Credit Union Cooperation Is Our Superpower to Speed Up and Meet Members in this Moment

 By Samantha Paxson

Credit union executives are in an interesting period of leadership – filled with what may seem like equal parts daunting challenges and loads of potential for our collective future. Not only are we actively tackling important delivery shifts needed to meet member needs in this rapidly changing environment, but we are also doing it in a time where traditional revenue sources have performed less consistently – putting constraints on where and how to invest in capital-intensive, multi-year projects to meet this moment. It leaves us with some tough brain food to cook-up into lasting solutions.

 Income is under pressure, membership growth is uneven and myriad new market entrants are fragmenting empowered consumers attracted to new use cases and new providers, creating decentralized financial relationships ripe for guidance on their overall financial performance and well-being. As subscription-based, embedded financial services move members further away from knowing if they are truly O.K. financially, we look at our own existing income streams evaluating our long-term growth and relevance.

Serving the member through digital interaction, active engagement and guiding their overall financial wellbeing is what they want and helps boost credit union loyalty and share. The problem? There’s a surprising amount of technology and integration baked into delivering those words! Getting creative about how we can continuously design ourselves more closely around daily member behavior will lead to economic participation, service, mission, differentiation and growth. It’s a mix of our collaboration, partnership and ingenuity that will get us there!

The Modern Member is a Digital Nomad, But So are We!

Our “digitally nomadic” members are comfortably empowered to patch together financial solutions from a variety of providers (on average, five) to meet their own, unique lifestyle needs. We’re not far off from where they are, finding ways to do the same with our operational delivery needs.

 Fintechs are capitalizing on this trend with digital payments and engagement, slowly disintermediating the member from the credit union. According to Co-op CU Growth Outlook research, conducted in partnership with EY and Filene, fintechs are harnessing payment products to accelerate growth and take over the marketplace, with PayPal and Chime experiencing 5x and 18x PFR growth respectively. 

Yet, credit unions have a built-in advantage over other financial services providers. It turns out we are just as comfortable in nomadic partnering to build a digital ecosystem in service to members. Building it ourselves is slow, buying is expensive, but partnering makes the work much easier – especially when we focus on credit union partners who understand our collaborative model, can integrate with our environments and who are committed to the success of credit unions and to the financial wellness of their members.

We’re in This Together: Rethinking Partnership and Innovation

 Examples of providers and credit unions who are rethinking everything to pool resources and meet this moment abound. MSU Federal Credit Union started their own VC firm, Reseda Group, investing in 15 new firms in one year to feed the movement. Coastal Federal Credit Union helped open digital banking upstart Constellation Partners and delivered one of the largest credit union capital raises in CUSO history to connect APIs with credit union environments. CURQL helped credit unions start our own venture capital fund and invest in new use cases for the movement. Existing CUSOs are aggressively innovating in payments and digital delivery to help credit unions drive engagement and usage across their interest and non-interest ecosystem. At the same time, new CUSOs like LenderClose, Upstart and Zest AI are seeking to remove friction across our environments and fight for member engagement and loyalty.

The full member experience is not just one product line. It’s member-centric digital technology – integrating and aggregating members’ financial lives – that will lift our financial model and mission.

Three Keys to Driving Member-centricity in a Partnering for a Digital Future 

1. Know your members like never before: Credit unions should pursue a multi-dimensional strategy that considers traditional, demographic-based market segmentation (e.g., gender, age, wealth tier, marital status, geography), coupled with a needs-based segmentation that incorporates life events, lifestyles and a mix of solutions that address both. Connect member data behaviors to serve as a member-centric investment roadmap.

2. Be their choice for every moment: Consumers have divided their Primary Financial Relationships between a primary savings institution (“passive”) and a primary transactional interface (“active”). Credit unions do well in passive relationships (ranked #1 for loans, savings and checking in Co-op’s 2021 CU PaymentsOutlook survey), but fintechs have achieved the top slot in active relationships (and credit unions fall to #3).

According to research from Accenture, 80% of people’s interactions with their financial institution are through payments. Payment products like contactless, P2P and mobile wallets drive more engagement, and form the heart of these active, transactional primary financial relationships.

3. Embrace the power of connection: Fintechs have risen to relationship primacy through the deployment of integrated digital technology ecosystems and solutions. The pathway to primacy for credit unions will require accelerating their investment in digital capabilities and bridging the gap between their digital and non-digital channels.

The resources to create an entire ecosystem of digital payments and interaction exists within our movement. By partnering within our industry, you can work with fintechs that offer more than a web of discrete solutions – they are there to help you connect all the dots as you fully embrace your digital evolution. We can do it and we are in it together!

Samantha Paxson is Chief Experience Officer for Co-op Solutions (www.coop.org), a provider of payments and financial technology for credit unions. You can connect with Samantha at https://www.linkedin.com/in/samanthapaxson/.