Imagine being asked to print a form, sign it, and deliver it somewhere. How likely are you to do it right away? Or, if you could do it online but had to wait months for processing, would you rush? That was the frustration with direct deposit switching—until now. As credit unions’ share of PFI has declined over the past five years, it's no surprise that streamlining direct deposit switch has become essential for them to reclaim primacy.
Direct deposit is the foundation of a member’s relationship with their financial institution. Once members set it up, they’re more likely to stay loyal, use additional services, and engage deeply with their credit union. With 87% of consumers considering their direct deposit institution as their PFI, direct deposit is key to winning the battle for primacy.
Despite its importance, many credit unions struggle with outdated switching processes, while larger banks—owning 63% of PFI status—continue to capture these relationships.
Why Direct Deposit Matters for Credit Unions
Assuming your members want to deepen their relationship with your credit union, is it easy for them to take the most important step—bringing over their direct deposit? In an era where larger banks and fintechs have streamlined the process, credit unions must adopt similar solutions to stay competitive. While over 2,000 credit unions offer direct deposit switching, the process is often slow, requiring 1-2 pay cycles or paperwork, frustrating members.
This is where newer Direct Deposit Switch (DDS) solutions come in, making it easier for members to transfer their direct deposits with just a few clicks.
Benefits of Newer Direct Deposit Switch Solutions for Credit Unions
Modern direct deposit switch (DDS) solutions are revolutionizing the process for both credit unions and their members, offering significant improvements over outdated methods. Here’s how these new solutions provide a superior experience:
1. No Logins or Passwords Required
Unlike older systems that required members to create logins and passwords, newer DDS solutions authenticate members directly with their payroll platform.
2. No Need to Manually Enter Account and Routing Numbers
Members no longer have to type in their account and routing numbers, which most people don’t have readily available. This not only improves the user experience but also reduces the risk of errors or typos that can cause significant delays or issues in the switching process.
3. Automatic Account Validation
The account number is automatically validated by the system, removing the need for traditional, outdated practices like providing a voided check, which used to be required by many credit unions. This step adds efficiency and ease to the process.
4. Instant Switch
One of the most significant advantages of modern DDS solutions is that the switch happens instantly. Because it is made directly in the payroll system, there’s no need for members to wait 1-2 months or continually monitor the status of their request. This instant processing meets the expectations of today’s digital-first members.
5. Enhanced Security
Members initiate the process from their trusted online banking platform, ensuring they are in a secure, fraud-protected environment. This sense of security is crucial in building trust with members, knowing their sensitive information is handled with care.
By leveraging these modern DDS solutions, credit unions can offer a more seamless, efficient, and secure experience for their members, further driving engagement and satisfaction.
Credit unions that adopt these modern DDS solutions report 3-4x increases in direct deposit acquisition, improved member engagement, reduced call center workloads, and greater trust through top-tier security.
Impact of Direct Deposit Switch
As Mitch Rosembaum, VP of Marketing at Credit Union of Colorado, states, "DDS has been a game-changer for us. We are using it for onboarding indirect members, shortening account funding time, and delivering the kind of fast, digital-first experience that younger members expect."
Credit Unions using DDS are seeing a 30 to 65% increase in direct deposit enrollment, a 65% reduction in the time to first deposit, and a 15% increase in lifetime value.
The Future of Member Engagement
Direct deposit is key to securing PFI status and fostering long-term member relationships. By offering a seamless direct deposit switch solution, credit unions can improve member experiences, increase engagement, and drive growth. In a competitive landscape, providing members with the tools they need to quickly and easily switch their direct deposit can make all the difference.
Contact us today to learn more about how Prisma's new Direct Deposit Switch, powered by Atomic FI, can transform your credit union’s member experience.
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