Fintechs & Credit Unions: Marketplace Banking Model


In the face of current macroeconomic challenges, credit unions are proceeding cautiously with digital innovation initiatives. PSCU President and CEO Chuck Fagan, NAFCU CEO Dan Berger, and Suncoast Credit Union SVP of Digital Strategy Jana Manley all shared with Karen Webster a singular strategy for advancing technology and, consequently, improving member experiences: avoiding distractions and focusing on what truly matters.

A prevalent concern among credit unions is their perception as technological laggards, with 38% self-identifying as such—an increase from 29% the previous year. This shift reflects not only a decrease in technology investment but also a fundamental reconsideration of the nature of innovation itself.

Dan Berger emphasizes that the decision to embrace technological advancements rests with each individual credit union, weighing member demand against economic feasibility. This sentiment echoes throughout the industry, with stakeholders recognizing the need for a tailored approach to innovation.

Jana Manley identifies a historical pattern wherein innovation often manifests as the pursuit of new products or services, akin to chasing after a “gleaming squirrel.” This metaphor, coined by Dan Berger, underscores the tendency for distractions to divert resources from meaningful advancements.

Manley criticizes the prevalent mindset of merely “bolting on” new products without considering their impact on the overall user experience. The notion of “build it, and they will come” falls short without a comprehensive understanding of how these additions contribute to member satisfaction.

Furthermore, the current economic landscape necessitates prudent spending, with projected revenue constraints from interchange limitations and card late payment penalties. Manley stresses the importance of prioritizing digital channels for providing loans to small and medium-sized businesses (SMBs) amidst these financial challenges.

The stakes are high, with more than a quarter of surveyed clients expressing a willingness to switch from their current credit unions to more innovative alternatives. This sentiment is particularly pronounced among younger generations, who exhibit lower tolerance for subpar experiences.

Chuck Fagan underscores the urgency of meeting evolving consumer expectations, emphasizing the imperative for credit unions to adapt swiftly to cater to the preferences of younger demographics. Failure to do so risks alienating a significant portion of the membership base.

In conclusion, the convergence of financial technology and traditional credit unions presents both challenges and opportunities. By prioritizing strategic technological investments and avoiding distractions, credit unions can position themselves for sustainable growth and continued relevance in an increasingly competitive landscape. It is imperative for credit unions to remain focused on enhancing member experiences while navigating the complexities of the digital age.