New research shows golden opportunity to connect members' short-term needs with long-term financial wellness

by
Samantha Paxson,
Chief Experience Officer
Co-op Solutions

Today’s members are looking for convenient financial solutions that can help them navigate a difficult economic environment, manage their day-to-day needs and achieve their long-term goals. But they’re not confident about which financial institutions can best meet those expectations. They're also unclear on whether credit unions can deliver the digital services they want.

Trust in financial services used to be defined by safety and security, but today it is increasingly measured on capabilities. As a result, financial institutions are now competing intensely for the industry’s greatest resource: the attention span of the consumer. 

For the third consecutive year, Co-op Solutions partnered with EY to determine how financial consumer and member behaviors, preferences, challenges and activities have changed. For an added layer of insight, Co-op also engaged Mastercard to better understand the psychology behind consumer payment behavior and help credit unions to deliver outstanding solutions to serve their members’ micro transaction needs through personalization and win their attention every day.

And the research tells us that member centricity is the golden thread that connects consumers' short-term financial needs to their long-term financial wellness.

  With 45% of respondents citing engagement as a primary relationship driver, credit unions must gain a deeper understanding of the day-to-day needs of their members, in order to stay relevant, connected and trusted. 

How our insights have evolved

The research has uncovered several important insights over the years. In 2021, consumers reported they wanted more digital engagement from their financial relationships. And in 2022, the research showed that fintechs had made that happen.

We know that today’s consumers are more digitally engaged and have financial relationships that are exceedingly fragmented. Their primary interactions with their financial providers are via digital channels. And digital ecosystems—including those provided by fintechs and Big Tech— are now credit unions’ primary competitors.

In 2022, our research also confirmed that payments are the path to growth. Fintechs have mastered payments to capture wallet share and consumer engagement. They're leaning heavily on that, and are moving from passive to active relationships. To maintain a primary financial relationship today, you have to be active in your member's life.

With this year’s research, our goal was to better understand these ideas of primacy, trust and connection. We wanted to understand the convergence of short-term and long-term member engagement and what that might mean in terms of credit unions’ ability to grow market share, revenue, utilization and the economic participation of our members.

So, we looked at both micro money management — the everyday money movement that your members are making, and macro money management—how they view their long-term goals. Above all, we wanted to understand how credit unions can better connect what the member is trying to do with their overall financial performance.

Key findings

Credit union relationships are increasingly fragmented: credit union members have on average 3X the number of financial relationships as non-credit union members.

Both current and prospective members prefer holistic offerings from credit unions over national banks by 4%, and over fintechs by 11%.

There is a direct correlation between daily money management and long-term spending and savings impacting members’ overall financial wellness. Micro-interactive offerings emphasizing convenience can generate recurring value streams that improve member conversion rates into long-term value products like mortgages, loans and investments.

While price remains a top consideration, both members and prospects show a preference for financial products that offer additional “convenience” features along with rates that are on par with the market. This successful combination can lead to differentiation and 33% higher engagement.

Early adopter credit unions who take the approach of increasing member engagement through micro-interactions have 5.6% higher membership growth, versus the industry average of -4.3%.

These insights highlight the compelling opportunity that credit unions have to effectively compete with national banks and fintechs, by offering financial tools focused on meeting their members’ daily micro transaction needs to grow member economic participation.

Learn more

For a deeper dive into Co-op’s research on the importance of connecting members’ short-term needs with long-term financial wellness through payments and active primary relationships, download our white paper, “Co-op CU Growth Outlook: Fueling financial performance through daily interactions.”