Credit unions take pride in satisfying the needs of their members. Partnering with fintechs is a key way to deliver the best experience possible to both retain existing members and attract new ones.

Charles Krawitz, Senior Vice President, Chief Capital Markets Officer & Head of Commercial Lending at Alliant Credit Union, joins the show to talk about how fintechs enable credit unions to innovate product offerings and better align with the needs of members.

We discuss:

• What it means to be an innovator in the credit union space
• Building an organization that collaborates with fintechs
• New product offering opportunities
• Incubating innovative ideas with universities and educational institutions

Innovation in the credit union space

Krawitz applauds the work that credit unions have done for their members. 

“Credit unions have been very member-focused and have done a lot of things right,” he says.

The majority of that innovation has come from collaboration in the community, but Krawitz believes that greater innovation can come from developing partnerships with fintech companies.

And that’s where Krawitz thinks credit unions are missing out on offering incredible experiences to their members.

“Very few of them have looked to engage with the fintech world, to really understand the business model of fintechs and how they might align with the business goals of the credit union and best serve their membership base.”

Krawitz assumes that one reason many credit unions steer clear of fintechs is because of their perhaps unearned reputation for risky or non-compliant behavior. Credit unions don’t want to be in a situation that could potentially create compliance and regulatory challenges after all.

But Krawitz does not view fintechs in that same light. In fact, Alliant Credit Union developed a highly effective way of working with them—and reaped immense benefits from those partnerships.

A credit union that collaborates with fintechs

The secret to Alliant’s success is engagement and expectation setting.

“We have certainly found that through engagement, we’re able to talk to fintechs about our regulatory and our compliance needs, and explain to them why, as a credit union with over $10 billion in assets, certain things are needed,” Krawitz says.

The expectation isn’t that the fintech will have everything in place on day one. Alliant is only looking for there to be an understanding of where progress can be made and a willingness on the fintech’s part to better align with Alliant's needs.

The hope is that sometime in the not too distant future, the fintech will up their regulatory and compliance game and produce a product that can be put in front of Alliant’s membership base.

Alliant keeps the needs of its members at the heart of everything they do. That’s why, whereas others may look at lending from the perspective of their bottom line, Alliant sees it as a means of supporting member needs.

So, what Alliant is hoping to receive when working with fintechs is a product set that is transparent, allows for easy price comparison, and benefits the financial journey of their members.

Potential new product offerings

As Krawitz sees it, there are a few new trends that could be fertile ground for new products.

Solar lending is growing. Concern for the environment is growing so consumers are looking for ways to lessen their reliance on fossil fuels. In addition, with wildfires becoming more regular in the western United States, people are concerned with the continuity of their power supply. Having a solar array could help with that.

Continuing with the green theme, consumers are buying more and more electric cars. So, personal term loans for car purchases, as well as other large expenditures like home improvement projects or buying an RV, are becoming more popular.

Incubating innovative ideas

Krawitz approaches innovation in a fairly unique way for credit unions. He partners with local universities to create incubator programs where students are tasked with a question and given free reign to explore that question however they wish (an example Krawitz offers is “If Alliant Credit Union were to go into the buy now pay later space, what fintech should they partner with?”).

This strategy allows Krawitz and his team to reach outside their institution for new ideas and new lines of thinking. It acts as another avenue to bring innovative programs and products into Alliant. 

That’s in addition to reaching out to their community members, talking to their credit union peers, and collaborating with fintechs.Krawitz believes there is so much opportunity for innovation through collaboration.

And he believes partnering with fintechs is a great place to start.

“Fintechs bring some really neat things, different ways of doing business, more efficient ways of doing business, ways of doing business that we shouldn’t be scared of,” he says. “Teaming up in the credit union space can really bring together two parties that combined will be very impactful.”

Stay tuned for new episodes every week on the Leaders in Lending Podcast.