Credit Unions Looking Into Fintech Partnerships
As consumer expectations change in a trend toward a more digital financial services landscape, credit unions are now exploring new services to remain innovative in a market that is rapidly growing more competitive. As mobile wallets and digital account openings have become product offerings that are demanded by modern consumers, many credit unions are looking into fintech partnerships to keep up.
“New areas are overtaking these priorities for credit unions,” said Owen Wheatley, lead partner for banking and financial services at Information Services Group, a Connecticut consultancy, according to American Banker.
Credit unions are prioritizing the implementation of real-time payments to keep up with bigger institutions and paytechs like Venmo and PayPal. 24 percent of credit unions are planning to utilize real-time payments in 2022, according to a survey by Cornerstone Advisors from December.
Additionally, credit unions have increasingly offered Bitcoin accounts since December, when the National Credit Union Administration said federally chartered credit unions can offer cryptocurrency services in partnerships with crypto firms. Both Visions Federal Credit Union in New York and Idaho Central Credit Union rolled out Bitcoin accounts for their customers.
“As trusted financial institutions, credit unions are well placed to offer crypto, and it’s a good way for them to attract younger members,” said Wheatley. “But, until effective cryptocurrency regulation is introduced, credit unions should be cautious due to potential reputational damage if something goes wrong, and just offer basic services such as buying, holding, and selling crypto.”
Credit unions are starting to automate the lending process as AI-based loan underwriting technology can help institutions use their data to approve loan applications from consumers who might otherwise get rejected by traditional scoring systems. It can also help credit unions compete with fintechs that offer instant loans.
“Technology can prevent members from getting rejected because of their credit score alone when data, such as their previous history with the credit union, shows they are capable of repaying a loan,” said Patty Corkery, CEO and president of Michigan Credit Union League.