How a Modern Payments Experience Can Help Credit Unions Gain and Retain Younger Members

At the same conference, I had the opportunity to speak with several credit union executives, and the problem resonated with the entire group. One reason credit unions might be struggling to register with younger consumers is their limited adoption of digital payments, either for collections or as a facility for their members.

Many credit unions, even some of the largest ones, do not offer digital payment types that have become the norm for younger generations, like Google Pay, Apple Pay, Zelle or Venmo.

As I spoke with credit union leaders and other experts, we all agreed that part of the reason for this is structural: the decision-making boards at credit unions have a lot on their agenda, and they also have various competing priorities for resources and budget. But navigating a way through these practicalities to be able to offer members — young or otherwise — the ways they want to pay (and the ways they are already used to paying for everything else) will be vital to gaining and retaining new customers.

And a quick look at recent consumer research shows us why.

ACI’s annual ACI Speedpay Pulse study is the largest, longest-running survey of consumer billing, payment and communication preferences in the industry.

The most recent results show that 47% of consumers want to pay their bills with alternative payment methods, such as PayPal, Apple Pay and Google Pay. For Gen Z and Millennials, that figure rises to 59% and 61%, respectively, but even a healthy 24% of Boomers would pay with a mobile wallet.

We see the risks of not fully catering to these expectations in some further research from PYMNTS, which found that 64% of credit union members were interested in seeing their credit union add more payment capabilities, and 27% stated that they would switch providers for more innovative solutions.

So how should credit unions respond?

Another credit union VP I met at the conference was proud of the way his organization’s focused selection of services had led to great customer satisfaction scores. But he was equally honest about the fact that limited payment options were a weak point when it came to collections.

It is common for credit unions to finally get a hold of overdue customers on the phone only to ask them to go to a branch to make a payment. The conversion rate of this approach is quickly approaching zero as the world goes digital. It would be infinitely better to be able to take the customers’ repayments on the phone by debit card or any other payment method they had on hand.

This scenario throws into relief the business case for investing in new payment channels (and absorbing the cost of taking those in-the-moment payments, which might cost a few dollars per transaction), because the cost of missing repayments altogether is much higher.

This also underscores the potential for credit unions to use collections as the best place to begin introducing new payment options — adding debit card, Apple Pay and Google Pay, for example — and experimenting with self-service channels for overdue members. These use cases can have a near-immediate, meaningful business impact while also serving as an on-ramp to wider payments modernization.

The right payments partner for credit unions looking to undertake this journey will be able to provide more than robust and secure technology solutions. They will also offer the consultative support services and expertise needed to ensure that the project is delivered in a way that maximizes efficiency and tightly manages costs and resources.

As an example, ACI Speedpay offers a simple and manageable way to accept the most used electronic payment methods, including ACH, debit, credit cards, Venmo, Apple Pay and Google Pay. It allows overdue customers to self-serve to bring themselves up to date, and it offers a pathway to better fraud defenses through ACI Fraud Management, featuring ACI’s incremental learning, which adjusts to new behaviors and outperforms traditional models by more than 10%.

Today, alternative payment methods don’t just enable banks and credit unions to provide customers with a variety of options and a frictionless payments experience — they have also become essential for businesses looking to compete in the evolving digital economy.

Connect with me on Linkedin for regular updates on payment innovation opportunities for lenders, and head here to learn more about ACI Speedpay.