If your credit union is finding it challenging to achieve previous levels of revenue and growth, much less see meaningful increases, you are not alone. Most credit unions are challenged to do so based on an array of industry-wide headwinds—factors that significantly impact key revenue sources like interchange income, interest income, and non-interest income. The new and fierce competitive landscape is a fundamental contributor to these difficulties, with fintechs and big techs developing alternative solutions that disenfranchise credit unions and the revenue sources they could once count on.
Many of these innovators are now reinventing channels like business payments, income payments, and point-of-sale. Others are leveraging their brand equity and loyalty to further disenfranchise credit unions by offering traditional financial services like deposits, loans, and cards—often with better digital experiences—to accomplish their ultimate goal of replacing financial institutions as the primary providers of financial services.
Digital reinvention has also expanded your competition well beyond comfortable, physical markets. Consumers and businesses can now open new accounts or apply for loans in minutes with a credit union down the street, a bank across the country, or a fintech or big tech that is only an app away.
Banking as a Service (BaaS) also threatens traditional banking, since it will enable virtually any company in any industry to embed financial services into its consumer experience.
And compounding these challenges even more, credit unions are facing ongoing, increasingly complex financial management.
Technology has driven many of today’s revenue challenges. But technology can also be the solution for forward-thinking credit unions. There are two crucial steps you can take to overcome revenue roadblocks.
First, embrace open banking and the need to become a platform. An open platform approach leverages APIs and provides absolute discretion over who you partner with, what solutions you integrate, and when you integrate them. Second, pick your platform partners wisely. With open banking widely considered to be the future of the financial services industry, if a potential partner can’t clearly demonstrate its open strategy, it lacks the future-ready vision you truly need.
Jack Henry™ offers timely resources, innovative technology solutions, and other valuable insights that can help your credit union overcome near- and long-term revenue challenges while meeting the needs of your members—and the communities you serve. To learn more, visit jackhenry.com today.