Fintech Experts Ponder the End of a Transformative Decade & Look Ahead
The last decade has been an extraordinary and pivotal time for fintech and credit union partnerships. Where is the next decade taking CUs?
How much has financial technology changed in the last ten years? Will the past decade foretell the future? A number of fintech professionals provided some perspective from their frontline vantage point.
This is the second in a series of articles highlighting their reflections:
Steve Robert, co-founder and CEO, Autobooks
The last ten years have been truly pivotal for small business banking. The U.S. added an estimated 2 million small businesses over the last decade, with the latest count totaling more than 30.7 million. Also, there is a growing trend of independent workers including consultants, freelancers, contractors, solopreneurs, and temporary or on-call workers adding another 28 million business owners.
Non-bank providers are aggressively targeting small businesses and independent workers with payment and business management products. These products disintermediate the business owner from the financial institution relationship and open the door for new products that compete with the financial institution.
This is a perfect opportunity for credit unions to step in and bridge the gap between consumer and small business banking. Helping small businesses succeed strengthens the local economy, providing economic benefits for the credit union and its members.
Stephanie Butler, director, advisory services, Baker Hill
Over the past 10 years, the credit union industry placed more value on data, including understanding its ability to enhance the member experience, which helps advance targeted marketing efforts and accelerate loan decisions. With a heightened focus on data, credit unions have expanded the use of credit scoring for member business loans, allowing for faster loan approvals.
With innovations in technology, information only needs logging one time from loan application to documentation and exception management, ultimately increasing efficiency and aiding in the elimination of input errors. Additionally, the industry has seen a rise in the availability of online applications and fraud detection.
The industry can expect a continued focus on the member experience, going further to provide more online applications, member portals, better marketing and pre-approvals and more assistance with financial advisory. The industry will see AI and machine learning aid in proactive credit risk management.
Matt Johnner, president and co-founder of BankLabs
As we think ahead to a new decade, credit unions are taking a deep look into their arsenal of technology, which has come to the forefront of emphasis to appease both financial institution and their customers. When prioritizing new technology from the lending side, what should credit unions look to incorporate?
- Verticalization. Winning CU’s will couple custom experiences with banking products tailored to member demographics.
- Mobility. Lenders and borrowers no longer tied to a desk or just one location need to work on a system flexible and accessible on a smartphone or tablet. Robust technology helps both lenders and borrowers. Not only does going digital decrease cycle times, but also allows credit unions to take on more commercial loans without increasing headcount.
- Automation. To help create a better experience, automation can auto-populate already-known information to help reduce cycle times and ensure accuracy.
Joe Salesky, CEO, CRMNEXT
- 2020 will be a year where digital innovation improves the blocking and tackling of credit union operations, delivering process management improvements that unlock savings and support efficient member servicing and growth.
- Beyond using digital to provide self-service for members, credit unions have noted the critical role of implementing digital internally to streamline business processes.
- Credit unions already manage account data well, though many lack visibility into work-in-process and leads. In 2020, many credit unions will begin the journey to organize/unify/transform sales and service information and processes, prioritizing areas for improvement and success measurement.
- 2020 will see further polarization between double-digit growth-focused credit unions and credit unions fearful of faster growth.
- Proactive keep-in-touch engagement of members will expand in 2020, fueling both member-intelligence and business growth.
Julie Esser, chief experience officer, CULedger
Ten years ago, credit unions were on their way to growing their digital presence beyond having a web site and allowing their members to conduct transactions electronically. As the internet matured, so did the online crimes and the black market.
The problems associated with centralized systems is becoming out of control and the need to allow consumers to gain back control over their personal information has to start now. Credit unions have always enjoyed high levels of satisfaction and trust among their membership when compared to banking counterparts.
As we move into the next decade, credit unions need to enhance relevancy among consumers and build on the trust inherent with credit unions. Usernames and passwords will quickly become a thing of the past, and Gartner predicts that by 2022, 40% of all customer interactions will be based on self-sovereign identity. Whoever wins the trust of the consumer to protect privacy and security will own the relationship, and credit unions are in a position to be the best provider of this service worldwide in the years to come.
Jeff Bender, vice president, digital solutions, Diebold Nixdorf
It was not until this last decade that we saw a tremendous rise in digital banking. Today, almost everyone has access to online banking via a mobile device. It has been challenging for credit unions to determine which solutions to invest in.
If credit unions can take away anything from the last decade, it is that having a well thought out digital business transformation program to introduce technology solutions to employees and members is essential.
Keeping up with the accelerated digital and technological change will be the single biggest challenge faced by credit unions in the coming decade. Larger financial institutions are aggressively investing in innovation to meet customer expectations. To keep up, credit unions must truly embrace open banking as a way to integrate third-party services capabilities quickly and efficiently.
Member expectations are in constant flux, and when it comes to technology, it is impossible to truly know what the next hot innovation will be until it is upon us. it is vital that credit unions respond swiftly to new technology and provide members with the experiences they demand.