As consumer preferences shift towards a digital-first mindset, credit union executives are teaming up with financial technology firms to modernize their offerings.
Unlike their larger counterparts, many boutique credit unions don't have the necessary economies of scale to develop products such as
Partnership isn't always the right answer. Regulators have continued to
But the right partner can provide the necessary expertise and resources to bridge the technological gaps between credit unions' capabilities and consumers' demands, said Joel Richard, chief experience officer at Interra Credit Union in Goshen, Indiana, during a panel discussion hosted by the New York-based ad technology firm Prizeout.
"The level of consumer expectations just continues to rise over time, and I think our members expect fast, they expect seamless, they expect digital and — at least from my perspective — we can't always deliver that at the speed and the pace that we need to," Richard said. "Partnering with fintech companies can help us do that, and leverage the strengths that they have."
A recent
The $1.7 billion-asset Interra has seen an outflow of Gen Z and millennial members as they move out of Elkhart County where the credit union is based, but it is working to stay engaged with the demographic and communicate the credit union's remote banking capabilities, according to Richard.
One component of the digital shift is the increased adoption of real-time payment services such as
Amy Hockman, vice president of digital experience at the $9.6 billion-asset Patelco Credit Union in Dublin, California, highlighted how younger members transact in fundamentally different ways when opposed to older consumers and has seen the volume of bill pay among the demographic decrease alongside an increase in Zelle activity.
"They're obviously not running checks and they're barely touching cash. … They've really shifted the model and we have to make sure that our products and services are shifting with that," Hockman said.
The tone for
Members' demands for immediacy and simplicity in their banking experience were fueled by the COVID-19 pandemic, and credit unions can meet these demands by partnering with fintech firms, according to Darlene Johnson, executive vice president and chief growth officer at the $17 billion-asset Suncoast Credit Union in Tampa, Florida.
"Credit unions were born out of innovation, but it feels like we haven't innovated since. … Bringing those fintech relationships in and viewing them as partners rather than competition, it gives us the ability to do just that," Johnson said.
But even as the NCUA warms to fintech partnerships, it is also sharpening its focus on the
David Metz, chief executive of Prizeout, explained how his company utilizes one set of strict standards when developing and deploying its products to ensure it remains compliant with current and future regulations.
"A lot of times technology moves faster than regulation and regulation has to catch up to it," Metz said. "So constantly holding yourself to the highest [security] standards and consistency is really important."
In addition to performing due diligence about security, it's important for credit unions to make sure their goals are aligned with any partners they choose, experts say.
"A lot of us here have gotten in early in the fintech credit union partnership space because we want to be innovative, we want to move fast and we want people that can help us do that as well," said Ben Maxim, chief digital strategy and innovation officer at the $7.5 billion-asset Michigan State University Federal Credit Union in East Lansing.
