During the last week of October, more than 10,000 people from around the world congregated in Las Vegas for the annual Money20/20 conference, an event dedicated to financial technology in all its various flavors. Or as the event bills itself, "Money20/20 is the largest global event focused on payments and financial services innovation for connected commerce at the intersection of mobile, retail, marketing services, data and technology."
With dozens upon dozens of sessions, many of them concurrent and many overlapping, it was impossible for one journalist to fully cover this conference. However, from talking to numerous vendors and attending as many sessions as humanly possible, some important themes did emerge, themes of which credit unions should take note.
Most obvious is the fact that there's big, big money to be made moving payments back and forth. This wealth is realized at the front end, where one can take a tiny amount from a high volume of transactions, and at the back end, where one can profit from the gold mine of data provided by all those transactions. While organizations have long enjoyed that front-end money, it's only now that they're starting to realize the true value of the so-called big data.
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Upstart companies also are scrambling to create new ways to move money from here to there, ways that bypass the traditional ACH and credit card rails. If any of them catch on – which remains to be seen – they promise to fundamentally change the payments landscape and in the process prove highly disruptive to those that currently profit from those legacy rails. Apple Pay is palatable to credit card companies because it uses their rails. The next wave of mobile payments likely won't be so kind.
Many companies also are creating products to empower businesses both large and small with advanced commerce and marketing technology. Today, Starbucks is well-known for its millennial-attracting mobile app. Tomorrow, the locally owned coffee shop will have its own mobile app that's as good or better than the Starbucks app.
This may sound like an exciting new world, but there's one problem. These innovative companies and their disruptive technologies for the most part have no interest in legacy anything, including your credit union. They seek to create a new payments paradigm that relies very little on traditional financial institutions.
This actually creates a tremendous opportunity for progressive credit unions. Would your members feel safer with a mobile wallet or peer-to-peer app that you provide, or one they get from some company they heard about on Facebook? Are your business members more likely to deploy a mobile app that has your endorsement and integrates to your core platform, or one they came across while Googling for something else?
The time is now for credit unions to reestablish their relevance in the local economy. In this day and age, the only way for credit unions to accomplish this is to embrace mobile transaction technology and become a catalyst in bringing that technology to the people they serve.
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