NEW YORK—Credit unions that embrace open banking aren’t just keeping pace with competitors—they’re pulling ahead, new data show.
A new report finds that innovation in digital tools and personalized experiences is emerging as the decisive factor separating credit unions that win lasting member loyalty from those at risk of losing ground.
“The 2025 Credit Union Innovation Readiness Index: Closing Gaps, Winning Members,” a June report produced in collaboration between Velera and PYMNTS Intelligence, underscores innovation as a defining factor for credit union success.
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“Facing shifting expectations from both consumers and small to medium-sized businesses (SMBs) toward digital convenience and tailored experiences, credit unions must modernize not just to compete with traditional banks, but to remain relevant to their members. The report, based surveys of 500 credit union executives, 15,000 U.S. consumers, and nearly 2,000 SMBs, measures the degree to which credit unions’ current and future product and feature portfolios align with their members’ preferences,” PYMNTS said.
PYMNTS noted the responses show that innovation must be targeted, data-informed and aligned with member expectations.
“That data, permissioned to banks to share with partners to develop apps and other features, can personalize everything from budgeting tools to loan offers. Open banking can also help CUs fine tune their cross-channel experiences. As more than 1 in 2 current members still prefer in-person interactions, nearly half of recent defectors say a lack of digital tools factored into their decision to leave. These contrasting signals underscore a critical truth: These institutions must balance their legacy strengths with future-facing capabilities,” PYMNTS asserted.
According to the study, credit unions at the top aren’t just adding features—they’re accelerating innovation. Over the past two years, leading institutions boosted their consumer innovation readiness by 13%, driven in part by advances in open banking.
- 85.6% of top-performing credit unions currently offer open banking, in stark contrast to just 12.9% of bottom performers. This represents a gap in foundational digital capabilities
- Gen Z consumers are 72% more likely than the average consumer to value open banking, signaling its importance for attracting younger demographics and future market relevance
- Small businesses that have recently switched away from a credit union are 168% more likely than average to desire open banking, indicating a significant role in member retention and avoiding churn among business clients
Even as digital adoption accelerates, branch services continue to matter—51% of consumers and SMB members still prefer in-person interactions. Yet the real momentum lies online: 68% of SMBs that left a credit union for another provider favored digital onboarding for new products, enabled by permissioned data. That same “switching sentiment” shows up among 48% of consumers and 52% of millennials who recently moved their accounts, PYMNTS said.
“Open banking, of course, is tied to joint efforts between financial institutions and fintechs. We found that success can hinge on the nature of external partnerships, with 79% of all credit unions citing them as instrumental for fostering faster and broader innovation,” PYMNTS said. “Top performers strategically leverage these collaborations to gain speed and scale, whereas less innovative credit unions often depend on partners to acquire fundamental digital capabilities they currently lack.”
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