Credit Unions Use Cash Back Rewards, Early Direct Deposit to Reward Member Loyalty

Credit unions (CUs) are well-known for their customer service, but they are often overlooked in favor of the flashier digital services provided by traditional banks and FinTechs. For example, a recent study found that 40% of financial institution (FI) customers are likely to leave their primary FI if its digital experience is not comparable to an online shopping experience, and CUs are no exception to this potential attrition.

CUs are working to reduce this potential attrition through rewards and loyalty programs, which offer members cash or other incentives to stick with their CU as their primary FI. Those that lack such incentives could quickly see their member base diminish in favor of traditional banks and FinTechs.

In the October “Credit Union Tracker®,” PYMNTS explores the latest in the world of CUs, including how rewards programs work to retain loyal members, new collaborations between CUs and FinTechs, and how CUs are working to integrate the latest in digital banking technology.

Developments From Around the World of Credit Unions

One CU loyalty program example comes from Navy Federal Credit Union, the largest CU in the country. The CU announced that its new card would offer 1.75% cash back on all purchases, with an additional $250 bonus for new cardholders that spend $2,500 within 90 days of account opening. Navy Federal’s head of card products, Justin Zeidman, said in a press release that this program is intended to reward the CU’s members for choosing it as their primary FI, promoting customer loyalty and discouraging closing their accounts

PSCU is also working to foster CU member loyalty and reduce churn. The company recently unveiled a new prepaid card platform to this end, allowing members to view their transaction history, check balances and receive real-time alerts through the PSCU My Card Manager mobile app. This prepaid card option was also inspired by the ongoing pandemic, which PSCU says sparked an increased customer focus on money management.

Digital banking is another promising path forward to promote member loyalty, but some CUs are still hesitant to hop on board the cyber train, with 15% of CUs still uncommitted to digital strategy, according to a recent study. Some of this hesitance can be attributed to the pandemic, with some CUs waiting for a less volatile industry and economy before committing to long-term change; however, most CUs have found that digital partnerships have resulted in steady growth.

For more on these and other CU news items, download this month’s Tracker.

VyStar on Pairing Rewards Offerings and Member-Centric Services To Build Loyalty

Rewards programs can go a long way toward fostering member loyalty, but they are just one part of a multifaceted approach to doing so. CUs must also provide exceptional customer service, including occasional, on-point surprise incentives, to keep members engaged.

In this month’s Feature Story, PYMNTS spoke with Melissa Thomas, senior vice president of payments and operations for the Jacksonville, Florida-based VyStar Credit Union, about how the CU leverages cash rewards and features such as early direct deposit to encourage member retention.

Deep Dive: Improving Member Retention Through Loyalty Programs

Member attrition is a constant worry for CUs, with large banks and FinTechs poaching customers through enticing digital services. Keeping these members with the CU is vital for long-term success, and many have found that rewards and loyalty programs are key to doing so.

In this month’s Deep Dive, PYMNTS explores how CUs are reducing member churn by offering cash back credit cards and other loyalty systems.

About the Tracker

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