“I think mobile wallet is absolutely going to be essential,” Chuck Fagan, president/CEO of the St. Petersburg, Fla.-based CUSO PSCU, said.

The high level of trust consumers have in credit unions creates a big opportunity today given the exploding but disjointed nature of the mobile wallet sector right now, he said.

“That fragmentation of everybody kind of having a wallet – sooner or later, there's going to have to be some narrowing as to a specific wallet that sits well with credit unions,” he said.

Options are out there right now even for small credit unions, and it's better to be on offense than defense, he added.

2. Enable P2P capabilities

Justin Benson, CEO of payments software firm Spreedly, said credit unions should focus on peer-to-peer payments offerings as much if not more than mobile wallets. Mobile P2P is booming – people transferred more than $1 billion to each other in January alone, and that was just through one app: PayPal's P2P app Venmo, which is particularly popular with millennials. Big players such as JPMorgan Chase plan to launch their own offerings.

“That is the place where commerce is happening,” Benson said.

P2P offerings can give mobile wallet products a substantial boost, he added.

“That might be the wedge that gets people used to using your mobile wallet,” he said. “Once they're comfortable paying their friends, their rent or sharing dinner, it's a logical extension to start paying in store. And then we can monetize. That's how we kind of see the whole mobile wallet stage today.”

Monetization has been an issue, however. Many P2P apps are free to users, which Benson said has deterred many credit unions from offering the products. But that deterrence is putting credit unions and other banks on the sidelines, forcing them into the dangerous position of having to try to catch up later, he said.

3. Implement a rewards program

The Durbin Amendment's cap on debit interchange fees was a death knell for many debit rewards programs, but today they're still an effective competitive tactic for credit unions. Durbin applies only to financial institutions with more than $10 billion in assets, which has created a huge opportunity for credit unions – especially those that want to attract millennials.

According to a survey last year of 4,000 consumers by Accenture, millennials are much more likely than other age groups to switch financial service providers, and they're very likely to blame high fees and poor loyalty programs for it.

Now, 50% to 60% of financial institutions in the U.S. offer debit rewards programs, according to a study published in April 2015 by Mercator Advisory Group. And 53% of credit unions said they're likely to add a debit rewards program in the next 12 months, according to a survey conducted by CUNA Strategic Services and Buzz Points.

“Rewards continues to be one of those things that consumers are looking for when they align with a card,” Fagan said.

Cash-back rewards are especially appealing to younger members; older members like merchandise and travel rewards, he added.

4. Offer alerts tools

“Alerts have been statistically shown to reduce fraud dollars by about 40%,” Fagan said. “There are newer technologies coming out that we all need to stay on top of. Visa, I know, and MasterCard are working on programs that align your cell phone with the proximity of your card. We need to be on the front end of those.”

A dollar saved is a dollar that can go to supporting a credit union membership, he noted.

“No silver bullet I guess is the point,” he said. “You've got to have many different things to try and protect your assets. It's a job that'll never stop.”

5. Put a smooth remittance compliance program in place

Foreign exchange is one of the fastest growing markets in the world, and remittances are a major part of that market.

“Cross-border payments services have not kept pace with the shift to a global economy and digital age, creating compelling opportunities for banks and nonbanks alike,” according to a forecast by global consulting firm McKinsey. As the shift to cashless transactions continues – even accelerates – transaction-related revenues, both domestic and cross-border, should grow by approximately 7% annually, it said.

“If I were running a credit union myself, I would be investing in our technology so that we can constantly adapt to the regulation changes that are going to come in,” Mike Ward, CEO of international payments firm World First, said.

Being able to handle that compliance work more efficiently is key, and on the horizon is technology that can scan IDs with a smartphone and pre-load form fields, he added. It improves the member experience, he said.

“Their ability to not have to walk into a branch and sit down for half an hour and fill out forms is changing. There's quite a high-end user experience to that,” he said.

Rather than build their own systems, credit unions are increasingly relying on third-party providers – especially if there's a revenue-sharing agreement involved, Ward said.

“It's a win-win, and we're seeing a lot more people have a lot more appetite for that,” he said.

6. Dedicate at least one human to payments

Payments is the core of financial innovation, and about 35% of fintech firms are active in the payments arena, according to McKinsey & Co. More than one-third of the world's 37 fintech “unicorns” (startups valued at $1 billion or more) focus on payments, it added.

“If you think about the importance of interchange and interest income and all of that stuff that comes off the card programs, having somebody own it makes a lot of sense,” Fagan said. “So in many of these mid-sized, larger credit unions, they are now designating a position specific to payments.”

Fagan said he's seeing that at a number of credit unions, typically those with $500 million and more in assets, though smaller credit unions are also designating personnel who “own” payments and build strategies around it. It's work that ripples through the entire credit union, after all.

“If you sit on the sidelines too long, then you're not going to be able to catch up,” he said.