BOSTON–A new analysis has found top-performing credit unions are succeeding in large part by “aligning their offerings with the expectations of their digital-minded members,” with new data showing half of members who have left their credit unions did so because of disappointment over digital tools.
The analysis was released as part of PYMNTS Intelligence’s Innovation Readiness Index (IRI), which measures how well credit unions’ current and future offerings align with what their members expect in a modern financial institution, from credit cards with perks and financial planning apps to digital onboarding and the ability to apply for loans and other credit products online.
The survey, research and analysis are conducted in partnership with Velera.
‘Innovation Readiness’
Based on surveys of credit union executives, consumers and small to medium-sized businesses (SMBs), the organizations said a forthcoming report reveals that top-performing credit unions have boosted their consumer innovation readiness substantially over the past two years and are now 49% closer to offering the “complete suite of financial products and features their members want.”
“The findings in ‘2025 Credit Union Innovation Readiness Index’ underscore that failing to modernize, particularly in digital services, poses a significant threat to credit unions’ relevance and market share against traditional banks, from regional to national,” according to the companies. “Digital capabilities are becoming a factor as critical as George Bailey’s winning rapport with members in growing and retaining customers.”
Not Small-Time Operations
According to PYMNTS and Velera, roughly one in five Americans, or around 63 million people out of 328 million, live in rural areas, the traditional stronghold of credit unions.
“But the institutions aren’t just small-time rural: Vienna, Va.-based Navy Federal Credit Union, which serves current and former armed forces members and their families, has $190 billion in assets, the biggest of its kind and larger than Cleveland-based KeyBank, the nation’s 22nd-largest traditional bank,” PYMNTS said in releasing its findings.
Basis for Findings
The organizations said the forthcoming report is based on three surveys: the first, of 500 credit union executives conducted from Feb. 6, 2025, to April 14, 2025; the second, a census-balanced survey of 15,758 U.S. consumers between Feb. 28, 2025, and March 31, 2025; and the third, a poll of 1,996 small and medium-size business (SMBs) from Feb. 26, 2025, to March 27, 2025.
Its IRI tracks where credit unions stand in offering 50 financial products, services and features deemed critical to thriving in today’s rapidly-evolving financial landscape according to the two companies.
Top Performers Pulling Ahead, Laggards Backsliding
With a top score of 100 means that a credit union “does it all,” PYMNTS and Velera reported the average IRI score for top-performing credit unions among consumers, which represents “how closely their portfolio of financial products and features matches members’ wish lists,” is 76.4, up from 67.6 just 16 months ago.
“In contrast, bottom-tier credit unions aren’t just significantly lagging but also backsliding, with the average score now 36.3, down from 43 over the same period,” PYMENTS and Velera said. “This gap is starkly visible in digital offerings: Only one in four bottom performers offer digital onboarding, compared to nearly two in three top performers.
‘Critical Shift’
“While over half of current credit union members still prefer in-person interactions — the equivalent of George Bailey welcoming them to the counter — the report points to a critical shift,” the analysis continued. “Nearly half of former members who recently left for another financial institution cited a lack of digital tools as a factor in their decision to bolt. Gen Zers in particular view the financial institution of the future as fast, mobile and frictionless. They are 78% more likely than the average consumer to expect digital, QR codes and open banking that lets them share their account details with financial apps such as Trustly, Plaid or Stripe.”
Closing the Gap
According to PYMNTS and Velera, among the report’s many findings are that nearly eight in 10 credit unions cite third-party partners as helping them innovate faster and at greater scale.
“While top-performers use partners for strategic goals like reducing time-to-market and cost savings, bottom performers often rely on them to gain access to fundamental capabilities like digital services,” the companies said. “The report unpacks what how some credit unions that were early adoptees of digital tools can be outpaced by those that throw themselves into quick launches of those tools by using outside help.”