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  • Writer's pictureRoy Urrico

Panel: Credit Unions and Changing Banking Preferences (Part 1)

By Roy Urrico

What is the financial technology narrative that will last beyond the pandemic? What tools and techniques ensure members have a positive credit union experience? How do fintechs enable credit unions to keep up with advancing technology and allow credit unions to compete for accounts?

In this first installment of a three-part virtual panel discussion focusing on credit unions and changing banking preferences, a trio of banking industry financial technology professionals offer their insightful perspective.


Karl Dahlgren, managing director of Chicago-based BAI, which provides in-depth financial service research.

Chris Doner, founder and CEO of Berkeley, Calif.-based Access Softek, a pioneering company in mobile and digital finserv solutions.

Mickey Goldwasser, vice president of marketing and chief of staff at Glastonbury, Conn.-based Payrailz, which delivers smart and engaging payment experiences for the financial services industry.

What was the fintech story/development during the pandemic that will continue?

“When the pandemic created a flash flood of customers in the digital channels, banks and credit unions were put to the test. Thanks to their fintech partners and their own internal technologies, financial services organizations were able to accommodate customers who could not visit the shuttered branches,” said Dahlgren.

The BAI managing director added some banking organizations consider fintechs, with their verve for innovation and automation, to be competitive threats. Dahlgren emphasized that increasingly financial institutions do not perceive fintechs as foes. “But as friends, valuable partners that help them create optimal customer experiences. Fintechs are helping banks and credit unions streamline everything from mobile account opening to payments to mortgage origination.”

Dahlgren noted when BAI surveyed banking and credit union leaders in 2021, 55% said they plan to team up with a fintech either now or in the near future, an increase from 42% in 2019.

“Financial services leaders, while under pressure from all the new players in the industry, should be reassured that consumers — by a large margin—consider traditional banking organizations superior to upstarts like fintechs and direct banks,” pointed out Dahlgren.

Earlier this year, BAI asked consumers which kind of organization had the best safety and security. Sixty-two percent said traditional organizations versus only 9% for fintechs and 26% for direct banks or those with no branches. When asked which kind of organization offered the most convenience, 55% said traditional versus only 13% for fintechs and 29% for direct banks.

“Consumers still have faith in the traditional organizations, which stand to become even better through productive fintech partnerships,” Dahlgren said.

BAI found one silver lining of the pandemic is that more customers have a better attitude toward their primary organization: 47% versus only 5% who have a worse attitude. Forty-eight percent reported no change in attitude toward their primary institution. One of the key drivers is increased use of digital, which customers said was generally positive.

Access Softek’s Doner maintained, “The emergence of digital banking solutions and less reliance on the credit union branch is here to stay.” He pointed to a survey Access Softek conducted midway through 2020, which found that “More than 20% of members surveyed expect a permanent decrease in the frequency of their branch visits once post-COVID-19 life begins.” Additionally, with digital banking usage on the rise since the pandemic began, almost 30% of those surveyed said they will continue to use digital banking channels and 34% said those channels are better at helping them meet their financial needs. “The pandemic showed us the importance of humanizing the digital channels through solutions like live video chat sessions between the FI and the consumer.”

Access Softek is also monitoring the generational transfer of wealth. “We surveyed more than 500 credit union members over the age of 65 between May 22-29, 2020, and found that 60% of respondents had children that chose not to bank at their parent’s credit union,” Doner noted. In addition to seeing their children choose different institutions, despite a typically long-term relationship with their credit union, only 9% of respondents had recommended their credit union to their adult children.

“This indicates that credit unions have an opportunity to expand their membership by cultivating family relationships,” Doner said. He added, the way to make this achievable is by offering a suite of products and services that appeal to all ages, especially adult children who are most likely to ask for advice about loans and investments and such.

“The first story that comes to mind is adaptability,” Payrailz’s Goldwasser suggested. “We as an industry had to adapt and adapt fast. With this in mind, there are so many things from the pandemic that we can expect to see continue, but the most obvious and the most prominent one is that of increased digital dependence.”

Goldwasser believes the trend of people of all ages transacting with their financial institution online is here to stay. “Members grew to appreciate the conveniences of transacting digitally with their credit union. For credit unions, this means they must continually strive to meet the demands and expectations of members when it comes to the digital experience.”

Moreover, Goldwasser noted where traditionally credit unions prided themselves on the personal relationships formed with members via the branch, these relationships now must occur digitally. “The way to strike a balance between increased digital services and strong personal relationships is to provide technology that demonstrates the credit union’s value that it used to demonstrate in-person. In other words, credit unions need to leverage technology to build closer digital relationships. Members will continue to demand better digital experiences and the credit union, to succeed, will need to deliver on that expectation.”

How many old technologies and computer languages still form the underpinning of credit union and financial institution IT today?

“We only use the newest technologies and do not see the languages being used by other providers and, therefore, do not have a good point of reference for the old technologies and computer languages that may be underpinning financial institutions’ IT today,” Doner said. He added, however, old does not always equal ineffective. “If the program is stable and does the job, there is not a significant motivation to change the base language that is being used. For example, the internal combustion engine is old technology that still works today. Certainly, there are constant improvements, but it is still the most broadly applied and widely used power-generating device currently in existence.”

Doner emphasized. “The real problem comes in when someone starts a new project with old technology and wants to rewrite old software that is working well. That is not typically worth it. We should look to innovation. If it’s not broke don’t fix it.”

Next up in this three-part series: Creating a positive credit union experience; and how credit unions can stand out in the payments space today.


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