The credit union business model is in jeopardy.
The culprit? The payments ecosystem, says George Hofheimer, chief research and innovation officer for the Filene Research Institute.
He defines the payment ecosystem as “a network that moves money between consumer and merchant bank accounts using computers, software, and communication links.”
While the current payment ecosystem is essentially the same as it was 30 years ago, Hofheimer believes “we now stand at an inflection point, where a new wave of innovation is approaching that threatens to undermine the very financial intermediaries that made the payment ecosystem what it is today.”
Included among those intermediaries are credit unions. “In the short term,” he says, “the regulatory environment governing the payment ecosystem will have a sharper and more dramatic impact on credit unions—think the Durbin Amendment and the CARD Act. However, other trends have the potential to alter your business model more dramatically over the next decade.”
Hofheimer cites four major trends affecting the payments ecosystem:
Google, Hofheimer adds, exemplifies a company that profits handsomely from data mashups. How should credit unions respond to these trends?