It’s no secret that credit unions must embrace technology in order to succeed in today’s marketplace. Last year, $31 billion were invested in the fintech industry through M&A, venture financing, and private equity buyouts. In the last four years funding for fintech startups has increased at a compound annual growth rate of 41%, reaching $40 billion in cumulative investments. Roughly one third of consumers worldwide are using two or more fintech services and 84% are aware of fintech.
While fintech can pose a threat to traditional financial institutions, this disruption also presents an opportunity to forward-thinking organizations. Fintech can be beneficial for both members and credit unions because it provides greater access and convenience to financial services for members while increasing efficiencies for organizations.
Because technology moves so quickly, credit unions may find partnering, investing in, or acquiring another organization with a proven solution in the marketplace is often the best solution for staying relevant. This brings a ready-made solution and new technological capabilities to your credit union much faster than attempting to develop your own fintech.
This new way of thinking shifts the focus from competition to collaboration and allows credit unions to leverage the benefits of fintech for their members and the organization. If you are ready to begin your search, here are three tips to help you find the right partner.
- Identify characteristics – It sounds simple enough, but before rushing off to search for fintech partners, make sure you define what you are looking for. This includes having a clear understanding of what you hope to accomplish with a fintech and how it will help your credit union’s growth strategy. Fintech can be used to fulfill a wide range of functions at your credit union. Do you want to offer mobile payments, integrate technology to expedite loan applications and increase efficiencies, or leverage big data to better serve member needs? Characteristics to consider include size, products and services, capabilities, members served, and key employees or management.
- Develop metrics – Once you have an idea of where to go, create measurable metrics so you can accurately compare and contrast options based on this benchmark. You should also prioritize and weight your metrics based on what is most valuable to you. Not everything is equally important. For example, if your goal is to augment your workforce with expertise in peer to peer payments on board, then key employees or technology will be weighted more highly than location of the organization. It is easy to get swept up in the excitement of a live opportunity, and down the road these metrics will help you stay focused and strategic.
- Be proactive – Don’t wait to potential partners to come to you. In life the right opportunity rarely falls into our lap. Consider looking beyond who you already know. Cast a wide net by searching at conferences and trade shows, conducting market research, getting input from your employees, or even considering organizations that are for-sale. Being proactive and building a robust pipeline will greatly increase your chances of finding the right partner for you.
Whether you decide to partner with another organization or build your own solution, one thing is clear: credit unions must leverage fintech to provide value to members. Partnering with an existing fintech organization through an investment or acquisition allows you to immediately meet the needs of your members with a “ready-made” solution. By following these tips above, you can find the right fit for your organization.