Chuck Fagan, president and CEO of PSCU, believes that payments innovation is key for credit unions that aim to meet their members’ needs long term. In this excerpt from The Connected Economy’s Power Source – CEO Edition, Fagan shares the new requirements for digital banking providers to build strong, trusted relationships with their members.
Prioritizing payments innovation is a critical area of focus for credit unions as they look to serve the future needs of their members. Payment solutions and offerings are key drivers of the credit union-member relationship, encouraging increased trust and ultimately leading members to continue banking with their credit union in the long term. Conversely, if proper attention is not given to innovation, it can push members away.
According to the most recent PYMNTS/PSCU Credit Union Innovation Study from February 2021, 88 percent of credit union members are “very” or “extremely” satisfied with their credit unions. At the same time, members want their financial institutions to innovate, and 22 percent of all members reported they would consider leaving their credit unions for competing FIs if their credit unions do not innovate.
Likewise, it is no longer enough for credit unions to simply provide the basic set of banking requirements — members’ primary interest no longer lies in legacy core banking systems, share accounts or loans, but rather in innovative payment solutions and offerings that are personalized, simple and secure.
Digital banking is the new core and must be integrated across all products, services and offerings. Members expect to access their accounts via multiple channels, and self-service tools are more important than ever for members seeking to manage their accounts — as well as for credit union employees to provide an optimal member experience. Members want to choose how they transact, making it critical for credit unions to provide the newest payment innovations and technologies like contactless cards. Buy now, pay later installment solutions can also provide members with the freedom to budget as needed and have more control over their finances – which is important, given the increased demand for this convenient payment option that has been further accelerated by COVID-19.
In addition, strong fraud management is critical as members shift to conducting more card-not-present (CNP) transactions and fraudsters continue to innovate and find new avenues of attack. With key functionality like digital issuance of plastics, real-time fraud text alerts, enhanced loyalty solutions that allow redemption at the point of sale, and more intelligent fraud tools that decline fewer transactions, credit union credit cards have the features to successfully compete with any of the large bank issuers when it comes to creating exceptional payment experiences.
Regardless of the enhancements in which a credit union chooses to invest, payment innovations must provide seamless integration with all other offerings in order to deliver a unified payments experience. We have seen the accelerated adoption of all things digital as the pandemic has progressed; these shifts are very real and are here to stay. No matter where credit unions are on their digital transformation journeys, it’s clear that payment innovations are the future of the credit union industry when it comes to meeting the evolving needs and expectations of members.