Fintech Experts Share Their 2024 Predictions: Part One

What advancements have defined credit union technology so far this decade, and what will credit unions’ fintech priorities be as they head into 2024? CU Times recently asked fintech experts to reflect on advancements in credit union technology over the past few years and share what they believe may be coming next.

This is the first installment in a series of articles featuring predictions from 12 leaders. For part one, we reached out to Origence COO Bob Child, Shastic Founder and CEO Joseariel Gomez Ortigoza, MDT Vice President of Fintech Solutions Pete Major and NCR Voyix President of Digital Banking Douglas Brown. Read part two here.

What have been the biggest advancements in credit union technology over the first few years of the 2020s?

Child: AI tools have made a big splash in the past year, and for good reason. While its customer-facing implementations, like chatbots for customer service needs, have received the bulk of people’s attention, its back-office use cases represent an even more radical means of increasing efficiency. AI tools, like document process automation (DPA) and underwriting, can automatically complete repetitive tasks for knowledge workers, enabling them to complete more loans and focus on delivering an enhanced member experience. Additionally, decisioning speed plays a critical role in the borrower experience, and AI technology has provided lenders with the flexibility and underwriting capabilities to make instant decisions confidently. AI solutions can also address security needs for credit unions by detecting suspicious behavioral patterns and acting on them accordingly. While AI advancement so far has been very compelling, we will be eagerly monitoring how it evolves in the years to come. In today’s economic climate, credit unions and their members need access to simple and affordable technology to boost efficiency and enable continued lending to members across the credit spectrum.

Ortigoza: First, artificial intelligence in lending. One of the most notable advancements has been the integration of AI in lending processes. AI is seeing applications for Intelligent Document Processing, enabling processors to focus on the member and leave repetitive tasks within the process to the computer.

Second, Robotic Process Automation (RPA). RPA’s role in automating repetitive and time-consuming tasks has been transformative. This technology has improved operational efficiency, reduced errors and allowed staff to focus on more strategic tasks, enhancing overall productivity.

Third, technological ecosystem growth. Significant advancements have also been seen in mobile banking, cybersecurity and the development of sophisticated payment platforms. These technologies have contributed to a richer, more interconnected ecosystem, enhancing member experience and operational efficiency. RPA use cases remove the dependence on legacy APIs, driving expensive and time consuming implementation cycles.

Major: Credit union technology has undergone a significant digital transformation, driven primarily by necessity. While the rollout of digital is not new, the events of 2020 supercharged this evolution, forcing individuals and businesses alike to seek new ways to interact with the world digitally. As a result, members now have an expectation to be able to do everything online. Shifting existing processes and services to not only exist in-branch but also to be digitally native can be overwhelming to say the least.

Also worth noting when it comes to the tech landscape is how extremely complex credit union technology has become. As credit unions increase the number of software/technology solutions to their portfolio, there is more opportunity for failure. And, real-time transactions and communication between the systems only exacerbate the intricacies. When something is wrong from a tech perspective, it’s typically not intuitive for credit unions to fix. This has become a significant problem for many credit unions, especially those without large and/or extremely technically skilled IT staff. Moving forward, we expect to see more credit unions rely on service providers to help manage, maintain and optimize their technology portfolio.

Brown: The 2020 decade is marked by the emergence of and gravitation toward digital-first technology across the credit union landscape. This doesn’t mean digital-only but digital everywhere; it’s all about connecting a member relationship in its entirety to all touchpoints, from digital to “digitized” physical experiences.

A true digital-first experience integrates all retail delivery channels into the digital ecosystem, creating a connected end-to-end member journey no matter when, where or how they choose to engage. For instance, perhaps a member pre-orders a cash withdrawal via their mobile app, authenticates that transaction at a kiosk or secure locker, receives physical cash, and finally obtains a digital receipt on their phone. Digital-first technology puts members in the driver’s seat.

Modern, cloud-based and open architecture is needed to power such a strategy, which is where we’ve seen notable tech advances over the past few years.

