What can UK credit unions learn from the US?
There’s no question, the role of credit unions has shifted dramatically in recent decades. From the move to online banking and the growth of digital platforms, leading building societies have placed innovation at the center of their vision for the future. But as customer reliance on physical branches falls, all building societies will face increasing pressure to modernise their operations to meet changing consumer behaviours and needs.
Recent research released from PYMNTS found that 80% of US credit union members believe their credit unions innovate “somewhat” or “very” well. While many US credit unions now offer a wide-range of digitally-focused products that attract customers from across the country, credit unions in the UK still face challenges in this area. More than half of the US population have used a credit union, compared to there being just two million members of credit unions in the UK.
A general lack of easy-to-use digital services and products is hampering efforts to reach more customers and draw them from the traditional banking sector. With digital-only banks entering the market with innovative technology and high-levels of customer service, competition is only going to increase moving forward.
As credit unions in the US continue to evolve into advanced digital financial providers, their UK counterparts may be able to learn from this transition and adopt some of their successful approaches. PYMNTS research showing that almost all (98%) of US credit unions have spent money to boost their loyalty and rewards initiatives over the past year and 93% have funded security, authentication and digital identity innovations in the past year.
By partnering with Fintechs, credit unions can embrace solutions that best fit their unique operating conditions. Innovative firms like Soar have worked with organisations such as Glasgow Credit Union to give their members access to apps and modern internet banking that help eliminate many conventional pain points.
Freeing up capital to invest in these projects is not easy but if UK credit unions are to be competitive with others in the industry they will need to build up their infrastructure to better provide solutions to digital customers. The advances made by US credit unions give UK credit unions a blueprint on how to move forward with technology in an inclusive way that helps all customers reach their financial goals.
No single credit union will be able to develop all the tech they need in-house, making collaboration with leading Fintechs essential in gaining access to the most effective technologies, whether they be for AML checks, digital banking or faster payments.
The physical branch network will still be a key selling point for many customers, especially those elderly members who don’t use digital. But for credit unions in the UK to play a larger role in the growing digital banking ecosystem they need to look beyond their existing banking footprint and consider the benefits of embracing new technologies and tools for their customers.
Written by Finbarr Toesland, Editorial Contributor
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