Fintech Experts Share Their 2024 Predictions: Part Two

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 second installment in a series of articles featuring predictions from 12 leaders. For part two, we talked to Mahalo Banking COO Denny Howell, Constellation Digital Partners President/CEO Kris Kovacs, Tyfone Chief Commercial Officer Marcell King and Pulsate CEO Sarah Martin. Read part three here.

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

Howell: First, financial inclusion, a movement to combat inequities in banking and better serve the financial needs of members regardless of any conditions, has become front and center for credit unions. This ensures that all members can access all financial services, improve their economic well-being, and contribute to the growth and stability of their communities.

Branches previously served as the touchpoint for all banking transactions; however, today that is not always the case. Being able to conduct all financial activities via a mobile device is paramount, not only for members but also for credit unions.

Credit unions understand that being unbanked comes at a deep cost and have turned their focus to developing products and strategies that prioritize financial inclusion. Financial inclusion for individuals with neurodiverse abilities is crucial. It is essential to consider their specific needs. As an example – providing information in multiple formats helps cater to different learning styles and communication preferences. This will continue to be a critical advancement well into the foreseeable future.

Second, card controls have become an essential feature in digital banking; not from third-party vendors but those that can be woven into the core platforms to streamline processes and create operational efficiencies so staff will not need to access disparate systems to get information. These controls enable users to easily manage various aspects of their debit or credit cards, such as setting spending limits, activating or deactivating the card, setting geographical restrictions, turning on/off specific transaction types (e.g., online or international transactions) and more. Additionally, they offer an extra layer of security, reducing the risk of fraudulent transactions.

Card controls often provide enhanced fraud protection with real-time account monitoring and alerts enabling users to receive notifications for every transaction. This allows members to detect any suspicious activity immediately. It also provides an added convenience and gives users greater control over their financial transactions, ultimately improving their overall banking experience.

Kovacs: The growth and development of more robust, extensive digital banking solutions has been tremendously important for credit unions over the last few years. The pandemic highlighted the shortcomings of so many of the legacy platforms for a large number of credit unions. Luckily, the industry has seen new, more capable and flexible solutions developed and entering the market to answer this growing need. The industry also broke through its fear of the cloud during this time. Previously, credit unions had spent an incredible amount of time and money repeating their upgrade cycles for key technologies, and the cloud has enabled them to finally begin escaping that incredibly wasteful pattern.

King: Digital banking is not new, but the pandemic accelerated the shift to digital. Every industry had to quickly shift the way they conducted business, and for credit unions, this meant implementing innovative technology and procedures to virtually meet members’ needs. Digital account opening, consumer and commercial lending, and member service are a few prominent examples of how credit unions successfully shifted to a digital-forward approach. This continues to be a priority, and moving into 2024, institutions must remain vigilant in terms of providing a seamless, frictionless member experience, supporting self-service and mitigating the rising fraud associated with digital banking.

Digital technology has deepened member engagement and provided credit unions with a competitive advantage. However, there remains an opportunity for credit unions to further support members via digital. In today’s economic environment, nearly 60% of Americans are living paycheck-to-paycheck. It is even more critical for credit unions to promote financial inclusion and enhance economic stability with digital tools.

Martin: The pandemic accelerated the prioritization and modernization of digital banking across the entire financial services landscape, with the biggest impact being the shift from the traditional branch to mobile banking. Today, only 10% of consumers prefer to bank at the branch as digital channels allow for far greater convenience, especially for simple transactions. However, credit unions have spent large amounts of time, money and resources implementing a wide range of digital products and services to better serve their members, only to achieve minimal adoption, because so often, the credit union is not top of mind for those members in their moment of need. This realization has led more and more credit unions to truly embrace digital transformation strategies with mobile channels at their core, winning greater share of mind and ultimately greater share of wallet.

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?

Howell: Based on ongoing trends and the evolving landscape of financial technology, I see several potential focus areas that may emerge.

Bolstering financial inclusion activities will remain top of mind. Credit unions are member-centric, and they want to be able to attract and retain members. The movement of money is not going to dissipate, and there are potential members that need to be reached.

Developing strategic partnerships with fintech companies to enhance digital offerings will become even more important. These partnerships could focus on providing innovative services like digital lending, improved mobile banking experiences, advanced payment solutions or personalized financial management tools for members.

Artificial intelligence and machine learning adoption may see significant growth to help streamline operations, improve member service and manage risk. Implementing AI-powered solutions for customer support, fraud detection, credit scoring and personalized financial advice could be potential areas of interest.

An emphasis on improving the digital experience for members will remain a constant. This might involve investments in user-friendly interfaces, omnichannel experiences, and personalized services leveraging data analytics and AI to cater to individual member needs.

Lastly, security will always be at the forefront. The increasing threat of cyberattacks and the growing importance of data privacy means credit unions must prioritize investments in robust cybersecurity measures and compliance frameworks to safeguard member data.

Kovacs: For those still frustrated with their legacy solutions’ inability to support member’s needs in an agile manner, many credit unions will continue to explore/focus on fintech partnerships in the New Year. Services such as subscription management, digital card issuance, financial education and targeted marketing will likely be a priority for most (anything specific to attracting and retaining new members and their deposits).

With this growing interest in partnerships, it’s likely we will see a continued focus on creating easier, more impactful integration capabilities among multiple partners as we head into 2024. Fintechs and credit unions are both seeking better ways to integrate – something that’s as easy as a single sign-on (SSO) yet offers deeper integration points, such as branding at the platform level that flows uniformly into all integrated services; better support for service-to-service workflow between separate fintechs; and centralized communications that can give financial institutions a single point to configure messaging and message channels. Additionally, because of these increased partnerships, it is likely more institutions will be interested in integration that is open and flexible rather than limited to a pre-arranged list of vendors.

Finally, with its rising interest and growth throughout the banking industry, AI will continue to be a major focus for credit unions in 2024. From delivering more personalized, relevant and frictionless experiences to members, providing better predictive analytics and data-driven decision-making, to offering intelligent automation and risk management, the applications of AI now extend far beyond the simple chatbots of previous years. Credit unions must prioritize AI adoption sooner rather than later, to remain ahead of the curve or risk being left behind their competition.

King: I believe that instant payments will be a primary focus for credit unions moving into 2024. Over the past few years, we have seen the explosion of peer-to-peer (P2P) payments options through the expansion of Zelle, CashApp and Venmo. In July, the Federal Reserve launched its long-awaited FedNow instant payments service, empowering financial institutions of all sizes to move money faster and cheaper than the traditional payments rails and promising to transform how individuals, businesses and families manage their finances. As credit unions adopt instant payments, credit unions must also implement security measures that prevent account takeovers and mitigate fraud.

Additionally, credit unions should continue to optimize and cultivate their relationships with fintechs, building an open ecosystem to improve their digital banking offerings and provide the best possible experience for their members. By doing so, credit unions can ensure that members are provided with technology that keeps their money secure and improves their financial lives.

Martin: Deepening and growing digital relationships with members will remain a key priority for credit unions in 2024, and finding the right partners to provide the right technology and approaches will be imperative. By leveraging mobile-first engagement solutions, credit unions can ensure they are providing timely and relevant outreach to their members in their time of need, leading to those deeper relationships as well as positioning themselves as members’ primary institution. This will be especially relevant in credit unions’ ongoing efforts to attract and retain deposits as they leverage data and their ability to have personalized engagement with members via the digital channels.