By W.B. King
For this year’s annual Finopotamus “Holiday Tech Wish List” feature, we sat down with forward-looking fintech and credit union executives who shared their tech hopes and forecasted market realities for 2024. Due to a significant number of intriguing responses, this year’s Wish List will be presented in five installments.
Part One includes insights from Cotribute, Tyfone, Epic River, Strategic Resource Management (SRM), Equifax Workforce Solutions and Constellation Digital Partners.
Wishing for Streamlined Account Openings for Credit Unions
Topping Cotribute CEO Philip Paul’s 2024 wish list is the integration of advanced technologies to streamline account opening for credit unions.
“Aligned with industry priorities, this solution accelerates membership growth by automating processes, ensuring operational efficiency and maintaining profitability,” Paul told Finopotamus. “The focus is on eliminating manual steps, reducing time and effort in onboarding and optimizing overall operations. This not only meets growth goals but also supports strategic objectives by maximizing margins.”
The Anaheim, Calif. -based fintech provides a platform designed to enable profitable revenue and customer growth for financial institutions (FIs).
“By delivering a seamless, user-friendly digital onboarding process comparable to leading consumer fintech platforms, credit unions can attract and retain members effectively,’” he said. “In essence, my wish is for technology that unifies growth, operational efficiency and an outstanding member experience — addressing the evolving needs of credit unions in 2024.”
The growing influence of consumer fintechs, he noted, will pose a “significant hurdle” in adoption rates as these fintechs are “eroding” credit unions’ market share.
“Successfully differentiating against these fintechs becomes imperative but challenging,” Paul continued. “Resource constraints within credit unions compared to consumer fintechs present a significant obstacle. The gap in financial and technological resources limits the ability of credit unions to swiftly adopt and implement advanced technologies for streamlined onboarding.”
To overcome these challenges, he said a strategic approach, based on coloboration, is required.
“Technology partnerships or innovative solutions tailored to the unique needs and constraints of credit unions,” he said. “The road to implementation will necessitate a concerted effort to bridge the resource gap and position credit unions competitively against the rising tide of consumer fintechs.”
As he looks toward 2024, Paul’s hope for the credit union industry is widespread adoption of technologies that can address challenges commonly faced by credit union executives.
“While credit unions offer superior products and services, they’ve struggled to compete technologically with mainstream financial institutions,” Paul noted. “My optimistic vision involves credit unions embracing technology to enhance user experiences. By simplifying processes, adopting mobile-friendly interfaces and enabling instant decision-making, credit unions can compete on the technology front. This shift can attract a broader audience.”
Wishing for Instant Payments
Tyfone’s Chief Commercial Officer Marcell King said "instant payments" should be on the top of all credit unions’ wish lists, which is based, in part, on the Federal Reserve’s recently launched FedNow program.
“With the rise of peer-to-peer (P2P) payments options through the expansion of Zelle, Cash App, and Venmo, consumers are now experienced and expect instant settlements when they send or receive money,” he told Finopotamus. “And FedNow is addressing this by providing instant payment and settlement capabilities. As credit unions adopt instant payments, they must also implement security measures that prevent account takeovers and mitigate fraud.”
The Portland, Ore. -based company provides consumer and commercial digital banking services for community FIs throughout the United States.
While he noted that hundreds of FIs are live on FedNow, he added that many others “remain unaware” of use cases and opportunities, including instant payroll for businesses, digital wallet transfers for consumers, earned wage access for employees, insurance claims and tax returns, and lowering fraud rates. Regarding the latter, he noted that one credit union client that uses FedNow has realized a nearly 60% lower fraud rate with FedNow than ACH A2A losses.
“Despite the clear benefits of FedNow, ultimately the ‘fear of the unknown’ is delaying many credit unions from moving forward with FedNow,” he said. “This will hurt credit unions in the long run – receiving via FedNow will be table stakes for every credit union and FI in the next few years.”
As King looks forward to 2024, he hopes that the innovations in the payments space, generative artificial intelligence (AI) and blockchain experienced in 2023 continues.
“This will enable credit unions to offer technology that helps consumers and their families simplify their financial lives and improve their financial health and well-being,” he noted. “Credit unions need to examine how they support their members’ financial health and well-being, starting with transitioning digital banking from a transactional interaction to a deep, meaningful, two-way relationship with their members.”
Wishing for Digital Lending Assistance to Healthcare Providers
When Epic River Founder and CEO Jeff Grobaski sat down to write his wish list, the first entry was: hoping credit unions will recognize the key opportunities to provide digital lending assistance to healthcare providers in the communities in which they live and work.
“By acknowledging the challenges faced by healthcare providers, credit unions can harness technology to establish mutually beneficial relationships,” Grobaski told Finopotamus. “In recent years, the rising cost of healthcare has become a prevalent concern for individuals, families, healthcare providers and entire communities. The financial burden faced by patients often results in more than half of all medical bills typically remaining unpaid, adversely impacting both patient financial well-being and the economic stability of healthcare systems.”
