Fintech has taken the tech and financial service industries by storm, and is considered by many experts as the next wave of disruption, changing how financial services are provided and consumed.
Fintech is simply defined as the application of technology to financial services. Essentially, a form of disruptive innovation, just like great disruptive forces of the last 20 years that impacted the media and telecom industries – now applied to financial services.
Disruptive innovation in the financial technology vertical has two focus points: Adapting to changing consumer behavior and creating efficiency for all stakeholders. The more effective and adaptable the disruption, the more consumers depart from current technology. In return, those departing consumers create a new market, eroding the old business model.
This is not a new concept: Western Union disrupted money transfer services in the 1870s and Visa/MasterCard disrupted payment networks in the 1950s. However, with the increasing speed of technology change, disruption in the Fintech sector has seen a significant uptick in growth, driven by the Internet and the mobile revolution.
Media and tech blogs tend to focus on the two big players in the Fintech sector: Emerging start-ups and big banks. Analyzing their benefits and disadvantages, an interesting story unfolds:
A Third Way
Both players in the Fintech sector have “pros,” but also come with some pretty serious “cons.” What if we could combine the assets from both big banks and Fintechs and eliminate all or most of the negatives (or actually take each “con” and rewrite it as a “pro”)?
There is a third way for consumers; a secure financial entity focused on personal service that delivers empowering banking technology. It takes shape in the form of a surprisingly traditional financial institution, a credit union.
Credit Unions: The Marriage of Products and Services Consumers Want
Credit unions are known for high member satisfaction, community involvement and having better rates and terms for loans. However, they also offer a surprising amount of tech in the current Fintech arena: including a wide variety of advanced mobile/virtual payment options for their members. In addition, credit unions can offer a nationwide surcharge-free ATM network and branch netwok as extensive as any bank.
One engine behind this third way option is CO-OP Financial Services, owned by about 1,200 credit unions and providing location-, payments- and mobile/virtual-based products and services to about 3,500 – roughly half of all credit unions in the country.
So, the brave new Fintech world is certainly not to be feared by the credit union movement. We should embrace it: We have the technology today’s consumer wants, and we offer it with the human touch.