Co-op Research Finds Credit Unions Can Challenge Fintechs with Daily Member Interaction via Payments

Samantha Paxson

​In 2021, consumers asked for digital engagement. In 2022, fintechs are making it happen. This provoking reality is just one of several uncovered by a joint research project commissioned by Co-op Solutions in partnership with EY (formerly Ernst & Young) and Filene Research Institute.
 
The proprietary research looked at changes to consumers’ financial behaviors and their preferences and activities, as well as the challenges faced by credit union leaders over the past year. The conclusions highlight an opportunity to meet member needs and ignite credit union growth through daily interactions, including payments.
 
Research results are contained in a new white paper from Co-op titled, “Co-op CU Growth Outlook: Bridging Member Needs and Payments Strategies to Deepen Trust.” The research confirms that credit unions can address members’ evolving expectations, meet the increased competition from fintechs and be truly member-centric by supporting their members in their daily activities, interacting with them at multiple points each day. The best way to activate daily engagement is by offering digital payment options, while creating financial transparency and helping members take control of their own financial lives.
 
“We now know that robust and relevant digital payments options are objectively the best way to activate daily engagement,” said Samantha Paxson, Chief Experience Officer for Co-op. “Layering financial transparency and member control on top of those digital payments tools is how credit unions will maintain the trust and, ultimately, the business of modern members.”
 
Step One to Daily Member Engagement – Digital Payment Options
 
The Co-op CU Growth Outlook white paper outlines six steps for activating daily engagement to win the business of more members. The first among them is to incorporate digital payment options, such as virtual wallets, contactless payments, P2P channels and POS purchasing integrations, like buy-now-pay-later solutions.
 
The availability of tools like these is crucial to earning and maintaining member trust, a must-have in today’s highly competitive financial services environment. According to the research, credit unions are falling behind in the race for trust. For example, EY’s survey of 2,000 credit union members and 1,000 prospective members revealed that consumers don’t trust credit unions to offer the digital payment solutions they want. The sentiment proves out in the numbers: 66 percent of respondents use some form of digital payments, yet only 16 percent do so directly with their credit union.
 
“Capturing member trust is about so much more than profitability,” said Paxson. “The competitors out there offering digital payments rarely have the financial wellness of their users in mind. Member-centricity comes down to meeting members where they are so we can get them where they’re going – faster, safer and in a more holistically healthy way. Fintechs, big banks and data-ravenous tech giants are not the answer; but members seek them out when they can’t get what they need from their credit union.”
 
Other findings explored in the research paper include:
 

• 34 percent of respondents report looking outside their current financial relationships for products that meet their needs.
• 41 percent of respondents would consider leaving a credit union because their products do not meet their current needs.
• Whereas credit unions are No. 1 in passive member relationships, fintechs have achieved the top slot in active relationships.
• Credit unions are confronted with multiple pressure points, including earnings, member experience issues and expenses, making it difficult to commit to a digital ecosystem.
• Yet, if credit unions invest in lifestyle banking product offerings, like digital payments, they can gain significant market share of both members (+16 percent) and prospects (+13 percent).

 
Credit union leaders can access the full report, “Co-op CU Growth Outlook: Bridging Member Needs and Payments Strategies to Deepen Trust,” at coop.org.

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