By Erin Wynn, executive director of product management for Digital Banking, Candescent
Last year was marked by widespread financial anxieties for members, rate fluctuations, and mixed messages regarding AI, introducing new complexities to the financial services landscape. Combined with lingering questions around embedded payments, the upcoming Great Wealth Transfer and new competition from unlikely sources, this year is shaping up to be ripe with both challenges and opportunities. The following trends should be watched as credit unions march into a new year.
Members increasingly seek more accessible financial fitness tools.
Members across the country continue to struggle to understand the ongoing impacts of rate cuts, inflation and the scope of their buying power, creating a great need for more targeted financial literacy tools and guidance. This need is even more pronounced among younger generations, as millennials are faced with managing the finances of aging parents and trying to prepare to inherit new wealth. At the same time, Gen Z and Gen Alpha are increasingly turning to unverified sources, such as financial influencers on TikTok, for advice about money management and investing.
As a result, there is a significant opportunity for credit unions to provide support, helping members and businesses navigate an increasingly complex financial landscape. To effectively offer this support, however, credit unions must be able to share information, offers and resources within the context of a member’s digital journey. Being able to incorporate advice or tools into an existing task on the mobile app will be far more effective than sharing one-off pieces of knowledge in unrelated moments. Such efforts are particularly critical as credit unions face an aging member base, creating an urgent need to foster loyalty and trust with the next generation.
Payments take center stage
The payments landscape continues to become more intricate, with various options consistently emerging such as real-time payments and FedNow, Pay by Bank, embedded payments and BNPL offerings. However, just because a new method or innovation is introduced does not mean that a credit union should automatically embrace it from the beginning. Instead, an intentional strategy should be established according to the credit union’s unique member base, risk profile and overall approach to technology.
Payments are especially important for small businesses, who increasingly need flexible, quick and lower cost options to pay and get paid. Providing support and relevant tools for this segment presents a strong opportunity for credit unions looking to attract business members.
As new payments options are evaluated and implemented, robust fraud prevention measures should also remain a top priority. After all, facilitating secure transactions is essential to maintaining member trust and safeguarding against evolving threats.
It will be proven that not all AI is created equal.
Ongoing AI noise have left many seeking real, tangible use cases instead of hearing about vaporware or hypothetical applications. Simultaneously, members are starting to become more familiar with AI and are growing comfortable using it in many aspects of their lives. Such usage is making it clear that there are good AI experiences and poor ones – with stark contrast between the two.
This year, credit unions will distinguish substance from hype as AI graduates from buzzword to an actionable tool in their arsenal. In order to effectively do so, it will be critical to conduct comprehensive due diligence on potential partners and applications, ensure all data is clean and actionable, and solidify a comprehensive AI policy and plan institution-wide.
Branch strategy will shift to enable connected experiences.
Branches continue to be a point of debate, as credit unions seek more cost-effective ways to serve and engage with their communities. At the same time, members’ preference for digital-first interactions and self-service capabilities continue to trend upward.
In response, the look and feel of branches will shift. More credit unions will forgo the traditional branch network in favor of smaller footprints; these branches will offer specialized advisory services and community resources, and there will be a more widespread incorporation of smart, digital-first technologies. Perhaps most importantly, branches will increasingly be designed to bridge digital and physical touch points, enabling members to benefit from more connected experiences.
This year, credit unions must navigate challenges surrounding member financial anxieties, AI advancements, changing branch strategies and a host of payment innovations they are expected to keep pace with. Personalized offerings, contextual digital-first tools and resources, and the flexibility to quickly adapt have never been so important. Those that effectively adapt and compete will heed these trends, rethinking strategies and embracing modern technologies to strengthen member relationships and grow.