Fintechs and Credit Unions Teamup to Design Tomorrow's Consumer...

Fintechs and Credit Unions Teamup to Design Tomorrow's Consumer Experience

By Brian Kaas, Vice President-Corporate Development, President & Managing Director, CUNA Mutual Group

Brian Kaas, Vice President-Corporate Development, President & Managing Director, CUNA Mutual Group

Consider these challenges facing the financial services industry:

Parental-controlled mobile banking that teaches teens to manage their finances. Student loan refinancing programs aimed at tackling a looming generational financial crisis. After-market extended warranty coverage geared to extend the life of used vehicles. Round-the-clock fraud and security monitoring services that span the financial ecosystem.

FinTechs and credit unions nationwide are collaborating to address these and many more of today’s financial industry challenges. Fueled by venture capital groups like CMFG Ventures (a subsidiary of CUNA Mutual Group), a start-up approach is driving a host of tech-driven solutions that would have been impossible in traditional industry silos.

“As a proponent of FinTechs, the challenge credit unions face is the vast number of companies entering the FinTech market,” said Michele Dean, chief strategy officer, Jovia Federal Credit Union, Westbury, New York. “We need to quickly drill down and vet companies that can help us move the needle.”

FinTech companies and credit unions from around the country gathered Sept. 16-17, in Madison, Wisconsin to exchange their ideas. Conversations were robust and revealed some best practices, including:

• Don’t put all your eggs in one basket: It’s an old saying, but it rings true in the venture capital space. The industry – and ideas – move quickly. Skip the whale hunting and look for credit partners who are willing to be flexible and agile.

• Co-develop whenever possible: Make sure your credit committee is on board from the get-go with your R&D process. This will help smooth the runway when your idea hits a roadblock.

• Build scale quickly: Whatever niche you’re addressing, ramping up your solution to compete or partner with key industry players is essential.

The common thread between summit participants was a focus on providing an exceptional consumer experience. While APR’s and rate shopping may still factor in consumer decision making, a seamless user interface is essential.

While sleek mobile apps grab headlines, significant capital and tech resources still pour into behind-the-scenes, back-end systems. Some participants argued this is where the real magic – and venture capital - opportunity lies.

“Banks are beating credit unions in the back office. You see this when comparing their efficiency ratios,” said Kelly Chambers, chief marketing and technology officer, Heritage Credit Union, Madison, Wisconsin. “Credit unions of all sizes can partner with FinTechs to automate behind the scenes, which allows more budget to be focused on building a forward-thinking member experience, both digitally and in-branch.”

Other emerging trends that FinTechs and credit unions are tackling include:

• The Gig Economy and the underbanked. Hundreds of thousands of individuals may not have W-2s. How can the industry provide solutions to address their financial needs, like loans and other credit requirements?

• The Health and Wealth intersection. Millions are saving for their hard-earned retirement, but forecasting tools are needed for baby boomers to calculate the long-term costs of healthcare.

• What about the predicted recession in 2020? Experts recommend having a firm handle on your cash flow and make sure valuation conversations are accurate.

• Data-driven decision making. Evolving organizational capabilities surrounding machine- learning technologies to drive improved human decision making.

CMFG Ventures’ annual Strategy Summit will continue to explore relevant topics impacting credit unions and the FinTech industry at next year’s event.

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