Fintech Experts Share Their 2024 Predictions: Part Three

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 third installment in a series of articles featuring predictions from 12 leaders. For part three, we leveraged insights from Strategic Resource Management (SRM) Chief Strategy Officer Mark Sievewright, Equifax Workforce Solutions Sales Director for Credit Unions – Verification Services Alison Heller, Jack Henry President of Credit Union Solutions Shanon McLachlan and White Clay Director of Community Solutions Scott Earwood. Read part one here and part two here.

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

Sievewright: The biggest advancements include the expansion and improvement of digital banking capabilities – especially in the mobile channel – and a significant increase in the use of fintech partnerships in member-facing channels and the back-office. Additionally, many credit unions have demonstrated a deeper commitment to data management, data analytics and the use of artificial intelligence, especially to drive increased automation.

Heller: Credit unions have done a great job in embracing digital technologies. This growing adoption significantly enhances service delivery to members and fortifies their competitive stance in the credit and lending landscape. For example, incorporating automation in several aspects of their operations has empowered credit unions to offer their members an elevated degree of transparency and smoother transaction experiences. Shifting from excessive paper-based processes to digital cloud-based solutions can allow credit unions to expedite the loan approval journey, gain more precise insight into members’ history, and adapt to ever-changing member needs and market trends. Digital technology solutions also provide operations scalability to better meet member demands with minimal disruption to the business by allowing credit unions to focus their resources on member engagement and initiatives that increase success rather than paper-intensive review processes.

McLachlan: The first three years of the 2020s witnessed a high surge in technology advancements, spurred by the unprecedented challenges of a global pandemic that confined people to lockdowns. Across all industries and scales, companies found themselves forced to undergo digital transformations to sustain operations and continue to support their customers. For credit unions, this forced them to re-prioritize and advance their member service and technology strategies.

Progressive credit unions embraced change, leveraging innovative technologies to strengthen or begin their digital strategies and remain resilient. They displayed a newfound openness to collaborative partnerships with fintechs, enhancing their ability to cater to the unique needs of their members. As a result, they became more adept at offering diverse account types, including those tailored for business and commercial accounts, and they started to extend their specific offerings beyond their geographical footprint, making their tools more accessible and affordable to members of a specific segment.

So far, the 2020s have demanded credit unions to break free from reactive patterns and prepare for the future, and this is only the beginning.

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?

Sievewright: Continuing to adapt to an increasingly diverse and digitally savvy membership base will be essential for credit unions in 2024. Credit union executives are keenly aware of shifting member expectations driven by changing demographics and the desire for personalization, convenience, and the challenge of staying relevant in a competitive and transformative landscape.

Heller: Credit unions can benefit from continuing to do what they do exceptionally well – catering to their members and addressing evolving member needs. By leveraging technological advancements, such as automation and also AI, credit unions can drive efficiency and personalization across various operational functions and processes to better serve their members. Ease of transacting, which can be empowered by these technologies, is instrumental in enabling credit unions to meet the evolving expectations of their members, particularly Gen Z, who demand instant, seamless and personalized banking experiences.

McLachlan: According to Jack Henry’s annual study, 90% of financial institutions aim to incorporate fintech into their digital banking experiences. Credit unions will focus on investing in advanced technology to enhance their role in members’ financial lives. This involves adopting an open banking approach, allowing seamless integration of third-party fintech solutions tailored to members’ unique needs. By leveraging this approach, credit unions can eliminate the need for members to go elsewhere to meet their financial needs.

Payments will also remain a priority in 2024 – no surprise given the new payments rails and open-loop, P2P alternatives maturing. Jack Henry’s survey found that 90% of financial institutions have plans to add a new payment type within the next two years, with FedNowSM Service ranking as the number one payments service planned, followed by contactless cards and a P2P alternative to Zelle coming in third.

There will also be a continued need for enhanced security and fraud mitigation. With real-time payments comes real-time fraud and the need for real-time fraud detection, prevention, mitigation and data analytics – including the use of AI and machine learning to make these protections possible.

Additionally, credit unions will prioritize offering full-spectrum business banking. Today’s digital platforms are building a bridge between retail and business banking services. Features like embedded invoicing and payment acceptance can be added to consumer-focused digital apps, while business platforms extend the familiar interface and popular user experience to businesses as well.

Finally, it’s crucial to highlight the increasing popularity of generative AI. This technology can – and we will start to see it – improve the way credit unions engage with their members by offering fast, tailored conversational support during critical moments. AI will start to evolve to grasp and maintain context for seamless and sophisticated conversations while efficiently handling diverse tasks to meet members’ needs. And credit unions can use it to refine financial models and ensure compliance with data privacy regulations. There are plenty of opportunities for credit unions to create a distinct digital presence and offer highly pertinent support to their members with gen AI.

Earwood: In the past few years, we’ve seen more credit unions step into commercial lending and credit to support small- and medium-sized businesses in their communities and help their communities grow. Although a natural progression for many credit unions, the commercial banking space comes with its own challenges, which are currently exacerbated by the economic environment. Rising interest rates paired with the higher cost of deposits and capital have led to shrinking margins. To stay afloat during this liquidity crisis and continue to offer commercial lending and credit options, in 2024 winning credit unions will prioritize building complete member visibility profiles with help from fintech partners.

Complete member visibility profiles – built by cleaning, analyzing and segmenting the data that credit unions already have on their members – will help credit unions better understand who their members are, both on the retail and commercial side. For example, a credit union will know if they own a business’ primary banking relationship or only the secondary relationship used just for loans. Based on this information, the institution can take data-driven decisions to expand or improve that relationship. The institution will also see how a business is performing and determine whether they qualify for an additional loan, avoiding delinquency risks. Having a single, accurate view of their banking relationships will also help credit unions better price their commercial loans and deposits according to the terms and risks involved, leading to a boost in liquidity and revenue.