Nearly 20 months after its emergence, COVID-19 continues to impact the U.S. economy, its consumers, and the global economic landscape. As consumers have become accustomed to change, the economy continues to demonstrate its resilience. The payments industry is no different.
For the fourth consecutive year, PSCU set out to gauge payment preferences among credit union (CU) members and other financial institution customers with its annual Eye on Payments study. Through this annual research, PSCU explores the factors that influence consumers when it comes to their choice and usage of payment methods, how these factors vary among different life stages and economic events, and how credit unions can better serve their members and adapt to evolving consumer preferences and needs.
To unlock the insights gained from PSCU’s 2021 Eye on Payments study, PaymentsJournal sat down with Tom Pierce, Chief Marketing Officer at PSCU, Norm Patrick, VP, Advisors Plus Consulting at PSCU, and Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group.
Key findings from the 2021 Eye on Payments study
According to Patrick, a key finding from the Eye on Payments study is the need for personalization in financial services. “Thinking about the way we shop, purchase food, [and] entertain ourselves, service and technology providers have really continued to step up their game and provide consumers with a highly personalized experience. And what I believe is becoming increasingly clear is that consumers want and expect personalization across all facets of their life, and [the realm] of financial services is no different at all,” he said.
Digging into the data, this year’s study indicated that 80% of respondents either agree or completely agree that they want to do business with a financial institution that knows them personally. At the same time, consumers view credit unions as a trusted partner, with 91% of surveyed credit union members believing that CUs are a great place to get financial advice and guidance.
Another key finding is the continuation of the digital acceleration that began when COVID-19 emerged. “When we did our study back in 2020, we saw some shifts with the immediate impact of COVID. It was interesting to look at the results this year and see, as folks started to come out of the pandemic in many areas, [whether] those behaviors and preferences stuck. Well, they did,” stated Pierce.
Mobile wallet usage is up. Survey respondents reported using mobile wallets 50% more than they did in 2020. More credit union members use contactless cards now too; with 40% growth over 2020, 36% of respondents reported using a contactless card at least a few times a week. E-commerce also continues to flourish, with online shopping becoming increasingly routine. In fact, this year’s study indicated that 91% of respondents shop online at least a few times a month.
“Mobile and online capabilities are a way to achieve personalization for credit unions and other financial institutions. It’s interesting that we are seeing a surge in both of these, because I do think that they support each other. I think personalization is going to be a keyword in 2022 for the payments industry in particular,” said Grotta.
Payment preferences vary among generations
The Eye on Payments study also identified generational differences in consumer payment preferences. A universal trend among consumers of all age cohorts is their lingering concerns around COVID-19’s impact on the economy. 70% to 80% of consumers across all generations expressed concern about the economy due to the pandemic. “When you look at the level of consumer angst among the generations, there really wasn’t a whole lot of difference,” said Patrick.
But generational differences did emerge when it came to two specific payment trends: Buy Now, Pay Later and cryptocurrency utilization. In both areas, younger consumers were more interested than their older counterparts. “For Gen Z, over 40% of folks say they would be more likely to use a [BNPL] installment payment option if it was offered by their FI,” noted Pierce. Millennials and Gen Z respondents were also significantly more likely to report investing in cryptocurrency than older generations.
For credit unions, capitalizing on these trends is a smart move. “Certainly, the most direct way is to offer a Buy Now, Pay Later solution themselves,” said Grotta. However, BNPL repayments are another opportunity. “How is it that a credit union can make sure their debit card or credit card is the repayment product of choice? [They should] really try to think about ways to get their payment solutions top of wallet through these Buy Now, Pay Later repayments,” she added.
Leveraging data insights to better serve credit union members
Using timely insights from the 2021 Eye on Payments study, credit unions can deliver personalized offerings at the level consumers expect. “Members have been conditioned over time to expect a lot more from their credit union in terms of personalized experience. With all that being said, now is the time for credit unions to shift the narrative,” said Patrick.
By using data insights to optimize existing processes, credit unions can be more proactive in providing a positive customer experience for their members. This leaves them well-positioned to satisfy rising member expectations for personalization.
This also means catering to shifting consumer expectations toward mobile and contactless payment offerings. “Credit unions need to invest now in their mobile capabilities and contactless card capabilities, or else their members could turn to other options for financial services,” warned Pierce.
Ultimately, staying on top of data trends can go a long way in helping credit unions keep their members satisfied. “I’d encourage folks to leverage both the annual information coming out of the Eye on Payments study as well as monthly PSCU Payments Index reports to drive some of their digital and other payments strategies upwards,” concluded Pierce.
Interested in unlocking more key findings? To learn more, fill out the form below to access PSCU’s 2021 Eye on Payments study.
