By Catherine York Powers, Constant
Let's be brutally honest here: most of us are guilty of the shiny new toy syndrome. We spend thousands acquiring bright, shiny new members while our existing members – you know, the ones already paying the bills – are stuck with loan servicing tech that would make Windows 95 look cutting-edge.
Here's the punchline that's not so funny: community banks and credit unions lose approximately 20-25% of new customers/members within the first year, with the average acquisition cost being $442 per member.1 That's like buying expensive gym memberships for people who quit after two workouts.
Retention gets plenty of attention in strategic plans, but the budget allocations tell a different story. Consider these metrics:
Yet across industries, 44% of all companies still prioritize acquisition while just 16% focus on retention.2 It's like investing in new rental properties but skipping property management – watching potential returns erode with each maintenance issue you ignore.
The latest NCUA data shows a trend that demands attention. The delinquency rate has risen from 38 basis points in Q1 2023 to 98 basis points in Q4 2024 – a 60-point climb representing a 158% increase in less than two years. Meanwhile, net charge-offs reached 80 basis points by Q4 2024, up 19 points year-over-year.3
These aren't just abstract statistics – they represent real members struggling with their finances. The good news? Technology now makes it possible to intervene earlier and more effectively. Recent studies show that 72% of consumers prefer to handle customer service issues on their own, especially in cases of financial hardship, and 91% would use an online knowledge base if it were available and tailored to their needs.
When members can self-serve in online banking where they can change their payment due date, skip a payment or access hardship relief without having to call and have an awkward conversation, collections workloads can be reduced by up to 40%. At Constant, we've seen credit unions streamline back-office operations and eliminate manual processing entirely, freeing up thousands of staff hours annually while improving member retention through these simple digital capabilities.
Remember when credit unions could coast on superior member service? Those days are rapidly fading into nostalgia.
According to CU 2.0, "Too many credit unions focus on member acquisition at the expense of attrition. Once they find a new member, they stop thinking about that member as a new lead."4
The math is straightforward: It costs "over $400 to acquire a new member" who generates "$100-200 each in revenue per year."4 Even with basic math, that's 2-4 years to break even – assuming they stick around, which if they don't, your origination strategy is upside down.
Meanwhile, LiveSurvey notes: "The credit union member experience used to surpass that of other financial institutions. But as banking practices grow increasingly digital, can credit unions keep up? Some sources say that banks have already closed that gap."5 That competitive advantage we've counted on for decades is being eroded by big national banks and fintechs with large technology budgets.
It probably feels like most credit union retention efforts feel like trying to repair a boat that's already taken on water. There's a reason for that.
CFS Insight puts it bluntly: "Most attrition models look at these deposit patterns and flag a member if they miss one of their expected deposits... By the time your anti-attrition staff calls the member, they could be two or more months from their decision to leave."6
In other words, by the time your traditional retention triggers fire, the member has already mentally checked out. Your "please stay" outreach isn't so much retention as it is an exit interview with better marketing materials.
Want to stop losing valuable members? Here's your three-step approach.
Even the NCUA recommends robust servicing practices. Modern servicing technology takes this from "checking boxes for compliance" to "spotting issues before they become problems."
As Arkatechture explains: "Servicing members includes the everyday operations of managing someone's accounts and continually fostering a good relationship when a member calls with a problem."7
In other words, fix the roof while the sun is shining, not during the thunderstorm.
We live in an era where people expect Amazon-level convenience in every interaction. Yet many credit unions still make members jump through hoops to manage basic loan adjustments.
CUInsight confirms: "Put simply, the speed of approval can significantly influence the choice of a financial institution. A quick loan approval process reduces the risk of application abandonment or seeking financing elsewhere."8
Self-service loan management doesn't just benefit members – it creates measurable financial impact for credit unions too. When members can proactively manage payment timing issues through digital servicing channels, they stay current on their loans. This preventative approach keeps members out of the collections funnel entirely, reducing delinquency rates by 15-20% and freeing staff from processing routine hardship requests. The operational efficiency gains alone often cover the technology investment within the first year.
Modern members want to handle financial matters with the same ease they manage everything else in their digital lives – preferably without having to speak to another human being unless they want to.
Your credit union likely has treasure troves of member data sitting in silos, untapped and underutilized. Arkatechture notes credit unions can now "gain the ability to predict what product is a good fit for a given member, through data and member habits."7
With self-service loan management embedded in home banking, every member interaction becomes a data point that helps your credit union understand patterns and predict needs. For example, members who request a payment skip during the holidays might benefit from debt protection which Constant embeds in the skip-a-pay workflow. These insights allow you to proactively offer solutions before more serious hardship develops – building trust while preventing delinquency.
While credit unions debate upgrading decades-old loan servicing systems, a technological arms race is already underway. The latest NCUA data shows loan growth crawling at 2.6%, reaching $1.65 trillion – a fraction of historical growth rates.9 Meanwhile, delinquency rates keep climbing.
The market understands the stakes: Allied Market Research reports the "global loan origination software market was valued at $4.8 billion in 2022 and is projected to reach $12.2 billion by 2032."10 But here's the disconnect: investing in slick origination while neglecting servicing is like building a state-of-the-art hospital with no beds.
The technology to deliver Amazon-level convenience in loan servicing isn't future tech – it exists today. Self-service hardship management platforms integrate with your existing systems to create seamless member experiences while automating the back-office processes that drain staff time and resources. The most successful credit unions are already implementing these solutions, seeing both immediate ROI through operational efficiency and long-term gains through increased member retention.
The credit unions that thrive won't just be the ones with the most frictionless application process. They'll be the ones who finally recognize that proactive member servicing that focuses on retention deserves at least as much attention – and technology investment – as acquisition.
So which side of history will your credit union be on? The one still losing members through the back door while celebrating new ones coming through the front, or the one that builds a complete member experience from application through the entire loan lifecycle?
Connect with Constant to learn more.
1"How to Elevate the Credit Union Member Experience Through Knowledge Sharing," Bloomfire, September 2023.
2"Customer Acquisition vs Retention Cost – Statistics & Trend," BusinessDasher, September 2024.
3"Credit Union Assets, Delinquencies, Shares and Deposits Grow in the Fourth Quarter," NCUA, March 11, 2025, and "NCUA Releases Q1 2024 State-Level Credit Union Data Report," NCUA, June 17, 2024.
4"Should Credit Unions Focus on Member Acquisition or Attrition?" CU 2.0, February 2020.
5"Improving the Credit Union Member Experience," LiveSurvey, March 2024.
6"Why Don't Member Attrition Models Work For Credit Unions?" CFS Insight, October 2023.
7"The Credit Union Member Experience Lifecycle," Arkatechture, March 2023.
83 ways data is transforming the credit union member experience," CUInsight, March 2025.
9"Credit Union Assets, Delinquencies, Shares and Deposits Grow in the Fourth Quarter," NCUA, March 11, 2025.
10"Growth in Loan Origination Software for Credit Unions," Credit Union Connection, November 2024.