In A Decade of Digital Transformation in 12 Months, 46 C-suite executives spoke with PYMNTS for its Q2 eBook on what the world will look like as recovery rolls on and the next iteration of normal rolls out. In this excerpt, Todd Clark, president and CEO of CO-OP Financial Services, discusses why he expects more credit unions to place a higher value on payments as a core component of their unique product offerings post-pandemic.
Read the entire eBook here.
The pandemic further fragmented consumers’ relationships with a wide range of providers, not the least of which are credit unions. That’s why cementing primary financial relationship (PFR) status with more members will be a strategic area of focus for growth-minded financial institutions (FIs) in a post-pandemic environment.
Consumers have a lot of choice when it comes to meeting their financial needs. And then there are the handful of “non-choices” they make every day thanks to embedded payments and other contextual commerce methods. FinTechs have made it easy to transact safely on still-developing rails and to hold money in pseudo-deposit accounts. Users of these still-emerging tools are not bothered by their newness. In a recent survey commissioned by CO-OP Financial Services and conducted by EY, credit union members named PayPal as their most trusted financial partner.
While it won’t be a walk in the park, becoming a trusted, reliable hub for all of a consumer’s financial needs is possible, even for small FIs. To become that go-to provider, however, requires a significant mind shift for leaders. Credit unions must now consider the day-to-day lifestyle of a member. This differs from strategies of the past, in which FIs focused on key milestones in a person’s life, like having a baby.
Being there for the everyday moments puts an FI at top of mind during the exceptional moments. But it doesn’t just happen; it takes strategic intention. Credit unions must rethink their core products and services for the modern era to prove their value in a rapidly reshaping world. In physical environments changed by COVID-19, lifestyle moments like ordering groceries, buying a birthday gift or paying for gas are increasingly done at a distance.
Consumers’ money movement needs now hover around things like touchless, remote and digital transactions. The survey found that 90 percent of transaction activity is occurring over these channels. We don’t see this changing. Having instant access to P2P channels, contactless forms of payment and card controls is too convenient to remove from a person’s daily life. These are the sticky experiences credit unions can own with the right intention and strategy. What’s more, they are experiences that every purpose-driven FI should own. Credit unions and other community FIs have a strategic imperative to guide consumers to long-term financial wellness. FinTechs often detract from that mission, prioritizing convenience over the establishment of healthy financial habits.
Consumer behavior has changed, particularly when it comes to payments (which already represent 80 percent of a consumer’s interaction with their FIs, according to the EY survey). Just look at how payments performed during the pandemic. Despite the direct impact of COVID-19 lockdowns, many aspects of commerce resumed relatively uninterrupted in most regions almost as soon as lockdowns were lifted. Leading payments players rebounded very quickly; others had no need for a rebound, having just experienced the best years of their businesses.
For these reasons, we expect more credit unions to place a higher value on payments as a core component of their unique product offerings post-pandemic. Payments is the path to PFR, and the more that purpose-driven and people-centric FIs pursue that path, the faster consumers will recover from the economic stressors of the last 18 months.