Why Digital Wallets Matter More Than Crypto for Credit Unions

Credit unions have an unusual digital asset dilemma. Most members are not asking them to become cryptocurrency exchanges, yet a sizable share of young members expect their financial institutions to provide some route into a financial system that includes crypto, stablecoins and digital wallets.

The PYMNTS Intelligence report “The Wallet Effect: How Credit Unions Can Close the Digital Currency Access Gap,” produced in collaboration with Velera, found that only 7% of credit union members said their institutions support cryptocurrency transactions, while 67% did not know whether that capability existed. Uncertainty was even greater around stablecoins, with 70% of members unsure whether their credit unions supported them.

According to the report, 54% of millennials expressed at least moderate interest in digital currencies, while 27% of millennials and Generation Z members reported knowing that their credit unions offer crypto services.

The issue for credit unions, therefore, extends beyond today’s transaction volumes. Young consumers are forming expectations about which financial services should be available through the institutions and applications they already use.

Velera’s CU Growth Outlook research added another consideration. Gen Z spending is projected to reach $12.6 trillion globally by 2030, representing nearly one-fifth of worldwide consumer spending. If these consumers establish investing, payments and digital asset relationships elsewhere, credit unions may have a harder time keeping a larger portion of their financial activity within the member relationship.

That does not make a rapid move into direct crypto trading the logical response. The research indicated uncertainty about what consumers actually understand and want.

Build the Access Layer First

A practical strategy starts with the digital wallet.

Strong millennial interest in cryptocurrency rose from 31% to 35% when access is provided through a digital wallet, the report revealed. The effect is more pronounced for stablecoins among credit union members. Strong interest increases from 5% for direct payments to 12% when stablecoins are accessible through a wallet.

Wallet infrastructure can establish an access point that supports additional services over time without requiring an institution to determine today exactly which digital assets will ultimately attract sustained member demand.

That flexibility can also change the build-versus-buy calculation. Developing custody, transaction processing, security controls, compliance procedures and specialized digital asset technology internally can impose demands that many credit unions are not structured to absorb. FinTech partnerships can allow institutions to obtain selected capabilities while keeping the member-facing relationship within their existing digital channels. The report specifically recommended evaluating FinTech partnerships that can reduce operational and compliance burdens.

There are limits to what outsourcing accomplishes. A technology provider does not remove a credit union’s responsibility for vendor oversight, risk management or determining whether a product is appropriate for its membership. Partnerships can reduce the amount of specialized infrastructure an institution must construct itself, but they do not transfer every obligation attached to offering the service.

Education consequently becomes part of the strategy rather than an accompanying communications exercise. If members have difficulty distinguishing cryptocurrency from stablecoins, credit unions need to explain differences in purpose, risk and functionality before interpreting expressions of interest as evidence of product demand.

That approach also gives credit unions useful information. Wallet engagement, member inquiries and educational participation can provide evidence about where demand is developing before an institution commits substantial resources to direct offerings.

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