PALM DESERT, Calif.–Four fintechs that are either partnering with credit unions or seeking to partner with CUs shared insights on their solutions during the California and Nevada League’s REACH Conference.
Acting as moderator during a session in which the companies explained what they offer was Bill Sarris, co-founder and CEO of Linqto, which offers among other solutions Linqto Personal Banker, a software application that addresses financial institutions’ need to instill and maintain customer loyalty, according to the company. Sarris was also among the co-founders of Mint.
Credit unions shouldn’t fear fintechs, according to Sarris, who said the digital startups have “woken up” and realize they are better off partnering with credit unions than competing with credit unions.
“They realize you have the members, you have the reputation. They have great products,” said Sarris.
According to Sarris, there are three primary reasons fintechs have grown so quickly:
- Choice. “Mint has about 10 million users and one reason it was adopted so readily is they gave consumers choice. Typically, we don’t want to give our consumers access to other accounts and relationships. But Mint did that. Credit unions send the message “We only care about our own members.”
- Access. “If I’m in the market for new mortgage and go to LendingTree, I can go there and sign up for a new account. Can they sign up for membership in your app?”
- Focus. “This is a mobile first strategy. Seventy percent of banking transactions are now done through a smartphone. But (FIs) took that huge desktop application and tried to shove it all into a mobile interface. What fintech has done is unbundled what we have all bundled into our applications.”
Why aren’t credit unions successfully attracting younger members? The big reason, according to Sarris, is that most mobile banking apps from CUs don’t allow for “discovery.”
“More than 50% of all app installs come from word of mouth, or what we refer to as word of screen,” he said. “But that doesn’t work with your mobile banking app. US Bank has 43 apps in the App Store; how many do you have? They are meant to attract Millennials into the market. Discovery brings new members.”
Sarris acknowledged that scenario might sound gloomy, yet credit unions still have the “secret sauce.”
“You have it and the fintechs don’t. You have all the members,” he said.
He said the app process typically involves distribution to CU employees first, then to members, then on to members, and finally to friends and then to friends of friends. “This creates the viral flow.”
“You can provide the channel fintechs don’t have for viral adoption,” he said.
Sarris said he and his company have been working with the California and Nevada Leagues to remove barriers to working and partnering with fintechs.
During the REACH meeting, the four fintechs that presented their solutions were:
Savvy Money, which has partnered with 95 credit unions: It offers an integrated credit score inside the CU’s online banking offering. “The real kicker here is we overlay your lending criteria on top, and then make offers,” said CEO JB Orecchia.
Finovera, which offers a consumer-centric digital bill payment management solution: CEO Purna Pareek said the solution is designed to manage a cumbersome and inefficient bill payment process. Pareek noted $4 trillion in bills are paid annually, in addition to $25 billion in late fees and penalties.
Snapcheck, a digital checking solution: The company’s Alfred Prepping said 92% of businesses uses paper checks predominantly, representing $54 billion in costs and $20 billion in fraud losses.
MoneyCarta, which offers intuitive advice right on a device.