51% of Credit Union Members Still Prefer Branches

New data on credit union innovation says what few FinTechs want to hear: Bank branches still matter, especially if you care about keeping your most loyal members.

That’s one of the less spotlighted, but most consequential, takeaways from “The Omnichannel Imperative: Why Credit Unions Need Both Digital and Physical to Thrive,” released by PYMNTS Intelligence and sponsored by Velera.

The study explores how top-performing credit unions are navigating the tension between digital acceleration and community-based service, with a growing consensus that future growth will require a dual investment in both.

While digital onboarding, mobile card issuance and Generation Z-centric features dominate headlines, the report shows a persistent demand for in-person banking. Credit unions, long defined by their relationship-first ethos, are positioned to win in this hybrid environment, but only if they resist the temptation to go fully digital.

Key data points from the report include:

Fifty-one percent of credit union members, including consumers and small businesses, prefer face-to-face service for their financial needs, underlining the branch’s continued role in member retention.

Sixty-five percent of baby boomers visit their credit union in person, and 53% also use the credit union’s website, making them the most omnichannel-engaged demographic.

Seventy percent of members who frequently use ATMs cite cash withdrawals as the primary reason, showing that self-service tools remain a critical bridge between digital convenience and physical access.

Even with digital expectations rising across the board, especially among millennials, Gen Z and small- to medium-sized businesses (SMBs), the report shows that “phygital” is the future, not just digital.

Navy Federal Credit Union, the world’s largest credit union, opened a new branch in March at Fort Irwin to serve 10,000 members in a military community despite record branch closures nationwide. The decision to expand its physical footprint reflects a deeper insight. Trust, accessibility and loyalty are still built face-to-face, particularly in underserved or high-need areas.

Meanwhile, policy is starting to catch up. In North Carolina, new legislation is in the works that would allow credit unions to serve rural residents living more than 8 miles from a bank, many of whom have lost access due to closures. If passed, the bill could expand eligibility and encourage physical reinvestment in so-called “banking deserts,” where traditional institutions have pulled out entirely.

The digital side of the story is equally important. Among SMBs that switched institutions, 68% say they preferred digital onboarding, while Gen Z is 78% more likely than the average consumer to expect digital onboarding and QR code payments. Top-performing credit unions are now 49% closer to offering a full suite of digital features compared to their lower-performing peers.

Still, the strongest institutions aren’t choosing between channels; they’re integrating them.

“Credit unions that blend digital convenience with the human touch of branch access are not only meeting today’s expectations across every generation but also setting the standard for trust, accessibility and long-term loyalty,” Amy Evans, senior vice president at Velera, says.

For credit unions, this isn’t a race to become the next digital-only challenger bank. It’s about delivering high-touch service at every touch point, whether that’s a branch, a smartphone or somewhere in between.