Report: Payments Can Carve the Path for Credit Union Growth
Surveys find 86% of consumers would prefer to get financial services from an institution they use for most payments.
Payments can carve the path to growth for credit unions, according to a new white paper by the Filene Research Institute and CO-OP Financial Services.
The report is based on two nationally representative surveys of more than 2,500 consumers that included credit union members, bank customers, users of non-bank digital payments platforms, and consumers who use non-conventional financial products and services.
A top finding of the surveys was that payments are the primary engagement driver. While consumers often use products and services from a number of different financial institutions, 85% of respondents preferred to use as few financial institutions as possible, and 86% would prefer to obtain most of their financial services from the same institution that they use to make most of their payments.
According to the white paper, using direct deposit and automated bill pay through one’s financial institution appears to be the most significant drivers of retention, and correlated positively with consumer satisfaction with their current institution.
Active use of a credit card connected to consumers’ primary financial institution was also an important factor in loyalty and retention. While 13% of active credit card users would consider switching to another financial institution, that number doubled to 26% for inactive/non-users, according to the white paper.
However, one of the two surveys found that 85% of all respondents used at least one non-bank digital payments platform, and on average they used two to three.
“More frequent use of such platforms correlated with greater dissatisfaction with current financial institutions,” according to the white paper. “The qualities that respondents appreciated most about digital platforms were ease of use, followed by speed and whether or not the service was accepted where they need to use it.”
In addition to leveraging direct deposits and automated bill pay to deepen financial relationships with consumers, the white paper recommended credit unions design payments and financial wellness tools with low- to middle-income members in mind, make data security, protection and transparency central to the organization’s values and messages, automate financial tasks and portfolio management wherever and whenever possible, and invest carefully in financial technologies of the future.
The 15-page white paper is available on the CO-OP Financial Services site.