By: Tom Pierce, Chief Marketing Officer, PSCU
The way in which consumers make purchases and interact with their credit union continues to evolve. Thanks to the COVID-19 pandemic and its effects on the economy, many consumers’ wallets and budgets have tightened. Additionally, consumers have become more open to using emerging payment methods, such as installment payments solutions or cryptocurrency.
Welcome to Part III of our blog series on 2021 Eye on Payments. PSCU’s fourth annual consumer payments study examines payment preferences among credit union members and other financial institution customers (“non-members”) across the U.S., including how they evolved over the past year. Through this research, PSCU explores the factors that influence consumers when it comes to their usage of traditional and emerging payment methods across multiple payment scenarios and how social and economic events impact payment choice.
In this third blog from our 2021 study, we explore the emerging payments landscape.
Interest in Emerging Payments Grows
Emerging payments have been in the news more and more over the past several years as consumers’ interest in, as well as merchant adoption of, cryptocurrency continues to increase. Some professional athletes are now even being paid their salaries in Bitcoin. Another popular emerging payment solution, Buy Now, Pay Later (BNPL), continues to gain traction with consumers and merchants alike. Some say that instead of a certain toy or electronic gadget, the hottest product of the holiday season was BNPL. This financing payment solution allows consumers to be more flexible with their budget and walk away with a product after their first payment.
In our 2021 Eye on Payments consumer study, credit union members report they are generally more open to emerging payment methods than non-members, or other financial institution customers. For cryptocurrency, one in three overall respondents to our study reported they would be interested in learning more about it, with more credit union members citing they are already active (24%) or interested in cryptocurrency (36%) compared to only 13% and 25% of bank customers, respectively. More than one-third (36%) of Millennials ages 25-44 have invested in or hold cryptocurrency, compared to 27% of Gen Z, 11% of those ages 45 to 64, and 4% of those 65 and older. Additionally, over half (53%) of Gen Z respondents and 49% of Millennial respondents want to learn more about cryptocurrency from their financial institutions.
The numbers for installment payments, such as BNPL, also showcase increased interest. Of those who know their financial institution offers these services, 61% report they have used such a program. However, over one-third of respondents are not sure if their financial institution offers BNPL. Yet, of those who do not know if their financial institution offers BNPL or knows it does not, 22% indicate they would be likely or extremely likely to use it if the option became available. Younger consumers whose financial institutions offer a BNPL option are most likely to use it, with 41% of Gen Z reporting they would be likely or extremely likely to use the program, followed closely by Older Millennials at 36% and Younger Millennials at 35%.
Education is Key
As consumers become more interested in emerging payments offerings and trends, credit unions should maximize the opportunity to educate members on new solutions and services, as well as how they can incorporate these items into their financial lives. However, even before educating members, credit unions should ensure their board members and employees are familiar and comfortable with the new technology and various use cases throughout the credit union space.
- Curate educational materials to help establish foundational understanding for all stakeholders. Knowledge of basic terminology and concepts will prepare board members for the oversight for which they will be responsible, as well as provide employees with the knowledge to help members better understand and take advantage of the latest offerings.
- Reexamine existing policies, procedures and practices. Some emerging technologies can introduce new risks to organizations. Ensuring compliance and mitigating risks is important.
- Partner with a CUSO to help deliver these types of offerings to your members. CUSOs monitor the regulatory environment, explore opportunities with card brands and assess the appetite for credit unions to offer crypto-related services to their members.
Credit unions need to stay competitive with big banks, many of which are starting to offer various emerging payments options for their customers. As adoption of emerging payments continues to grow, now is the time for credit unions to educate and prepare.
Delve into the key findings and takeaways that your credit union can leverage to effectively market to members and achieve continual growth and success. Download the full 2021 Eye on Payments study now.
In his role as SVP, Chief Marketing Officer, Tom Pierce is responsible for leading and executing PSCU’s marketing and communications strategy. Pierce has successfully led marketing teams for more than 30 years, with the latter half of his career spent in the payments industry. Prior to joining PSCU, Pierce served as Chief Marketing Officer for Cardtronics, a global ATM organization serving the retail and financial services industries, where he directed a global marketing team in the development and execution of strategic marketing and communications initiatives.