Credit Unions offer interesting financial services, and with the evolution of time, they need to elevate their offerings to meet customer needs. The main reason for this is that the ecosystem for banking is going through a transformation. This is where the possibility of partnering with Fintechs comes in. Fintech involves the application of technology to financial services. It is possible to bring the worlds of Credit Unions together with Fintechs, but for this to work, you need to be clear about the differences.
Credit Unions, the bulk of them, are now moving into the discovery of digitalization and advanced technology. Fintechs are also discovering that for their long-term growth and prosperity, it is important that they create partnerships with other financial institutions like Credit Unions. Looking at this type of partnerships requires an in-depth assessment of why you should or should not explore the partnerships.
Here are some factors worth considering: -
Good Reasons Why
- CHANGE THOUGH DISRUPTION
The traditional model for Credit Unions has worked for decades, and rather than simply changing it, disrupting and adapting to a better way of doing things is more effective. That is what happens when credit unions consider Fintechs. By having a Fintech partner, the risk is well managed and a credit union is able to create a customized solution for its members.
- CREATING RELEVANCE
Credit unions face competition within the space of financial services, and they need innovations to help them remain relevant. With Fintechs, this is possible as the services the credit unions are then able to offer are digitally centered with the customer as a focus. This means that they are able to create more features that are customer-centric for ease of customer engagement and interaction.
- FASTER FEEDBACK
When it comes to information sharing, Credit unions tended to be on the slower side, often sharing feedback with customers on a weekly or more often, a monthly basis. By partnering with Fintechs, this is changed and it becomes more possible to give real-time updates as well as proactive alerts. This makes interaction for the customer so much easier.
- GIVE CUSTOMERS WHAT THEY WANT
Customers are clear about what they are looking for, and it is essential to ensure that they are more satisfied, and have access to better services. Fintech can change that. Through Fintech, accessibility of the credit union services becomes easier, and these credit unions are able to benefit from better financial service offerings.
- A NEW REVENUE STREAM
This may be the biggest advantage of all for any credit union to partner with a Fintech. By doing so, the union opens itself up to benefit from an additional revenue stream. This works in two ways, making customers transact more easily which will lead to higher transactions and greater benefits. Then there is the fact that these services help to bring down overall costs by taking advantage of automation.
- STAND OUT FROM THE COMPETITION
Through offering a Fintech solution, it is possible for credit unions to stand out from the competition and thus, gain a competitive advantage. The trend right now in the financial service industry is for everything to be automated and transactions to be smoother. Fintechs give credit unions the opportunity to play in this space, helping them remain aligned with trends, and giving the opportunity for them to stay ahead of the trends as well.
The Reasons Why Not
- REMAINING FOCUSED
Credit unions have a traditional structure that they have sustained for decades, and by partnering with Fintechs, that structure is threatened. There is always the challenge of making sure that the credit union does not turn into something that it is not supposed to be. This is because it would put the customers at risk. There is another angle though of what would happen if a credit union completely ignored Fintech. It may force customers to look elsewhere for Fintech offerings.
- IT NEEDS STARTEGY
Without a proper plan on how to partner with a Fintech, credit unions will find that they are planning to fail. A good strategy needs to be unearthed, and then followed particularly because of risk management. It is important for the credit union to remain true to their brand, so rather than experiencing a complete change, they become better versions of themselves.
- THE PIGGY-BACK
For credit unions, the Fintech may behave like a piggyback. This is because they often need to ride on the experience of the credit unions, and they may not actually have the relevant financial experience. They are also not used to dealing with the customer on a human level which could affect the user experience. Credit unions need to come up with a long-term partnership framework for fintech companies.
Bottom line, Credit Unions and Fintechs are better together. Individually, these companies have their own strengths, but together, they become a powerhouse. Through Fintechs, Credit Unions are able to easily benefit from upcoming innovations, as well as to elevate their infrastructure and fit into digital spaces. Fintechs are also able to benefit from the credibility of the credit unions, making it easier for customers to accept them. Success for both of these entities looks different, so one of the key things that need to be established from the get-go is good communication. This way, the unique offerings that they have will be able to mesh well. When these two types of entities come together, it is more of a partnership than a competition between each other. They should make sure that they have aligned their expectations from the beginning and also established clear business objectives. They also need to ensure that as companies, their cultures are compatible and there is constant monitoring throughout their partnership. They are both working towards the same goal, and a partnership will help to ensure that they thrive while doing so. Therefore, Credit Unions should pair up with Fintechs.