MUSKEGO, Wis.–As analysts debate the future of digital wallets, one expert says the debate is over and they will someday become the central tool for financial services.
“In five years, if not sooner, the digital wallet will become the center of the consumer financial ecosystem,” said Gregg Tushaus, president of Emergifi, a CUSO of Corporate Central CU serving credit unions’ technology needs. “Credit unions need to develop a strategy to participate in and leverage the digital wallet. As more and more new technology emerges, credit unions will need to respond faster and faster, with more reliability and more caution.”
Tushaus emphasized that consumers are gravitating toward digital wallets and digital ID.
“Consumers are adopting the digital wallet, and many credit unions are missing out because they just aren’t prepared with the technology,” he said. “But there are still huge target audience opportunities beyond these early adopters. And credit unions have an obvious advantage because of innate member trust. Credit unions need to adjust quickly and cautiously to the changing banking ecosystem. Younger members are insisting on having these digital tools now. Business consumers are insisting on having these digital tools today, if not yesterday. And all of these consumers require secure, trusted digital IDs for authentication and verification. This may be the biggest opportunity—and the biggest obstacle—for credit union growth in the years to come.”
Can't Tackle Alone
Tushaus contends that credit unions can’t afford to tackle technology alone, not with its growing pace of advancement.
“Most credit unions are not staffed to keep up with these changes and they can’t just put it into the hands of companies that aren’t carefully vetted,” said Tushaus. “Partnering with a credit union-focused CUSO for their technology solutions is probably their best alternative. In a way, this pooling of technology resources will help keep the cooperative spirit of credit unions thriving and alive.”
With data breaches commonplace, Tushaus said Emergifi member credit unions want solutions for identity verification, protection and management.
Gregg Tushaus
“There are artificial intelligence (AI) services within reach for credit unions, but most don’t have the vetting resources on staff,” he said. “To address this need, credit unions are turning to reliable technology partners to constantly and extensively research and vet identity management product offerings for them. AI has application in member services, risk management and compliance. There are so many worthwhile applications for AI, but so little time for credit unions to granularly examine each application before committing to a product or service. The primary focus for credit unions in 2018 should be to find a partner they can afford and they can trust to help them with their security and technology solutions.”
Biggest Threat?
The rapid pace of changing technology may be the biggest threat to credit union survival, concluded Tushaus.
“Just when a credit union introduces a new technological advancement, consumers are asking for something newer, better, faster, more convenient. Nontraditional competitive options are coming out of the woodwork and growing fast,” he said. “The market disrupters are also threatening credit unions from many member service and product points of view—including free digital wallets and mobile pay apps like Venmo and Apple Pay, online payment processing services like Amazon, digital payroll services from Intuit, and person-to-person mobile payments via Facebook. They’re all scary successful and threaten to take away more and more credit union business. Even traditional credit union car loans are in danger of more and more threats. People are opting out of driving themselves, for example, with super convenient alternatives like Uber and Lyft. No need for a car loan if you don’t drive a car.”