Let’s get one thing clear:
Credit unions are generally not known for their technology. It’s rarely the most innovative, convenient, or user friendly. In many cases, credit union technology is years (sometimes many!) behind competitors.
And yet, the same is often true for banks. Even the big ones. And it makes sense—financial institutions have a lot more to deal with than in-house technological development projects.
On the other hand, fintechs can get away with creating a single solution. They can develop and optimize it without worrying about literally anything else. And that kind of focus gives them the most innovative, convenient, and user-friendly technology out there.
But which fintechs have what you need? Which are right for your credit union? Is a partnership your best option, or would you be better served by a traditional vendor relationship?
Changes to Consumer Behavior
One of the main drivers of technology is consumer behavior, demand, and expectation. For example, let’s say you thought that you didn’t need a mobile banking app. How would your members react to that decision? Chances are that they would let you know how much they desire one. Or they might just leave without saying anything!
The move toward online and mobile banking has been inevitable. (Of course, the pandemic has only reinforced and accelerated this trend.)
And mobile banking is just the tip of the iceberg. There are countless other useful or critical services out there that may make or break a member’s perception of your credit union, such as:
- Peer-to-peer payments
- Premium credit cards and rewards
- Online account opening
- Streamlined or instant digital loans
The list could go on. But the point is that today’s members expect that your institution will provide them with a convenient, user-friendly experience. (The innovative part is just a cherry on top.)
Which Fintech Is Right for Your Credit Union?
Fintechs may have better technology than your credit union, but it’s not always the technology that you need. Or, sometimes, the fintech may not be the best partner or vendor. Here are some questions to ask yourself about a potential fintech partner or vendor.
Do you need what they’re selling? Everyone loves a good deal. Don’t let a good deal fool you into buying something you won’t use—or worse: something your members won’t like. Make sure that they’re solving a real problem!
Which direction is the fintech going? If the fintech in question is open to working with credit unions but suggests that another industry is their real target, they may not be a good fit for long. Or if they plan to develop or emphasize functions that might benefit an institution with different goals, then maybe keep looking.
Does it make sense financially? If a fintech seems otherwise perfect, but their price or ROI is otherwise untenable, see if they’ll work with you. If they won’t, don’t look back. I may think a Ferrari is the perfect car for me, but my budget tells me that a Mustang will do.
Do your cultures align? This is especially important for credit unions, which typically bring a lot more personality and culture to their services. If the fintech doesn’t share your values, then working with them may present long-term challenges.
Can they support your growth plan? If you’re looking to grow quickly, you’ll want to make sure they provide a scalable solution. Or, if you intend to continue serving a smaller community, will their plans to expand leave you in the dust in a few years?
These questions are just a starting place. But they’re important to think about to ensure that you’ll find a good fit. Otherwise, you risk spending a lot of time, energy, and money for a solution that may benefit neither of you in the long run.
Vetting Fintech Vendors
Would you like help vetting fintechs for your credit union? Would you like quick introductions or rundowns on the latest in financial technology?
We’re offering short calls on a quarterly basis to help your credit union stay abreast of what’s new in the fintech world. We’ll also introduce innovative fintechs, those with best-of-breed technology, and we may suggest fintechs looking for strategic partnerships.
The calls are completely free and are as casual as you’d like. To learn more about them, please email Chris Otey.
