Talk to experts in the credit union (CU) space, and they’ll tell you most CUs are trailing their peers in the banking industry when it comes to innovations.
Catching up will mean CUs making substantial digital strides — from technological investments to complete overhauls of infrastructure — as well as an honest assessment of the digital experiences CUs offer.
And that’s not the only challenge facing credit unions. While CUs continue to attract more members, many of them are struggling to keep these members from seeking some banking products or services from other financial institutions.
Solving this issue will require CUs to pair personalization and customer service expertise with the latest digital offerings to win back members testing the waters with brands like Stripe, Square and other FinTech giants, Brian Scott, senior vice president and chief growth officer at PSCU, told PYMNTS in an interview.
He notes that while CU membership grew 29% in 2020 — partially sparked by credit unions expanding digital service offerings for historically underserved communities — more than half of members looked for services from other financial institutions.
This means CUs need to be judicious in considering which digital offerings they need to earn customers back.
Scott adds that credit unions are set up nicely to leverage their strengths in serving small and medium-sized businesses (SMBs). The pandemic has put these businesses in the spotlight and spurred their growth. Credit unions, he argued, have a chance to gain a foothold in the market by expanding and emphasizing their SMB-related offerings.
Study: Just 12% of SMBs are Turning to Credit Unions
And therein lies another challenge. Newly released research shows that CUs have trailed other financial institutions in helping small businesses during the pandemic.
Most of these businesses have worked with banks to get access to financial products and services, with a little under half choosing large banks and 45% choosing small ones. Another 23% say they use financial services firms, and 12% have turned to CUs.
Tapping into this market will be instrumental to helping credit union growth, as 89% of SMBs say they rely on loans on loans and lines of credit for capital and 21% use credit cards for funding.
Credit unions may be facing challenges, but a lot of CUs are engaged in some unique innovations. To learn more about what’s happening in this sector, download our latest Credit Union Tracker, a PYMNTS and PSCU collaboration.