Friday, July 17, 2020

Digital Divide Between Large and Small CUs in the Age of COVID-19

S&P Global Market Intelligence is reporting that larger credit unions are increasing their investment in electronic services leading to a digital divide between large versus small credit unions.

The fallout from COVID-19 is underscoring the need to adopt electronic banking services as a vehicle to connect to members/consumers, as many branches closed their lobbies.

Mobile-based banking services offered by credit unions have steadily gained ground on internet-based banking services in recent years.

For example, 77.3 percent of credit unions offered internet-based banking, while only 48.7 percent provided mobile-based banking services. However, by the first quarter of 2020, the percent of credit unions offering internet-based banking and mobile-based banking services was 79.8 percent and 65.9 percent, respectively.

However, mid-sized and large credit unions are offering the most electronic financial services and are the most tech-savvy.

Over 97 percent of credit unions with more than $100 million in assets offer mobile banking services. But just over half of credit unions with less than $100 million in assets offer such services.

S&P Global Market Intelligence noted that there is a significant gap in e-signature authorizations between smaller credit unions, at 19.01 percent, and mid-sized and large institutions at 63.41 percent, and 70.06 percent, respectively.

Only 41.61 percent of the smallest credit unions permitted new loans to be originated electronically, compared to 92.38 percent of mid-sized credit unions and 95.76 percent of the biggest institutions.

The article makes it clear that these larger credit unions are better positioned to make the investments in technology than smaller institutions.

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