Technology is developing rapidly, and the new generation of consumers is accustomed to digital access. Credit unions can either sit back and watch as fintech disruptors meet the financial needs of Generation Z, or they can adapt, collaborate, and offer expanded technology.
“The marketplace is clearly expanding, these competitors are eating up our business, and money is flowing into fintechs,” says CU 2.0 Executive Vice President and Chief Revenue Officer Chris Otey, who addressed the 2022 CUNA Marketing & Business Development Council Conference in Los Angeles. "Yes, there’s disruption, but there’s a workaround: partnering with fintechs.”
Finding the right partner isn’t easy and not every partnership will prove beneficial. Successful credit unions will navigate this field and determine which fintechs are friends, which are foes, and which offer a middle ground.
Otey says there are three types of fintechs: “the ones that want to eat your lunch” by competing with credit unions, “the ones that want to sell you lunch” by charging for services, and “the ones that want to eat lunch with you” by working together.
Finding the right partner starts with credit union boards understanding the need to take part in digital transformation.
“Your ability to partner with fintechs is dead in the water if your boards are the same as they were 20 years ago,” says Otey, who is also board chairman at $130 million asset South Bay Credit Union in Redondo Beach, Calif. “Getting your board to wrap their head around that technology is changing is extremely important.
“At South Bay, we spend 15 minutes every board meeting talking about strategy and innovation,” he continues. “By changing it up, you’re changing the dynamic of the board meeting.”
Most fintech solutions focus on serving younger generations, Otey says, particularly via payments, blockchain, marketing technology, and artificial intelligence.
Otey suggests credit unions act quickly and not be afraid to fail as they move into the digital era.
“Through those failures will come success,” he says. “Don’t confuse doing nothing with a strategy. The longer you wait, the harder, costlier, and riskier it’s going to be.”