BANKING
But it is also more complicated than that , as Longo says embedded finance is cutting through into the credit union market , resulting in them needing to find ways to evolve their growth strategies and find new sources of income .
A shift in focus The pandemic has impacted credit unions in terms of their operational services . Longo points out that as a result of members reducing their spending due to the pandemic , there has been an influx of deposits at credit unions . Under pre-pandemic circumstances , community banks and larger banks were typically deposit-heavy . But credit unions now find themselves experiencing deposit growth – at a much larger scale than they would have , had the pandemic not hit .
“ The impact of COVID-19 in terms of quarantines and a lack of travel has meant that interest income and fee earnings expected from cards or loans have not materialised ,” he says .
“ Credit unions are based around the needs of their members , providing a somewhat ‘ white-glove ’ service . The pandemic has made it hard to interact with the community , and credit unions now need to find new ways to translate brick-and-mortar services to online channels . Unions have conventionally generated custom through word of mouth and have grown organically . However ,
“ THE FINTECH SPACE IS MOVING AT A BLISTERING PACE , PROVIDING BENEFITS LARGER BANKS SIMPLY DO NOT OFFER ”
with larger banks spending excessively on marketing , credit unions may now need to do more to attract members .”
Keeping up with the fintechs Like all pre pandemic organisations that have relied on legacy system technologies , the sudden growth of the fintech industry has also had an effect on the way credit unions operate and manage their services .
James Hickman is the COO at
Ecospend , a leading open banking provider in the UK . He says new open banking technology is playing an important role in driving the sector forwards .
New open banking solutions , he points out , deliver a smoother and easier customer experience by cutting out the need for manually entering any personal or card data to complete a payment , as well as delivering the solution at a fraction of the cost of cards . “ For a credit union , this allows for a more inclusive online product that allows for greater reinvestment into its product offering ,” Hickman states .
He continues , “ There are other material benefits for credit unions using Open Banking payments . A key example lies within loan repayments , where customers that pay