SAN ANTONIO—One person has an interesting question when it comes to the perception of credit unions and just how tough competition is in financial services.
“When is the last time you heard about a credit union innovation on the national news? Now, when did you last hear about a technology firm offering innovative financial services through the same national media? Likely, the answers are, respectively, ‘I don’t know’ and ‘about five minutes ago,’” said Jason O’Brien, director of digital strategies at SWBC.
While the media coverage does not indicate an imminent threat from the startups, consumers’ growing attention to the fintechs is indicative of brewing disruption in financial services and, more specifically, relationships with credit union members, said O’Brien.
It is estimated that global fintech investments hit $24 billion in 2015, way up from $12 billion in 2014 and $4 billion in 2013.
“And by end of year 2016, global fintech investments are expected to double 2015’s numbers—stunning figures for sure,” said O’Brien.
Online Tech
But what should be more concerning, according to O’Brien, is consumer’s receptiveness to using online technology for financial services previously trusted to the security of a face-to-face branch interaction.
“And, apparently, venture and angel investment firms see this consumer trend with 20/20 vision, explaining the influx of cash to eager fintech startups,” he said.
So, do these trends mean that credit unions should go out and collaborate with other organizations to build new services for consumers?
Get The Board On Board
“Perhaps,” said O’Brien. “Or, does it mean that huge investments should be made on the latest desktop, mobile, tablet, watch, and augmented reality-based technologies? Maybe. What does matter is that you recognize which, if any, services being created by fintech players are threats to your transactions and take action to deflect erosion.”
Ultimately, the matter comes down to making sure the board and leadership remain open to new value propositions. “Propositions that force the CU to toss decades-old thinking about existing services, based on dated technologies, out the window and rethink how a ground-up technology or service redo could create new and significant value for your members and your organization,” O’Brien said.