If credit unions can't beat the fintechs, why not join 'em?
That's what nine credit unions in New York, Florida and Alabama are doing in a six-month pilot project with LEVERAGE, the for-profit subsidiary of the League of Southeastern Credit Unions, and Linqto, a Silicon Valley company that specializes in software for fintech applications.
The short-term goal of the pilot project is for credit unions to work with fintech developers to determine what specific apps are most likely to appeal to existing and prospective millennial members.
The long-term goal of the project is to help fintech companies monetize their apps and enable credit unions to use popular unbundled, or single-function, apps – an emerging trend among young consumers, who find these apps more convenient and easier to use.
The centerpiece of the pilot project, launched in April, is the LEVERAGE app store, which features white-label fintech apps such as Mint, Money Stream, FutureAdvisor, Level Money, Acorns, Wallaby, Wally+ and Vera.
But unlike the Apple, Android and Amazon app stores, the LEVERAGE app store is exclusively powered by Linqto's patent-pending software platform, Otter.
According to Linqto, it has developed a first-of-its-kind platform that enables credit unions to select popular fintech apps and upload their customized brands within those apps to market to their members and prospective members.
Developing, testing and implementing an app – something that used to take a financial institution six months – can now take six minutes, according to Linqto.
The Otter platform enables both fintech companies and credit unions to achieve two important goals, Linqto said.
"Fintech apps are having a problem in monetizing [their apps]," Linqto CEO Bill Sarris said. "They may have been successful in attracting the millennial market, but their apps had to be free in the Apple store. Developers have realized they can't charge for their apps. It's the kiss of death. In our system, credit unions pay for the branding and usage rights of an individual app. Then the developer keeps 70% and the app store keeps 30%, but the consumer doesn't pay anything for the app."
Patrick LaPine, president/CEO of the Southeastern league and LEVERAGE, said Linqto is contributing millions of dollars to support the pilot project. About half of that amount will be committed to helping credit unions market and promote the apps to members and millennials. LEVERAGE has also earmarked resources to support the pilot project.
"I think this is a great opportunity for us to learn from a fintech company, to learn about their processes, how they go about product development and how they conduct pilot programs," LaPine said. "It's like going to fintech school for six months."
Read more details about how this pilot project is working in the May 11, 2016 print edition of Credit Union Times.
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Peter Strozniak
Credit Union Times reporter covering credit union operations, fraud, M&As, leagues, business continuity, and breaking news.