The Fort Collins, Colo.-based company, a lending-as-a-service provider that connects FIs with healthcare providers to streamline patient payments, has 18 credit union clients.
“Through the implementation of end-to-end digital lending systems, credit unions can extend financial support to local healthcare providers,” he said. “This partnership enables the credit union to access a larger loan volume and an additional source of interest income, while the provider can offer patients an affordable payment option to reduce the risk of unpaid bills and ensure a stable cash flow.”
Among challenges in this niche lending space, he explained, is that credit unions often note concerns regarding staffing levels or in-house expertise necessary to capiltize on growth opportunities.
“It is a prevailing barrier that, if left unaddressed, could hinder progress and innovation. However, a promising solution for overcoming these hurdles lies in cultivating strategic relationships with fintech partners,” he continued. “By leaning on fintech expertise, credit unions can tap into a reservoir of knowledge and ensure seamless adoption of new technologies and innovation approaches, regardless of internal resource constraints.”
For 2024, he hopes that a sense of stability is restored to the credit union industry, which, he noted, has “traditionally been recognized for its hallmark predictability and steadiness.”
He continued: “In recent times, the credit union sector has faced various challenges, including economic uncertainties, understaffing, cybersecurity threats and evolving regulatory landscapes. Achieving newfound stability will set the necessary foundation for sustainable industry growth and allow credit unions to continue innovating their services to effectively support the financial well-being of their communities.”
Wishing for Legacy Systems Modernization
Strategic Resource Management (SRM) Chief Strategy Officer Mark Sievewright wishes that in the coming year continued progress is made in the area of legacy systems modernization.
“A myriad of opportunities now exist for credit unions to embrace emerging technologies, including solutions offered by innovative fintech providers, to improve both member experience and operating efficiency,” he told Finopotamus.
The Memphis, Tenn.-based company offers payments, digital transformation, core processing, AI, digital assets and overall operating efficiency solutions to FIs.
When asked the likelihood of his wish being implemented, Sievewright was optimistic.
“I have seen credit union leaders across the country commit to strategies that have legacy systems modernization as a top priority,” he noted. “Challenges continue to be the availability of resources and the inability for credit unions to extract themselves from existing (i.e., legacy) vendor agreements in a timely and cost-effective way.”
His hope for 2024: “The credit union industry centers on improved market conditions, such as the economic and interest rate environments, and, consequently, reduced financial pressures on consumers and small businesses.”
Wishing for Addressing Evolving Member Needs
Equifax Workforce Solutions’ Alison Heller, sales director, credit unions - verification services, wishes credit unions continue doing what they do “exceptionally well” – catering to members evolving needs.
“Through the use of technological advancements, such as automation and even AI, credit unions can improve operational functions, and customize their service to their specific members,” she told Finopotamus. “These technologies can improve the ease of many types of transactions, which is critical in enabling credit unions to meet the changing expectations of their members, particularly Gen Z, who demand instant, easy and personalized banking experiences.”
The St. Louis,-based company, a wholly owned subsidiary of Equifax, provides solutions in areas of human resources, payroll, tax management and compliance.
As credit unions look at this ever-changing landscape, Heller said determining what new technology advancements to adopt can be daunting.
“Challenges can arise when choosing which technologies best fit your credit union and prioritizing when to make the leap to something new,” she said. “Credit unions, however, are motivated to remain competitive with traditional banks, which will continue to help drive the business forward with a clear focus on member well-being.”
Despite high inflations rates and affordability issues for many Americans, Heller’s hope for 2024 is that credit unions continue to set the "lending" example for other FIs.
“We have heard that credit unions are partnering with their members to create individualized plans that meet each member where they are. If a member is struggling with loan repayment, their credit union would like to be right there with them to help figure out a plan to get through it,” she continued. “I would like to see credit unions continue to blaze the trail of responsible lending.”
Wishing to Harness the Power of Innovation
Constellation Digital Partners President and CEO Kris Kovacs believes that inspiration shouldn’t come only once a year – like forward-looking ideas during the holidays – but rather there should be “a constant daily embrace” of innovation.
“This year I hope we can cultivate a culture of kindness towards our dreams and give the gift of support to the innovative ideas of others,” he told Finopotamus.
The Raleigh, N.C.-based credit union service organization (CUSO) offers a cloud-based suite of digital financial services dedicated solely to credit unions.
“Technology is evolving at an unprecedented pace, and clinging to past constraints prevents our ability to seize today’s technological marvels. Our competitors, especially asymmetric ones and startups, aren’t shackled by such self-imposed limits, which is a key factor in their success,” Kovacs continued. “The path to breakthroughs lies not in dwelling on past barriers, but in envisioning how things can be achieved with a fresh perspective.”
As Kovacs looks forward, he referenced the message in the holiday film, The Polar Express.
“The act of believing is what enables us to see the true potential of our ideas and aspirations,” he said. “In embracing this mindset, credit unions can transform their operations, harnessing the power of innovation and breaking free from the shackles of outdated thinking.”
