Fintech growth in the banking industry has exploded in just a few short years. From 2013 to 2017, fintech lending went from $1 billion to $12 billion, according to a report by S&P Global. Banks, who once saw fintechs as rivals, have been embracing fintechs, leading to enhancements in their financial product offerings and customer experience. Through partnerships and acquisitions, fintechs have been swallowed into banks or left to operate as stand-alone entities with access to FDIC insured bank deposits.
Credit unions haven't embraced fintechs the way banks have. But that is starting to change. An online poll of credit union executives, conducted by consultancy West Monroe Partners, found that 54% of respondents are considering a bank merger or fintech partnership/acquisition. 22% of them are considering fintech organizations.
“Credit unions should make it a goal in 2020 to either invest in digital loan application capabilities on their own websites or else partner with a fintech firm that can provide the capability to do so,” Rohit Arora, CEO of Biz2Credit, stated in a report put out by the firm titled 'Biz2Credit Small Business Leading Index'. “Although the member business lending cap is a hindrance for some credit unions, the bigger problem is that many credit unions are technologically behind banks and alternative lenders.”
Fitnechs aren't only about lending, of course. They also provide payments, enhanced customer experiences, a streamlined application process, and more. Recently Rancho Cucamonga, Calif.-based CO-OP announced its Developer Portal, as reported by CreditUnionTimes. The Portal allows credit unions to add additional functionality and features into their digital applications more easily..
While banks are starting to develop symbiotic relationships with fintechs, credit unions are just now getting to know these smaller, more nimble technology companies. Such relationships will lead to partnerships and provide overall enhancements for the credit union customer experience.