The most valuable tech partnerships boost financial inclusion, reduce fraud and seamlessly enhance the member experience.
Providing value is what every credit union aims to do—it is the goal behind searching for services and solutions that strengthen the member experience and helps pinpoint the services members desire.
Paul Davis, director of market intelligence for CUESolutions provider Strategic Resource Management, Memphis, says that any digital convenience CUs can provide is a plus. “Still, a credit union’s mobile interface should, at a minimum, be stress-free for members. This includes easier navigation and enhanced functionality, the essential elements of a digital platform.”
An excellent place to start a value-enhancing initiative is your consumer banking platform. “This includes adding tools within your platform to help members improve their financial situation—tools to qualify and apply for loans before rates increase, track expenses and deadlines for payments, improve budgeting skills and credit scores, or plan for retirement,” says Davis.
A recent SRM report found that service remains the top differentiator for credit unions, and in today’s climate, it’s not surprising that members are open to myriad digital offerings. “A comprehensive suite of products built with innovative partners to anticipate your members’ needs, including those that emphasize member well-being and social causes, can keep consumers from going to another credit union or challenger bank,” adds Davis.
Fintech partnerships can improve the speed at which decisions are made on behalf of the member, he notes. “These include online loan applications, credit decisioning software and AI (artificial intelligence) to help members navigate the process.”
Offering a streamlined experience is also essential—and if a member has to call or walk into a branch, you know there’s work to be done, says Sarah Murray, deposit product manager and counsel for Compliance Systems, Grand Rapids, Michigan, a compliance software provider that works with both financial institutions and technology partners. “What information is the member looking for that they can’t get through your app today? Is it information that helps members compare products or details about your credit union’s policies?
“Adding this content can quickly add value, simplify service and ensure your credit union is part of the member’s daily financial decision-making,” she continues. “If your app is not robust enough to provide a single stop for banking services, it risks increased abandonment rates and member frustration.”
When deciding whether to leverage fintech to provide online or mobile banking enhancements, “much depends on a credit union’s membership and overall digital strategy,” says Sunil Sachdev, head of fintech and growth for CUES Supplier member Fiserv, Brookfield, Wisconsin. “For example, if a credit union has financial wellness as part of its mission, fintech experiences that support budgeting, paying down student debt or teaching kids how to be smarter financial consumers are a natural fit.
“Fintech partnerships should also enable credit unions to offer enhanced capabilities while building their brand and delivering popular digital-first experiences,” notes Sachdev. “For example, two fintechs Fiserv partners with, Goalsetter and FutureFuel.io, recently won 2022 Fintech Breakthrough Awards for their contributions to personal finance. Credit unions can integrate these services as compelling digital experiences that make life easier for distinct membership segments.”
Offering fintech capabilities today may mean delivering a white-label (rebranded for the credit union) version of the fintech’s app to members or linking to the app from the credit union’s digital platform. Sachdev predicts that as technology evolves, the member experience will more often have fintech functionality embedded seamlessly into the credit union’s digital experience.
Credit unions that take a seamless, digital-first approach to service, enabling members to complete any process online, will boost satisfaction levels, notes Steven Kaish, SVP/product marketing and alliances at Glia Technologies, New York, a fintech specializing in digital customer service.
Glia’s digital customer service platform integrates easily and securely into a credit union’s digital properties—from public websites to authenticated portals and mobile apps—with a single line of code. More than 150 credit unions currently use DCS.
“Eliminating the need for new physical branches, a DCS virtual branch engages members with messaging, voice and video banking online,” Kaish explains. For example, $1 billion Unitus Community Credit Union, Portland, Oregon, which averages 24,000 monthly calls, implemented DCS in 2020. “The result was a 28% reduction in online handle times, with 85% of virtual branch visitors saying they would interact with the institution again. It also earned a 4.7 out of 5 client satisfaction rating—higher than any of the credit union’s physical branches.”
Glia offers a “quick, nondisruptive implementation so credit unions can provide seamless member experiences,” continues Kaish. “DCS enables members to choose their preferred communication channels for continuity and choice and connect with credit union representatives however they prefer, without disengaging from the credit union’s digital domain.”
A solid fintech strategy always begins with the member. “Everything a fintech does, from product design to marketing language, should not only seamlessly integrate but appeal directly to that consumer,” says Bolun Li, CEO of financial education platform Zogo, Austin, Texas. “This customer-first approach is an obvious first step to building a better product and is often overlooked. The key is to adapt to the demands of tech-focused generations without compromising the quality of service. That’s why the best fintech partnerships cut barriers to access and amplify a credit union’s good work, making it inclusive to anyone who wants it.”
