VyStar Credit Union has recently invested $1.25 million in PayverisCU, a Credit Union Service Organization (CUSO) with a focus on financial wellness and innovative money movement capabilities. VyStar is working with the CUSO to develop products and services specifically designed to help their credit union members. The investment will leverage Payveris’ intelligent MoveMoneySM technology with data aggregation and artificial intelligence to simplify money movement, money management and financial wellness for credit union members.
While not new, these types of partnerships between credit unions and fintech companies are growing in the credit union and banking space. “We expect the trend to continue, especially with the rate of change we continue to see in technology and related costs,” says Joe Colca, SVP, Digital Experience for VyStar Credit Union, in Jacksonville, Florida.
The Emergence of Fintech
Financial technology—or fintech—is a term that has emerged to “refer to innovations in the financial and technology crossover space, and typically refers to companies or services that use technology to provide financial services to businesses or consumers,” according to an article in TheStreet.
Some popular consumer examples—PayPal and Venmo—apps that allow consumers to transfer funds between one another. “Fintech describes any company that provides financial services through software or other technology, and includes anything from mobile payment apps to cryptocurrency,” according to The Street.
As technology has emerged, and continues to develop, to allow for various innovations to change the ways in which consumers interact with a wide range of businesses, and devices, credit unions and other financial institutions may be both threatened—and technologically enabled—by these disruptors.
Forming partnerships such as the one between VyStar and Payveris provide a way for both credit unions and fintech companies to leverage potential synergies.
These types of partnerships can manifest in many ways, says Colca: “From launching new digital banking platforms, to finding new and improved ways to move and manage money, to leveraging data to drive insights that form better connections between credit unions and their members.” In addition, he says, the industry is seeing more consortiums pull together within the credit union space to expand various touchpoints—e.g. MDC, CUNA, and various accelerators.
Synergies Between CUs and Fintech
VyStar has set aside a $10 million fund designated for investments in fintech companies wanting to partner with credit unions to deliver innovative solutions. “In many cases, fintech companies and credit unions share similar philosophies when it comes to providing greater value for the end user,” says Colca. For credit unions, that means members. “Partnerships like these can bring economies of scale for fintech companies, ultimately driving down costs, improving speed to market and increasing their credit union market share,” Colca says.
Credit union members also reap rewards, he says. “When credit unions are more actively involved in the development of technology it helps ensure a better product and experience for them and their members. Efficiencies created by these partnerships and the improved technology they help to create can be reinvested back into the credit union and their members.”
Benefits for Credit Unions
Credit unions can reap many benefits from partnerships like these, says Colca. “These partnerships allow credit unions to collaborate alongside fintech companies to learn about their methods processes, development, innovations and go-to market strategies that can bring value to the way credit unions operate and the products they deliver to their members.” In addition, he says, these investments in fintech companies allow credit unions “to have a true seat at the table when it comes to product development to hep the fintech shape their products in ways that provide maximum benefits to credit unions and their members.”
Essentially, Colca says, partnerships between credit unions and fintech can serve as an extension of the credit union’s own R&D efforts, “and allow credit unions to offer progressive member experiences that compete with much larger banks and financial services providers.”
“Partnering with fintech companies is an important strategy for VyStar to ensure we are delivering industry-leading solutions,” said Chad Meadows, Executive Vice President/Chief Operations Officer. “As a result, VyStar’s goal through these partnerships is to find the like-minded fintech companies that are laser-focused on delivering value and ultimately the best experience for our membership.”
Thomas Beattie, CEO of Voleo Trading Systems, Inc., a mobile fintech company that offers a collaborative investing platform, says that: “Innovative credit unions know that user engagement is key to growing their member base and that authentic experiences build lasting relationships.” While Voleo doesn’t have a formal relationship with VyStar, Beattie says: “This announcement from VyStar is very exciting. They are taking a bigger step to participate directly in the shared value creation with this model.” This will, he says, allow VyStar to “bring added value and benefits to their members who may, alternatively, find such solutions elsewhere while transforming their institutions and the industry as a whole.”
In an environment where fintech players are increasingly moving into spaces previously held by more traditional businesses, Beattie says: “Programs such as these and other partnership between credit unions and fintechs will become even more important.”
VyStar’s move, Bettie says, helps to further establish the credit union as a leader in innovation.
“Investing in innovative companies allows VyStar to learn from and replicate pieces of their innovation methods,” added Joe Colca, Senior Vice President of Digital Experience. “These partnerships also allow VyStar to truly have a seat at the table to help ensure the products and services provide the maximum benefit to credit union members.”
“Beyond developing deep partnerships with fintech companies, VyStar is also looking to provide a positive financial return, therefore each investment will be carefully analyzed to ensure maximum value is returned and ultimately reinvested back into our members,” added Meadows.
“It’s an exciting time for credit unions but more so for the members who will see benefits from these partnerships,” says Colca.
Lin Grensing Pophal is a financial freelance writer. Her website address is firstname.lastname@example.org.