By Todd Clark, President and CEO, Co-op Solutions
When I speak with credit union leaders what I hear are the same concerns. The credit union industry is facing competition on all sides, and the traditional relationship- and service-focused business model is getting squeezed by the “3 Es” – earnings, experience and expenses.
These pressures become harder to prioritize as credit unions shift to meet the changing needs of existing and prospective members. Evolving consumer expectations are rapidly moving toward digital and mobile services as the primary engagement channels. Meanwhile, fintechs continue to appeal to a wider audience as their business model makes it so easy for consumers to engage with them.
As the leading payments technology innovator for credit unions, Co-op invests in comprehensive, in-depth research on behalf of our credit union clients and partners to ensure we are in front of emerging trends and consumer demands. We ask the big questions designed to help credit unions achieve record growth and long-term success. That’s why we are excited to release the Co-op CU Growth Outlook: Bridging member needs and payments strategy to deepen trust on financial industry trends and opportunities for credit unions.
Co-op Solutions partnered with global consulting firm EY (formerly Ernst & Young) to determine how financial consumer and member behaviors, preferences, challenges and activities have changed over the past year. For an added layer of insight, Co-op also engaged Filene Research Institute to assess credit unions’ current challenges and opportunities for growth.
Fintechs are Winning on Digital Engagement and Payments
What did our research uncover?
For one, fintechs are harnessing payment products to accelerate growth and take over the marketplace. For example, since last year, PayPal has experienced 5X relative growth in primary financial relationship and Chime showed 18X growth.
As a result of these focused efforts, consumers now trust fintechs over credit unions to serve their digital payment needs and wants. In fact, credit unions were the only primary financial relationship (PFR) type to show statistically significant declines in the past year. Credit unions’ primary payments relationships fell by 3%, while other providers, including national and international banks, regional banks, wealth and investment firms, and online banks and fintechs either remained flat or showed growth over the prior year.
That’s all well and good, but how important is access to convenient, always-available digital payment option to today’s financial consumer?
As it turns out, it’s critically important.
“Future-proof” Your Service Model
I encourage you to explore our new research and findings including the Co-op CU Growth Outlook white paper, which contains pages of additional insights about the needs and expectations of today’s financial consumer, along with a detailed member-centric roadmap for credit union success.
The opportunity for growth is at your fingertips – if your credit union can bridge the gap between what your members expect and demand.
Credit unions already hold strong incumbent advantages: they are their members’ most highly valued providers, offering outstanding service, trusted advice and secure banking solutions. By introducing market-leading digital technology and services, credit unions are well-positioned to offer the broader marketplace a value proposition that would serve as a compelling alternative to the digital-only brands.
The credit union of tomorrow will have personal relationships at the center, with compelling digital-branch services and products and strong data security and protection protocols built in. With the support of strategic industry partners with the expertise and ability to provide consultative advice and the right solution set, credit unions can design a modern member experience that will help them retain and grow primary financial relationships with their members.
The time has come for credit unions to evolve toward becoming the member-centric financial services provider of the future. Begin your journey today.
For a deeper dive into Co-op’s research on the importance of driving member-centric growth through payments and active primary relationships, visit the Co-op Research Hub to view the white paper, an interactive research report and other resources to help your credit union navigate this new era.