Innovation for Credit Unions – How to Make it Cost Effective

In North America, credit unions and community banks have long been the bedrock of personal financial services. They are trusted institutions that prioritize the needs and well-being of their members and customers. However, as the financial landscape evolves, and consumers expectations become more sophisticated and less forgiving, these institutions must adapt to stay ahead of the curve. As well as meeting their members’ needs, they must also maintain a competitive edge in an increasingly digital world.

Legacy Systems: The Upgrade Challenge

Historically, many credit unions (CUs) have relied on legacy systems to manage their operations. These systems, while reliable, often lack the flexibility and efficiency required in today’s fast-paced digital environment.

Recognizing this, some credit unions contemplate significant infrastructure overhauls. Such transformations, though potentially beneficial in the long run, come with hefty price tags and can disrupt day-to-day operations. Whole system changes also come with the risk of inbuilt obsolescence – it might not be long before the replacement needs replacing.

The Fintech Alternative: Strategic Partnerships

An emerging and viable alternative to this scenario is forging strategic partnerships with specialist fintech suppliers. This approach offers a middle ground – leveraging the advantages of modern digitization without the costs and upheaval of replacing whole-organization systems. By collaborating with fintech specialists, credit unions can access innovative, future-proofed services that cater directly to the changing needs of their members.

Multiple Benefits: Cost-Effective Innovation

This strategy yields benefits on multiple levels. Firstly, it allows for the introduction of innovative financial products and services at an affordable cost. Secondly, it negates the need for extensive bureaucratic procedures or delays in implementation. Most importantly, these services are designed with a keen focus on the real needs of members and customers, ensuring that their user experience is significantly enhanced. These, and other aspects of the process, were explored recently in Finextra by Kelly Ryan of Fintech Sandbox*.

For credit unions and community banks this is empowering. It enables developing and upgrading their service offerings in a cost-effective manner. For members and customers, it translates to an enriched user experience, characterized by efficiency, convenience, and modern financial solutions.

Case Study: Money 4 Travel and Credit Unions

A practical example of such a fintech solution is Money 4 Travel from Essiell. This service exemplifies how specialist fintech collaboration can revolutionize the member experience in credit unions. Money 4 Travel offers a uniquely convenient service that aligns perfectly with the needs of credit union members.

For the user, who can order foreign currency for their vacation online, and collect it from their chosen branch, it’s simple and easy. For the credit union, Money 4 Travel sits comfortably with existing systems, is intuitive at the point of sale, and streamlines back-office processes. It’s efficient and cost effective. Importantly, this innovative service complements traditional banking rather than working in opposition. User experience and operational efficiency both improve.

Embracing Fintech for Future Success

Money 4 Travel is evidence that for credit unions and community banks to seek modernization does not require replacing everything. By embracing partnerships with fintech specialists these institutions can achieve the twin goals of innovation and member satisfaction in a cost-effective and timely manner. The combination can be powerful, the key to enhancing member experiences, maintaining a competitive edge,  and unlocking growth.

By Declan Morton, staff writer at Money 4 Travel and Essiell Ltd.

*By partnering with fintechs, credit unions and community banks can turbocharge innovation and growth, Kelly Ryan, Finextra, January 2, 2024

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