Members don’t hate fees, they hate friction

Today’s consumers are sending a message across nearly every industry: the lowest-cost option is not always the one they choose.

They still care about price and they’re still comparing their options. But they are also increasingly willing to pay more when the experience saves time, reduces effort, or solves an immediate problem. Grocery delivery, ride share, same-day shipping, convenience fees, and instant transfers have all normalized a simple tradeoff: when the value is clear, convenience can outweigh cost.

Financial services are not exempt from that shift.

That may be uncomfortable for credit unions to hear. After all, credit unions are careful about fees for good reason. The member-first philosophy is built on trust, fairness, and long-term relationships. No one wants members to feel like they are being charged unnecessarily or pushed into a more expensive experience.

But the market is showing something more nuanced. Members are not only members; they are consumers. Their expectations are being shaped by every fast, digital, low-friction experience they have outside the branch, and those expectations are starting to influence how they evaluate financial products.

Home equity is one place where this shift is becoming hard to ignore.

Non-banks lenders are gaining ground, even though they are not always competing on the lowest-cost experience. In some cases, borrowers may be paying origination fees estimated around 5% on HELOCs. And yet, many are still choosing those providers because the experience feels faster, clearer, and easier.

Experian’s latest housing report reinforces that shift. Non-bank lenders saw a 140.2% increase in HELOC originations from 2023 to 2025, significantly outpacing banks and credit unions. Experian points to digital-first experiences and streamlined workflows as increasingly decisive factors for borrowers.

That should challenge a common assumption for credit unions: that members will automatically reject fees. The real issue may not be the fee itself, but rather if the member believes the experience is worth it.

The same logic that drives consumers to pay for convenience in other parts of their lives is starting to matter in home equity lending. Members don’t hate fees as much as they hate friction.

In home equity lending, borrowers are usually trying to solve a real and timely financial need, such as funding a renovation, consolidating debt, covering an unexpected expense, or accessing equity while timing matters.

Those needs make the experience itself part of the value.

A competitive rate still matters, but it is no longer the only factor shaping the borrower’s decision. If the process feels slow, confusing, or uncertain, the member may start to question whether the lower-cost option is actually the better one. Speed, clarity, and ease are no longer luxuries in lending. They are part of how borrowers evaluate the offer.

Credit unions often worry that they will get pushback from members on fees. But the bigger risk may be the friction members are already experiencing in the lending process.

Home equity lending often still involves manual handoffs, document delays, unclear next steps, and long cycle times that make the process feel more complicated than members expect. And those expectations are no longer being shaped only by other credit unions or community banks. They are being shaped by every fast, digital, low-friction financial experience members use in other parts of their lives.

That does not mean every member wants a fully automated lending experience. It does mean they know what it feels like when a process is clear, the next step is obvious, and money moves quickly. They also know when it does not.

What makes this especially important is that members may not always complain or explain where their experience broke down. They may not describe the issue as operational friction, or even know which internal step caused their waiting. They simply know the experience felt longer and harder than it needed to.

And in a competitive market, that feeling matters.

A member can value the credit union relationship and still choose another provider that feels easier to work with in their moment of need.

Credit unions do not need to abandon their values to rethink convenience-based pricing. In fact, the opposite may be true.

A modern member-first approach should not only ask, “How do we keep costs low?” It should also ask:

Sometimes, the most member-focused experience is not simply the one with the lowest cost. It is the one that removes stress, saves time, and helps the member move forward with confidence.

That does not mean credit unions should add fees without thinking or charge extra for every service. It means fees need to be viewed in context. If a fee is attached to a faster, clearer, more convenient experience, members may view it differently than they would a fee that feels random or unnecessary.

How the fee is positioned matters. But the experience behind it matters more. A convenience fee only makes sense if the convenience is real.

For credit unions, the opportunity is not to introduce new fees simply to generate additional revenue. It is to rethink how value is communicated and delivered.

If a member is paying for speed, they should understand what that speed means. If they are paying for convenience, the process should actually feel easier. If the institution is positioning a premium experience, the follow-through has to be there to support it.

That is where credit unions have important work to do.

Before reframing fees, credit unions need to understand whether their current lending experience supports the value they want to offer. Can they deliver on a predictable timeline? Can they show members what happens next? Can they reduce the friction that tends to slow loans down?

If the answer is unclear, the issue is not pricing. It is process readiness.

That is why the conversation around convenience fees should begin with the experience, not the revenue opportunity. Members are not resistant to value. They are resistant to paying more for an experience that still feels slow, unclear, or difficult.

Fortunately, credit unions do not have to choose between affordability and convenience.

The real challenge is making sure the lending experience reflects what members now expect from the financial tools they use every day. That means taking an honest look at cycle times, borrower communication, application visibility, and the points where manual work slows the process down.

Modern lending is not only defined by cost. It is defined by how well the experience meets the member’s needs in that moment.

For credit unions, this creates an important opportunity. By improving the home equity process first, they can create the foundation for stronger positioning, clearer value, and more confident conversations around speed and convenience. A Home Equity Health Check can help evaluate whether your current lending experience aligns with modern member expectations and where operational friction may be getting in the way. Request one today to get started.