Credit Unions Tech Up For Competition

With over 58 percent of customers saying they’re “extremely” satisfied with credit unions (CUs) and nearly six in 10 saying they would stick with their CU even if it didn’t have all the bells and whistles of bank tech that competitors do, the bond between members and CUs remain strong.

Considering that roughly 22 percent of CU members said they would switch to a more innovative CU, trust and technology are the things insulating CUs and members from some of the worst effects of the devastating “black swan” event known as COVID-19.

In the latest PYMNTS Credit Union Tracker® done in collaboration with PSCU, we delve into the technology gap that exists among many CUs (less than 5 percent of those in the U.S. currently offer mobile banking apps, for example) and how it’s effecting institutional survival odds now.

‘Innovate or Die’

“The credit union industry loses one company every four days,” the report states, “meaning they must innovate or die after failing to keep pace with the technological innovations driving the sector.” It’s happening, as more CUs embrace digital features and experiences that members are clamoring for. Navy Federal Credit Union’s use of VoiceID is a big step in call center authentication, for example, and a smooth form of friendly friction.

Emerging tech is the table too, “… including products powered by advanced data analytics, artificial intelligence (AI) and machine learning (ML),” the report states. “Such solutions could be key to preventing evolving fraud types, according to Jack Lynch, senior vice president and chief risk officer at credit union service organization (CUSO) PSCU. The group is focused on advancing its Linked Analysis tool, which uses AI to connected CUs with different platforms and provide better security for transactions between them, merchants and customers.”

And something will need to be done about that paucity of banking apps among U.S.-based CUs. “CUs that currently do not offer banking apps must work toward designing, launching and supporting such solutions quickly to adequately compete with both existing and emerging players within the financial services space,” the report states. “CUs are not only working to attract members from fellow credit unions but also from established banks, up- and-coming FinTechs and online-only banks that promise speed and convenience to consumers that clamor for mobile options.”

And Finally, Fraud

No one yet knows exactly what the fraud landscape looks like in the aftermath of the coronavirus pandemic, but new vectors are appearing, and big hacks are happening even as the world shuts itself indoors waiting out the bug. The CU-member trust bond will be tested by this.

“Exploring different ways to keep members safe — including through authentication, the use of biometrics and artificial intelligence technologies — will ensure consumers and their information are protected,” Sean McElroy, chief information security officer at Lumin Digital, told PYMNTS.

“While these tools and solutions are important for safety, credit unions also need to keep in mind the member experience when solidifying their authentication tactics. Credit unions should continuously educate their members, explaining why traditional means of authentication are no longer enough to protect account and personal information. The more members know about changes in security and expectations for their day-to-day account activities and how their credit union is working to keep their information protected, the more seamless the experience will be for both parties,” McElroy said.