This article previously appeared on CU Insight
By Todd Clark, President/CEO
As we begin a new decade, I want to share three words that I believe will define the future of the credit union movement: primary financial relationship (or “PFR”). Do our members see credit unions as the first place they go to for all their financial needs? They should. Americans have at least five accounts with different financial institutions, and of those that belong to credit unions, only 20% see it as their primary relationship.1 With big tech and fintech actively engaging in our market and growing market share, deepening relationships with our members is critical!
The good news? Credit unions are very much defined by the human-centered relationships we have with our members. Yet the question many of you are asking is: how do we take it from here? Where should my credit union invest to stoke this growth? We believe that owning more member moments through payments is the path to building a stronger economic index for each credit union. Credit unions that understand the correlation between payments and loans and focus on growing both can raise overall volume, engagement, and revenue. Designing for members’ lifestyle, not just their life stage, is the way forward.
Today, payments represent almost 80 percent of a consumer’s interactions with their primary financial institution, and banks are surpassing credit unions in the payments to lending performance ratios.2 Credit card loan portfolios make up 21.6% of total loan volume for the country’s top three banks, in comparison to credit unions’ 6.5%, and they are outperforming our industry by more than $300 billion in total loans.3 Additionally, there is $500 billion of incremental interchange revenue up for grabs in the next five years that will drive overall loan growth.4 Think about the dozen times per day, year-round, that a member dips, taps or clicks to pay, and how that everyday interaction can lead to more opportunities within your credit union – from lending to selling other products and services. By focusing on payments, we’re not only driving engagement, but we can use that data to understand our members better and offer them the right financial products and services when they need them. When we do that, we become more than an institution; we become their trusted primary financial relationship.
CO-OP is boldly investing to design and deliver the solutions that will give your credit union the scale, technology, and resources to grow. From securing top of wallet with latest digital wallet solutions and rewards programs to supporting them with consistently reliable member service through our Contact Center. All of this, backed by industry-leading security and risk management systems and easily accessible through a library of APIs (Watch: Learn about the new CO-OP Developer Portal).
I highly encourage you to watch our Q1 CO-OP Quarterly Update Livecast held on February 19th. During this event, my colleague Bruce Dragt (Chief Product Officer) unveiled CO-OP’s 2020 product roadmap and provided a closer look at our upcoming Zelle and Insights Center solutions.
We have a tremendous opportunity ahead of us, and I am pumped about what we have delivered in 2019 and what’s coming in 2020. As always, CO-OP’s success will come from continued collaboration and partnership with you. My door is always open, and I can’t wait to hear your feedback.
Watch an on-demand recording of the Q1 CO-OP Quarterly Update Live Cast and get a closer look at CO-OP’s product roadmap:
1 Federal Reserve: “2016 Survey of Consumer Finance”
2 McKinsey: “Global Payments Report 2019: Amid Sustained Growth, Accelerating Challenges Demand Bold Actions”
3 CU Data from Callahan database; Bank balances from 10-Qs (BofA, Chase, Wells Fargo, Citigroup)
4 Accenture: “Payments Pulse Survey: Two Ways to Win in Payments”