Initially perceived as threats to credit unions and financial institutions, financial technology – more commonly known as fintech – disrupters and innovators are now widely recognized for the opportunities they represent. In fact, with the continued digitalization of financial services and the adoption of fintech products by both the financial services industry and consumers, many credit unions are beginning to embrace fintech collaboration.
The term “fintech” is primarily used to describe small start-up companies that develop innovative technological solutions in areas including digital payments and big data. By design, they are often created to resolve a specific functionality gap in the industry or enhance an experience that exists today but that is often overly complex. They typically isolate a niche experience that needs enhancing and build a more intuitive, easier-to-use digital solution. Due to fintechs often being solely focused on solving only one or two problems, they can dedicate all their time and resources to refining and achieving those particular solutions.
So why should credit unions consider fintech collaboration? Fintechs can add extraordinary value to credit unions and other financial institutions by making it easier for them to compete with big tech through identifying and solving specific gaps. Fintech partnerships can give credit unions the ability to provide cutting-edge solutions that help enhance the overall member experience through the personalized and digital-first experience today’s consumers expect. Providing the most sought-out, innovative payment solutions that consumers have access to through the big banks – for example, contactless and mobile payments management, among others – is critical for credit unions to remain competitive in the marketplace and retain members.
The Added Value
Realizing the value it can bring to their owner credit unions, PSCU – the nation’s premier payments credit union service organization (CUSO) – was an early adopter of fintech collaboration. Through strategic partnerships, PSCU has been able to offer credit unions the tools, experiences and services members are seeking. For example, PSCU’s partnership with Amount – a fintech focused on next-generation digital account opening, lending, and buy now/pay later (BNPL) solutions for some of today’s larger financial institutions – is helping the CUSO and its owners resolve the pain point surrounding the often lengthy process for account opening and lending approval. With Amount’s data automation and advanced identity-verification technology, consumers can quickly and easily apply for credit cards from anywhere and be approved instantly. Not only does it make the process faster and easier, but it also provides consumers who are not yet members with the ability to apply for credit union membership as a part of the credit card application process, driving new member acquisition.
Another example is PSCU’s partnership with Curinos, a global data intelligence business. Credit unions have traditionally struggled with obtaining necessary data to strategically manage their digital offerings. Curinos is working with PSCU to close this gap. PSCU’s Advisors Plus consulting team is utilizing the Curinos Digital Banking Hub – a centralized platform of digital banking journeys that allows financial institutions to review digital banking capabilities in the market – as part of its new Digital Consulting Practice. Through this strategic collaboration, PSCU has added an extra layer of capabilities to its offerings to empower credit unions with a detailed analysis of member preferences and industry best practices.
Finally, PSCU’s acquisition of Juniper Payments, the largest cloud-based non-bank third-party provider of inter-bank transaction and reporting systems in the country, expanded the CUSO’s value-added services to support additional payment types. The acquisition, announced in May, gives PSCU access to multi-tiered payments, enabling the CUSO to directly participate in faster and real-time payments development, among other technological advantages.
Fintechs are uniquely positioned to introduce cutting-edge technology to the market at a rapid pace, setting the tone for member expectations in the financial services industry. By forming strategic partnerships, credit unions can leverage fintechs’ technology to keep up with competing financial institutions and provide unparalleled member experiences. When done right, these partnerships can play a critical role in growing the bottom line and accelerating innovation.
Scott P. Young oversees the Innovation, Design and Integration Teams at PSCU. With over 25 years of experience in payments, Scott started his career at First Data in Omaha before moving to Pentagon Federal Credit Union (PenFed) and more recently, Bank-Fund Staff Federal Credit Union before joining PSCU in late 2019. A passionate advocate for the credit union movement, Scott is also a leader in Diversity, Equity and Inclusion (DEI) efforts at PSCU and across the industry. Scott is a graduate of the University of Nebraska.