All Aboard the Fintech Service Bus: Accelerating Digital Transformation

This piece is based off of a roundtable discussion at the CU 2.0 Brainstorm Event in January 2022. It’s not intended to be comprehensive—rather, it will provide a quick look at emerging trends in fintech service bus strategies for credit unions.

Several Brainstorm Event panelists suggested that credit unions are now technology providers. If that’s true—and we believe it may be—then they are unfortunately inefficient technology providers.

Different core systems, legacy infrastructure, complex tech stacks, and limited resources impede the deployment of new technologies and solutions. A fintech service bus—a streamlined and systematized way to onboard new vendors into new environments at scale—is the next step toward helping credit unions move forward.

Expert panelists from Mobetize, CommonWealth One Federal Credit Union, BankingON, and ModusBox join the CU 2.0 Brainstorm Event roundtable to share their insight:

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Fueling CU Innovation and Growth with a Banking Marketplace Super-App

Ajay Hans, CEO of Mobetize, jumps right into open banking trends:

  • Improving competition and consumer choice;
  • Expanding financial inclusion; and
  • Strengthening consumer privacy.

Open banking principals are available to credit unions, too. Hans suggests the following three strategies to accelerate digital transformation and compete:

  • Embed a member-first ethos into the culture;
  • Support that culture with branches and meaningful human/community relationships; and
  • Double own on digital, member experience, and data to implement a banking marketplace strategy.

The last one is key. Currently, member access banking solutions through multiple channels. However, if credit unions incorporate partner technologies into their digital banking platforms, they can offer a broader, more consistent experience across all of a member’s finances.

It comes down to this:

Credit unions should pursue partnerships that will allow them to provide more solutions through their digital banking platform, turning their platform into a broader, more comprehensive banking marketplace for their members.

A CEO’s View on Digital Transformation Growth

Frank Wasson, President and CEO of CommonWealth One Federal Credit Union. Wasson started with what is now a classic question:

Who led the digital transformation of your company over the last few years?

  1. The CEO
  2. The CTO
  3. COVID-19

The answer is obvious. And by extension, we should remember that transformation almost always come from without rather than within. Whether from fintechs, consumer expectations and demands, or something else, external pressure is the biggest driver of technology change.

Additionally, Wasson noted that CU staff are the “middleware” in digital transformation. They’re the ones usually tasked with implementing and supporting new solutions. Ultimately, that’s unsustainable—they need to be focused on members, not technology.

Ultimately, Wasson says this:

It’s not enough to introduce new technologies. You have to think about scale, too. Otherwise, digital transformation will be disorganized and difficult every time.

Fintech Experience Engine and Mobile Integration Hub

Alexey Krasnoriadstev, President and CEO of BankingON, focused immediately on the member experience of any fintech solution.

Or, to be blunt:

You can’t just integrate a bunch of technology and solutions into your mobile app… it also has to make sense to the user.

The more fintechs you integrate, the more siloed data you have. If you have all the products and support in the world, but members can’t figure out where to find them or how to use them, then you’re doing it wrong.

What credit unions need are:

  • Tools for credit unions to integrate fintechs faster and easier;
  • More data and better APIs;
  • A focus on user experience (UX) and design (UI); and
  • Digital banking partners and platforms that help credit unions reinvent themselves as technology companies.

To accomplish all this, centralized data, a centralized data strategy, and an increased focus on user experience will be key.

APIs, Microservices, and Automations

David Wexler, CEO of ModusBox, is no stranger to the concept of a fintech service bus. In fact, ModusBox already does a lot of the work that a fintech service bus would. They help credit unions with APIs, microservices, and automations.

In short, credit unions work with an increasing number of banking service vendors. While this provides them better banking solutions, it also increases the burden on credit union tech staff and makes for more disjointed member experiences.

To prepare for the acceleration of digital transformation, credit unions will need to:

  • Automate manual processes,
  • Fill capacity gaps, and
  • Move toward embedded solutions.

Additional Discussion

Kirk Drake, Founder of Ongoing Operations and CU Wallet and CEO of CU 2.0 and Painted Hills, led 30 minutes of lively discussion.

Each Brainstorm Event session features 25 minutes of expert presentations and insight. Then, CU 2.0 welcomes audience participation and interaction so that everyone has a chance to weigh in, share their view, and discuss strategy, tactics, and nuance with presenters.

Join the Conversation

CU 2.0 hosts biannual Brainstorm Events featuring expert panels of credit union and fintech leaders. Topics range from marketing challenges, leadership strategy, and data analytics insights, to emerging technologies such as artificial intelligence (AI) and blockchain/DeFi.

Each session features ample discussion and networking time. Save your spot at our next one here.