Credit unions in the U.S. enjoy a strong rapport with their members, with 61% identifying them as their primary financial institution and 87% expressing high satisfaction levels. However, this loyalty does not translate into card usage at the checkout, where credit unions capture only 48% of transactions compared to 69% for national banks. This disparity signifies a substantial loss of potential engagement and revenue, as each transaction represents not only customer interaction but also valuable interchange fees that are currently benefiting competitors. The challenge lies in converting this member loyalty into active card usage, particularly in discretionary spending where rewards play a pivotal role in consumer choice.
The potential for growth is evident, as data reveals that members who prioritize their credit union cards tend to increase their deposits significantly. Specifically, 31% of consumers and 41% of small and medium-sized business (SMB) members report making more deposits after converting their primary card to a credit union product. This indicates that top-of-wallet positioning is not merely a metric of card usage but a critical driver of deposit growth and member retention. Credit unions are already winning automated bill payments, but they must enhance their offerings in discretionary spending to capture a larger share of their members' wallets.
Interestingly, credit unions that fall under the Durbin exemption, with assets under $10 billion, retain a higher interchange revenue per transaction than their larger counterparts. This financial advantage could be leveraged to introduce competitive rewards programs that appeal to members' preferences, particularly in cash-back offerings, which are a decisive factor for 44% of cardholders. For SMBs, the development of specialized business cards with enhanced features such as expense tracking could further cement loyalty and usage. By addressing these gaps and aligning products with member expectations, credit unions have the opportunity to not only retain their existing members but also attract new ones, ultimately driving deposit growth in a competitive landscape.
The potential for growth is evident, as data reveals that members who prioritize their credit union cards tend to increase their deposits significantly. Specifically, 31% of consumers and 41% of small and medium-sized business (SMB) members report making more deposits after converting their primary card to a credit union product. This indicates that top-of-wallet positioning is not merely a metric of card usage but a critical driver of deposit growth and member retention. Credit unions are already winning automated bill payments, but they must enhance their offerings in discretionary spending to capture a larger share of their members' wallets.
Interestingly, credit unions that fall under the Durbin exemption, with assets under $10 billion, retain a higher interchange revenue per transaction than their larger counterparts. This financial advantage could be leveraged to introduce competitive rewards programs that appeal to members' preferences, particularly in cash-back offerings, which are a decisive factor for 44% of cardholders. For SMBs, the development of specialized business cards with enhanced features such as expense tracking could further cement loyalty and usage. By addressing these gaps and aligning products with member expectations, credit unions have the opportunity to not only retain their existing members but also attract new ones, ultimately driving deposit growth in a competitive landscape.
Source: PYMNTS
