banking connectivity, mobile tools and real-time functionality can turn churn risk into retention and growth. The roadmap to success includes building readiness, moving early and making self-service the default.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.