The news: Credit unions need to revamp their credit card strategies to meet changing consumer expectations, per CUInsights.

Inside the insights: Credit unions need to address new metrics of competitiveness on par with larger issuers.

• Mobile wallet integration. 42% of US consumers have used a virtual card recently, and 65% expect to use one within the next year, per an Elan white paper. Digital expectations only increase with prime acquisition-aged clients: We forecast that 45.7 million millennials and 43 million Gen Zers will tap to pay with their phones this year.
• Credit-building tools. Credit scores matter to Gen Zers, who see them as a major marker of financial health. Offering products like secured credit cards and credit-building loans can help Gen Zers raise their scores and qualify for bigger loans through the credit union.
• Installment options. Young users also want payment flexibility for their purchases. Michigan State University Credit Union launched BNPL program powered by equipifi to meet student members’ installment needs, and other credit unions gained access to Affirm’s services for their debit cards through a Fiserv tie-up.

Credit union cardholdership is growing in popularity: The share of consumers using their credit union or community bank card as their primary card rose from 8.3% in 2020 to 13% in 2023, per a PYMNTS Intelligence and Elan collaborative report. 

There’s rising demand for these cards for their competitive interest rates, which could get a boost from adding new features. With these updates, credit unions could get closer to capture high-spending non-revolvers—only 8.7% of this population would choose a credit union when applying for a new card, per PYMNTS. 

Implications for credit unions: Credit unions can’t compete with big banks on robust rewards. Instead, they can emphasize their winning strengths—low interest rates and local, personalized touches—to their members. 

To rapidly meet changing consumer expectations, inking strategic partnerships with BNPL providers can offer turnkey solutions over costly infrastructure projects.

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