4 Unexpected Credit Cardholder Insights

As they exited the pandemic and entered a new economic climate characterized by fast-rising rates and even faster-rising inflation, credit union members were looking for reassurance. Within the banked environment, they began to find this reassurance in the form of convenient financial solutions – the kind that balance immediate needs with long-term financial success.

To dig into the ramifications of emerging consumer priorities, Co-op Solutions engaged Ernst & Young (EY) and Mastercard in a study of the payments behaviors and perceptions of both credit union members and non-members. The findings uncovered an incredible opportunity for credit unions: By giving members the convenient payments tools they want, credit unions provide members the reassurance they need.

What Matters to Credit Cardholders

Among the findings of the Co-op, EY and Mastercard research were four insightful peeks into the credit cardholder mindset as compared to that of the debit cardholder mindset. Primary credit users:

• Are budgeters and more attentive to individual expenses;
• Experience greater pain when they spend money;
• Are more focused on future well-being while debit users have a present orientation; and
• Tend to be promotion oriented.

With a more vigilant orientation around day-to-day spending, those who use credit as their primary payments vehicle represent the ideal target for a credit union’s member-centric promotions and other growth strategies. They are highly attuned to their daily financial needs while also keenly aware of how their everyday moves influence future financial well-being.

The World Around Credit Cardholders

Meaningful member-centricity considers more than behaviors and perceptions. It also considers the world around a particular set of individuals. The Co-op/EY/Mastercard research found that today’s cardholders are living in a post-pandemic environment that is noisy, fast-paced, digital and, in many ways, high-stakes.

Noisy: Members’ financial relationships are increasingly fragmented. Credit union members have on average three times the number of financial relationships as non-credit union members. And when fintechs are in that mix, they gobble up loyalty. A quarter of all respondents told Co-op/EY/Mastercard researchers they trust PayPal the most among their providers.

Fast-paced: Convenience tops cost for many consumers today. While price remains a top consideration, both members and non-members show a preference for financial products that offer additional convenience features along with rates that are on par with the market.

Digital: Nearly 90% (88%) of those surveyed said they are digitally engaged with their financial institutions. More than 70% (73%) said they interact mainly online or through mobile channels. On the micro transactions front, card-not-present payments are primary. Making payments digitally has emerged as the top driver of member engagement. Why is daily engagement important? Forty-five percent of consumers surveyed cited it as the top reason for maintaining a primary relationship with their financial services provider.

High-stakes: Particularly in the minds of credit cardholders, there is a direct correlation between daily money management and long-term spending and savings. Seven in 10 (69%) primary credit users say they keep precise track of their financial activities. This is among the reasons credit unions must not lose sight of the thousands of micro interactions in a member’s financial life. Being reliable in those moments builds trust, inspires long-term loyalty and bolsters primary financial relationships.

A New Model of Member-Centricity

The opportunity for growth – of credit cardholders and beyond – can be broken down into a few pragmatic, people-centered strategies for credit unions. Call it “a new model of member centricity.” Following the model will enable credit unions to regain the trust of their most valuable members while also achieving long-term growth.

The model begins with a reframing, encouraging credit unions to rethink their reliance on life-stage services, such as auto, home and student loans, and instead focus on meeting members’ everyday, lifestyle financial needs.

As part of the new model of member centricity, credit unions should address three areas of concentration:

1. Engage every day: Credit unions can acquire and deepen member relationships by becoming more deeply embedded into transactional value streams. Being alongside members for moment-by-moment decisions draws a connection between the present and the future. As just one example, nearly 80% of primary credit users agree with the statement, “I consider how things might be in the future and try to influence those things with my daily spending behavior.”

2. Give good guidance: By helping members manage their daily financial needs, credit unions are well positioned to support their long-term financial wellness goals. And those goals are top-of-mind for all consumers. Eighty-two percent of credit union members and 79% of non-members agreed with the statement, “I am worried about inflation.”

3. Earn member balance sheet: Respondents told researchers they are basing their decisions on adding new financial products on trust (42%) and benefits (36%). Trust means something different today than it has in the past. Reliability and convenience now trump tenure in the minds of consumers. Credit unions can earn more of their members’ trust by offering solutions that combine competitive rates and pricing with outstanding convenience – all designed around personalized member needs.

Mounting evidence suggests micro transactions, the great majority of which occur in the payments channel, are the gateway to long-term relationship value. Indeed, they are the best route to institutional growth, not to mention the fulfillment of the movement’s promise to help bring about greater financial wellness. Credit unions have a clear advantage in the current financial climate, with their competitive rates allowing them to grow their payments portfolios significantly. To build on this momentum, credit unions can leverage differentiated services and offerings to capture an even greater share of the market.

Samantha Paxson Chief Experience Officer Co-op Solutions Rancho Cucamonga, Calif.