Credit Unions Convert 64% of Members to Primary Accounts

Once perceived as technologically trailing larger financial institutions, credit unions are embracing digital innovation, positioning themselves for growth and engagement with a digitally native consumer base, according to a new report.

The “Credit Union Advantage: Seven Trends Driving Future Growth,” a collaboration between PYMNTS Intelligence and Velera, paints a picture of a sector adapting to the demands of members and small businesses. By investing in digital capabilities and focusing on areas like self-service and mobile engagement, credit unions are fortifying their existing member relationships and laying the groundwork to attract the coveted younger generation.

The report surveys credit union executives, consumers, and small to mid-sized businesses, revealing seven trends that underscore the sector’s dynamism. Credit unions, including smaller institutions, are demonstrating a shift toward innovation, a departure from previous perceptions.

This surge in innovation is coupled with an ability to cultivate primary account relationships, indicating a strong foundation upon which to build enhanced digital experiences. Furthermore, investments in technology and member experience are proving to be directly correlated with stronger member retention, highlighting the tangible benefits of this digital transformation.

Key data points underscore the digital focus among credit unions:

• Fifty-five percent of credit unions are planning to innovate self-service digital solutions like mobile banking and digital onboarding within the next three years, recognizing the importance of meeting member expectations for digital interactions.
• Larger credit unions are leveraging partnerships to accelerate their innovation agendas. Those with over $5 billion in assets are, on average, developing 8.4 products and features either fully or partially through collaborations with third parties, indicating a willingness to embrace external expertise to enhance their digital offerings.
• Credit unions are keenly aware of the need to cater to younger demographics, with 21% of Generation Z consumers identifying mobile credit card management apps as a priority innovation, signaling a clear demand for sophisticated mobile-driven features.

Beyond these digital-centric trends, the report highlights other compelling advantages for credit unions. Notably, they boast a 64% conversion rate of memberships to primary accounts among consumers, demonstrating a deep level of trust and engagement.

Moreover, microbusinesses show a greater inclination to use credit unions as their primary financial institution, with 12% reporting them as their main FI.

Perhaps most significantly, the data reveals that top-performing credit unions, those investing an average of 5.6% of their assets in innovation, experience a lower member churn rate of 1.7%, compared to bottom performers with a 3.1% investment and a 3.3% churn rate. These figures underscore the wisdom of investment in innovation and member experience as drivers of long-term success for credit unions.

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