NEW YORK—In a financial landscape where the largest credit unions have traditionally outpaced smaller players in growth and innovation, new data reveals a notable shift: Small credit unions are taking meaningful steps to level the playing field—through digital transformation.
According to the PYMNTS Intelligence/Velera report Credit Union Innovation Readiness: The Smallest Step It Up, smaller credit unions are no longer trailing far behind in innovation. In fact, they are accelerating their digital efforts at a rapid pace.
The share of small credit unions (under $500 million in assets) lagging in innovation has plummeted from 55% to just 15% in the span of a year—a 40-point drop that signals a clear pivot in strategy and ambition, the PYMNTS/Velera data show.
This change is significant. While large institutions are proceeding with a measured approach to innovation, small credit unions are seizing the moment, recognizing that digital transformation is critical to compete and remain relevant in the eyes of modern members, PYMNTS said.
Digital Payments: A Catalyst For Competitive Growth
One of the most notable areas of digital investment is in payments. Real-time payments have become a cornerstone of credit union innovation, with small institutions increasing their offerings by 71%—demonstrating that speed, convenience, and modern expectations are driving their strategies, the data show.
Across all asset sizes, real-time payments emerged as the most common addition to product portfolios between November 2023 and November 2024, the data show.
Even traditionally conservative institutions are embracing change. Same-day ACH payments, contactless debit and credit cards, and mobile payment capabilities are now widespread priorities, with small credit unions leading much of this change. For example, the smallest institutions increased contactless debit and credit card offerings by 61% and 58%, respectively, PYMNTS noted.
Competing Through Credit Offerings
To better serve their communities and attract new members, small credit unions are also expanding their credit product lines. While the largest institutions (above $5 billion) are adopting buy now, pay later solutions—a 50% increase year-over-year—smaller credit unions are carving out their niche by focusing on student loans, which rose by 28% in the same period.
The PYMNTS/Velera findings underscore that credit union success no longer hinges on institutional size, but rather on making timely, strategic moves that align technology goals with member expectations.
Innovation As An Equalizer
The takeaway is clear: innovation is no longer reserved for institutions with billions in assets.
“While the smallest credit unions are enhancing mobile payment and card app offerings, the largest institutions are using their scale to introduce advanced features such as artificial intelligence-powered chat/customer support (a 57% increase for those over $5 billion) and financial planning/budgeting tools (a 72% increase for the largest players),” PYMNTS said. “Meanwhile, open banking has emerged as the most-added feature for all but the largest credit unions, enabling new forms of data sharing and service integration.”