Innovation Boosts Credit Union Member Financial Wellness, Fuels Member Growth

The fact that, in the midst of the pandemic, credit unions were able to grow their members by 2 percent might seem like something of an anomaly.

Even 2 percent growth, given all the economic bumps of the past year and a half, is still growth.

Brian Scott, chief growth officer at PSCU, said that, with the right mix of digital initiatives and innovation roadmaps, that growth can be ratcheted up significantly.

The conversation came against the backdrop where the May Credit Union Tracker, done in collaboration between PSCU and PYMNTS, found that only 34 percent of credit unions (CUs) have invested in contactless credit and debit cards, as CUs, in general, have instead been focusing on QR codes and digital wallets.

The 2 percent growth number, he said, has both positive and negative sides. Yes, positive numbers signal trends are headed in the right direction, he said. But that same stat lags the growth seen at the top larger banks. Digital-only banks, he said, are growing at especially high rates.

To grow faster, he said, CUs must meet the needs of existing and potential members, across channels. Word of mouth helps too, he said — where members might help bring their extended family into a CU’s orbit, boosting revenues without additional marketing spend.

“If you significantly help and improve somebody’s financial journey through life, they are going to tell other people, and that’s going to lead to a more dramatic growth than what we’re seeing at 2 percent,” he said.

At a high level, he said, “prioritizing payments innovation is incredibly important for credit unions.” But which payments to prioritize can be a bit of a challenge for CUs, he said. After all, he said, ticking off the options; including checks, credit, debit and online bill pay (just to name a few).

Indeed, it can be hard for CUs to successfully prioritize payments.

The ‘And’ Conversation

“It’s always an ‘and’ conversation,” he remarked. “For the CUs, it’s ‘we need to do this and we need to do that.’”

He noted, though, that contactless payments are table stakes for credit unions — issuing contactless cards remains a priority just to be a contender within financial services. The fact that only a third of CUs have made the investments needed to issue those cards means there is much work to be done, according to Scott.

“When you look at the competition in the marketplace, primarily the larger banks are already there with contactless — and they’ve been there for months,” he added.

Contactless payments and mobile banking, can lead CUs to create new experiences for members, particularly through the development of virtual branches.

Scott told PYMNTS it’s important to clarify that a virtual branch is different than an online bank.

“They are two very different things,” he said, adding that “a virtual branch is there to simulate the experience that you would have in a physical branch, while an online bank or an online financial institution is something different altogether.”

With virtual branches, he said, members are interested in interacting with financial institutions in ways that are familiar but not high-touch, with virtual tellers, for example, replacing in-person ones. Virtual tools, online education and outreach efforts can all be combined by the CU to cement relationships with members and spur an ongoing dialogue about what they need, immediately and over time, in the bid to improve financial wellness.

The opportunity is there, according to Scott, who said 60 percent of CU members (and, separately, 60 percent of CU employees) have said they are struggling financially — a number that “hits you in the face,” Scott said, “and it says we’ve got to do something here.”