What will be credit unions’ biggest priorities heading into 2024 in the areas of fintech partnerships, AI and/or other areas of business related to technology?

Child: Despite credit unions’ challenges, they still have growth opportunities, especially in auto lending. While credit unions have seen some success in certified pre-owned car lending, the more dramatic growth has been in electric vehicle (EV) sales. EV sales represent 7.2% of new car sales, a 100% year-over-year increase. With the direct-to-consumer sales approach becoming increasingly popular among EV companies, credit unions should invest in tools, like AI, that extend their reach to be a part of embedded financing opportunities.

Additionally, as we move into 2024, we expect many more credit unions to begin reaping the benefits of AI technology as developers build on top of this year’s advancements. As positive use cases such as DPA and automated underwriting continue to develop, credit unions will begin to see the undeniable benefits and efficiency that this technology can create for financial processes. This technology will improve internal operations and enhance the overall member experience, making credit unions more competitive within the crowded financial ecosystem.

Ortigoza: First, the further integration of AI. AI will continue to be a focal point, with credit unions likely to explore new applications of AI in various operational areas. This includes expanding AI use in lending, risk management, customer service and fraud detection.

Second, credit unions will prioritize initiatives that improve operational efficiency and member experience. This may involve further investment in technologies like RPA, AI chatbots and Intelligent Document Processing, aiming to streamline processes and enhance service delivery.

Third, optimizing loan programs with AI automation: In response to the challenging financial landscape, credit unions will likely focus on utilizing AI automation tools to enhance the efficiency of their loan programs, including technologies for faster document retrieval and solutions for managing lost or abandoned loans.

And fourth, regtech. Credit unions devote attention to meeting all regulatory demands, which becomes more difficult with each passing year as the compliance landscape becomes increasingly complex. Personal data and privacy concerns continue to worry regulators, and credit unions will need to implement tools that aid in compliance. Utilizing automation in lending processes prevents duplication of member data across several interaction points and prevents fair lending risks removing people from update and collection tasks.

Major: Capital remains a widespread challenge, so credit unions will prioritize initiatives that help them bring in additional sources of deposits and fee income. This isn’t the time for credit unions to pause efforts in their loan processing capabilities. Making improvements to these processes now while rates are high will serve them well once rates start to come down. Along that same vein, credit unions are getting better at tailored outreach – using technology to reach the right members with the right offers at the right time, as well as using technology to more accurately identify members that are at risk of churning. That will continue to be a priority next year.

And, we can’t talk about trends without mentioning AI. More credit unions are considering how to leverage AI to help increase efficiencies, such as assisting them in simpler member chats or supporting the loan approval process. AI also has the power to transform how large sets of data are analyzed, which could really positively impact the credit union space.

A credit union’s technology priorities should always come back to their overall strategy. For example, those credit unions that really differentiate on the digital experience will likely have very different tech priorities than those that still heavily rely on physical branches and touchpoints for brand recognition and attracting members. Technology should support the overarching strategy of how a credit union differentiates and competes.

Finally, the importance of strengthening a credit union’s security posture can’t be overstated; proper guardrails must be put in place. As fraud, security breaches and ransomware attacks multiply in scope and intensity, this certainly will be an area for credit unions to prioritize in 2024.

Brown: Many credit unions are prioritizing investing in technology that allows them to better organize, mine and analyze their data – something that has the potential to impact and add value to every part of the organization. For example, insights gained from a more sophisticated data strategy enable credit unions to better support members’ financial fitness, which is especially critical given the current widespread financial anxiety.

AI will also continue to be a major focus. More use cases will emerge next year, as credit unions look for ways to optimize efficiencies and, again, more effectively analyze the large amounts of data available to them. It will be important for credit unions to at least finalize their strategy around AI next year.

Payments also continue to evolve, creating the need for credit unions to formulate a plan. As money movement options continue to multiply and faster payments emerge, credit unions need to determine how to optimally enable choice for their members.