For CUTX it is a matter of staying on top of fintech. Malbrue noted after making a core conversion decision, there are many questions credit unions must answer, such as: What about the supporting systems that make up their technology ecosystem? And, what about the existing partners and vendors that provide products and services that the membership interacts with daily? "These and many other questions task the senior leadership as they go about the business of improving the technological infrastructure so that it is well poised to support a growing and deserving membership," he said.

Mickey Goldwasser, vice president for Payrailz, observed in 2018 that credit unions examined their relationships with the fintech industry, particularly whether to view fintech as a friend or a foe. "They continue to face competition within the financial services industry, and that has forced many of them to either choose to partner with fintech organizations or to compete with them."

Goldwasser maintained that for many credit unions, this meant identifying organizations with common goals and objectives, gaining a deep understanding of financial institution operations and regulatory compliance, and pinpointing those organizations actively looking to capture depository relationships.

"2018 was a record year for fintech investment. In fact, we'd already seen that milestone reached by mid-year, according to FinTech Global. Capital raised by fintech firms in the second quarter soared to a record of $32.2 billion, more than triple the same quarter last year," Ben Rempe, COO of LenderClose, said. "The takeaway for our industry? Everyone is coming for credit union members. Everyone. Big banks, little banks, fintechs, venture capitalists, retailers, not to mention digital marketplaces like Amazon and Zillow, all see credit union members as a smooth pathway to market penetration."

Rempe added, "Streamlined processes and ease of use will drive the future for credit unions fighting to maintain loyalty from members."

The fintech evolution led to a significant increase in the number of credit unions forming strategic partnerships with companies that specialize in creating digital banking products and services. Terry Ammons, systems partner for Porter Keadle Moore LLC explained, "In turn, more and more fintechs have begun to also see the value of working with financial institutions rather than competing with them directly. Instead, they see credit unions as prospective partners."

Pam Perdue, chief regulatory officer for Continuity, also detected that drift this year. "We saw more credit unions tapping into the opportunity to partner with fintechs," she said. "Credit unions have more flexibility than they previously did when it comes to partnering with fintechs and leveraging new capabilities. Staff are better informed than in years past, and more ready to embrace the kinds of fintech offerings their members are demanding."

Perdue added that historically, the NCUA has been more relaxed than its banking regulator counterparts in terms of permitting innovative approaches inside credit unions. "It's no longer just a handful of large credit unions that can use the technology to drive strategy and outcomes. Now more than ever, credit unions can prioritize innovation as a key business objective."

Mark Anderson, CEO for Banc Intranets, noted fintechs are recognizing the need for more efficient services and technology, and for helping streamline the onboarding process and engaging staff with a unique culture and mission. "While financial technology has still not yet disrupted the financial services industry, fintech firms continued to play a key role in helping credit unions reduce costs and increase operational efficiencies throughout 2018."

Tedd Smith, CEO of FirstClose, said, "With investments in U.S.-based fintech companies increasing to $14.2 billion across 427 companies during the first half of 2018, fintech has become a major topic among credit unions."

Smith added, "Unfortunately, credit unions are typically not known for keeping up with bleeding-edge technology and advanced marketing tools to compete with larger institutions, but credit unions that find fintech companies willing to share their abilities to help boost credit union business, and attract and qualify members in unique, automated ways, will thrive."

The use of AI, and its subset machine learning, is also a rising trend among financial institutions as they seek to improve consumer satisfaction, reduce inefficiencies and fight fraud. Smith said he sees the greatest influence on credit unions coming from companies creating AI, bots, enhanced integrations and automated decision-making technologies designed to augment a credit union's business instead of take away from it.

For Todd Clark, president/CEO of CO-OP Financial Services, the democratization of artificial intelligence was a big story in 2018, particularly within the world of fintech. "No longer a thing of science fiction, the technology entered the financial services sector in a big way this past year. It's an innovation that has begun to reshape the way financial service innovators approach the customer/member experience. That may be because more financial services companies (81%) than those in other sectors (69%) regard customer journey optimization as very important."

Machine learning, auto process discovery and natural language processing are big contributors to optimizing member experience, a particularly meaningful aspect of digital transformation, Clark noted. "When combined with human expertise and ingenuity, this trainable technology has the potential to see ahead, identifying patterns and better predicting trouble spots so credit unions can deliver seamless, secure and customized experiences for their members."

Goldwasser indicated the industry saw artificial intelligence come of age in many ways this year. "While AI has been a major development in the industry for some time, this was the year that financial institutions saw many practical applications of AI in banking at use. Because of the valuable data financial institutions have at their fingertips, credit unions have explored how they can more intelligently leverage this data to serve their members more successfully."

Look for comments on other 2018 trends in the areas of business lending, compliance, data analytics, digitalization, distributed ledger technology, member experience, risk management, and security in parts two and three online in the CU Times Tech Center.