By W.B. King
For this year’s annual Finopotamus “Holiday Tech Wish List,” we sat down with forward-looking fintech and credit union executives who shared their tech hopes and forecasted market realities for 2024. Due to a significant number of intriguing responses, this year’s Wish List will be presented in five installments.
Part Two includes insights from VSoft Corporation, Plinqit, Pidgin, Ncontracts, Finotta and ebankIT.
Wishing for Emerging Trends in Payments
VSoft Corporation Chairman and CEO Murthy Veeraghanta told Finopotamus that his wish for 2024 centers on the credit union industry “staying ahead of the latest developments in the payment space,” including emerging trends in fraud.
“Check fraud has risen over the last several years and even though more members are adopting newer, digital payment methods, check fraud continues to pose a problem,” he said. “I hope that credit unions are prepared to get ahead of this issue with technologies designed to mitigate fraud risks.”
The Atlanta-based fintech, which counts more than 500 credit unions as clients, offers an innovative banking and payments solutions to financial institutions (FIs) around the world.
While he noted that as “total risk” of paper check fraud decreases as fewer people and businesses use the payment medium, the “remaining paper checks” are worth more.
“Americans only wrote 3.4 billion checks in 2022, but the average value of those checks climbed to $2,652 from $673 in 1990 when checks were at their most popular,” he continued. “When you factor in the 100% increase in check fraud that the Financial Crimes Enforcement Network (FinCEN) reported back in February of this year, check fraud remains a top concern for community financial institutions.”
As a result of the Federal Reserve’s FedNow program, he added that consumers have access to more payment methods than ever before, including The Clearing House’s Real-Time Payments network.
“Credit unions can provide their members with access to instant payments through new features on their mobile apps, online banking, or other interfaces such as those used for business payments,” Veeraghanta continued. “To make instant payment adoption a reality, credit unions should carefully consider the important role that mobile banking apps will play in these efforts and I hope more institutions make this a priority in 2024.”
As Veeraghanta looks to the coming year, he hopes the credit union industry continues to “grow and deepen their relationships with member businesses” in their communities.
“The right payment capabilities, alongside intuitive online and mobile banking experiences, will support this. As more and more banks use instant payment capabilities to differentiate their products, consumers will gravitate toward the products that best fit their needs and expectations. Businesses are doing the same,” he offered. “The credit unions that can make real-time payments a seamless part of the mobile banking experience will increase the ‘stickiness’ of their members, especially their member businesses.”
Wishing to Unlock Access to Low-Cost, Sticky Deposits
“My top wish for 2024 is likely similar to what many credit union leaders are hoping for in the year ahead: a way to unlock access to low-cost, sticky deposits while helping members thrive financially through technology,” Plinqit Founder and CEO Kathleen Craig told Finopotamus.
“Maintaining a strong deposit base is a top priority among financial institutions of all sizes. Today’s consumers, who have enjoyed historically low rates for several years, are seeking the best returns on their funds,” she continued. “When loyalty and deposits are at a premium, credit unions should focus on how they can help new and existing members live their best financial lives and deliver expected digital experiences, rather than rely on promoting a product with the highest rate.”
The Ann Arbor, Mich.-based fintech, which has 15 credit union clients, offers an automated savings, intelligent content, peer comparison, and virtual account management platform to FIs.
By embedding financial wellness and savings tools within a FI's online and mobile banking, Craig said credit unions can become the primary financial resource for their members.
“These tools can also capture valuable data, which enables credit unions to deliver truly personalized recommendations and advice to deepen engagement with members and expand the relationship,” she said. “As a result, credit unions can help their members adopt smart financial habits long term while generating sustained deposit growth.”
Citing a J.D. Power 2023 U.S. Retail Banking Advice Satisfaction Study, she offered that FIs that proactively offer personalized financial advice earn high customer satisfaction scores and build strong customer engagement.
“However, just 38% of customers recall ever receiving such advice,” she said. As she looks to 2024, she added: “Credit unions have an opportunity to step in and close this gap. By doing so, they stand to grow deposits while also making a positive impact for their members.”
Wishing to Embrace Real-time Payments
Now that the Federal Reserve’s FedNow Service is live, Pidgin Founder and CEO Abhishek Veeraghanta said his wish tracks with many credit union leaders, which is to “advance payment operations and embrace real-time payments” on a broader scale.
“We’ve already seen several credit unions set up receive-only capabilities on the FedNow Service and in 2024, we anticipate more institutions will evolve their strategies to support sending real-time payments via FedNow as well,” he told Finopotamus. “As more credit unions realize the benefits of both sending and receiving real-time payments, we also expect to see a growing number of organizations leverage request for payment (RFP) functionalities, which will present implications for online and mobile banking interfaces.”
As a result, he said credit unions planning to integrate “faster and more modern payment options into their product suite” need to align their IT investments and resources accordingly.
“Earlier this year, six credit unions and seven corporate credit unions went live with FedNow,” he continued. “That number is certain to continue growing, which means the coming year will be filled with integrations and exciting product developments, along with ongoing market education. 2024 will likely be a pivotal year for innovation in U.S. payment infrastructure.”
The Atlanta-based fintech, which counts 40 credit unions as clients, offers a payments ecosystem designed to enable FIs, business owners and individuals to process transactions faster and with lower fees.
As Veeraghanta sets his sights on 2024, he hopes the credit union industry continues to “raise the bar on their members’ payment experience,” including business members.
“In recent years, credit unions have gained significant traction serving businesses and commercial enterprises, and offering instant payment options is an excellent way to deepen those member business relationships,” he noted.
