BOSTON–The loyalty of credit union members may prove “fickle” as the result of new technologies, according to a new study, which found more than a quarter of members saying they would move to another FI for product innovation.
The latest Credit Union Innovation playbook, a product of joint research between PYMNTS and PSCU, reveals the advantages technology advancements bring when it comes to grabbing consumer marketshare, according to the two companies.
“But the subhead of the report, we note, is ‘Product Development Slowdown Tests Member Loyalty,’ which indicates that the pressure is on for the FIs, and for credit unions (CUs) in particular,” PYMNTS said in releasing the study. “The fact remains that, like any other enterprise navigating the challenges of the current operating environment, there’s only so much money to go around. Inflation’s crimping margins mean that R&D budgets may not go as far as they once did — if those budgets are not being slashed in the first place.”
CU Execs Lament Lack of Resources
According to PYMNTS, nearly half of the CU executives it has surveyed said a lack of resources prevents them from bringing innovations to market, “which is visible in the data.” The data revealed that 19% of CUs classified themselves as “early launchers of new products” at the end of 2021, but only 13% gave themselves a similar label at the end of 2022.
“The data also shows that many FIs are turning to partnership models in a bid to fine tune their technologies and bring new products and services to markets,” the company said. “More than half of the CUs we surveyed are partnering with industry consultants and credit union service organizations (CUSOs) to roll out new innovations.”
Would Rather Switch Than Fight
As the chart below shows, 27% of CU members said they would switch where they keep their financial accounts to find product innovation, up from the 17% of CU members who were willing to do the same as recently as 2018, according to PYMNTS.
“We found that 64% of CU members want their primary FIs to offer more payment capabilities, demonstrating their strong influence,” PYMNTS said. “In addition, 79% of the FI account holders who would switch where they bank to obtain more innovative products would like to see more payment products and services from their current providers. The hints are all there. Now it’s just a matter of the credit unions finding the ways — and the means — of heeding those calls for innovation.”