By W.B. King
For this year’s annual Finopotamus “Holiday Tech Wish List,” we sat down with forward-looking fintech executives who shared respective tech hopes as well as forecasted market realities for 2023. Due to a significant number of intriguing responses, the Wish List will be presented in three installments. Here goes Part 1.
Wishing for Tech Solutions that Drive ROI
With many analysts forecasting an uncertain economy in 2023, Carla Bettens, vice president of marketing and communications at Member Driven Technologies (MDT), told Finopotamus that financial institutions need to reconsider how best to effectively spend tech dollars.
“My top IT wish is that credit unions place a greater emphasis on technology and solutions that are ROI drivers,” Bettens continued. “Innovation will continue to be a top priority, but instead of focusing on exploring new areas, such as the metaverse, credit unions should focus on investing in technology that directly impacts member service, such as digital account opening, online and mobile banking and online loan applications.”
The Farmington Hills, Mich.-based MDT, which counts 113 credit unions as clients, is a credit union service organization (CUSO) that provides a private cloud alternative for core processing and IT needs.
Bettens believes that her IT wish will come true if more credit unions prioritize member-driven solutions and services, but understands hurdles remain for many organizations.
“The biggest challenge credit unions face is getting overwhelmed with the endless fintech options out there,” she said. “It will be important to rely on strategic partners to help vet technology and focus on the solutions that deliver efficiencies and member service enhancements.”
Looking toward 2023’s economic landscape, which Bettens noted will likely include talent shortages and thinning margins “challenging credit unions across the board,” she said financial institutions that invest in strategic tech partnerships can optimize margins and bridge talent gaps.
“Times of economic anxiety are often when members need their credit unions the most,” she continued. “I have no doubt credit unions will rise to the challenge next year, continuing to provide their members with the personal, robust support they need to weather any storm.”
Wishing for Automation and Alternative Data Sets to Strengthen Existing Loan Portfolios
Steve Bireley, chief technology officer for Lokyata, told Finopotamus his IT wish is that “credit unions will build on their digital transformation investments by further utilizing automation and alternative data sets to strengthen their existing loan portfolios.”
The Washington, D.C.-based company, which focuses on delivering products that digitize, automate, and scale lenders’ credit decisions, touts the motto: “Make better lending decisions at scale to lower your risk and increase profits.”
He noted that his wish includes moving away from the traditional FICO score–a longstanding industry metric that has proven not to be inclusive for all consumers, he said.
“We hope to help credit unions better reach their communities at a time when economic challenges are rising and their members need increased – not decreased – access to loans.”
Bireley is optimistic that his wish will come to fruition in the coming year explaining that a handful of federal financial regulatory agencies, including the NCUA, have provided statements “allowing and encouraging the use (of) alternative data” to support credit unions’ financial inclusion initiatives.
“These agencies recognized the need for data changes and that certain information not included in traditional credit scoring, such as bank statements, rent rolls, utility bills, and mobile phone payment data, can make a meaningful positive difference in the evaluation of many loan applicants,” he said.
As Bireley looks ahead, he said Lokyata’s collective hope is that credit unions “will lead the charge in driving financial inclusion” within their communities by “expanding the availability of credit” to more consumers.
“With many economists and industry experts predicting some level of recession in 2023, this is a time when credit unions can really impact their local communities and fulfill a need that has historically gone unmet,” he said.
Wishing Credit Unions Embrace Cloud, APIs and Micro-Services
NCR Corporation’s Vice President of Digital Banking Doug Brown’s wish is that credit unions embrace cloud, APIs and microservices to re-architect existing platforms. This approach, he said, would provide credit unions’ with the ability to quickly bring new, reliable services to market.
To effectively do so will require “breaking down the complex and bespoke silos of traditional infrastructure,” he added. “The key is developing channel services that are reusable across touchpoints and optimized for both member and credit union employee experiences.”
Counting more than 600 credit unions and banks as clients, the Atlanta-based consulting and technology company provides professional electronic products, including ATM software and hardware services, in 160 countries.
By converging channels, Brown explained that credit unions can empower members to move transactions across different touchpoints, which allows the credit union to “operate consistent business rules,” while enabling better use of data.
“Through modernization, fragmented member experiences can be transformed into seamless journeys,” he said, adding that there are trials associated with executing his wish.
“The biggest challenge for any organization embarking on a change is embracing a growth mindset and getting over the hurdle of the ‘we’ve always done it this way’ mentality,” he said. “Member expectations are heightening, technology is quickly evolving, and the market outlook is uncertain.”
The biggest mistake a credit union can make in 2023, he added, is doing nothing.
“My hope is that credit unions will seize the opportunity to transform their data into action, with a particular focus on helping members improve their financial wellness,” he noted.
“Credit unions,"he continued are "the ideal partners to step up and help members during times of economic turbulence. I’m confident that next year we’ll see more institutions provide personalized advice to help members better manage their finances.”
As far as the coming year is concerned, Brown expects the industry to experience new innovations, such as credit unions offering artificial intelligence (AI)-driven education through video-based curriculum models and gamification.
“We’ll also see the emergence of deeper budgeting assistance, such as through automatic budgeting tools, advice around savings goals and paying off debt, and proactively pointing out potentially problematic behaviors, such as engaging in an excessive amount of buy now, pay-later-type services or excessive cryptocurrency investing,” he said.
Wishing to Streamline the Divide Between Digital Channels and the Traditional Call Center
Glia Technologies’ Co-Founder and Chief Strategy Officer Justin DiPietro told Finopotamus that now is the time to “finally overcome the digital disconnect between digital-first member service and phone interactions.” To this end, his wish for 2023 is that more credit unions “explore ways to bring traditional call center phone service into digital-first” member support.
The New York City-based company, which provides a digital member-service platform that lets credit unions interact with members through messaging, video, voice, bots and/or co-browsing, has more than 200 credit union clients.
“While there is a growing preference for digital channels, many members are still picking up the phone,” DiPietro said. “For most credit unions, this means managing two or more systems, which is inefficient and often leads to poor member experiences.”
In DiPietro’s estimation, his wish could be realized if more credit unions understand the “cost, staffing and ease-of-management advantages of a single member engagement platform.” He understands, however, that the transition can be taxing.
“The biggest challenge for credit unions will be letting go of the unfulfilled promise of omnichannel and instead embracing solutions with an architecture that is free of channel limitations,” he continued. “It can seem daunting at first, but we’ve had many credit unions successfully make this transition and are now enjoying the time, cost and member service benefits.”
By using a combination of “human and virtual assistants in one platform, including chatbots for digital engagements and virtual assistants for phone and digital voice engagements,” DiPietro’s said credit unions “will no longer have to manage multiple solutions across different technologies.”
This approach, he added, reduces related costs and staffing needs, which “creates a more consistent member experience.”
Wishing That Credit Unions Continue to Embrace Artificial Intelligence Solutions
For Shelby Austin, co-founder and CEO of Arteria AI, her holiday tech wish is squarely focused on further expanding the reach of AI in the financial services space.
“My top IT wish is for credit unions and community banks to understand just how meaningful the impact of using AI to get a better understanding of their documentation can be,” she said.
The Ontario, Canada-based company helps financial institutions digitize respective legacy documentation processes and contract management lifecycle (CLM).
“I think it is completely possible. The tech is here and is now more accessible than ever," she said of her wish. “For 2023, my hope is that the end-to-end lending process can be made more transparent and efficient with the better use of automation and AI.”
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