Consumer Satisfaction Falls for CUs, Rises for Online Banks: Report

Credit unions may be losing ground to online banks when it comes to consumer satisfaction, according to a new report from PYMTS.com and PSCU.

The February 2022 report, “Credit Union Innovation: Responding to Member Demands for Digital Financial Services,” revealed credit union member satisfaction fell from 88.4% in 2020 to 86.3% in 2021, while consumer satisfaction with their digital/online bank grew from 82.8% to 84.8% during the same time period.

Fifty-one fintechs, 101 credit unions and 4,832 consumers were surveyed in November 2021 for the report, which was a collaboration between PYMTS and the St. Petersburg, Fla.-based payments CUSO PSCU. Credit union member satisfaction has fallen by 6% since 2018, when 91.7% were satisfied, the organizations found.

What’s behind the shifting satisfaction levels? When asked to choose the most important reason why they are satisfied with their credit union, fewer members chose the following reasons in 2021 than in the year prior: Online banking capabilities that are convenient or easy to use (down from 8.7% in 2020 to 6.3% in 2021), the credit union being “easy to deal with” (10.1% to 7.5%), not having to visit a physical branch to complete most transactions (7.1% to 6.6%), transactions being completed in a timely manner (4.5% to 4.3%), mobile banking capabilities that are convenient or easy to use (6.4% to 5%), that the credit union regularly innovates (1.9% to 0.9%) and that the bill pay service is easy to use (2.1% to 2%). These results represented potential areas of improvement for credit unions, according to the report.

However, trust is the top reason why members are satisfied with their credit union, and the percentage of survey respondents who said they’re satisfied with their credit union due to trust increased from 28.7% in 2018, to 31.8% in 2020 and 38.8% in 2021, the report said. Coming in second was cheaper fees – 21% of members said they were satisfied with their credit union for this reason, an uptick from 19.6% in 2019 and 20.4% in 2020. Data security was also a growing member satisfaction factor, with 6.3% naming it as the top reason for their satisfaction in 2021, compared to 6.1% in 2020 and 3.3% in 2019.

“The trust credit union members place in these financial institutions has helped them hold their share of the retail financial services market,” the report stated. “However, the rise of popular digital financial services and the intense competitive pressure from neobanks means credit unions are under growing pressure to roll out new services to retain members’ loyalty.”

The report also revealed the following:

• Four types of services were the leading reasons why credit union members would decide to switch to a different financial institution if their credit union did not offer them: Remote deposit capture (38%), digital cards that can be issued directly to their digital wallet (38%), P2P payments (35%), digital wallets (36%) and cardless cash withdrawals (35%). “Each of these five areas of innovation shows the vulnerabilities that pose the greatest risk for credit unions to lose members, but they also provide a roadmap for how credit unions can strengthen relationships with their members through innovation efforts of their own,” according to the report.
• When asked which product/service innovation areas they consider most when deciding to switch financial institutions, responses varied by age group. Twenty-four percent of Gen Zers, 27% of millennials, 29% of bridge millennials (those sandwiched between millennials and Gen Xers) and 25% of Gen Xers named mobile banking, while only 13% of baby boomers did. Account fraud protection was named by 45.4% of boomers, 30.9% of Gen Xers, 28.5% of bridge millennials, 24.7% of millennials and 27.6% of Gen Zers. However, there was more of a consensus among age groups when it comes to loyalty or rewards offerings – 26.2% of Gen Zers, 33.6% of millennials, 32.6% of bridge millennials, 34.8% of Gen Xers and 37.5% of boomers chose this as an area of innovation they consider when deciding to switch institutions.
• Assigning credit unions one of four labels identifying their level of digital innovation, the report found 74% of “early launchers,” 81% of “quick followers,” 72% of “followers” and 65% of “laggards” are innovating in mobile banking. Seventy-four percent of early launchers, 53% of quick followers, 72% of followers and 65% of laggards are innovating with mobile wallets. And, early launchers are 17% more likely than other credit unions to innovate with buy now, pay later (BNPL) options, 20% more likely to innovate with personal loans and 54% more likely to innovate with planning and budgeting tools, the report said.