Innovative digital banking technologies, including peer-to-peer (P2P) payments, mobile wallets, and instant cards, provide UCs with important ways to attract and retain members, especially younger consumers. A recent PYMNTS study found that almost a quarter of credit union (CU) members would consider switching financial institutions (FIs) to access more innovative products such as P2P payments and mobile deposits. The share of these “potential changers” reached 36% among consumers under the age of 45.

The opportunity to gain and retain members by investing in innovation is one that UCs cannot afford to miss. This month, PYMNTS examines the factors determining the primacy of FIs for consumers and how UCs can implement technology to prevent wallet leaks and attract new members.

Unmet demand for innovative services

Consumers have demonstrated a high rate of adoption of P2P payment during the pandemic, with 79% of respondents to a 2021 survey reporting having used a P2P service during the fourth quarter of 2020. Despite this interest, 47% of consumers said that they did not know if their FIs offered these services. .

Data from PYMNTS also suggests that credit unions may be overlooking opportunities for P2P payment innovation. While UC investment in P2P payments nearly doubled year-on-year in 2021, only 50% invested in P2P payment services – albeit up significantly from 27% in 2020. By comparison, 74% of credit unions invested in mobile banking in 2021, down from 70% in 2020. At the same time, however, CUs investing specifically in mobile wallets fell from 86% in 2020 to 64% in 2021, giving a somewhat contradictory picture of CU innovation priorities in mobile banking over the period.

Digital innovations such as these represent a significant opportunity for UCs, as they are among the key determinants of where consumers choose to bank. P2P payments, mobile remote deposit capture, cashless card withdrawal, digital wallets and instant card issuance to digital wallets are the areas where CU investment and product promotion can have the greatest impact.

PYMNTS research found that 23% of UC members would consider switching their main FIs to innovative digital banking products. Of these, 38% of CU members would prefer access to mobile check deposits, 38% for digital cards that can be issued directly to their digital wallets, 35% for P2P payments and 35% for cash withdrawals without card.

Even higher proportions of younger consumers would opt for such innovations, including 31% of Gen Z, 34% of Millennials, and 36% of Gateway Millennials. Therefore, digital innovation in these areas could provide opportunities for credit unions to limit portfolio leakage and attract new members in desirable demographic groups for the long-term viability of CUs.

Fifty-five percent of UC members already turn to a secondary FI for at least one financial product or service, but 45% of members would prefer all their financial products to be provided by a single FI. This strengthens the opportunity for credit unions to stem portfolio leakage through innovation.

By implementing technologies and services that cater to a wider range of consumer preferences, UCs can make themselves more competitive in the eyes of existing and potential members.