Retention Roadmap: Credit Unions Drive Member Loyalty via Priority Alignment

Credit unions (CUs) are being challenged to align their offerings with members’ priorities in an increasingly digital financial landscape. Members seek seamless digital experiences, robust security measures and meaningful rewards from their financial institutions (FIs). While many CUs are making strides in digital transformation and cybersecurity, challenges remain in fully aligning offerings with member priorities.

Innovations in technology and strategic partnerships present opportunities for CUs to enhance satisfaction, drive engagement and foster long-term loyalty. However, imperfect alignments in key areas, such as rewards programs, highlight the need for continued adaptation. As CUs navigate these shifting demands, understanding how to bridge these gaps will be essential to staying competitive and retaining members in a rapidly changing industry.

• Member Alignment: The Key to Satisfaction and Retention
• Well-Aligned: Security and Self-Service
• Needs Adjustment: Rewards Innovation
• Memo to CUs: Strengthen Loyalty Through Rewards

Member Alignment: The Key to Satisfaction and Retention

Credit unions that innovate to meet member demands see lower churn and higher digital adoption. Tech partnerships and product enhancements can help CUs bridge digital gaps, ensuring seamless experiences that strengthen satisfaction and long-term loyalty.

Product innovation drives member retention for CUs.

PYMNTS Intelligence research finds CUs that have the most innovative product and feature offerings have significantly lower churn. Top performers in this area have a churn rate of just 1.7%, approximately half the 3.3% churn rate of bottom performers. Furthermore, CUs with proactive innovation strategies and a high degree of innovation readiness achieve active mobile banking user rates that are 20% higher than those of CUs that lag behind in innovation.

1.7%

Churn rate of top CU innovators, about half that of bottom performers

However, CUs face a gap between digital ambitions and actual offerings.

More than 8 in 10 CU executives say it is at least somewhat important to have a fully compliant digital strategy. However, nearly three-quarters (72%) of CUs say they are not confident in their ability to achieve such a strategy using their current tools. Moreover, just 9% of CUs currently provide a complete suite of digital lending offerings, including online banking and loan applications.

Partnering with tech companies can help CUs boost their digital innovation.

To meet members’ demand for more seamless digital experiences, CUs are calling in reinforcements. For instance, Gold Coast Federal Credit Union recently announced a partnership with digital banking provider Tyfone. By adopting Tyfone’s nFinia® Digital Banking Platform, the CU aims to offer members a more frictionless mobile banking journey.

Similarly, aiming to drive digital adoption among its members, Eastman Credit Union recently kicked off a collaboration with WaveCX to develop engaging product demos. Early demos through this partnership have been effective in driving engagement and usage.

Well-Aligned: Security and Self-Service

CUs are prioritizing what matters most to members: security and self-service. By investing in cutting-edge cybersecurity, biometric authentication and AI-driven self-service tools, CUs are aligning with member expectations.

CU members — consumers and SMBs alike — cite security and self-service as their top priorities.

64%

of CUs plan to offer biometric authentication or digital identity in the next three years.

PYMNTS Intelligence finds that nearly one-quarter (24%) of consumers say security features are the most important investment for their primary FIs to make in the next three years — a greater share than for any other capability. Meanwhile, 16% prioritize self-service digital solutions, making it the second-leading priority. For small to mid-sized businesses (SMBs), security features and self-service digital solutions are also the top two priorities, as cited by 24% and 22% of SMBs, respectively.

CUs are innovating to meet the demand for increased cybersecurity.

For instance, Koin Credit Union and North Star Community Credit Union recently adopted Mahalo Banking’s Thoughtful Banking® platform, which includes Credential Assurance Technology (CAT) to combat credential stuffing attacks, among other innovations. The CUs are tapping the solution provider’s cybersecurity tools to protect their members. In addition, nearly two-thirds (64%) of CUs plan to offer biometric authentication or digital identity within the next three years.

Consumers are pleased with how CUs are innovating in this area. In 2024, 77% of CU members report being satisfied or very satisfied with how their FIs have handled their fraud situations, a 14-point jump from 63% in 2023.

