Active member relationships drive long-term growth in credit unions

A new report explores consumer financial behaviours

A survey of 3,000 US financial consumers found that credit unions must develop a comprehensive strategy to address the member experience.

The CU Payments Outlook research from consultants Ernst and Young (EY) was commissioned by CO-OP Financial Services, a US credit union service organisation. The paper argues that credit unions must develop a comprehensive strategy to address the member experience by employing “needs-based segmentation” to better serve their members.

The survey found that around 30% of respondents reported having their primary financial relationships (PFRs) with a fintech firm. Around 88% of respondents are digitally engaged with their financial footprint while 73% of interact online or through mobile only.

The survey featured 2,000 members and 1,000 prospective members, and looked at their evolving preferences on banking behaviours, digital services, and impacts from the pandemic, among others.

Taking into account the findings, EY says that credit unions need to use digital payments as an enabler for more relevant offerings; personalise offerings and experiences based on members’ lifestyles and priorities; and put those offerings in front of members at the right time, in the preferred channel.

The research suggests credit unions must offer their members comprehensive “lifestyle” financial products and services, with a particular emphasis on “active” solutions over traditional, “passive” offerings like deposit accounts and event-based loans. Payments and digital solutions are also crucial to meeting the needs of today’s members and establishing or strengthening primary financial relationships, suggests the research. This can be done by combining people’s demographic information with insight into their ambitions and life events, it adds.

“Credit unions have traditionally focused on delivering value through product-centric, life-stage solutions like low-rate loans, high-yield savings and personalized branch-driven service,” Samantha Paxson, CEO of CO-OP Financial Services, told EY. “However, consumers are needing financial services that are embedded into their daily lifestyle. They expect personalised transactional solutions to be available to them where, when and how they need them. We need to help our credit union clients determine the highest-impact solutions to deepen their relationship with their members and grow market share.”

According to the research, the gaps between what financial products people say they need but don’t own range from 27% to over 50% across areas such as advisor-managed accounts and automated investment accounts.

Customers are also using branches less that in the past. The research showed that 32% of customers visit a branch less often than monthly, while 73% interact online or through mobile, and 88% of respondents are digitally engaged on some level. EY advises credit unions to identify the preferred channels of their members by focusing on the points of interaction and converge these channels.

The consultancy is also encouraging credit unions to explore new payment workflows such as Buy Now Pay Later (BNPL) and social media payments as well as prioritise active solutions in mobile wallet, peer-to-peer and contactless payment methods, coupled with features such as fraud and security monitoring and easy-to-use apps.

“Credit unions and community banks can start to elevate their game and deliver like a FinTech, as opposed to the very slow and incremental approach that they’ve taken over a number of years. And CO-OP’s products and capabilities are effectively the accelerator,” Nikhil Lele, EY Americas’ financial services digital and customer growth leader, said in an article on the company’s website.

In this article

Join the Conversation