Credit unions in the modern era are adapting to significant changes in the finance sector by using fintech partnerships to enhance their technological infrastructure and provide customers with individualized experiences.

While national and international banks are closing their branches in different towns and cities, credit unions are generally attempting to combine the best aspects of both worlds by continuing to offer in-person services while digitizing their core offerings in order to cater to a new, technologically savvy customer base.

That may be the reason behind Zur Yahalom's prediction that 2024 would prove to be the year of the credit union, according to Amdocs' SVP and Head of Financial Services for North America.

Credit unions are gaining a new edge over big banks by forming strategic alliances with fintech partners.

"Better availability of basic banking technology has been a game changer for credit unions, allowing them to better understand members’ financial requirements and personalize products accordingly, and at pace,” says Steve Round, co-founder of SaaScada.

In fact, there have been more fintech startups entering the market in recent years, providing credit unions with more options to choose from when seeking for the best solutions. According to Round, this enables them to "unlock new revenue streams, deepen relationships with existing members, and attract a new generation of members."

He continues by saying that this helps credit unions "make braver decisions to ensure members' needs are being delivered" in addition to helping them compete with larger organizations.

Fulfilling member experiences

Naturally, having a specialized market is something credit unions have long taken great pride in compared to larger banks. Credit unions now have to adapt to the evolving technology expectations of its members in order to maintain their customer-centric principles.

According to Yahalom, "credit unions can offer even more specialized solutions to specific targeted segments, like doctors, realtors, retailers, etc., through partnerships with the right fintechs."

Credit unions are able to enhance consumer engagement, generate new revenue streams, and foster loyalty by providing customized service bundles. Credit unions will be more likely to prosper the more they can assist their local customers and provide additional services.

The incorporation of data and AI is top of mind when it comes to extending customized products, much like larger financial incumbents and new challenger banks. Meanwhile, cloud computing services are enabling credit unions to increase efficiency and cut costs.

Furthermore, providing top-notch mobile banking apps enables credit unions to assist its members in having access to the appropriate financial solutions whenever and whenever they need them.

Yahalom claims that credit unions are now able to "better saturate local markets typically underserved by large financial institutions" as a result of utilizing the newest technologies.

Amdocs is a fintech supplier that focuses a lot on its family-first and business-first banking models, which credit unions can use to maximize their consumer offerings and deliver services.

Furthermore, credit unions can "further develop personalised offerings that help meet clients’ financial goals" by combining fintech capabilities with their "pre-existing knowledge of their customer base," according to Yahalom.

"This can include automation tools and resources tailored to their clientele, more convenient banking via an app, and even fraud protection services that guarantee their clients have a safer, more secure banking experience," he continues.

According to Round, credit unions must "select technologies that provide a 360-degree view of customers" in order to offer highly personalized and feature-rich services.

Furthermore, Round would strongly advocate for credit unions to work together, "pooling their resources to better support their communities."

This is especially important for credit unions that cater to the same clientele and local areas.

Round continues, "credit unions can create more competitive, innovative banking products and services for their members – allowing them to compete with traditional banks and neobanks – by working together to source cutting-edge core banking systems."

Profiting from the significant bank retreat

Of course, credit unions are using innovation and digitalization to help them compete with larger incumbents and neobanks on services, but maybe what sets them apart is what they aren't doing.

As noted before, credit unions are continuing to be physically present in towns and cities, offering one-on-one services when banks are leaving.

As far as Round is concerned, credit unions are taking advantage of this "opportunity for them to fill the void."

"Why shouldn't credit unions take advantage of the fact that they are providing support to underprivileged and neglected communities?" he asks.

Many people still spend their lives exclusively through in-person banking and cash transactions; these people are mostly members of the most vulnerable social categories, including the elderly, those with lower incomes, and those living in rural areas. Therefore, it is crucial to make sure that a cashless society that only uses digital banking does not lock people out of financial institutions.

According to Yahalom, credit unions should continue to have an in-person presence in order to demonstrate to their patrons that they are still aware of them, even though their in-person services are crucial for reaching clients who are dependent on cash transactions, especially those who are less tech-savvy than others.

"Many customers prefer to have a local branch as part of their financial services experience," the speaker clarifies. Even while it might not be their main method of service consumption, many consumers find it crucial to know that there is a branch close by with a familiar face that can help when they need it.

It's possible that large banks with branches in isolated locations lack the authority to handle client concerns outside of their regular business hours. Unlike credit unions, where staff members are typically “empowered to be creative and find the right solutions to serve their clients,” Yahalom says this is not the case.

"The human touch of a local teller who knows the customer and greets them by name is still very hard to replace," he says.

"Gen AI can help make digital experiences feel personal to the point that it can be difficult to tell if you are interacting with a person or a machine. Technology is coming a long way in personalizing services."

Financial institutions are projected to benefit from consumer loyalty and appreciation if they can effectively use technology to provide distinctive and personalized experiences.

"But, achieving these experiences correctly is far from simple, and we think that for the foreseeable future, striking a balance between human and digital experiences will be the best course of action."