Small Credit Unions See 8.5% Surge in Early Tech Adoption

In a notable shift, new research indicates that smaller credit unions are not merely catching up to their larger counterparts in technological innovation but are rapidly emerging as leaders, defying traditional expectations of size determining pace. This burgeoning momentum among community-focused institutions underscores a powerful redefinition of competitiveness in the digital age.

A recent PYMNTS study, “Small Steps, Big Gains: Innovation Gap Narrows as Small CUs Catch Up,” sponsored by Velera, illuminates this significant transformation. The report reveals that small credit unions, once perceived as slow adopters of new technology, are decisively closing the innovation gap, propelled by their agility and a keen focus on member needs. Their strategic embrace of modern solutions is centered on enhancing fraud prevention, improving operational efficiency and elevating the overall member experience, often through partnerships with technology providers.

The data supports this accelerated momentum among smaller credit unions:

• The share of small credit unions, defined as those with less than $500 million in assets, identifying as early adopters spiked to 8.5% as of November 2024, a dramatic increase from 0% just 12 months prior. This demonstrates a clear intent and successful execution of innovation strategies.
• Concurrently, the proportion of these smaller institutions falling behind on innovation plummeted to just 15% in November 2024, a stark contrast to more than 55% in the same period a year earlier. This significant reduction highlights their successful navigation of the technological currents.
• In a direct response to evolving consumer preferences, 36% more of the smallest credit unions offered mobile wallets in 2024 compared to the previous year. This deliberate expansion of mobile payment options underscores their commitment to digital-first experiences.

Beyond these statistics, the report details how this innovation surge is primarily driven by the demand from younger generations, specifically millennials and Gen Z, who prioritize low-friction, digital-first experiences. To meet these expectations, small credit unions have prioritized the adoption of contactless debit and credit cards, with their offerings rising by 61% and 58% respectively over the past year.

Also, 31% more small credit unions provided mobile credit card applications in 2024, signaling a concerted effort to deepen mobile engagement, a key preference for younger members who frequently use mobile wallets. While smaller credit unions are making strides, the report also acknowledges that their mobile applications currently receive fewer and lower app store ratings compared to those of banks, suggesting a continued need to elevate the digital user experience through improved usability, reliability and features.

Velera Senior Vice President of Emerging Services Scott P. Young said this innovation is about “removing friction, deepening trust and ensuring your credit union remains relevant in a rapidly evolving landscape.” The collective efforts of these agile institutions are reshaping competitive dynamics, proving that strategic focus, rather than just size, can fuel substantial growth and member satisfaction.

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