Big Moves by Small Credit Unions Reshape Member Innovation Landscape

Financial innovation is often seen as the domain of billion-dollar institutions, but the latest data reveals a surprising shakeup: The smallest credit unions are catching up — and in some areas, even outpacing — their larger counterparts. It turns out that small does not mean slow when it comes to digital transformation. From slashing the number of innovation laggards to making bold product and feature investments, these once-cautious players are quickly closing the innovation gap.

CUs of all asset sizes are shifting their strategies, allocating resources and responding to rapidly evolving member needs. Real-time payments and contactless cards are just the start. While smaller CUs are diving into mobile wallets and credit apps to meet consumers on their phones, the largest institutions are leaning heavily into AI-powered customer service and budgeting tools. But despite these different approaches, the unifying message is clear: Innovation is no longer optional, and size alone won’t determine who leads.

In “Credit Union Innovation Readiness Index: The Smallest Step It Up,” we surveyed 500 CU executives between October and November 2024 to understand how institutions of varying sizes approach innovation. This report uncovers which financial products and features are in demand, how adoption trends vary by asset tier and what CUs are doing today to stay relevant with tomorrow’s members.

Inside “Credit Union Innovation Readiness Index: The Smallest Credit Unions Step It Up”

• Discover how the smallest CUs cut their share of innovation laggards from more than 50% to just 15% in one year.
• Explore which digital products — from real-time payments to youth-focused debit cards — CUs are adding fastest, and why.
• Analyze how innovation priorities differ by institution size and what those differences reveal about each group’s strategic focus.
• Uncover why the largest CUs are pulling back from early adoption and what that means for long-term competition.

The insights from this playbook provide more than a snapshot of the current innovation landscape — they point to the beginning of a broader realignment in the credit union sector. With agility, strategic investment and a clearer focus on member needs, even the smallest institutions can lead in the digital age. For CUs looking to compete, adapt or simply understand the pace of change, this report offers the clarity and urgency needed to move forward.

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“Credit Union Innovation Readiness Index: The Smallest Step It Up,” a PYMNTS Intelligence and Velera collaboration, is based on a survey of 500 CU executives conducted from Oct. 11 to Nov. 22, 2024. The playbook examines CUs’ current product and feature offerings and their plans for future innovation, delving into what these financial institutions are doing to retain current members and attract new ones.

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