Credit unions are entering a year of significant change. First, potential deregulation, some of which is already unfolding, poses many threats and opportunities for credit unions. On one hand, it’s an opportunity for credit unions to step out of their comfort zone and expand their offerings to improve member experiences and strengthen their role as a trusted financial option. On the other hand, it intensifies competition.
Fintechs, despite being heavily regulated in the past, have continued to push boundaries. In some ways, heavier regulations have slowed them just enough for credit unions to keep up; but if restrictions ease, fintechs will advance even faster, putting pressure on credit unions to adopt new technologies and rethink traditional business models to stay competitive.
At the same time, an aging membership adds another layer of urgency for credit unions to modernize so they do not lose relevance. While younger consumers are highly community-focused, frequenting farmers markets, supporting local shops and artists, and dining in neighborhood restaurants, they rarely bank locally. Many don’t understand what credit unions offer or why they’re a strong option; they often don’t realize credit unions provide the same or better financial products than big banks and fintechs. This disconnect stems from credit unions' failure to effectively communicate their value proposition.
As the banking industry approaches potential regulatory shifts that could remove restrictions and allow all players to operate more freely, credit unions must act now. Here are three key modern strategies to stay competitive and attract the next generation of members:
Leverage embedded finance to increase visibility
Despite their strong community ties, such as sponsoring local events and supporting small businesses, credit unions often struggle to stay top-of-mind in their communities. To remain relevant, they need to find ways to meet consumers where they are. Other financial players have successfully leveraged embedded finance to replicate the relationship banking model credit unions are known for, but on a national scale, using mobile apps and digital innovations.
By adopting embedded finance, credit unions can do the same—integrating their services into non-financial platforms like e-commerce sites and local business point-of-sale systems. This can help them gain a presence in spaces traditionally dominated by larger, tech-driven companies, making it easier for consumers to access the services they need, right when they need them.
Use data to drive personalization
Data is a powerful tool for making engagements more relevant and tailored. Credit unions can target specific consumer segments with firm-rate financing options based on individual risk profiles. They can provide personalized financial wellness tools and product recommendations at the point of sale. By doing so, credit unions can become matchmakers, connecting consumers to better rates and responsible options. With rising loan demand and the ongoing deposit crisis, creative, data-driven solutions will allow credit unions to continue serving their communities.
Eliminate ‘memberization™’
While fintechs onboard new users in minutes with a simple sign-up process, many credit unions still require consumers to fill out lengthy applications before they can access financial products. This friction creates unnecessary inertia and makes credit unions seem more difficult to work with than their fintech competitors.
Instead of requiring consumers to fill out an application to ‘become a member’ upfront, credit unions should streamline the onboarding process, automating membership enrollment to remove barriers and improve conversion rates. This isn’t just about making things easier for consumers; it’s about survival in a market where convenience wins. Credit unions must ensure that their services don’t feel antiquated compared to digital-first competitors.
Regulatory shifts and changing consumer expectations will shape the future of credit unions in 2025. The future belongs to those willing to evolve and innovate. Credit unions that embrace embedded finance, simplify member onboarding, and actively engage younger consumers in meaningful ways won’t just survive the changing landscape; they’ll thrive in it.
