Fintech Experts Share Their 2025 Predictions: Part Two

What advancements defined credit union technology in 2024, and what will credit unions’ fintech priorities be in 2025? CU Times recently asked fintech experts to reflect on innovations in credit union technology over the past year and share what they believe may be coming next.

This is the second installment in a series of articles featuring predictions from 10 leaders. For part two, we reached out to Pulsate CEO Sarah Martin; Rapid Finance Vice President, Client Solutions Preethi Janardhanan; and SRM Chief Strategy Officer Mark Sievewright. Read part one here and part three here.

What in your opinion were the biggest advancements in credit union technology in 2024?

Martin: In 2024, we witnessed several significant advancements in credit union technology that have fundamentally transformed how credit unions operate and engage with their members. One of the most notable advancements was the widespread adoption of data-driven, personalized engagement platforms. These platforms have enabled credit unions to deliver highly personalized, contextual offers and communications directly within their existing mobile and digital banking platforms. This shift has allowed credit unions to transform their digital channels into comprehensive sales and service centers, driving meaningful deposit growth and enhancing member engagement.

Additionally, the focus on mobile-first solutions has continued to grow. Credit unions risk losing 90% of growth opportunities with existing members if they don’t engage them outside of physical branches, and with more members relying on their smartphones for banking, credit unions have prioritized mobile app enhancements to ensure seamless, user-friendly experiences. This includes the implementation of features like real-time micro-engagements, which have proven to be 22 times more effective at engaging members during their moments of need.

Janardhanan: Last year, the biggest advancements in technology were data-driven, AI-powered solutions that enabled credit unions to better serve their small business members. Given that small businesses are crucial fixtures in their communities and the broader U.S. economy, credit unions and community financial institutions are realizing that a lack of fast and flexible access to funds is a major issue plaguing small businesses across the country.

Forward-thinking credit unions are remedying this problem by partnering with fintechs to leverage advanced technology to provide vital capital to small businesses when they need it most. This includes not only new technology infrastructures, but an increase in embedding financial services into third-party platforms. Real-time payment integration transforms transaction experiences for personal and business accounts, while AI-powered fraud prevention tools provide stronger safeguards against evolving threats. Additionally, investments in data modernization further improve data-driven decisioning and operational efficiency.

Credit unions have large volumes of member data that can be used to unlock deeper insights into member and small business needs. With the right tools, credit unions are using these data-driven insights to deliver efficient and tailored financial services, leading to increased retention and member satisfaction while positioning credit unions for sustained growth.

Sievewright: While 2024 proved to be a challenging year for many credit unions (the credit union system had less than 3% year-over-year loan growth, continuing credit quality challenges and only 2% net membership growth), in overall terms credit unions made solid progress in upgrading their technology environments. Further improvements were made in online and mobile banking capabilities, as well as online account opening and loan origination solutions, and a greater emphasis was apparent last year around data strategy and data analytics.

Notwithstanding the appropriate hype around artificial intelligence, adoption of new AI capabilities has been relatively spotty, especially among the 3,000-plus credit unions below $500 million in assets. Understandably, many of these credit unions are relying upon their third-party technology providers to identify and implement AI-enabled solutions that can increase efficiency and improve member experience. Among larger credit unions, some good progress was made in the use of AI for member experience solutions (including AI-powered chatbots or virtual assistants), process automation tools, and fraud and risk management solutions.

What will be credit unions' biggest priorities heading into 2025 in the areas of fintech partnerships, AI and/or other areas of business related to technology?

Martin: Credit unions will need to prioritize several key areas to stay competitive and meet the evolving needs of their members. One of the top priorities will be forging strategic fintech partnerships. Collaborating with like-minded fintech companies will enable credit unions to leverage cutting-edge technologies and innovative solutions that can enhance their service offerings and improve operational efficiency.

Another critical priority will be the continued focus on data utilization. Credit unions must overcome the challenges associated with data management and start using their data more effectively to understand and meet member needs. This includes leveraging first-party and third-party data to create personalized, data-driven engagement strategies that drive member loyalty and retention while generating meaningful deposits through the digital channel.

Lastly, credit unions will need to enhance their digital banking platforms to ensure they are not just transaction-focused but also serve as profit centers. This involves implementing solutions that facilitate cross-selling and up-selling, similar to the strategies employed by digital-only and neobanks. By doing so, credit unions can maximize the potential of their digital channels and provide a more comprehensive and engaging member experience.

Janardhanan: It’s likely that credit unions will increasingly seek ways to expand their small business lending, including the adoption of advanced analytics. In addition to prioritizing investments in technology, credit unions must address the challenges associated with adopting this type of technology.

Partnering with innovative fintechs is a key component of overcoming technological and operational hurdles. Credit unions that strategically collaborate with fintechs can deliver innovative and scalable solutions that greatly enhance member services. Moreover, credit unions can tap fintechs to modernize their legacy systems, making them suitable for integration and real-time data-sharing. Ultimately this will help credit unions enhance their efficiency and responsiveness.

Many credit unions will look to fintechs for turnkey solutions that can rapidly scale small business lending and provide access to expanded financial networks. Additionally, enhancing risk management through AI-driven fraud detection and credit assessment tools is also something credit unions should prioritize this year. AI will also play a major role in personalizing member experiences and streamlining operations.

In 2025, credit unions should also look beyond traditional lending and banking solutions to better serve small business members. There is demand among small business owners for real-time access to capital that allows them to manage cash flow, seize market opportunities and protect themselves against financial risk. Credit unions can meet this need by providing products like business lines of credit tied to payment card access or finding the right partners that would allow them to provide innovative products to their members. This combination offers small businesses 24/7 access to capital that can be managed from a digital platform.

Sievewright: Throughout 2024, we worked with many credit unions to help them determine their strategic priorities for 2025 and beyond. Almost universally, these credit unions are working on three strategic focus areas for technology, namely:

Provide frictionless member experiences via fully integrated delivery channels;
Develop highly personalized (and intelligent) marketing capabilities to drive growth; and
Increase operating efficiency and effectiveness by optimizing their technology eco-systems.

We believe that 2025 will be a pivotal year for credit unions in the broader adoption of AI across the system. We should see increased adoption of AI-enabled chatbots or virtual assistants; AI-driven loan decisioning and underwriting technology; and improved risk mitigation tools driven by AI. However, before embarking on the broader use of AI, it’s vital that credit unions determine their AI-related strategies and policies, including regulatory compliance with the Fair Lending Act, the Equal Opportunity Act and other relevant consumer protection laws.

Additionally, we believe that throughout 2025 credit unions will continue to upgrade their new account opening and loan origination tools as part of their continuing efforts to deliver fast, convenient and easy-to-use digital services to their members. Finally, we believe credit unions will allocate more of their tech budgets to data analytics and automation.

NOT FOR REPRINT

Natasha Chilingerian has been immersed in the credit union industry for over a decade. She first joined CU Times in 2011 as a freelance writer, and following a two-year hiatus from 2013-2015, during which time she served as a communications specialist for Xceed Financial Credit Union (now Kinecta Federal Credit Union), she re-joined the CU Times team full-time as managing editor. She was promoted to executive editor in 2019. In the earlier days of her career, Chilingerian focused on news and lifestyle journalism, serving as a writer and editor for numerous regional publications in Oregon, Louisiana, South Carolina and the San Francisco Bay Area. In addition, she holds experience in marketing copywriting for companies in the finance and technology space. At CU Times, she covers People and Community news, cybersecurity, fintech partnerships, marketing, workplace culture, leadership, DEI, branch strategies, digital banking and more. She currently works remotely and splits her time between Southern California and Portland, Ore.