Filene and the Institute for Money, Technology & Financial Inclusion at the University of California, Irvine recently launched a research hub at UCI focused on how emerging technologies influences credit union business practices and clients. “They've done a lot of work around how financial services organizations can really tap into technology and sort through the hype,” Downin said.

“We are delighted to partner with Filene to explore how credit unions can leverage trends in mobile banking and other technological interventions,” IMTFI Director Bill Maurer, dean of UCI's School of Social Sciences, said. “The IMTFI has established itself as the premier research center on the impact of financial technology and fintech on people's personal and commercial banking practices, and we look forward to helping credit unions continue to create opportunities that meet the demands of changing consumer behavior.”

A report coming out of the IMTFI center later this year details drivers of financial technology change, as well as consumer adoption. It will include recommendations to help credit union leaders make wiser decisions.

Another way Filene encourages credit union technological change is through its i3 innovation program. More than 200 credit union leaders from the U.S. and Canada participate through virtual discussions, collaborative fieldwork and self-study to create possible solutions. The innovation program then identifies several concepts with the most promise and moves them into the Filene incubator.

“The i3 program continues to move forward with strength and a lot of participation across the credit union industry,” Downin emphasized. Currently, Filene has a catalogue of 200-plus ideas that came out of i3 over the last dozen years. However, only a few of these ideas are in use at credit unions or commercially successful.

“A big part of i3 is centered on design process and really teaching credit union executives to put themselves in their members' perspectives,” Ryan Foss, managing director, innovation, at Filene said.

Two products, which developed from the i3 program, are currently in two different stages of availability to credit unions.

The first is Boost Savings, which helps members handle unplanned expenses while still encouraging them to build long-term savings. Members enrolled in the program receive access to a line of credit. Boost is ready for credit union utilization. “There are versions of boost savings out there in the marketplace today at credit unions,” Downin pointed out.

The second, Centsus, uses a web-based tool and allows consumers to use emoticons to rank how they feel after spending, making them aware of how financial decisions impact emotions. Centsus hasn't seen the same success as Boost Savings.

“A big part of innovation is nine out of 10 darts aimed at the dartboard aren't going to hit a bullseye,” Downin noted.

In May, another seven teams will pitch i3 on new concepts. Foss stated, “We talk a lot about i3 and credit unions trying to innovate and one thing we are trying to get better is that kind of elasticity and connection to the fintech world. We've had a lot of starts and stops and were trying to get better at that.”

I3 also has a couple of products in the development hopper right now.

Debt Dragon guides students through relatable, interactive scenarios that show real-time financial implications and alternatives about their investment options with clear action items, next steps and checklists.

Bank on Family taps into the awkwardness of peer-to-peer lending defaults. Foss said the reality is only 37% of informal loans are paid back. This is not only unhelpful to the borrower but puts a strain on the relationship. Bank on Family makes the credit union the facilitator of a streamlined P2P lending process.

One of the i3's successful alumni is WSECU, which created a loan platform, QCash, in 2004 to meet the short-term lending needs of members who were requesting large money orders to pay off payday lenders.

QCash Financial, a CUSO and wholly-owned subsidiary of WSECU, provides automated, cloud-based, small-dollar lending technology for financial institutions seeking to serve some of the nearly 68 million financially underserved adults in the U.S.

WSECU also discovered that offering members small-dollar short-term lending options at very competitive rates provided a consistent revenue stream in return. WSECU's QCash program books more than 30,000 loans annually, maintains loan loss rates in the 6% to 8% range, provides financial education for members and generates an annual net income of $4 million.

QCash Financial's technology was also used to launched small-dollar lending programs by the recently renamed $2.9 billion San Antonio (Texas) Federal Credit Union, now Credit Human, the $1.2 billion Rye, N.Y.-based USALLIANCE Financial Federal Credit Union and the $1.7 billion, Richland, Wash.-based Gesa Credit Union.

The QCash platform originated 34,907 loans by WSECU in 2016, amounting to more than $28 million loan dollars funded. Last year, Gesa used the QCash platform to originate 1,157 loans, amounting to $1,126,591 loan dollars funded in the six months.

Also in 2016, Filene and QCash Financial launched a collaboration that offers credit unions the opportunity to bring this lower cost, multi-channel loan experience to their members while also participating sharing data with the researchers at Filene. QCash Financial's new relationship with USALLIANCE resulted from the company's partnership with Filene.

Morales spoke of Filene, its support for startups and the incubator process, and really trying to bring innovation to the credit union industry. “They've been one of those organizations that has continually evolved and adapted to current situations, current thinking and current needs.”

QCash soon plans to incorporate data analytics and predictive modeling into its platform. Beginning in the fall, credit unions can integrate their own risk model or buy one from FICO and host it on the QCash platform as a way to manage risk. It is also building in financial coaching capabilities.

“We're a cautious, conservative industry,” Morales explained. “When you do have a startup and you're asking someone to take a leap of faith, the cycle from awareness to actually making the decision to implementation is long for credit unions.”

He added part of the opportunity as an industry is building room in a strategic plan to be innovative, to take a little more risk, to just say 'yes' and try it.

“The challenge you have with incubators and startups is how we make it comfortable for credit unions to take a little bit more risk,” the QCash CEO suggested. “If I had a wish for the industry, it is build a little bit of risk-taking into your strategic plan.”