New Report Finds Digital Readiness Critical to Credit Union Survival

The classic holiday film “It’s a Wonderful Life” is sometimes called “the credit union movie” for its heart-warming depiction of a member-owned financial institution with strong ties to the local town, friendly customer service and no bells or whistles. Even though Bailey Brothers Building & Loan wasn’t technically a credit union, it shared many features with the closely-related pint-sized institutions that until recently persisted as the defining features of a credit union.

No longer. A forthcoming report from a collaboration between PYMNTS Intelligence and Velera reveals how top-performing credit unions are surging ahead in modern financial services, not just by offering more of the money products and features found at traditional banks, but by strategically aligning their offerings with the expectations of their digital-minded members.

PYMNTS Intelligence’s Innovation Readiness Index (IRI) measures how well credit unions’ current and future offerings align with what their members expect in a modern financial institution, from credit cards with perks and financial planning apps to digital onboarding and the ability to apply for loans and other credit products online. Based on surveys of credit union executives, consumers and small to medium-sized businesses (SMBs), the coming report shows that top-performing credit unions have boosted their consumer innovation readiness substantially over the past two years and are now 49% closer to offering the complete suite of financial products and features their members want.

The findings in “2025 Credit Union Innovation Readiness Index” underscore that failing to modernize, particularly in digital services, poses a significant threat to credit unions’ relevance and market share against traditional banks, from regional to national. Digital capabilities are becoming a factor as critical as George Bailey’s winning rapport with members in growing and retaining customers.

Roughly one in five Americans, or around 63 million people out of 328 million, live in rural areas, the traditional stronghold of credit unions. But the institutions aren’t just small-time rural: Vienna, VA-based Navy Federal Credit Union, which serves current and former armed forces members and their families, has $190 billion in assets, the biggest of its kind and larger than Cleveland-based KeyBank, the nation’s 22nd-largest traditional bank. Multinational companies from Boeing to Disney have their own credit unions for current and former employees. The institutions, which took off after the Great Depression, now number nearly 4,500 and more than 142 million members, National Credit Union Administration data shows, making them a mainstay of financial services for a large swath of Americans.

The forthcoming report is based on three surveys: of 500 credit union executives conducted from Feb. 6, 2025, to April 14, 2025; a census-balanced survey of 15,758 U.S. consumers between Feb. 28, 2025, and March 31, 2025; and a poll of 1,996 small and medium-size business (SMBs) from Feb. 26, 2025, to March 27, 2025. Its IRI tracks where credit unions stand in offering 50 financial products, services and features deemed critical to thriving in today’s rapidly-evolving financial landscape. A top score of 100 means that a credit union does it all.

Top Performers Pulling Ahead, Laggards Backsliding

The average IRI score for top performing credit unions among consumers, representing how closely their portfolio of financial products and features matches members’ wish lists, is 76.4, up from 67.6 just 16 months ago.

In contrast, bottom-tier credit unions aren’t just significantly lagging but also backsliding, with the average score now 36.3, down from 43 over the same period. This gap is starkly visible in digital offerings: Only one in four bottom performers offer digital onboarding, compared to nearly two in three top performers.

While over half of current credit union members still prefer in-person interactions — the equivalent of George Bailey welcoming them to the counter — the report points to a critical shift: Nearly half of former members who recently left for another financial institution cited a lack of digital tools as a factor in their decision to bolt. Gen Zers in particular view the financial institution of the future as fast, mobile and frictionless. They are 78% more likely than the average consumer to expect digital, QR codes and open banking that lets them share their account details with financial apps such as Trustly, Plaid or Stripe.

Closing the Gap

Among the report’s many findings are that nearly eight in 10 credit unions cite third-party partners as helping them innovate faster and at greater scale. While top performers use partners for strategic goals like reducing time-to-market and cost savings, bottom performers often rely on them to gain access to fundamental capabilities like digital services. The report unpacks what how some credit unions that were early adoptees of digital tools can be outpaced by those that throw themselves into quick launches of those tools by using outside help.

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