Credit unions have traditionally been known for their personal touch and community-focused approach to banking. However, as FinTech providers continue to disrupt the industry, credit unions have more opportunities to stay ahead of the curve and better meet the evolving needs of their clients. By partnering with FinTechs, credit unions can access cutting-edge technology and services that can enhance their competitiveness, help them streamline operations, and mitigate cyber fears, while avoiding associated costs and risks.
Technology can help put people first
Credit unions (CUs) focus on people rather than profits. According to a survey by the Motley Fool, members was accounts with low fees and higher return on their savings. They also want quality customer service, mobile and online access, and robust security features, among other items. How can credit unions assist members with those other needs, such as secure payment transfers and immediate access to funds?
The National Association of Federally-Insured Credit Unions (NAFCU) encourages credit unions to partner with financial technology providers for survival. Like credit unions, FinTech companies also prioritize people. Their banking-as-a-service (BaaS) products, such as digital banking apps or lending platforms, provide new data and insights about members to help credit unions improve their products and services. These innovations help credit unions stay ahead of the curve by meeting the evolving needs of their members.
Why use a technology advisory firm
Many lending intuitions turn to an independent technology advisory firm that specializes in providing expert guidance on the latest trends and technologies in the financial industry. They also help credit unions navigate complex regulatory requirements, identify emerging risks, and develop customized strategies that meet their unique needs. Here are three reasons why credit unions should consider partnering with financial technology consulting firms.
Innovation to Stay Competitive
Nationally, credit unions have seen more failures in recent years than banks, with nine lending institutions that failed between 2018 to 2023, according to the federal National Credit Union Administration. Financial technology can help credit unions survive by harnessing cutting-edge technology and services that can improve efficiency, streamline operations, and enhance member experience.
For example, small businesses tend to favor credit unions, with more SMEs shifting from banks to CUs in recent years. Credit unions could use FinTech to create transparent marketplaces or user-friendly payment infrastructures for members to plug into to showcase their products or services and for secure transactions. Credit unions already have their inbuilt communities and Know Your Client (KYC) procedures to help them. These lending institutions could further compete by pushing BaaS services out to external SMEs who may be interested in their products and services.
Independent technology advisory firms have a deep understanding of the latest trends in the financial industry, including blockchain, artificial intelligence, and digital payments. They can help credit unions leverage and understand emerging technologies to drive innovation, stay competitive, and provide better services to their members.
Operational Efficiency
Today’s members are digital-centric and expect their banking provider to provide them with easy control of their money and immediate access to their accounts. Many processes that were previously manual, time-consuming, and prone to error can be automated, leading to cost savings and better member service. Features like the ability to make mobile payments are used by more than two billion people globally, with millions more consumers coming online each year. FinTech companies can help credit unions easily plugin online and mobile banking options for their members and scale with demand.
Independent technology advisory firms can help credit unions streamline operations by implementing automation solutions that can reduce manual processes, and improve data management, thus helping credit unions reduce costs, increase profitability, and enhance overall operational efficiency.
Risk Management
According to FinTech strategist Christian Junior, credit unions tend to hold back innovation due to their fear of cybersecurity risks, such as phishing attacks and supply chain interruptions.
A technology advisor can help mitigate cyber fears with strategies that include secure IT infrastructure, strong authentication, biometric fingerprint login and data encryption. These cybersecurity tactics allow credit unions to embrace technology innovation while helping credit unions protect their members’ assets and maintain their reputations.
How Hartman can help your credit union develop and implement a FinTech strategy
Barely a year ago, the National Credit Union Association (NCUA) allowed credit unions to digitize their services, thereby helping them remain relevant and competitive by assisting members with core needs, such as secure payment transfers and immediate access to funds. Choosing to lead your credit union into a partnership with FinTech is a great approach, but it needs to start with a clear strategy, a strong cybersecurity backing and be customer-driven. The right financial technology consulting firms can help you expand into many different service offerings and markets and avoid associated costs and risks.
Hartman Executive Advisors can help you align your IT strategy to your business strategy, create a business case, perform proper diligence, and execute implementation to gain traction quicker and more efficiently. If you are a credit union leader who is looking for more information, please contact the experts at Hartman Executive Advisors to schedule a free consultation.