in the A decade of digital transformation in 12 months, 46 C-suite executives spoke to PYMNTS for their Q2 eBook about what the world will be like when restoration and the next iteration of normal rollouts begin. In this excerpt, Todd Clark, President and CEO of CO-OP financial services, explains why he expects more credit unions to value payments as a core part of their unique post-pandemic product offerings.
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The pandemic has further fragmented consumer relationships with a wide variety of vendors, not least credit unions. Because of this, consolidating the primary financial relationship (PFR) status with more members will be a strategic focus for growth-oriented financial institutions (FIs) in a post-pandemic environment.
Consumers have a wide choice when it comes to meeting their financial needs. And then there are a handful of “no-decisions” they make every day thanks to embedded payments and other contextual trading methods. FinTechs have made it easy to trade securely on tracks that are still developing and to hold money in pseudo-deposit accounts. Users of these emerging tools will not be bothered by their novelty. In a recent survey commissioned by CO-OP Financial Services and conducted by EY, credit unions named PayPal as their most trusted financial partner.
While no stroll in the park, it is possible for even small financial institutions to become a trusted, dependable hub for all of a consumer’s financial needs. To become this provider of choice, however, executives need to rethink their approach considerably. Credit unions must now take into account a member’s daily lifestyle. This differs from strategies of the past, where FIs focused on key milestones in a person’s life, such as having a baby.
Being there for the everyday moments lets an FI come first in the extraordinary moments. But it doesn’t just happen; it takes strategic intent. Credit unions need to rethink their core products and services for the modern age to prove their worth in a rapidly changing world. In a physical environment changed by COVID-19, lifestyle moments such as ordering groceries, buying a birthday present or paying for gasoline are increasingly being carried out remotely.
Consumers’ money moving needs now revolve around things like touchless, remote and digital transactions. The survey found that 90 percent of transaction activity occurs through these channels. We don’t see that change. Instant access to P2P channels, contactless payments, and card controls are too convenient to remove from a person’s daily life. These are the sticky experiences credit unions can have with the right intention and strategy. In addition, it is experience that every purpose-oriented FI should have. Credit unions and other municipal financial institutions have a strategic need to guide consumers towards long-term financial well-being. FinTechs often distract from this mission and place convenience over the establishment of healthy financial habits.
Consumer behavior has changed, especially in payments (which, according to the EY survey, already accounts for 80 percent of a consumer’s interaction with their FI). Just look at how payments have performed during the pandemic. Despite the direct impact of the COVID-19 lockdowns, once the locks were lifted, many aspects of trade resumed with almost no disruption in most regions. Leading payment providers recovered very quickly; others did not need a rest, having just passed the prime of their business.
For these reasons, we expect more credit unions to prioritize payments as a core component of their unique post-pandemic product offering. Payments are the path to the PFR, and the more purpose-driven, people-centric financial institutions that follow this path, the faster consumers will recover from the economic stressors of the past 18 months.