DES MOINES, Iowa—As credit unions prepare for 2017, what’s keeping them up at night?
According to one analyst, it’s payments, largely due to the new ways consumers can pay bills and new entrants into the payments space.
“The stickiest of sticky services, payments are the core of a consumer’s day-to-day relationship with his or her financial institution,” noted Benjamin Rempe, vice president of business development at TMG Financial Services. “Troubling for credit unions large and small is that consumers are finding it just as easy, and maybe even a little more compelling, to turn elsewhere for tools to pay their rent, buy their coffee and spend their paychecks.”
The relationship threat from new entrants to the payments ecosystem is not the only reason credit unions’ strategic planners will be focused on payments in 2017 and beyond, insisted Rempe.
“Don’t get me wrong: the Apples, Googles and Facebooks of the world have unquestionably changed the way consumers think about transacting,” he said. “Yet, there are other trends likely to keep payments on the radars of strategic planners. In fact, the NCUA calls them ‘key risks’ in its draft 2017-2021 strategic plan.”
Rempe outlined the key trends to watch:
Benjamin Rempe
Consolidation: “Among the reasons credit unions merge is to offer expanded services. No doubt ‘fintechy’ payments will be among those desired services pushing credit unions to maneuver in new and interesting ways,” Rempe said.
Aging Membership: “Anyone who has ever cared for an aging parent understands the pain points associated with accessing financial accounts to pay bills and manage personal budgets. As planners brainstorm ways to continue serving older members and their families, they should consider new, innovative ways to evolve payments products and services for this growing market,” Rempe said.
Population Diversity: “Just 38% of Spanish speaking families in the U.S. are fully banked,” noted Rempe. “As the Hispanic segment continues to expand and become more nuanced, credit unions have a great opportunity to grow with it. According to Coopera, payments products lend themselves well to a multicultural strategy.”
Generational Shift: “Millennials have different values when it comes to personal finance. Study after study continues to demonstrate their preference for doing as much on their own as they possibly can,” said Rempe. “Frictionless, invisible payments tap into this desire to move money without doing much more than clicking a button. Today, those super-simple payments are still made possible by credit and debit cards. So for credit unions, how to get their cards stored—and in the primary, default position—in these apps, widgets and sites will be critical.”