“Collaborations with fintech companies — once viewed as advantageous — are now essential for survival and growth in the modern financial landscape.” — Danny Phillips, SVP, CU*SOUTH
Credit unions are facing a pivotal moment in their evolution, addressing the critical need for technological innovation through the integration of advanced technologies. As a result, collaborations with fintech companies — once viewed as advantageous — are now essential for survival and growth in the modern financial landscape.
Technological Advancements: A Key To Competitiveness
As reported in a January 2023 article published by American Banker, there is a significant gap in membership growth between larger credit unions, which are equipped with the latest technological advancements, and their smaller counterparts.
For example, credit unions boasting assets of more than $1 billion have experienced an 8.1% growth in membership. Conversely, smaller credit unions with assets ranging from $100 million to $500 million report a 4.3% decrease in membership. This trend highlights the critical role technology plays in attracting and retaining members, with larger institutions leveraging their resources to offer frictionless member experiences and innovative services.
The Risk Of Technological Stagnation
It’s crucial for credit unions to stay technologically updated, especially when considering the competitive pressures arising from both within and outside the traditional banking sector. Credit unions are increasingly losing ground in small business lending, a sector where digital lending tools offered by fintechs and other financial innovators are setting new standards for speed and convenience.
This shift underscores the urgency for credit unions to embrace digital transformations to not only defend their market share but also expand their reach and enhance their service offerings.
Simplifying Processes To Enhance Member Experience
The need for digital optimization extends beyond competitive positioning. It directly impacts the ability to attract new members and business.
According to an October 2022 article published by The Financial Brand, the abandonment rate for digital applications for deposit products was less than 10% for only 14% of banks and credit unions in the United States. This emphasizes the necessity for streamlined, user-friendly processes that would help credit unions significantly reduce abandonment rates and improve operational efficiency.
Embracing The Digital Shift
In order to thrive, credit unions must leverage their unique strengths — such as their community focus and member-centric values — while aggressively pursuing digital innovation and fintech partnerships. This approach not only addresses the immediate challenges of member retention and competitive pressures but also positions credit unions as forward-thinking, responsive institutions ready to meet the evolving needs of their members.
Additionally, this methodology empowers credit unions to enhance their value proposition, attract a broader member base, and secure a competitive edge in the increasingly digital financial marketplace.
For credit unions seeking to navigate this digital transformation, partnering with CU*SOUTH offers a pathway to leveraging state-of-the-art technology and fintech solutions. Visit cusouth.com to book a discovery call and explore how to effectively modernize operations, enhance member experiences, and drive growth in a technology-driven landscape.
Danny Phillips is senior vice president of client experience at CU*SOUTH. Reach him at danny.phillips@cusouth.com.
CU*SOUTH, a 100% credit union-owned CUSO, champions credit union growth and embraces innovation to deliver top-tier, future-ready core processing and mobile banking solutions that redefine member experiences.
