Think beyond credit score

A credit union’s ability to deliver the right products and services to meet members’ daily needs is the most important factor in creating a superior member experience. Credit unions should prioritize investments and operations, including expanded credit card underwriting, digital solutions, and financial literacy support to strengthen membership growth and loyalty.

Expand underwriting processes

Many underwriting approaches rely primarily on credit scores. Although this is a straightforward approach, credit scores do not tell the entire story, and can impact a credit union’s ability to meet the needs of members.  

For example, younger generations just beginning their credit journey may not have the established credit scores of older generations. Additionally, the average credit score in 2021 was 714, and about 60% of people in the U.S. have a score lower than 714. Further, several age cohorts have scores below the national average, including Gen Z (679) and millennials (686).

Expanding underwriting methodologies can help credit unions identify and provide opportunity for more members who can be responsible users of credit cards. Having the ability to support more members not only improves their experience but deepens the overall relationship.  

Digital development

To remain competitive, credit unions should offer robust digital services and support for cardmembers. Many credit unions still ask credit card applicants to enter a branch to complete paperwork. This is a challenge for a member or potential member to apply for a card.

According to PYMNTS research, credit unions have been slower to adopt new technology, as just 19% are early adopters or innovators. However, 74% of credit unions made investments in mobile banking in 2021, 64% adopted mobile wallet technology, and half now offer peer-to-peer (P2P) payments capability — nearly double the number from a year earlier.

Offering digital services to credit card holders shows that credit unions are committed to evolving with their members’ lives.

Help more members understand their finances

According to the Goldman Sachs Consumer Sentiment Study, 44% of respondents want to focus on improving their credit score throughout 2022. Because credit unions excel at this, continued financial literacy assistance can reach more members to help them understand their financial health, adopt good financial practices, and save for major purchases.

Supporting financial literacy can positively influence the membership experience, deepen member engagement, and use more of a credit union’s financial services — including credit cards.

Support your members

As preferences shift, it’s vital that credit unions remain agile and adaptable. Having the resources to respond quickly to new products and services will help member engagement.

One recent change in consumer behavior is the growth in “buy now, pay later” (BNPL) and similar services. According to Accenture, spending on BNPL grew by 230% during 2021. Notably, 14.4% said they use BNPL because they can’t get approved for a credit card — potential further reasoning for credit unions to explore expanded underwriting.

Download Elan’s latest whitepaper for more insights and strategies to engage your members and contact Elan to learn how your credit union can stay competitive with a credit card partnership.

Sources available in full whitepaper. 

Matthew Carpenter is the market director at Elan Credit Card.