NEW YORK—Are credit unions at a crossroads when it comes to buy now, pay later?
A new study from PYMNTS Intelligence in partnership with Velera suggests CUs need to make some quick, and important decisions regarding the fast-growing service.
Eighty-one percent of CU members said innovation is a deciding factor when they pick a financial services provider.
“Perhaps more importantly: CU members also said they expect their institutions to keep pace with industry trends when it comes to enhancing products and services,” PYMNTS said.
So, how are CUs doing in providing their members with innovative services? PYMNTS suggested a look into BNPL provides answers.
“Currently, 99% of CUs surveyed offer traditional auto loans and personal loans, while only 1.5% currently offer BNPL. And while 31% of CUs told us they plan to introduce BNPL in the next three years and 18% have similar plans for six years, nearly half of CUs have no plans whatsoever to offer BNPL plans to their members,” PYMNTS said.
While 25% of credit union members are seeking innovation in personal loans and 21% are looking for advancements in auto loans over the next three years, 17% also express interest in buy now, pay later innovations—nearly double the 9% of non-CU members who share that interest. PYMNTS explained
“This disconnect — that CU members are nearly twice as likely as non-CU members to want their CU to offer BNPL innovations while almost half of CUs have no plans to do so — suggests many CUs are running the risk of losing members. On the other hand, those CUs that do commit to offering BNPL products stand to gain by welcoming new members who seek innovation,” PYMNTS said.
More Study Data
The report also shows credit unions are continuing to attract new members, with about one in five current members reporting to PYMNTS Intelligence that they switched their primary financial institution within the past year.
Based on a survey of over 4,500 U.S. consumers, the study reveals that 73% of new credit union members joined after leaving a different type of financial institution, while 27% switched from another credit union.
“Why the change? CU members identified multiple reasons. Eight percent said they switched because their previous FI lacked sufficient online and mobile banking features, while 12% said they switched because their previous FI did not have nearby branches,” PYMNTS said.
And while mobile banking features and nearby branches can attract new members, PYMNTS Intelligence shows such factors may not be enough to keep them, the company said.