A successful partnership will blur the borders between a fintech product and a credit union’s offerings with simple integrations and hands-off implementations. “For us, it’s a merging of experiences,” notes Li. “With our integrations, we can include our educational content directly in a partner’s app; users can move from their financial institution’s product directly into ours without any breaks in the experience. They receive easy access to financial literacy education, partners build goodwill with members, and Zogo gets to do what it does best: educate.”
Li believes that strengthening members’ financial acumen is an opportunity for every credit union—and it’s an area where fintech can assist.
“According to the TIAA Institute, the average American adult cannot answer about 50% of questions regarding key financial concepts,” says Li. “This lack of financial literacy translates into problems, such as risky spending, excessive debt and vulnerability to fraud. When credit unions can educate their members, they aren’t just teaching them about finance; they’re taking the fear out of the equation and replacing it with confidence.”
Financial illiteracy doesn’t just mean a lack of financial knowledge; it can also translate to inaction. “Credit unions offer many financial products and services, and each one not explored is an opportunity lost,” says Li. “We want to open those opportunities to our users by giving them the critical, baseline knowledge they need.”
Supporting financial literacy initiatives can also help credit unions reach outside their existing member base. “It takes only one good lesson to turn a learner into a teacher, and people love talking about the valuable things they’ve learned,” says Li. “Being a source of trustworthy education is the best possible position for a credit union. People will trust your advice—and they’ll also seek it out. With 76% of Gen Z consumers advocating for improved financial education, that’s a lot of seekers.”
“Fintech solutions can and should lead to greater financial inclusion,” says Nathan Pinto, CEO of Credit Mountain, a Dallas-based fintech specializing in AI-powered credit counseling tools. “Reaching underserved communities and helping members weather the tough times remains critical—and is the largest opportunity for growth in today’s market.
“These individuals require a high personal touch to assist with financial literacy gaps, money management coaching or challenging credit profiles,” Pinto explains. “And while credit unions have previously moved the needle with underserved communities by deploying trained credit counselors, a one-on-one approach is unscalable and fails to meet changing consumer preferences for digital.
“When a credit union can identify these borrowers and implement scalable personalization, it can bring help to the masses.”
Credit Mountain’s AI Credit Counselor platform equips participants with tools for credit card paydown, rent reporting and credit-builder loans. “Currently, nine credit unions are delivering the experience via a white-labeled (standalone) mobile application with custom branding,” adds Pinto. “As a standalone option, nonmembers as well as members can easily download and use the credit counseling experience, which requires zero integration with existing credit union systems.”
For credit unions preferring integration with their own websites, a mobile-friendly viewer of AI Credit Counselor can be created in a CU-branded microsite that opens in a new tab.
Payments & Bill Negotiation
According to 2021 Fiserv consumer trends research, “Expectations & Experiences: Fintech Adoption”, consumers are open to using third-party nonbanking apps and websites to pay a bill (63%), buy a product online and pick it up in-store (69%), and pay another person (74%). Additionally, almost seven in 10 consumers (68%) had used digital wallets in the 12 months before the survey, compared with 49% in 2019, and two-thirds of consumers (67%) now use voice-activated devices to make their lives easier.
“Convenient new ways to pay are a growing area of innovation” in the financial services space, says Sachdev. “For example, credit unions can implement Zelle as a fast and easy way to send money to other people. This is an important opportunity to rival the growing popularity of services like Venmo and PayPal, which continue to expand their capabilities and build market share with users. Zelle can also be integrated into the credit union’s website or mobile app for seamless access.”
Payment strategies can also build loyalty. “Fintech partners can help members fight the effects of inflation and improve their financial position—and bill negotiation and subscription management are two capabilities that provide an immediate impact,” says Steve McKean, CEO of fintech ApexEdge, Miami, the developers of Billshark.
Billshark is software that’s embedded in a credit union’s mobile app or website. Once it’s integrated, the member does not leave the credit union’s digital channels to use Billshark’s features.
“Bill negotiation enables members to save money by helping them secure better pricing and/or rates on monthly bills, creating a revenue opportunity for the credit union,” notes McKean. “ApexEdge helps credit unions generate additional noninterest revenue through Billshark because they get a share of the total savings negotiated on behalf of the member. Subscription management builds on that by assisting members in eliminating unnecessary subscriptions.”
Credit unions that invest in tools that improve data quality and expense categorization also enable members to see how much of their money is directed towards housing, utilities, takeout food orders, commuting costs, etc. “This better data ultimately helps members manage their monthly budgets, giving members the tools to succeed, especially during financial uncertainty,” says McKean.
Today’s consumers are also looking to their CUs as trusted institutions to assist with buying, holding and selling cryptocurrency.
“National Credit Union Association rules and regulations prevent credit unions from holding cryptocurrency, offering it as a dividend/interest or being custodian of a member’s cryptocurrency holding,” Sachdev explains. “However, the NCUA issued guidance in December 2021 clarifying it does not prohibit credit unions from partnering with third-party providers of digital asset services. … This includes facilitating member relationships with third parties that allow credit union members to buy, sell and hold various uninsured digital assets.”
