UCs can leverage member connection to grow

Credit unions (CUs) have seen impressive growth throughout the pandemic.

But in an interview with PYMNTS, PSCU Senior Vice President and Chief Growth Officer Brian Scott said there is still room for improvement, leveraging the competitive advantages that UC already enjoys. In short, they can use their service expertise to better meet member needs.

Globally, UC membership jumped 29% in 2020 as UCs ​​expanded access to financial services, especially for historically underserved groups. Scott highlighted the fact that UC has recently focused on expanding access to digital services and tools in less affluent communities, which have proven to be lifelines during the pandemic.

And yet, even with this rate of growth, he said, about half of UC members still have banking relationships elsewhere, which means there is at least some business going to those other suppliers that, at least in theory, could go to UCs.

“The Holy Grail is that CU be the primary and only financial institution [(FI)] for their members,” Scott said. But UCs (and traditional FIs, for that matter) face competition from FinTechs. “A lot of these consumers try [Block]Stripe, Klarna and Chime.

Many of these competitors have attractive, easy-to-use digital offerings, which is why so many consumers use UC but also gravitate towards these other companies, he said. Not so long ago, applying for a loan could take days or even weeks. But with these digital businesses, loan applications can be made in less than a minute, with high approval rates.

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“If my credit union doesn’t offer something I want, I’ll moonlight and go somewhere else for the services I want,” he said.

As a result, UCs need to rethink their offerings and perhaps revamp their suite of products and services, he said. Financial leaders are taking note. Two-thirds of UC decision makers surveyed by PSCU and PYMNTS said they want to at least go beyond simple consumer relationships and deepen their business-focused offerings.

“If credit unions aren’t focusing on the enterprise segment right now, I think that’s a mistake,” Scott said.

Small and medium-sized businesses (SMBs) are currently experiencing something of a renaissance as consumers look to support their local businesses and UCs (though Target, Amazon, and Walmart aren’t going away any time soon). And many UC members form small businesses – meaning UCs naturally have an installed base through which to sell business-related financial services.

While the global growth rate may have hit double-digit percentages recently, Scott noted that the normalized growth rate is in the low digits.

To accelerate growth, he said, UCs must capitalize on the trust placed in them by their members — which has long been a competitive force. Now, it is imperative that UCs learn to innovate and attract younger members (the average age of a UC member is currently around 45).

But, he warned PYMNTS, “It’s important to focus on where the member is in their financial journey – and it’s especially important to provide robust mobile banking, digital payment tools, digital loan approval tools and understand where the member is individually.”

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NEW PYMNTS DATA: ACCOUNT OPENING AND LOAN SERVICE IN THE DIGITAL ENVIRONMENT

On: Forty-two percent of US consumers are more likely to open accounts with financial institutions that facilitate automatic sharing of their bank details upon sign-up. The PYMNTS study Account opening and loan management in the digital environmentsurveyed 2,300 consumers to explore how FIs can leverage open banking to engage customers and create a better account opening experience.