Credit Unions Bet Trust Can Beat Tech Gaps

For credit unions, relationships with members are often measured in decades, not years. But as younger generations grow into their prime earning and spending years, credit unions risk losing that long horizon unless they can meet the digital-first expectations of Gen Z and millennials.

What was once a differentiator — personal service and community roots — must now be paired with frictionless payment tools like tap-to-pay cards and mobile wallets to keep younger members engaged from the start.

The Credit Union Advantage

The opportunity for forward-looking credit unions (CUs) lies in making innovation a core part of their service promise.

Smaller institutions, long thought to be slower to adopt, are increasingly investing in modern payment experiences. The latest PYMNTS Credit Union Tracker done in collaboration between PYMNTS Intelligence and Velera, titled “Small Steps, Big Gains: Innovation Gap Narrows as Small CUs Catch Up,” shows that many are closing the innovation gap by focusing on fraud protection, efficiency and member experience.

But perhaps the most significant driver is meeting younger consumers’ demand for seamless, digital-first interactions. By prioritizing contactless options, credit unions can retain existing younger members and attract new ones, ensuring relevance in a marketplace where competitors are already moving fast.

Where Contactless Counts

Data underscores the case for contactless payments as the bridge to younger consumers:

Contactless cards: 56% of younger millennials and 48% of Gen Z use contactless cards at least a few times a week.

Mobile wallets: 38% of Gen Z and 36% of younger millennials use mobile wallets weekly, and 12% of Gen Z name it as their most-preferred payment method.

CU adoption rates: Among small credit unions, the share offering contactless debit cards rose 61% in one year, and contactless credit cards by 58%.

These numbers show a clear demand and a clear opening for credit unions that want to be seen as modern, accessible and member-first.

Closing the Gap With Competitors

Credit unions still face challenges. While adoption rates are rising, CU mobile apps lag behind banks in ratings and usability. This gap in user experience risks undoing gains in contactless card adoption.

But with FinTech partners offering real-time account validation and other tools, small institutions can move quickly without carrying the cost of building everything in-house.

The advantage for credit unions is trust. Members often see them as more community-centered and service-oriented than national banks. When that foundation of trust is combined with digital ease, CUs can create a loyalty loop that starts early and lasts for decades.

A Strategy for the Next Generation

The lesson is clear: investing in contactless is no longer optional. Gen Z and millennials expect it, use it, and increasingly prefer it. Smaller credit unions are proving they can keep pace, with early adoption rates climbing sharply over the past year. Those that lean into this shift will not only narrow the gap with competitors but also strengthen long-term ties with the very members who will define their future.