Murray reports that, as such, some FIs are aligning with fintech partners to enable consumers to buy cryptocurrency through their deposit accounts and with debit cards. “Consumers can also access cryptocurrency in their digital wallets through single sign-on technology via the same website or mobile application where they manage their traditional deposit accounts. Account interest or rewards from debit cards can be easily transferred from a digital wallet; the flow may also go in the other direction, with the proceeds from selling crypto deposited back into a deposit account.”
Fiserv recently analyzed ACH debits from a sample of nearly 200 financial institutions. “More than half a dozen popular crypto custodians appeared, representing over $15 million flowing out of the financial institutions in just 60 days,” shares Sachdev.
Credit unions may be surprised to learn that it’s not just the youngest consumers adopting fintech for crypto services. “Fiserv research shows that 78% of Gen X and boomers who bought or sold crypto used a fintech—compared to 65% of Gen Z and millennials,” he reports. “As crypto adoption becomes more mainstream, we’re focusing on helping credit unions partner with fintechs to facilitate member relationships with third parties like NYDIG that allow members to buy, sell and hold digital assets.”
There are many crypto exchanges available where members can act as their own custodian and purchase crypto directly, using a crypto wallet for safe storage. But “by embedding crypto services into the credit union digital experience, it provides a single location for members to manage both traditional and crypto accounts, which helps deepen the credit union relationship,” says Sachdev. “This is why Fiserv has partnered with crypto custodians to enable an embedded crypto experience.
“An added benefit of accessing an app like NYDIG via a credit union integration is that the credit union will have multifactor authentication in place to authenticate the user through the digital channel, so members have an added layer of security protecting their crypto activity” from fraudsters, he adds.
Individual states and the U.S. federal government are developing legislation and policy for digital currency, so credit unions interested in providing cryptocurrency-related services must stay abreast of new regulations. Murray reports that Wyoming, Arkansas, Nebraska, Texas and Indiana have enacted legislation modifying their Uniform Commercial Code to add new definitions and rules related to virtual currency. Additionally, according to the National Conference of State Legislators, 33 states and Puerto Rico had pending legislation in the 2021 legislative session, and 17 states have enacted legislation or adopted resolutions.
“With data breaches at an all-time high, credit unions and consumers need to elevate their protection measures and vigilance against fraud,” says John Ainsworth, president of Bonifii, Denver, the developer of MemberPass, a digital identity solution.
Credit unions should consider two points, says Ainsworth: 1) how they can ensure their financial accounts are secure and protected from account takeovers, and 2) how members can protect their own accounts. “Seek partnerships that help your credit union and members reduce the risks associated with cybersecurity and fraud.”
MemberPass offers a secure way for members to authenticate their identity. Specifically, Ainsworth says, MemberPass uses distributed ledger technology within a decentralized database that the consumer controls to deliver a verifiable credential. “Members choose the information to provide and when and where it is shared. Compare this to data stored in a centralized location, which is a ripe target for fraudsters.
“The CU needs to know without question that the person it is interacting with is authentic,” he adds. “And as a consumer’s prolific use of digital channels continues, added security must be a priority.”
Credit unions use MemberPass in various ways, but seamless integration within a credit union’s digital channels is critical. “Most use it as a tool in the call center or branch, offered by the service agent when a member calls or visits, while advertising the program on their websites” as a member benefit, explains Ainsworth. “After the employee facilitates enrollment, a seamless verification process occurs each time the member contacts the credit union, saving time while offering another layer of protection.
“The member is authenticated, not by verifying the member’s maiden name, etc., but through the MemberPass technology, with the member receiving verification on their phone,” says Ainsworth.
MemberPass has no direct relationship with the member; it stores no personal identifiable information. And since coming into market in 2019, there have been no reported fraud cases when members use MemberPass.
The Right Fit
Choosing the right vendor is vital. When vetting potential fintech partnerships, Kaish says a fintech should meet these four criteria:
- It fully understands the credit union’s business initiatives and pain points from the front end to the back end.
- It must integrate seamlessly with the institution’s technology stack, especially with such member-facing online offerings as online banking, account opening and loan origination.
- It should provide ongoing consultation, not just on how to use the technology but also on how to get members to adopt it.
- It should adapt to the institution’s business operations in a digital-first world.
If a fintech checks these boxes, the credit union can generate more revenue and deliver a better, scalable member experience. cues icon
Owner of Fab Prose & Professional Writing, Stephanie Schwenn Sebring assists credit unions, industry suppliers, and any company wanting great content and a clear brand voice. Follow her on Twitter @fabprose.