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  • Writer's pictureW.B. King

New Co-op Solutions Report Sheds Light on How CU Members View Primary Financial Institutions

By W.B. King


While credit unions have historically relied on membership loyalty to their primary financial institution (PFI) – be it for checking and savings account or loans – Co-op Solutions’ latest report, PFI, PFR and Winning the Member Balance Sheet: 4 Steps for Achieving a New Model of Member-Centricity Today, tells a different tale.


“Credit unions enjoyed great success under this PFI model, given their long-held commitment to delivering exceptional service and low rates to their members, which led to a deep trust,” the report stated. “But the financial services landscape has changed and is growing increasingly fragmented.”


As the largest credit union-owned interbank network in the U.S., the Rancho Cucamonga, Calif.-based Co-op Solutions merged with the Tampa, Fla.-based credit union service organization (CUSO) PSCU in January 2024. The two organizations operate under a new holding company.


Redefining PFI


The 2024 and beyond “member-centric” model, the report offered, is based on three pillars: engage every day; give good advice; and earn the member’s balance sheet.


“Co-op has long urged credit unions to focus more on primary financial relationships (PFR) versus PFI – placing the emphasis on the member engagement, rather than the institution,” the report noted. “But today, to even be considered your members’ PFR, credit unions need to double down on capturing their wallet and mindshare, by winning the moment-to-moment, daily financial interactions.”


According to Co-op’s 2023 CU Growth Outlook research, credit union relationships are increasingly fragmented. To this end, credit union members have on average three times the number of financial relationships as noncredit union members. “The time has come for credit unions to embrace a new definition of PFI, which when combined with a member-centric PFR focus, will allow them to win the moments that matter.”


Maintaining/Gaining Member Confidence


In Co-op’s view, a credit union’s daily goal should be achieving primary relationship status with members. Forty-five percent of consumers, for example, cite engagement as the top reason for maintaining a primary relationship with a financial services provider.


“It means engaging with the member when they are evaluating their household budgeting and making plans for their family’s future. During every life stage and for every lifestyle, for every micro-transaction your member makes, every day, you need to be embedded in the conversation,” the report continued.  Digital payments in particular have grown in usage since the pandemic and have emerged as the primary driver of daily interactions and member engagement.”


When it comes to “engaging every day,” credit unions must keep in mind that that the average acquisition cost per member is between $400 and $600, which is often higher for lending and investment vehicles. This is especially important because Co-op’s research found that 25% of credit unions don’t retain these new accounts more than a year after being opened.


“The opportunity for credit unions is to capture long-term value via micro-interactive products that generate recurring revenue streams,” the report noted. “Products like financial planning, buy-now/pay-later (BNPL), credit cards, and digital payments. These products create the natural pathway of engagement that guides members toward higher value, truly ‘sticky’ offerings like mortgages, investments and loans.”


Moments That Matter


Regarding “giving good guidance,” 43% of respondents said they are “not very” or “not at all” financially secure. To this end, Co-op said credit unions must ensure they are there in the “moment that matter.”


“Look for ways to enhance your members’ convenience through digital channels, while offering guidance embedded within their daily transactions,” the report stated. “Lastly, ensure your members have clear access to their financial picture so they can more easily manage their household finances.”


To ensure credit unions are earning their member’s balance sheet, the report stated that while credit unions have traditionally been able to offer “the best deal in town,” today’s member is being offered many options through a myriad of digital banking channels.



“Credit unions only win 13% of the time when they offer the most competitive rates in their market. But the propensity to engage rises dramatically when a credit union bundles in the most coveted convenience features, to 31%  – even with the worst rates in town,” the report noted. “By offering a combination of the best rates and most convenience, the propensity to engage rises to 67%.”


The report offered parting advice, which includes that in order to remain relevant, credit unions executives must adjust to the evolving needs of membership.


“The new definition of PFI focuses on capturing members’ primary financial interactions, and positioning your credit union at the very center of their daily lives,” the report offered. “To accomplish this goal, you must maintain active daily engagement with your members through their preferred payment channels.”


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