Banking consumers will have many more choices, especially for the underbanked.
PayPal and Venmo will offer debit cards and online bill pay, and shopping for auto, mortgage, home equity and small business loans on Amazon.com will be commonplace.
Checks will finally have started to disappear from the scene, being replaced by person-to-person payments and other electronic formats. Plastic will still be around, but only used by “old school” customers, much like checks were only used by a few credit union members in 2017.
Interchange will no longer be a significant source of revenue, averaging around 30 basis points for both credit and debit.
The number of credit unions, and community banks, will be greatly reduced, down to around 1,000 of each from 6,000 credit unions and 6,000 community banks in 2017.
The merchant experience will be very different, relying on mobile for order ahead, order customization, and payment.
Stores will not carry inventory. Shopping in-store will consist of trying on clothes or trying out electronics, scanning a barcode, and having the item delivered to your door the next day.
Several branchless, online-only credit unions will have succeeded to compete with fintech, while several “traditional” credit unions will have expanded nationwide to compete with mega banks.
Credit unions will adopt artificial intelligence (AI) to replace many staff functions. Chatbots will respond intelligently to inquiries 24x7, loan decisioning will take into consideration hundreds of data points and return responses instantly, drive-through (or by then “fly-through”) lanes will be “staffed” by AI functions that handle transactions full-time.
How to succeed in the future
How will credit unions succeed in the future? Use technology and your superpower: Collaboration.
Credit unions sit on a wealth of data, from their core processing, customer relationship management, loan origination, and other systems. But it takes a well-defined data strategy to collect the data and use the data for better decision making.
If you are not using data to make a decision, you are just another person with an opinion.
Combine this with demographic and census data, and credit unions can be in the forefront of data mining to get the perfect offers to the right members.
Credit unions have a unique superpower: the power of collaboration. Credit unions can work together, through credit union service organizations, to aggregate needs and data, and share solutions.
LOU GRILLI is director of payments strategy for Trellance.