BOSTON–Credit unions continue to win over new members, but there is one “disconnect” for many CUs when it comes to service offerings, according to a new report.
PYMNTS Intelligence has released its “Growing Credit Union Membership via Lending and Omnichannel Banking Innovation” report, which is a collaboration with PSCU that seeks to provide “insights on how CUs are working to win over new members — as well as areas where they appear to be missing the boat entirely.”
According to PYMNTS Intelligence, the report, which is based on surveys of more than 4,500 U.S. consumers, found that among new CU members, 73% joined their current credit union after leaving a different type of financial institution (FI), while 27% migrated from another CU.
“Why the change? CU members identified multiple reasons,” according to PYMNTS Intelligence. “Eight percent said they switched because their previous FI lacked sufficient online and mobile banking features, while 12% said they switched because their previous FI did not have nearby branches.”
May Not be Enough
While mobile banking features and nearby branches can attract new members, PYMNTS Intelligence added that it “shows such factors may not be enough to keep them.”
“Eighty-one percent of CU members said innovation is a deciding factor when they pick a financial services provider,” PYMNTS Intelligence said. “Perhaps more importantly: CU members also said they expect their institutions to keep pace with industry trends when it comes to enhancing products and services.”
The Question
So how are CUs doing in providing their members with innovative services?
To answer that question, PYMNTS Intelligence urged consideration of one lending product that has captured the attention of millions of consumers: buy now, pay later (BNPL).
“Currently, 99% of CUs surveyed offer traditional auto loans and personal loans, while only 1.5% currently offer BNPL. And while 31% of CUs told us they plan to introduce BNPL in the next three years and 18% have similar plans for six years, nearly half of CUs have no plans whatsoever to offer BNPL plans to their members,” the company said. “Why is this significant? Because, as PYMNTS Intelligence data confirms, CU members want innovative borrowing options, including BNPL.”
PYMNTS Intelligence noted that where 25% of CU members want innovative personal loans, and 21% want innovations on auto loans in the next three years, 17% are also “hungry for BNPL innovations in the next three years, nearly double the 9% of non-CU members who want the same.”
The Disconnect
“This disconnect — that CU members are nearly twice as likely as non-CU members to want their CU to offer BNPL innovations while almost half of CUs have no plans to do so — suggests many CUs are running the risk of losing members,” PYMNTS Intelligence said. “On the other hand, those CUs that do commit to offering BNPL products stand to gain by welcoming new members who seek innovation.”
The full study can be found here.
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