The events of the past year have made digital innovation a necessity for all financial institutions (FIs), but the stakes have never been higher for credit unions in particular. PYMNTS’ most recent Credit Union Innovation Playbook, a collaboration with PSCU, revealed that nearly half of CU members are more interested in touchless payments now than they were when the pandemic began last year, and more than one-third would be “somewhat,” “very” or “extremely” likely to switch to a financial institution that offers these options. Another recent study reported that, while credit union members are generally more satisfied with their FIs than traditional bank customers, failure to innovate is a sore point, cited by members as the most common reason for unhappiness with their CUs.
Many CUs have failed to listen to their members when it comes to touchless payment innovations, however. PYMNTS’ research shows that contactless credit and debit cards hold the top spot on members’ wish lists, yet only one-third of CUs have invested in these innovations. Competition has also become increasingly cutthroat from FinTechs introducing these options as banking goes digital-first. These findings have spotlighted the need for CUs to increase contactless innovation — or lose their members.
Alliant Credit Union, an 86-year-old Chicago-based CU with more than 600,000 members and $14 billion in assets, is heeding the call. Sumeet Grover, the CU’s newly appointed chief digital officer, told PYMNTS in a recent interview that Alliant prizes its members’ feedback, using it to prioritize features that mean the most to them. Alliant has implemented several innovations as a result.
“Our member feedback has helped us create a fantastic checking account, supported by a contactless debit card, [an] award-winning mobile app and an intuitive online banking platform,” he said.
Alliant’s touchless payment journey began a few years ago when it added support for Apple Pay, followed by Google Pay and Samsung Pay.
“During the pandemic, we saw a 50 percent year-over-year increase in Apple Pay usage,” he said. “New members have been getting new, contactless debit cards, and existing members have been getting [contactless] cards when their old cards expire or are lost or stolen.”
Going Contactless By 2022
Grover said that contactless debit cards have resonated with members, who have gradually adopted the technology as it has been rolled out. He said that he expects all of Alliant’s debit cards to be contactless by 2022.
“We’ve seen contactless debit card transactions increase trifold,” he said. “We’ve noticed that our members may prefer the contactless option for quick, small purchases, like a coffee run or a lunch break. We believe contactless usage will grow as we issue more cards.”
Research has shown that contactless credit and debit cards are the most popular payment options with CU members, followed by mobile wallets. PYMNTS’ most recent study nevertheless reported that 86 percent of CUs invested in mobile wallet innovations last year, yet just 34 percent put resources into contactless cards. Grover said that Alliant’s priority, by contrast, is to finance the features members care about most.
“We’ve been investing in debit cards, and we were well positioned as the pandemic accelerated [the number of] members wanting contactless cards,” he said. “Because mobile wallet adoption is pretty stagnant, we’ve dedicated our digital resources to other projects, like enhancing our payments and transfers capabilities in online and mobile banking. We’ve continued to invest in contactless and mobile wallet functionality.”
Grover predicts that contactless payment usage will grow as more merchants enable the technology and consumers expect the ease and security of this type of payment.
“The payment experience is changing, and it’s important to stay ahead of the technology,” he said. “Alliant is excited to continue to provide the digital solutions our members expect as their needs evolve.”
Credit unions that fail to catch up with consumers’ preferences for innovative touchless payment options will risk seeing their members exit in favor of FinTechs and banks. Those that not only hear but also act upon their members’ wishes can position themselves to earn their members’ long-term loyalty.