“Credit unions looking to build lasting relationships with this valuable member segment can gain a huge competitive advantage by supporting instant payments,” he continued. “Even credit unions that start with just receiving real-time payments will likely see more deposit opportunities among business members, as members will go with the institution where they can get access to their funds faster.”
Wishing to Say ‘Goodbye’ to Manual GRC Processes
Ncontracts Senior Vice President of Industry Engagement Rafael DeLeon pointed to a recent in-house survey of 150 FIs, including credit unions, which found that 24.1% of FIs that rely on manual processes report they are “dissatisfied” and that “there are gaps in our data, systems and tools.” As a result, his 2024 wish for FIs is to ditch manual government, risk and compliance (GRC processes) and embrace automated technologies.
“Even more of a concern is that these financial institutions are 16.8% more likely to experience examiner questions and concerns about compliance management,” he told Finopotamus. “It’s not surprising to see that financial institutions with manual processes encounter more risk management, vendor, and compliance challenges at examination time.”
The Brentwood, Tenn.-based company provides integrated risk, vendor and compliance management software to over 4,000 FIs, mortgage companies and fintechs in the United States.
“Relying on manual GRC processes is no longer a sustainable approach, especially at growing institutions,” he noted. “None of the FIs with between $1 billion and $10 billion [in assets] we surveyed use manual processes – a sign that as an institution grows, manual processes simply can’t keep pace.”
Nearly 30% of FIs that rely on a single vendor suite for GRC have reported the highest satisfaction levels, claiming to have a full understanding of their risk and compliance stature, he offered.
The Ncontracts survey also found that roughly 54% FIs reported use a vendor management program to evaluate potential fintech partners, which includes documented policies and procedures. “However, an alarming 28.4% do not. This is most common among institutions with less than $500 million in assets,” said DeLeon.
As far as 2024 is concerned, he added that for credit unions to be positioned for growth and to remain competitive, they will need to have a solid vendor management program in place.
“The risk is too great. Credit unions,” he noted, “must keep a close eye on risk and compliance. This is especially critical as more seek out fintech partnerships to improve operational efficiencies and member engagement.”
Wishing to Prioritize Personalization and Member-Centric Strategies
Parker Graham, founder and CEO of Finotta, wishes that credit unions will “fight” to remain the primary FI for their valued members.
“This means they must have a solid understanding of what they need and want,” he told Finopotamus. “We know that digital banking is non-negotiable. Members will go elsewhere if you don’t offer sleek, digital features. But it goes beyond fancy apps. Personal finances remain a top concern across individuals of all income levels, particularly among households making less than $40,000 per year.”
The Overland Park, Kan.-based fintech helps banks and credit unions personalize their mobile banking experience.
“Credit unions must ask how relevant and valuable traditional personalized financial management (PFM) tools that have been widely embedded into digital banking apps are,” he offered.
To this end, he said credit unions must consider a new approach: personalized financial guidance (PFG), which “functions like a virtual financial coach in your back pocket, motivating users to make healthy financial decisions without intimidation or shame.”
Noting that growing deposits will be one of the biggest challenges in 2024, Graham said this topic should be a “top priority” for all financial institutions in the coming year.
“PFG offers a proven strategy, helping financial institutions uncover opportunities within their existing members by providing something competitive and what they want and need,” he added. “Not only is this more effective, but it’s a more cost-efficient approach to growth.”
Leveraging gamification, Graham explained, is also imperative as it rewards users for positive behavior or when goals are met. “For example, rather than intimidating users by reporting how much money they spent on Starbucks last month, banks can encourage them to improve their financial wellness by suggesting actions like saving for retirement and then celebrating with them when they do so.”
As he looks forward, he hopes that credit unions will lean heavily into their hard-earned industry reputation of being member-centric.
“Credit unions have a massive opportunity to innovate and stand apart from nonbank competitors,” he said. “By prioritizing personalization and member-centric strategies, credit unions can establish lasting relationships founded on mutual understanding and trust, ensuring sustained growth and success in 2024.”
Wishing to Humanize Digital Banking Services
As ebankIT’s Vice President of Market Development Paul Provenzano sees it, credit unions can strengthen their bond with members by placing a stronger emphasis on personalization.
“In my vision for 2024, I hope to see credit unions embracing the concept of humanizing their digital banking services,” he told Finopotamus. “This can be achieved by letting users customize their online/mobile dashboards using widgets and creating conversational workflows in digital channels that mimic the warmth and friendliness of a physical branch. Through these strategies, credit unions can deepen their relationships with their members and enhance their overall experience.”
To achieve this goal, he said credit unions need to implement a “user engagement hub” which he explained gathers relevant data from users who utilize digital channels like web or mobile banking. This allows credit unions to deliver efficient, personalized, and intuitive self-service solutions.
“Through the power of the user engagement hub, digital channels will be infused with a human touch. Intelligent tools will efficiently handle routine questions with warmth and provide valuable insights about the credit union's services and products,” he continued. “This does not only empower credit unions members to find answers to their questions in a matter of seconds but also reduces frustration and churns.”
The Porto, Portugal-based fintech, with an office in Atlanta, offers banks and credit unions a solution to deliver humanized, personalized, and accessible digital experience on mobile, web, and voice banking. The company serves more than 40 credit unions around the world.
While he noted that national banks usually have bigger budgets for digital service initiatives, credit unions have a distinct advantage in that these FIs provide a more personalized experience to their members.
“Digital services, done well, will help credit unions to remain competitive in a challenging environment. Technology does not replace human interaction but instead allows credit unions to reach their members in new ways and through new channels,” he said. “This allows for an experience that is just as impactful as an in-person branch interaction, while also being more cost-effective for credit unions to operate.”