CUs are also stepping up their self-service capabilities to align with consumer priorities.

Fifty-five percent of CUs plan to offer self-service digital solutions in the next three years. Utah Community Credit Union, for example, has partnered with NCR Atleos to offer easier and more secure self-service options for members to access cash.

Artificial intelligence (AI) and generative AI (GenAI) also play a role in CUs’ efforts to step up their self-service offerings. Currently, 45% of CUs have implemented conversational AI or chatbots, while 36% have utilized GenAI. Additionally, 29% plan to invest in or implement GenAI tools in 2025.

Needs Adjustment: Rewards Innovation

While rewards are a top priority for members, they are last in line in CUs’ innovation plans. To stay competitive in a rapidly evolving banking landscape, CUs must invest in rewards to drive engagement and loyalty.

Consumers view rewards as a top priority, but few CUs are innovating to meet this demand.

When PYMNTS Intelligence asked consumers which features were most important for their primary FIs to invest in within the next three years, rewards and loyalty programs ranked third, following only security and self-service. However, just 17% of CUs plan to innovate in this area in the next three years, the lowest percentage among all features. Roughly three-quarters of CU members say rewards influence their choice of whether to use their debit or credit cards. Not innovating rewards for using them, therefore, could represent a missed opportunity for CUs to gain top-of-wallet status.

81%

of CUs that created or enhanced their rewards programs in 2024 reported that this innovation was at least somewhat effective.

Some CUs are differentiating themselves by rewarding loyalty.

Dow Credit Union, for instance, recently announced that it was distributing an estimated $18.5 million to members via rebates and rewards. The move is part of its yearly Member Giveback program.

Overall, 20% of CUs offer rewards programs via FinTech partnerships. In 2024, 81% of CUs that created or enhanced their rewards programs ranked doing so as at least somewhat effective.

Memo to CUs: Strengthen Loyalty Through Rewards

To drive long-term member retention, credit unions must align their offerings with what members value most. This includes offering compelling rewards for essential and ongoing expenses. While security and digital convenience are critical, rewards programs remain an underutilized opportunity for CUs to deepen engagement and loyalty.

PYMNTS Intelligence recommends the following strategies to help CUs align their offerings with member priorities and strengthen engagement:

• Prioritize rewards innovation. Only 17% of CUs currently plan to enhance their rewards programs, despite strong consumer demand. Investing in modern, flexible rewards structures can help a CU stand out in a competitive market.
• Reward everyday spending. Members want tangible value from their financial institutions. Offering cash back, discounts or points on essential purchases — such as groceries, gas and recurring bills — may drive consistent engagement.
• Leverage FinTech partnerships. Collaborating with tech providers can help CUs quickly scale and enhance their rewards programs without overhauling internal infrastructure. Currently, only 20% of CUs partner with FinTechs for rewards, leaving room for significant growth.
• Personalize and differentiate offerings. Data-driven insights can help CUs tailor rewards to individual spending habits. Doing so can make programs more relevant and attractive. Personalized perks can significantly boost program adoption and usage.
• Promote and educate members. Even the best rewards program will not drive retention if members are unaware of the benefits. Proactive marketing, education and seamless redemption experiences ensure strong engagement.

Aligning rewards programs with member priorities is becoming a competitive necessity. By offering meaningful incentives for everyday expenses, CUs can reinforce their value, increase engagement and build lasting member loyalty in an evolving financial landscape.

In today’s competitive digital landscape, member loyalty isn’t just about a program — it’s an outcome and a catalyst for growth. Now more than ever, rewards innovation is a critical investment for credit unions. The industry is experiencing a dynamic shift toward gamification, personalization and deeper engagement. By offering compelling incentives for actions such as enrolling in eStatements, increasing card usage or unlocking surprise bonuses, credit unions can forge stronger member connections and ensure long-term success.”

Cody Banks
Senior Vice President, Product Experience & Enablement, Velera

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