The average credit union member is 53 years old. Reasonably affluent, well traveled down the journey of life’s financial goals — and well aware of the personalized and community approach of the credit union (CU) itself.
But as is the case with any business, credit unions and community banks need to expand their accountholder base and gain ground with younger consumers who either are unaware of their local CUs, or may equate them with relatively staid business models.
Chuck Fagan, president and CEO of Velera — the newly rebranded PSCU/Co-op Solutions — told Karen Webster that credit unions can create some heady momentum if they augment their human-centric approach with technology.
“They have to have velocity to compete in today’s market,” Fagan said. That can be a difficult endeavor for financial institutions (FIs), especially for smaller players in the community markets with assets of a few hundred million dollars. They have limited tech resources and staff on hand.
But Generation Z and millennial cohorts beckon. These generations, he said, are going to increase their spending six-fold between now and the year 2030. There are some basic tenets of the CU model that have proven to be beneficial through the past several decades, said Fagan (and will remain unchanged no matter how much digital transformation there may be in the offing).
“When you say you’re going to do something,” he said, “you follow through with it. You engage in different ways when the member walked into the branch.”
Those qualities can transfer into an omnichannel setting, Fagan said, who added that technology has become a significant component of the services equation.
“But as you build technology,” Fagan said, “you have to do it in a way that allows the consumer to connect with the [FI] the way they want.”
The CUs, he said, recalling an observation he made during a recent interview with former president George W. Bush, must do as much as they can with the information they have on hand … but technology can help them mine and use that information in new and engaging ways.
As PYMNTS reported last month, the Velera brand is being rolled out in phases through the next year. The Co-op brand will be retained for its ATM network and Shared Branching consumer-facing solutions.
The overarching mission will be to drive credit union growth, he said.
“One of the advantages credit unions have to exploit is velocity,” he told Webster. And that velocity is underpinned by connections to FinTech providers and as the CUs build technology of their own.
The joint efforts of PSCU/Co-op, which combined roughly five months ago, are crystallized in an Emerging Services team and in a FinTech advisory group that help CUs take a leading-edge approach to new distribution channels and digital efforts.
“Marrying up those segments with the FinTechs and the 4,000+ FIs” served by Velera, “puts us in a good position” to modernize CUs’ operations and offerings, Fagan said.
There are also a number of shared tools in place that are resultant of the combination — PSCU hadn’t previously had access to shared branching, a surcharge-free ATM network or Co-op Pay. Co-op, for its part, had not had access to Juniper Payments to enable and support faster, real-time payments.
“The cross-pollination of these products and solutions means that we can help a credit union with a more robust package offered to a member … and to have an ability to consistently invest on an ongoing basis,” Fagan said.
Those investments set the stage for a widened embrace of buy now, pay later options and digital wallets. Blockchain also holds the potential to secure and digitize various payment channels as consumers increasingly embrace using phones as payment vehicles instead of plastic cards.
“Digital wallets are on a hockey-stick trajectory right now,” Fagan said, “and most everybody [in the merchant community] takes tap and go. It’s safer on a phone due to the tokenization aspects.”
Open banking demands that CUs seek new ways to mitigate fraud losses in an age of permissioned data and faster payments. If those defenses are not erected, Fagan said, consumers will eschew technology and go back to using cash.
Looking ahead, engaging with younger consumers means offering them budgeting apps and proactive education about over-spending in various categories, so that these users gain a holistic view of their finances.
As he noted to Webster about Velera’s mission to spark momentum with CUs’ members: “If they grow, we grow. And it’s in our best interest to do things that keep them competitive.”