86% of Top Performing Credit Unions Support Open Banking

Small businesses may still like the local, relationship-first feel of credit unions, but that loyalty now comes with a digital price tag.

The new PYMNTS Intelligence and Velera report, “Credit Union Innovation Readiness: The Real Story Behind Member Churn,” found that most small- to medium-sized business (SMB) credit union members are not planning to leave in the next year, yet a sizable minority is already leaning toward the exits. The pattern is less about rates and more about relevance.

SMBs increasingly expect the same ease they get as consumers, like opening an account online, managing cards in an app, connecting accounts through open banking and handling routine tasks without calling a branch.

When those basics are missing, small businesses do what they do in every other part of their operations. They look for a better tool.

Credit unions have an opportunity here. The report demonstrated not merely that churn risk exists, but that it is measurable and addressable. SMBs that want to leave are signaling what would make them stay, and those signals line up with what top-performing innovators are already building, including broader product sets, faster rollout cycles and partnerships that compensate for internal system limits.

This is a fixable gap. It is also a growth plan.

Key data points from the report:

Within the next 12 months, 38% of SMB credit union members said they are at least “slightly” likely to leave their current institution, including 22% who are at least “somewhat” likely to go and nearly 12% who are “very” or “extremely” likely to leave.

Among SMBs looking to leave, 75% said their next stop will likely be something other than another credit union, and roughly 6 in 10 pointed to a bank as the likely destination.

Digital experience is the dividing line, as 70% of SMBs that left a credit union for another institution said they prefer online onboarding when applying for new products, and innovation leaders outpace laggards on capabilities such as open banking (86% versus 13%) and digital onboarding (63% versus 25%).

Geography does not guarantee stickiness, according to the report. Small-town SMBs are less likely than metro SMBs to say they are “very” or “extremely” likely to leave, but more likely to say they are “slightly” or “somewhat” likely to bolt, which lifts overall flight risk. That suggests many rural SMBs are keeping their options open and will move once a credible alternative is within reach.

The report drew a line between top and middle performers. Top innovators are not simply launching more features. They are building the operating model to keep launching them. Many top performers lean on third-party partners as essential to innovation, giving them a way to move faster even when core systems and compliance requirements slow internal teams. Middle performers, meanwhile, reported heavier friction from integration hurdles, core constraints and compliance burden, which show up downstream as missing digital tools that SMBs increasingly view as standard.

SMB churn risk can be converted into SMB loyalty gains by treating innovation readiness as a retention discipline, according to the report. Credit unions must invest early, prioritize self-service, modernize onboarding and card controls, and use partnerships to close capability gaps faster than competitors. They already have the relationship advantage. With the right digital layer, they can keep it.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.