By John San Filippo
Much has been written about the need for credit unions to partner with fintechs. However, the risk to credit unions in partnering with fintechs is often overlooked. Expose too much data to the fintech and a credit union could end up providing data that the fintech could later leverage to steal business from the credit union, not to mention the possibility of the credit union falling out of compliance. What’s needed is a secure, compliant means to provide sufficient data to the fintech while protecting any personally identifiable information (PII) that the fintech doesn’t need. A company called Asa seeks to solve this problem.
Finopotamus talked with Asa CEO Landon Glenn at the recent SymWest conference.
Connecting with Fintechs
The need to partner is clear. “Right now, a credit union has its app that it’s trying to own and control and make it so all of its members want to use this one app,” said Glenn. “They have one solution and it has to be good for everybody, which is hard to do. Individuals all want different things. They have different needs, different preferences. So, it's nearly impossible to find something that everyone's going to love. And if a member wants technology that they can't get from their credit union, their only choice is to 'cheat' on their credit union and download a competing product or service.”
Glenn further explained, “We've got 10,000 banks and credit unions that have almost the exact same app. They do very similar things. And these fintechs, (there are now over 10,000 fintechs) are building things that credit unions don't have.” He noted that many of these fintechs offer additional financial products like loans and credit cards that can erode a credit union’s business. The choice for credit unions, he said, is simple: partner with fintechs or lose business to fintechs.
According to Glenn, the Asa platform provides a secure conduit between credit unions and fintechs that allows fintechs to offer services over the credit union’s rails. “Asa is bridging that gap between credit unions and the consumer financial apps their members are craving,” he told Finopotamus. By connecting a credit union with a fintech, the fintech becomes an extension of the credit union and a part of the member experience.
“Today people go and download an investment app, a budget app, a specialty personal financial management tool, whatever meets their needs best,” said Glenn. “The difference with Asa is that instead of connecting it through a third party where you have to go through Plaid, for example, to get the data, they can go directly to the credit union using our infrastructure.”
He continued, “Right now, there's so many good ideas out on the market. And there are so many ways fintechs can empower people financially and serve the underserved and create opportunity. But the barriers to go to market with a credit union are so big right now, the fintechs are having to choose to compete instead of collaborate.”
Under the Hood
The Asa platform, Glenn explained, extends the technological reach of the credit union while putting the member in total control.
“Today, a member downloads a fintech from the Apple app store or Google Play. For example, let’s say they download Mint,” said Glenn. “The difference with our platform is how you connect Mint to the credit union data. Instead of the member having to share their name, email, username, password, account numbers, and all of that with a third party, Asa is tokenizing all of the credentials and we're anonymizing all of the PII.” This approach, he added, also eliminates any compliance issues associated with sharing PII.
To use the technology, the member downloads the Asa vault, which Glenn compared to a digital wallet. This download is performed at the direction of the credit union. The vault app then syncs the member’s credit union data. When the member downloads a participating fintech app, that app connects to the vault app, which provides the fintech with anonymized financial data.
“We authenticate that credential with the core on the back end, and then we can attach biometrics,” said Glenn. “Now you have a biometrically authenticated credential. We have that backend proprietary API into the core platform, as well as the frontend APIs that the fintechs connect to. The member chooses an app that’s part of our ecosystem and it's just point and click from there.”
Glenn said that the Asa platform is fully integrated with Symitar’s Episys. Other core integrations that are in various stages of development include Corelation’s KeyStone, Prodigy and a number of Fiserv cores.
“Because the fintechs aren’t receiving regulated data, they don't sell regulated products,” added Glenn. “Those opportunities bounce back to the credit union and the credit union sells the loan or the credit card or whatever.”
Glenn said that they are many advantages for fintechs that participate in the Asa ecosystem. Because there are no issues of managing regulated data, “the fintechs can go to market about 20 times faster and about 20 times cheaper than what they would if they had to spend money on SOC-2 compliance and all the different regulatory issues they’d have to worry about” with regulated data.
“The fintech can go to market in less than a week,” claimed Glenn. “Anyone can build anything. And any credit union can use that app at unlimited scale.”
Securing the Future
“Right now, credit unions are having to gamble on their future’” said Glenn. “They're having to select the one fintech that they're going to partner with because they can't afford to partner with everyone. And if it doesn't work out – if they guess wrong – they’re going to lose a lot of money and a lot of time, not to mention member confidence. We're removing that innovation risk from the credit union and placing it upon the crowd. It's a merit-based system where the best ones get the best reviews and rise to the top.”