Credit Unions Use Digital Tools to Keep Members From ‘Moonlighting’ With Rivals

April 14, 2022
Credit Unions Use Digital Tools to Keep Members From ‘Moonlighting’ With Rivals
In a PYMNTS interview, PSCU Chief Growth Officer Brian Scott discussed the challenges CUs face in an environment where PYMNTS research finds nearly one-quarter of consumers willing to switch financial institutions if their digital desires aren’t being met.

Moonlighting always meant having a second job on the side. In the age of connected economy payments, it’s taking on a new meaning — one that credit unions (CUs) should know about.

In a PYMNTS interview, PSCU Chief Growth Officer Brian Scott discussed the challenges CUs face in an environment where PYMNTS research finds nearly one-quarter of consumers willing to switch financial institutions if their digital desires aren’t being met.

Additionally, 45% want all their finances consolidated into a single digital-first financial entity.

Those stats derive from the latest Credit Union Tracker, a PYMNTS and PSCU collaboration, and Scott sees them as indicative of a wider trend.

Calling self-service options more important now than ever, Scott said the findings tell him that, “Self-service is super critical. What are those areas where members really want self-service? Lending is a critical component of that. Nobody wanted to go into a branch and sign a bunch of paperwork for a loan anyway.

“Now that we’ve had experiences that say I don’t have to do this in person, I don’t have to do things on paper, it’s now not about the pandemic,” he said. “It’s about just [wanting] it easier.”

In pursuit of “easier” — and looking for financial brands they can trust in a time of proliferating options — Scott said, “I think people are switching, moonlighting at least, to other providers for easier financial services.”

“That’s where you see things like Chime, Klarna, Square, and some of those FinTech companies really gaining market share. They may not be taking the entire financial relationship, but they’re taking pieces of it.”

It’s a trend that may cause some sleepless nights as the CU sector catches up to the digital shift.

Leveraging Digital Options

With members testing out disintermediated FinTech offerings at a level that Scott believes to be higher than surveys reveal, credit unions must keep the innovation pedal to the metal. And because they often don’t have the resources to develop tech of their own, they turn to credit union service organizations (CUSOs) like PSCU for the tools — and guidance about how to deploy them.

It’s complicated. “Part of it is about options,” he said.

“I’ll use myself as an example. I love using Apple Pay and some of the virtual payment wallets, but I don’t always. It becomes about what’s easiest at that point in time.”

Invoking the late, great TV pitchman Ron Popeil — purportedly originator of the expression “set it and forget it” — Scott said, “People set it and forget it, like Ron Popeil.”

He added that “whether it’s Apple Pay or the Starbucks app, staying at the top of that wallet is critical. Monitoring it [and] tracking it are incredibly critical to credit union success.”

Another piece of tech CU members are moonlighting with is P2P transfers. The Credit Union Tracker notes that 79% of members are using P2P transfers, and it’s something that CUs can hitch their wagon to in a marketing sense at virtually no cost to the organization.

He said, “P2P is such an interesting space. We’ve talked about the death of cash and checks forever, and P2P is one of the last places where cash and checks are still used.”

“Things like Square Cash and Venmo are great free options for a credit union to be able to play in that space, to provide members a service without actually having to incur the expense around offering a P2P solution. Any credit union could just market on their website, ‘If you want to pay other people use Venmo, use Square,’ use these options that are available.”

The Year of Changing Member Expectations

Long renowned for expertise in member retention and satisfaction, credit unions weren’t at the vanguard of digital transformation when the pandemic hit, and that hurt some. But it’s impossible to simply offer or integrate trust — the intangible feeling members have toward credit unions that harks back to their formation as specialized financial institutions serving specific populations, from civil servants to union workers and others.

Another riveting statistic cited in the Credit Union Tracker is that 91% of those surveyed see CUs as sound sources of financial advice and expert guidance on related matters.

Unquestionably a great finding for CUs, holding onto that high level of trust as dazzling new options beckon regularly is a major challenge, and becoming harder over time for CUs.

Part of the reason, Scott said, is “because it’s so easy to moonlight, and it’s easy for somebody else to gain trust.”

“Maintaining that trust means their experience has to be easy, it has to work every time … they have to feel their data is secure. A lot of pieces go into it and it’s harder than ever but more essential than ever to maintain that trust. Holding onto that 91% is so critical.”

Sounding a cautionary note, Scott added that members have a new set of demands from their credit unions after the pandemic digital shift, saying, “I’ll call [2022] the year of changing member expectations.”

Modernizing isn’t easy in any legacy business, especially finance, which is why credit unions looking to grow are turning to partnerships that will help them meet members’ changing demands.

“No credit union can do this alone,” he said. “That’s where it’s important to be able to make those investments, find partners that are adaptable … and can integrate with others. All these solutions are coming together. Finding those that work well with others — play well in the sandbox together, so to speak — is really critical.”