The Credit Union Innovation Success Study measures the state of innovativeness of the credit union sector based on member experience and identifies opportunities for these institutions to differentiate themselves from traditional bank competitors and fintechs.
Innovativeness cannot be ignored because it drives loyalty in the long run, and the lower-perceived innovation levels will begin to impact loyalty.
Over the past few years, we have witnessed a tidal wave of unprecedented disruption and change across the financial services sector, with credit unions caught squarely in the path. First, the COVID-19 pandemic created a generation that learned to work and bank from home using digital and mobile technology. Innovation flourished as service providers, including credit unions, rose to the challenge and adapted to new needs and habits with digital innovations. A heightened emphasis on generative artificial intelligence has shaken business models and produced angst among the public about the future of their jobs. On the horizon, other technology also looms, including robots, the metaverse, and blockchain. At the same time, financial institutions continue to introduce and refine transformative applications. Against this landscape, how will credit unions compete over the next decade?
Why Innovation Index Scores Matter
Innovation matters to credit unions because it has a demonstrated relationship to member loyalty, which translates into better financial performance resulting from higher member retention and share of wallet. Credit union members are generally more loyal than bank customers, but more innovative credit unions have higher member loyalty than credit unions that are perceived to be less innovative.
Credit unions that are perceived to be more innovative by their members enjoy higher loyalty, attractiveness, and satisfaction; greater member loyalty and attractiveness translates into more sales.
While credit unions excel in member loyalty, their business innovativeness and social innovativeness as viewed by members are only slightly above average compared to other financial institutions. Traditionally credit unions have been stigmatized with the perception of falling behind on innovation, this year, they rank higher than nearly all traditional bank brands captured in the survey. However, the fintech brands Chime, CashApp, SoFi and PayPal, as well as Navy Federal Credit Union, together rank above all established banks and the credit union sector.
Differentiation Through Innovation
Certain innovation features are critical because they are highly desirable to members and constitute table stakes, such as security and good rates. At the same time, another set of features presents a greater opportunity for differentiation because the are both desirable and drive perceptions of innovation, including empathy, accessibility, and responsiveness service. The key differentiators—areas that tap into both innovativeness and value include:
- Caring about members
- Offering fast and responsive service
- Being available when needed
Often times we think of innovative organizations having the latest and greatest technology or consistently launching new or improved products and services. Now consumers are craving empathy and excellent service and the bar has been set so low over the last few years that anyone one that excels in delivering these attributes has successfully differentiated from the pack of sameness and is considered an innovator. Credit unions looking to stand out and grow should focus on showing empathy and providing great service each and every day.
