2020, Time for Fintech to Serve Modern Members: Jack Henry

Members turn to their credit unions for critical moments of need now more than ever, looking for help from tools needed to make smart monetary decisions and increase their financial confidence.

In its annual predictions concerning the role of credit unions in 2020, the Monett, Mo.-based provider of financial technology and payment processing services Jack Henry & Associates suggested it will be a time for technologies that serve the modern member to take a strong leap forward. “Partnerships between credit unions and their vendors are strengthening, enabling the industry to reach new heights in member service and capabilities,” Shanon McLachlan, president of Symitar, said.

According to Jack Henry, 2020 is going to begin a separation in financial services; the rift will become evident between philosophies of those who want to automate everything, and those who want to remain personal, maintaining true human touch at the points where they are most meaningful. “As has been a hallmark of credit unions and engrained in Jack Henry’s heritage, technology should support personal attention and superior service in order to compete in today’s commoditized marketplace. Credit unions positioning their digital, payments and innovation strategies with a member-first approach will find themselves future ready,” McLachlan held.

McLachlan also offered some fintech trends Jack Henry expects to affect credit unions this year:

• Digital-first disruption. Member-first is the future model, blending digital availability with the human touch that modern consumers expect from credit unions.
• Financial services are becoming more accessible. “Financial services should not be difficult to access or costly for low- or non-income consumers, so credit unions are providing better services and education to attract segments of underbanked members.” He added, the growth of small businesses and gig economy workers has also led credit unions to begin offering more solutions that meet their unique needs.
• Member engagement continues to evolve. “You do not necessarily need to automate and digitize everything to be successful. In 2020, we expect to see the adoption of modern personal engagement.” McLachlan noted virtual assistants and chatbots can complement human support while providing deeper, personal assistance at the member’s moment of need. Meanwhile, role-based assistants can help credit union employees automate mundane tasks so they can humanize the meaningful services they offer their members.
• APIs allow more collaboration and partnership between credit unions and vendors. The technology ecosystems that encourage open banking and data sharing have many innovative advantages. “Many believe that open banking will become a reality in the U.S. within the next one to five years. The development of industry API/data sharing standards is building, and early open vendors and credit unions have the opportunity to lead the way.”
• Standalone services are dying. Personal financial management apps and trendy mobile-only services are prohibitive to future-focused institutions. McLachlan suggested banking is no longer viewable in channels, so technology integration and platforms are a top investment priority for credit unions in 2020. “People do not post on their mobile LinkedIn – it is just LinkedIn – and credit unions are responding by providing the simple, seamless experience consumers want.”
• Credit unions are deepening their understanding of the lifecycle of a member. As siloed channels become less important, credit unions have the opportunity to gain a better view of a member’s entire relationship. “This means they can provide better service and sales across most areas, especially those that have been notoriously clunky such as lending. We expect fewer multi-platform lending systems in favor of a single, centralized platform approach that accommodates consumers, small businesses and commercial members.”
• The wait for faster payments is over. Consumers and businesses are increasing their expectations for faster payments as quickly as the new services hit the market. Jack Henry also expects bill pay to benefit from faster payments. “Requests for payments will reinvigorate the options, allowing billers and credit unions to take advantage of the rising consumer demand. Many credit unions will watch instant payroll/payout as fintechs and business-to-consumer services introduce real-time payroll and payday advances,” McLachlan said.
• The age of artificial intelligence is here. Real-world use cases for AI are emerging in the areas of back office operations, compliance, member experience, risk management, lending, marketing, and more. Jack Henry expects credit unions to work more closely with vendors to build their AI-readiness.
• U.S. regulators aim to foster innovation. “Regulators at recent industry conferences spoke about fostering, rather than impeding, innovation. The CFPB and OCC have echoed comments about removing barriers to innovation, as long as credit unions can explain the details.”
• Credit unions acquire banks. McLachlan pointed out more credit unions are making headlines as they pursue bank acquisitions as a growth strategy and enter into business banking.
• Diminished (consumer) demand for auto ownership. As more consumers opt to delay becoming licensed drivers in the wake of alternative options like ride-sharing apps and subscription services, consumers pump the brakes on auto loans. “This is concerning to credit unions whose bread and butter direct auto loan portfolios might be at risk due to less demand, and indirect lending becomes less profitable.”