BY MICHAEL ADEBISI
What does the new-age ride service Uber have to do with credit unions? A lot, it turns out, when it comes to the adoption of financial technology. Will your CU be a victim of or a participant in the fintech wave of the future? These strategies will make adopting such technology less of a regulatory headache.
What is more important to people than their money? Their time. The former is hopefully replenish-able. The latter is not. Ever. Credit union members are no different from traditional bank customers in that respect. Members love their credit unions, but still they need to have access to financial services quickly and securely.
While credit union members are loyal, they are not insulated from the realities that technology offers the rest of the world. Fintech-assisted financial institutions offer consumers easy access to their money, their balances, investments and more. Additionally, consumers can use all the financial analysis they want for a fraction of what people used to pay, in a fraction of the time it used to take. What’s at stake is that consumers have the ability to not only act but act instantly on this information, whether it is for car or student loans, home loans, insurance, investments, IRAs, HSAs, CDs or anything else financial organizations, including credit unions, currently provide. The disintermediation that fintech brings to financial services parallels Uber in the disruption of the taxi industry: credit unions and their members are susceptible and can be either victims or participants.
Fintech (sometimes written FinTech) refers to new applications, processes, products or business models in the financial services industry. While fintech officially started in the 1990s, the global recession forced the movement into a temporary retreat. But as the economy recovered, global investment in financial technology increased and has risen more than twelvefold from $930 million in 2008 to greater than $12 billion in 2014.
Obstacles and challenges
There are two main obstacles that deter credit unions from partnering with fintech providers. They are regulatory constraints and data security issues.