Talk to experts in the credit union (CU) industry and they’ll tell you that most CUs lag behind their banking industry peers when it comes to innovations.
Catching up will mean that UCs make substantial digital advancements – from technology investments to complete infrastructure overhauls – as well as an honest assessment of the digital experiences UCs deliver.
And that’s not the only challenge facing credit unions. As UCs continue to attract more members, many are struggling to prevent those members from seeking certain banking products or services from other financial institutions.
To solve this problem, UCs will need to combine personalization and customer service expertise with the latest digital offerings to win back members who are testing the waters with brands like Stripe, Square and other FinTech giants, Brian said. Scott, senior vice president and chief growth officer at PSCU. PYMNTS in an interview.
He notes that while CU’s membership grew 29% in 2020 — in part due to the expansion of credit unions’ digital service offerings for historically underserved communities — more than half of members have searched services from other financial institutions.
This means that UCs need to be judicious in considering the digital offerings they need to win back customers.
Scott adds that credit unions are well organized to leverage their strengths in serving small and medium enterprises (SMEs). The pandemic has put these companies in the spotlight and spurred their growth. Credit unions, he argued, have a chance to gain a foothold in the market by expanding and emphasizing their SME-related offerings.
To study: Only 12% of SMEs turn to credit unions
And that’s another challenge. Recently published research shows that UC has followed other financial institutions in helping small businesses during the pandemic.
Most of these companies have worked with banks to gain access to financial products and services, with just under half choosing large banks and 45% choosing small ones. Another 23% say they have used financial services companies and 12% have turned to UCs.
Tapping into this market will be key to fostering the growth of credit unions, as 89% of SMEs report relying on loans and lines of credit for capital and 21% use credit cards for financing.
Credit unions can face challenges, but many CUs are committed to unique innovations. To learn more about what’s happening in this industry, download our latest Credit Union Tracker, a PYMNTS and PSCU collaboration.