Credit Union Fintech Incubator Launched

CUNA Mutual Group and Filene Research Institute on Tuesday announced a partnership to test new fintech services at credit unions.

Filene and CMFG Ventures, the venture capital arm of CUNA Mutual Group, have established the FinTech Catalyst Incubator to support the development of services designed to improve the financial stability of credit union members, said Brian Kaas, CMFG Ventures’ managing director.

“We are committed to the success of our entrepreneur partners and that commitment goes beyond funding, which is why we’re so pleased to partner with one of the country’s leading research organizations, Filene Research Institute, to test companies and ideas for desirability, viability, and feasibility,” Kaas said.

The FinTech Catalyst Incubator will test services that could fill credit union system gaps and create new opportunities for credit unions to innovate, grow, and better serve their members. Credit unions can sign up to participate in testing an innovative program or idea to help meet a member need.

Over the past five years, Filene has garnered the involvement of more than 100 U.S. and Canadian credit unions to create, test and adopt more than 15 innovations.

“We have a long and successful track record of executing incubators that test and scale solutions in the marketplace,” said Ryan Foss, Filene’s senior director. “We’re excited to help position credit unions as drivers of innovation in the financial services industry.”

In the new incubator, each fintech service will be tested by a group of up to 12 credit unions of varying asset sizes, locations, and consumer demographics for six months.

During this time, participating credit unions will offer their members the new service while receiving support from Filene to test a unique hypothesis. The program is designed to give participating credit unions a head start in adopting needed solutions, to allow them to shape outcomes by sharing feedback during testing.

Research findings, including next steps and launch recommendations for viable products, will be published by Filene after testing ends.

The incubator’s first research test is underway at Align Income Share Funding, a Chicago company whose investors include Continental Investors of Chicago and CMFG Ventures. Align offers Income Share Agreements, in which payments back to Align change based on its users’ income.

“Look for test results later this summer,” Kaas said.

Its next research test will begin will begin in July and run through December with two different companies:

• Finhabits, a certified B Corporation based in New York, that explores how different demographics approach saving for retirement, and
• Steady, a two-year-old Atlanta company that helps people find work in the gig economy through its mobile phone application, which passed 1 million installs in May.

“The rapidly changing market means the credit union system of the future will not look the same as it does today,” Foss said. “We believe that this type of incubation testing eliminates the front end risk of testing new products and ideas for credit union members while accelerating decision-making and credit union growth.”