Credit unions (CU) members have a reputation of being loyal to their financial institution (FI) — and not without reason. CU members, by and large, are happier than most financial consumers are with their primary FIs, with 88.5 percent saying they are very or extremely satisfied with their CUs’ performance. This compares to just 80.5 percent of non-CU members who say the same.
Yet CUs are far from complacent when it comes to their customers’ loyalty. Many CU executives express growing concerns about the looming competitive threat posed by digital-first competitors, including not only challenger banks like Chime, Ally and GoBank, but also BigTech and FinTech firms, from PayPal, Google and beyond. As much as 41.4 percent of CUs believe that challenger banks will play very or extremely important significant competitors in the coming years, largely because they worry that challenger banks will prove to be better innovators.
The fear is palpable, but just how likely are members to leave their CUs over their ability to innovate?
This is the key question PYMNTS set out to answer in the 2020 Credit Union Innovation Index, in collaboration with PSCU. We surveyed 3,908 U.S. consumers, 137 CU decision-makers and 55 FinTech executives to learn more about the importance CU members place on FI innovation, which types of products and services they express the most interest, whether their CUs’ innovation plans are aligned with their ever-changing demands and expectations and, most importantly, how worried CUs should be about the potential of them leaving for new financial providers.
Our research shows that CUs may have valid reason to worry about the threat of challenger banks. One in five CU members would be willing to leave their CUs for challenger banks if innovation was not made a priority, and eight out of 10 those who would be willing to switch point to easier-to-use, more convenient services as a reason.
Such findings not only show how real the competition is, but also underscore how important of a role innovation can play in CU members’ engagement efforts. CUs who do not or cannot invest in innovations that can meet their members’ demands for easy-to-use and convenient services risk seeing them leave to bank with institutions that can.
What is even more interesting is the types of innovations in which consumers and FIs express the most interest. P2P payments are at the top of consumers’ lists, with 35.8 percent saying they would be interested in using peer-to-peer (P2P) payment services, if available. CU decision-makers appear to be aware of this interest, as 91 percent of them say they would be interested in investing in P2P payment innovations over the next three years.
Yet the innovation possibilities expand far beyond P2P payments. The 2020 Index explores which technologies CUs should prioritize to keep their current members, attract new ones and stave off competition from challenger banks.
To learn more about the state of CU innovation in 2020 and beyond, download the Index.