Credit unions increasingly face the threat of losing deposits. This trend poses a significant challenge to the cooperative model and the services credit unions provide to their members.
Aside from the traditional competition from large money center and community banks, credit unions now must contend with the rise of digital banking and challenger fintech companies. These new market entrants offer a range of innovative products and services, often with higher interest rates on savings accounts and competitive loan terms. The heightened competition from these “shiny new toys” has lured away members who are seeking higher returns, greater convenience, and a better digital experience.
Also contributing to deposit erosion is the changing demographics of credit union membership. As younger generations — who are more tech-savvy and open to digital banking solutions — join the workforce, they might be less inclined to choose traditional brick-and-mortar institutions.
Credit unions must adopt a proactive approach that focuses on innovation, member engagement, and member experience. By embracing digital technologies and offering innovative products and services, credit unions can attract and retain younger members while better serving their current members. Investing in personalized member experiences and building strong relationships with members can foster loyalty and encourage deeper relationships. This combined with the trust, safety, and service already provided by credit unions will give members reasons to stay and for new membership to grow.
CUSO Collaboration Gets Results
This begs the age-old question: Build in-house or find a trusted service provider to partner with? Building takes time and resources most credit unions just don’t have. The vast majority of credit unions’ tech and product budgets cannot compete with the large banks in their markets. The power of credit union collaboration through CUSOs can help fuel innovation at scale, allowing credit unions to compete and thrive as they build and implement meaningful engagement tools. How can credit unions make deposit accounts more relevant and offer new and existing members unique and valuable tools?
Enter CashBack+, a digital engagement, rewards and loyalty platform powered by Prizeout — the direct result of CUSO collaboration to solve these issues.
Michigan State University Federal Credit Union ($8.2B, East Lansing, MI) leverages CashBack+ to reward and engage with their members. Earlier this year, MSUFCU deployed Offers, the first of three CashBack+ products. CashBack+ Offers is a digital marketplace where members can take advantage of personalized merchant-funded cashback shopping offers when paying with their MSUFCU accounts. This is a secure marketplace with over 500 offers which lives behind banking walls in both online and mobile banking, delivering instant cashback and puts MSUFCU top of wallet on every transaction.
Cashback and shopping rewards have generally only been available to credit card users…until now. CashBack+ Offers enables debit card and checking account users to earn instant cashback on every purchase they make using their deposit accounts, and there are no limits on how much they can earn throughout the year. MSUFCU members are taking advantage of this benefit.
Members are earning more cashback:
- The top 25% of users are on pace to earn $190.00 per year.
- The average user is on pace to earn $91.00 per year.
- CashBack+ rewards earned average is in the 8% to 10% range, compared to the national average cashback rewards earned percentage of 1% to 2%.
While earning cashback is a win and satisfying for members, MSUFCU is also benefiting from increased digital engagement, capture of member spend, and increased product use:
- Driving Digital Engagement: CashBack+ users are 3.5x more likely to have online banking sessions than those who don’t convert.
- Consistent Engagement: CashBack+ users check for offers 1.7x a week.
- Product use is consistently growing: Purchase volume is growing 15% each month.
- Member Satisfaction: Active users are spending 17% of their eligible spend with CashBack+ each month.
- Member Retention: Two-thirds of users will buy again in a quarter.
- A New Source Of Non-Interest Income: MSUFCU is paid a revenue share that outpaces debit interchange on every member transaction.
“For years, we have been looking for a simple and secure way to reward our members for their loyalty without adding complicated or cumbersome steps to receive their benefit. Many of the current options can be difficult to use, leading the member to lose interest,” says Ami Iceman, chief experience officer. “CashBack+ Offers from Prizeout has quickly proven to be a great tool that our members love using, especially when we know every dollar matters.”
In the first quarter, Prizeout will be releasing CashBack+ Pay (a pay-by-credit-union cashback shopping tool) and CashBack+ Rewards (a spend-based and actions-based rewards platform) to give credit unions even more ways to reward and engage with their members.
“We are very excited to add Pay and Rewards to our member engagement strategy,” Iceman adds. “The full suite of CashBack+ products and services is a true differentiator as MSUFCU works to retain and grow our membership. Benefits such as these reinforce the value we can provide our members as their primary financial institution.”
The Prizeout Partners CUSO was formed in February of 2023 by 20 founding members to build digital products for credit unions, by credit unions. Prizeout now powers the engagement, loyalty, and rewards strategy for more than 30 credit unions. For more information about deepening member relationships with CashBack+, visit prizeout.com.
