Credit Unions Lay Tech Groundwork in Bid to Unleash Innovation

The pervasiveness of digital can be seen in the utter transformation of everyday activities, Scott Young, vice president of innovation and design at PSCU, told PYMNTS.

Take traveling, for example.

Young recounted how during a recent trip, he was able to check in digitally, get a rental car digitally and check into his hotel digitally.

“I pretty much didn’t talk to anyone except a TSA agent along the way,” he said.

Digital has also come to financial services in a big way, raising consumer expectations for faster transactions, on-demand banking and seamless omnichannel services.

At a high level, Young said the pace of innovation at credit unions (CUs) — as a whole — is looking better than just a couple of years ago, when CUs that had not yet adopted digital solutions pre-pandemic were forced to do so out of necessity.

“The pandemic was a catapult to innovation, but we still have room to grow,” he said.

There are still pockets of friction no matter where you look. Young said he encountered a bit of friction on his recent trip, too — namely, when he went to get a soda at the vending machine, which accepted only coins. The same holds true for CUs, where streamlining operations and moving away from manual and paper-based processes are critical.

In one example, in a nod to the demand for speedier services, Young noted that PSCU has partnered with Amount to leverage the latter’s instant account opening and decisioning tools — in turn enabling instant card approval and credentialing into digital wallets.

Expanding Opportunities

Despite progress by leaps and bounds, CUs still have a lot of opportunity to innovate.

PYMNTS and PSCU joint research shows that only about 20% of CUs believe their organizations are on the cutting edge of innovation as early launchers (bringing new features to market before anyone else) — not an insignificant number, but hardly a majority. But then again, that’s up from around 8% only a few years ago.

“The trend is headed in the right direction,” said Young.

For CUs, there’s no need to boil the proverbial ocean all at once; showing some technological progress and a steady evolution of new offerings is sufficient, he said.

Innovation will proceed naturally as use cases gain ground. In the case of real-time payments (which move beyond simply faster payments), he said that several dozen financial institutions (FIs) are already connected to The Clearing House (TCH).

PSCU is seeing potential, too, in innovating to meet the demand for real-time payments. PSCU’s May acquisition of Juniper Payments will expand PSCU’s ability to have direct connectivity to the Federal Reserve, TCH and the forthcoming FedNow service, adding multi-tiered payments — including automated clearing house (ACH) processing and domestic/international wire remittance — for its CUs.

Looking ahead, it’s imperative that CUs capture mindshare and wallet share among younger consumers, Young said. Combining elements of digital banks and the in-branch experience can help cement that loyalty.

There’s some comfort in knowing that branches are available, just in case some face-to-face interaction is warranted. It’s easy to walk into branches, he said, and 5G makes it possible to transact digitally from anywhere.

“These consumers are going to want to see that our credit unions are being innovative,” he told PYMNTS, “launching new tech and, above all, showing progress at all times.”