The Current Landscape
Ever-changing regulations can make policy planning a total nightmare, especially for somewhat smaller organizations like credit unions. As Dan so wisely points out, “no business out there likes surprises from a regulatory standpoint.”
The NAFCU is serving millions of hardworking Americans by ensuring that their preferred CU is performing in a sustainable growth model. They achieve this by educating industry leaders on new laws and helping members stay in compliance.
Another focus is providing more economic opportunities for underserved areas and the unbanked. Many regional banks are closing branches in neighborhoods across the country, creating a financial services desert that stifles the growth of small businesses and homeownership.
The pandemic created a digital banking transformation. Credit unions have always been staunchly dedicated to member engagement and satisfaction — but now customers demand the seamless experience across multiple platforms that has been pioneered by fintech.
“There's a lot of shiny squirrels out there that we all want to go and chase. But does it work? Do you have an example, a case study that it worked at XYZ bank or ABC credit union, that it helps everybody?” — Dan Berger
A Legacy of Trust
Credit unions are, at the root, a not-for-profit financial cooperative, and have been building strong relationships with customers for over 150 years.
Fintech got its start when the world became more digital than analog. Credit cards, ATMs, stock exchanges, and the rise of e-commerce all contributed to the nearly endless iterations available today.
However, no nascent fintech can hope to inspire the level of trust enjoyed by neighborhood credit unions that have been faithfully serving members for decades, no matter how snazzy their marketing might be.
Traditional banks and CUs are also regulated and insured, unlike many fly-by-night startups and trading platforms.
“Anyone not focusing on AI is gonna get smoked. The bank down the street, the FinTech that's in the space, and the other credit unions that embraced it are all doing it. So, you’re going to get left behind.”— Dan Berger
Vital Partnerships
Startups need customers, and credit unions need the latest tools to stay competitive. By working together and developing beneficial relationships, both industries can thrive.
One facet of the constantly changing market for financial products is the current lack of inventory. There’s currently a shortage of both new and used cars due to the pandemic, as well as a lack of available housing.
Formerly lucrative loan departments are sitting on a ton of capital, so they should be taking this opportunity to invest in tech stacks and infrastructure to improve the customer experience.
Boomers who only ever went to the branch are now hip to the mobile banking trend due to COVID, and partnerships with fintech are how forward-thinking credit unions will anticipate and serve their customers’ changing needs.
“It needs to be faster, it needs to be better. It needs to be more seamless, more frictionless. The experience has to be smooth. Everybody had plans, and it's all changed and accelerated. But yeah, that digital transformation is happening, rapidly, and they really need to focus on what does the member really want, and what do they really need.” — Dan Berger
Laser Focus
Dan emphasizes that CU leaders have to be obsessive about your members’ needs. That should be the driving force behind any fintech partnership. How can you better serve the customers?
AI, robotics, and machine learning will all be playing a crucial part in the credit union evolution. You want to have a fully stocked toolbox for innovating and improving the member experience.
The NAFCU is continuously researching and refining best practices and educating CEOs on how fintech can streamline processes and help ensure compliance.
Credit unions must embrace how AI can benefit their members or risk being left behind.
“You have to have a firm understanding of the power behind AI. If you could drill down into your data, utilize the AI tools, and you're operating in a low-interest-rate environment, your margins are minuscule, tiny, and you can use any platform that helps you get a benefit, why wouldn't you utilize it?” — Dan Berger
For the entire fascinating discussion, find us on Apple Podcasts, Spotify, and here.
