Commenting on the announcement that the OCC intends to design standards that will allow fintech companies to be chartered as special-purpose national banks, Controller of the Currency Thomas Curry said: “More than 85 million young adults in America are entering the financial world with the majority of their financial lives still ahead,” he said. “They want technologies and services that provide better, faster, more accessible products and services, and they are willing to switch providers or use multiple providers to get what they want.”
The prospect of such a large customer base turning to fintech provided services can be daunting for traditional financial institutions. However, taking it into account as an early warning and adjusting their strategies accordingly, the banking sector, including credit unions, has a way to turn the situation to its benefit. The solution to tailoring banking products and services to the expectations and the mindset of millennials and generation Z comes from the same place as the original threat: technology.
As the young adults start settling down and having families they will certainly appreciate the community focused enterprises, including credit unions.
To get on the radar of this new customer base, credit unions should take advantage of technological innovation to increase focus on efficiency and the end user experience. That does not mean grabbing the latest fad off the market and implementing it with hope to seem “up-to-date”, but rather having a solid core platform in place with the option to allow third parties to utilize the platform to innovate and develop new applications on top of the credit union’s own solutions.
A project to either digitize existing processes or launch new ones will never be the same for every credit union, however, there are several areas that need to be addressed before the implementation phase:
1. Setting up strategic goals and corresponding solutions
Depending on what issues a credit union wants to address via technological upgrade, the process can significantly vary. First of all, it’s best to decide on the services you want to put in place or upgrade – instant loan decisions, automating KYC process, managing commercial loans online etc. The involvement of a professional fintech consultant can be immensely helpful at this stage. They can assist in navigating a vast array of existing solutions in the market and finding the right fit for your organisation.
2. Considering upgrading core processes first
Consider improving services critical to your members and revenue generation, such as lending. Online lending has been around for several years now, and it is no longer considered radical or unconventional. By digitizing data integration, origination and management of your credit union’s loan portfolio, you can increase profit margins as well as expand into other types of lending, previously underutilized, for example, micro-financing, offering borrowers non-traditional loan options etc.
3. Involvement of the legacy system
IT infrastructure in place is commonly found to be several years old and might not be suitable for current business needs. This should be considered an opportunity to improve the situation combining several legacy systems on the new platform.
4. Choosing a platform
Keeping in mind that high pace of innovation makes it more likely that we’ll witness new services and corresponding customer expectations emerging in the near future, it is worthwhile to consider open APIs (application programming interface) and a Cloud Back Office to keep all components in one place. Normally, API providers should also test all services offered in its API Framework and clarify regulatory needs, which is crucial in strictly regulated financial markets. With the an option to open their platform to third party applications, credit unions will obtain agility in a rapidly changing business environment.
5. Finding developers
Depending on the goal (automating KYC, setting up online lending etc.) one or several vendors for the solutions can be chosen for the tasks on hand. If the API provider offers a “sandbox”, the developers can test the platform to ensure a seamless operation process for the applications.
6. Reviewing fringe offerings
While traditional banking services – lending and taking deposits – remains at the core of credit union services, the open API enables other options that might resonate with your clients while complementing the community spirit of your organization:
As the young adults start settling down and having families they will certainly appreciate the community focused enterprises, including credit unions.
To get on the radar of this new customer base, credit unions should take advantage of technological innovation to increase focus on efficiency and the end user experience. That does not mean grabbing the latest fad off the market and implementing it with hope to seem “up-to-date”, but rather having a solid core platform in place with the option to allow third parties to utilize the platform to innovate and develop new applications on top of the credit union’s own solutions.
A project to either digitize existing processes or launch new ones will never be the same for every credit union, however, there are several areas that need to be addressed before the implementation phase:
1. Setting up strategic goals and corresponding solutions
Depending on what issues a credit union wants to address via technological upgrade, the process can significantly vary. First of all, it’s best to decide on the services you want to put in place or upgrade – instant loan decisions, automating KYC process, managing commercial loans online etc. The involvement of a professional fintech consultant can be immensely helpful at this stage. They can assist in navigating a vast array of existing solutions in the market and finding the right fit for your organisation.
2. Considering upgrading core processes first
Consider improving services critical to your members and revenue generation, such as lending. Online lending has been around for several years now, and it is no longer considered radical or unconventional. By digitizing data integration, origination and management of your credit union’s loan portfolio, you can increase profit margins as well as expand into other types of lending, previously underutilized, for example, micro-financing, offering borrowers non-traditional loan options etc.
3. Involvement of the legacy system
IT infrastructure in place is commonly found to be several years old and might not be suitable for current business needs. This should be considered an opportunity to improve the situation combining several legacy systems on the new platform.
4. Choosing a platform
Keeping in mind that high pace of innovation makes it more likely that we’ll witness new services and corresponding customer expectations emerging in the near future, it is worthwhile to consider open APIs (application programming interface) and a Cloud Back Office to keep all components in one place. Normally, API providers should also test all services offered in its API Framework and clarify regulatory needs, which is crucial in strictly regulated financial markets. With the an option to open their platform to third party applications, credit unions will obtain agility in a rapidly changing business environment.
5. Finding developers
Depending on the goal (automating KYC, setting up online lending etc.) one or several vendors for the solutions can be chosen for the tasks on hand. If the API provider offers a “sandbox”, the developers can test the platform to ensure a seamless operation process for the applications.
6. Reviewing fringe offerings
While traditional banking services – lending and taking deposits – remains at the core of credit union services, the open API enables other options that might resonate with your clients while complementing the community spirit of your organization:
- Real estate crowdfunding – enabling retail clients to invest in real estate for commercial purposes. There is an opportunity here to add a personal touch by choosing prospective investment in their local area, so that your clients could actually go and see it themselves.
- Crowdfunding for social projects – facilitating fundraising for charity and other similar projects within your community.
About the author - Markus Lampinen
Internationally awarded digital finance entrepreneur, active in pioneering new securities models worldwide. Has worked in digital finance since 2009, recruited over 100 individuals, built up a operations on six continents and been recognized as one of the top 100 thought leaders in crowdfunding. Markus has pioneered new funding models in the US and Europe, advised policy makers worldwide - including the SEC, the European Commission and Italian regulator CONSOB - for more effective markets, and worked with visionary organizations such as the World Bank and the Kauffman Foundation to improve frameworks for digital finance. Markus has studied computer science and economics (M.Sc).
Internationally awarded digital finance entrepreneur, active in pioneering new securities models worldwide. Has worked in digital finance since 2009, recruited over 100 individuals, built up a operations on six continents and been recognized as one of the top 100 thought leaders in crowdfunding. Markus has pioneered new funding models in the US and Europe, advised policy makers worldwide - including the SEC, the European Commission and Italian regulator CONSOB - for more effective markets, and worked with visionary organizations such as the World Bank and the Kauffman Foundation to improve frameworks for digital finance. Markus has studied computer science and economics (M.Sc).
RSS Feed