New Report: Aiding Pandemic-Related Financial Hardships Key to Credit Union Member Loyalty

Credit union (CU) members are traditionally loyal, but the accelerated shift to digital banking amid the pandemic has led a growing number to consider other banking options.

Members are seeking seamless digital services for speed and convenience, but they also expect their CUs to offer innovative loyalty and rewards programs that add value to their experiences. Such offerings can include those that help them better manage their financial affairs, get the best deals on energy programs or office supplies and ultimately help them save money.

Many CUs are falling short on offering these kinds of programs to their members, however. The Credit Union Innovation Playbook: Loyalty Innovation Edition revealed that 49.1% of members want their CUs to focus on loyalty innovations, but that only 29.4% of CU decision-makers say their institutions have recently done so. This shows that CU members are keenly interested in such offerings, and that CUs would do well to cater to their preferences.

In the June “Credit Union Tracker®,” PYMNTS examines the value of innovative loyalty and rewards programs that can help CUs develop stronger relationships with existing members as well as appeal to new ones. The Tracker also reveals the disconnect between how many members seek rewards offerings — such as mobile app coupons or app-based cash back programs — and the relatively modest number of CUs that are investing in them.

Developments From the CU Space

CUs today are focusing on innovations that help them keep pace with a multitude of financial institutions (FIs), including digital and legacy banks, and many are turning to loyalty offerings to distinguish themselves from competitors. Tropical Financial Credit Union, for one, is working to gain more members in South Florida by launching a rewards credit card that features no annual fee and allows users to earn three points per dollar. Each point can be redeemed for 1 cent, meaning members essentially receive 3 percent cash back on an unlimited number of purchases.

CUs could also benefit by innovating their loyalty programs to serve customers leaning heavily on digital technologies amid the pandemic, especially contactless payments. Recent data from mobile card services provider Ondot Systems shows that contactless technologies and services are becoming more popular, with 37 percent of consumers who reported using such payments for the first time in March saying they would continue doing so after the pandemic receded.

CUs that cannot provide the loyalty and rewards innovations consumers crave risk losing them to other digitally focused FIs, including challenger banks. PYMNTS’ recent Credit Union Innovation Playbook revealed that 19.4% of CU members are at least “somewhat” interested in using challenger banks, while 1.7 percent already use such services in addition to those of their current CUs.

For more on these stories and other CU headlines, download this month’s Tracker.

How CUs Can Leverage Loyalty Programs to Boost Brand Awareness

CUs have traditionally relied on personalized banking to suit their members’ needs, but those unable to meet such expectations in today’s world of digital innovation risk losing members to other FIs. Nearly four out of 10 CU members said they would be willing to switch primary FIs, according to the PYMNTS Credit Union Innovation Playbook, revealing that the stakes are high for CUs that do not cater to members’ desires for loyalty- and rewards-based offerings.

For this month’s Feature Story, PYMNTS spoke with Krista Thompson, director of channel strategy and integrations at TDECU, on how innovative loyalty programs that engage members can provide more value and appeal.

Deep Dive: Turning to Loyalty Innovations to Strengthen Banking Relationships

Many CU members say rewards innovations are a high priority, with recent PYMNTS research finding that nearly 50% of the 2,000 CU members it polled wanted their FIs to focus on such innovations. Less than 30% of CUs have made loyalty program initiatives a priority in the past three years, however, with such developments ranking behind innovations in fraud management, real-time payments and digital wallet capabilities.

This month’s Deep Dive explores the value of loyalty and rewards programs for retaining members, adding cost efficiencies and generating referrals that can appeal to potential members and boost brand awareness.

About the Tracker

The “Credit Union Tracker®,” done in collaboration with PSCU, is the go-to monthly resource for updates on trends and changes in the credit union industry.