Banking & lending

Credit unions and fintech connect for success

There’s a funny saying that’s half-curse, half-joke: “May you live in interesting times.”

Credit unions are certainly living in interesting times. The number of credit unions in the US has decreased from 10,000 to less than 4,800.

The Durbin Amendment in Dodd-Frank cost the credit union industry $42 billion, leading to the loss of debit card rewards programs and other negative effects on consumers.

But credit unions are having a moment, too. Despite the reduced number of credit unions, membership growth has increased, with 135 million Americans now members. 

That’s because credit unions are doing what they do best: playing a vital role in serving underbanked communities and building trust with their members.

Credit unions + fintechs are the right pairing

The time to capitalize on those benefits is now. And there’s a big opportunity for credit unions to align with other forward-looking players - especially fintechs - to continue to elevate the experiences of their members.

In a webinar with American Banker, Dan Berger, President and CEO of the National Association of Federally Insured Credit Unions (NAFCU) explained the benefits of credit union/fintech partnerships.

"Credit unions can't go it alone. They can't hire 200 programmers to develop an app. So you have to partner and collaborate with a fintech and then share that with a bunch of other credit unions, maybe not necessarily in your backyard, but across the country, to reduce the costs associated with it."

Erin O’Hern of Viclarity agreed.“We’ve seen a lot of successful examples where credit unions have been able to enhance the member experience or their internal practices because they partnered with a fintech,” she said to Credit Union Times.

How AI fintech can deliver for credit unions

Right now, a big opportunity is artificial intelligence. Because we see big banks investing in AI, the time is ripe for credit unions to do the same.

We’ve already seen AI’s increasing utilization within banking and lending, particularly in loan underwriting processes and customer service chatbots. But that’s only the beginning.

"If you look at it, the power there to really build efficiencies into your operations at a financial institution, you have to have some form of AI and then the various divisions of your credit union or your financial institution because it'll save you money, it'll save you time," said Dan from NAFCU.

Shantanu Gangal, CEO of Prodigal, which provides AI-powered solutions to consumer finance teams, including credit unions, agreed. In a webinar on using large language models (LLMs) in consumer finance, he said, ““Anything you are doing several times a day or that you spend several hours in a month doing is something you should figure out how you can automate."

What AI can do for your credit union team

For credit unions, automation can be a game-changer, providing opportunities to improve efficiency for member service representatives while simultaneously freeing up their attention to focus on delighting members with excellent communication and problem-solving skills.

Some of the opportunities for credit unions to partner with fintechs to use AI in order to bring exceptional service to their members without the expense of custom development include:

  • Automated complaints identification and capture 
  • Real-time member services representative support
  • Increasing representative efficiency to combat staffing shortages
  • Streamlining and standardizing after-call work
  • Automating compliance and QA audits
  • Using rich and complex data to gain insights to improve business processes and strategies

And by connecting with fintech, credit unions benefit from not having to start from scratch. Those companies have already done the development and taken on the experimental risk, and come with the experience (and often the data) gained from working with other customers.

That means credit unions can focus on what they do best - serving their members, with the confidence that they're bringing the best of today's technology to support their operations and deliver excellence.