Executive Summary:
- Fintechs and neo/challengers surge: 73% and 54% seen as top threats; most credit unions identify as “fast followers.”
- Five priorities: Faster payments, small business services, unified data, stronger vendor relationships, and member experience expertise.
- Lead with digital: Deliver speed, security, and personalized experiences to stay competitive.
The 2025 FinXTech® Credit Union Survey paints a clear picture: The competitive landscape has fundamentally changed, and financial technology companies (73%) and neo/challenger banks (54%) are the undeniable competitive threats.
While 66% of credit unions increased their technology budgets last year, the reality is 60% still identify as "fast followers" regarding technology adoption.
To compete effectively and better serve members, credit union leaders must strategically pivot their focus. Based on my work forecasting payment trends and advising on product enhancements, these are the five immediate, critical imperatives derived from the survey data that demand executive action include:
1. Expand Faster Payments to Strengthen Your Member Experience
As new payment rails are introduced and payments continue to fragment, payments deficiency is a critical void.
More than a third (37%) of credit union leaders do not believe their current payment offerings are sufficient to meet member needs. Competition thrives on convenience and successful credit unions will remove friction in money movement.
It’s imperative credit union leaders expand payment options, prioritize investments into instant and faster payment options, such as Zelle® or FedNow® Service, and enhance both digital and mobile wallet features. However, as leaders noted in the survey, implementation cannot sacrifice security; Real Time Payments (RTP) also need robust fraud controls.
Ensure you deliver speed and security simultaneously.
2. Grow Your Revenue by Expanding Small Business Digital Services
Many credit unions prioritize operational efficiency (50%) over attracting and retaining members (36%) when setting their technology strategy.
This focus is shortsighted, especially when looking at the underserved small business sector.
The survey reveals glaring service gaps for commercial members, with essential digital services like RTP (24%), treasury management (19%), and cash flow accounting (5%) barely being offered. Furthermore, only 55% offer integration with common accounting systems like QuickBooks®.
By providing advanced, integrated digital business tools, your credit union can significantly deepen relationships and attract valuable deposits.
3. Unify Your Data to Improve Analytics and Member Insights
Effective competition requires deep, actionable member insight. Yet, survey results indicate 60% of credit unions keep data siloed within the systems that generate it. Only 40% are leveraging modern solutions like a data lake or warehouse to combine disparate information.
When data is siloed, its value collapses.
This is evident in analytics usage: Only 46% feel they use data analytics effectively in Marketing, and a mere 31% do so for Operations. It’s no wonder data strategy and management expertise is identified as the second most critical in-house skill needed (47%).
A unified data strategy will enable real-time insights, targeted member services, and competitive relevance.
A critical data gap exists, with 37% of credit union leaders reporting they only have access to 25% to 50% of their members’ financial data, and 17% accessing less than 25%. Open banking offers a concrete pathway to acquire insights into members’ external financial relationships.
This adoption is crucial for credit unions to enable AI use cases and deliver the personalized services needed to attract and retain members.
4. Improve Vendor Relationships to Strengthen Your Technology Strategy
Credit unions are investing – 66% increased their technology budgets.
Yet, despite the rise in investing, nearly half (49%) report their technology initiatives have fallen short of their objectives over the past 18 months. This paradox is primarily driven by execution failures.
Insufficient vendor support or performance was noted by 53% of respondents.
To protect investments, credit union leaders can refine their vendor due diligence processes. Expect integration challenges (cited by 31%) and resource appropriately. When recommending vendor relationships, it is important that credit unions openly communicate with vendors – discuss deliverables and support with their providers, to ensure that technology spend translates into positive, measurable results.
5. Build Member Experience Expertise to Effectively Compete
While improving operations is necessary, it shouldn't overshadow the need for competitive digital offerings that attract and retain members.
To achieve this, member experience expertise (47%) and digital strategy expertise (38%) are critically needed in-house. To compete with fintechs and banks – accelerate beyond the "fast follower" approach, focusing on relevant services like personal financial management and digital budgeting capabilities, which are offered by only 58% of respondents.
Lead with delivery of enhanced digital experiences to stay relevant with the next generation of members.
Download the full survey results to unlock data insights and learn how credit union executives are making decisions about technology.
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