Are clunky vendors holding credit unions back?
Credit unions are adopting technology at a ferocious pace, embracing new products and services to enhance the member experience. There’s almost a grassroots movement within the credit union industry to diversify their sources of technology and services, moving away from the large, traditional providers that they have relied on for years.
These incumbent providers once offered an all-encompassing range of technologies but have grown too big and, often, too complacent to keep up with the rapidly evolving financial landscape.
For many credit unions, these large vendors have become less responsive and slower to innovate. They seldom focus on delivering standout member experiences that credit unions rely on to remain competitive. As these vendors expand, credit unions—typically amounting only to a small fraction of their client base—frequently find themselves deprioritized on the sidelines.
It’s no surprise that credit unions are seeking faster, more specialized solutions from young fintech startups that can move at the speed of today’s market.
The rise of specialized fintech startups
Credit unions are not known to be early adopters of new technology. However, they have begun to gravitate toward innovative fintechs that offer specialized services. This shift isn’t just about finding faster solutions; it’s about survival.
Americans are spoiled with choices in financial products today, often offered through sleek mobile apps from neobanks that roll out new features at an unmatchable pace. These consumers, especially those under 30, expect an intuitive, fast, and flexible banking experience. The digital-native generations have incredibly high expectations for convenience and online experiences, and that’s not what most credit unions offer today. To remain relevant, credit unions must swiftly integrate fintech products into their offerings, achieving a level of sophistication and agility that meets the modern member’s expectations.
Take Clutch, for example. This four-year-old fintech specializes in digital account opening experiences. While credit unions could use account opening tools offered by traditional digital banking platforms, the bar for online onboarding is now so high that a clunky process might push a potential member to open an account with a competing neobank like Chime in just minutes.
Similarly, Posh.ai offers AI-driven customer service assistants for voice and chat. While many worried that members might not take to the idea of talking to a bot and might prefer speaking to a real person, Posh’s success shows that there’s a clear demand for fast, reliable answers that AI can deliver. By balancing efficiency with a high-quality member experience, Posh has found a way to make AI feel personal.
Building a competitive edge with fintech partnerships
By partnering with nimble startups, credit unions can offer a powerful suite of products that combine top-notch technology with the community-focused values that have always set them apart. No longer must members choose between a great banking experience and a financial institution that truly cares about their long-term well-being.
However, there’s a catch: it’s not just the legacy vendors that are slowing credit unions down. Onboarding these new vendors and managing the associated risks is also a major bottleneck.
Credit union business teams will invariably tell you that their vendor onboarding process is often long and tedious. After identifying a vendor to work with, it frequently takes months to get them through the process. In that same amount of time, neobanks may already have released two new features via a monthly release cycle.
On the other hand, credit union vendor management teams who have undergone a National Credit Union Administration (NCUA) third-party risk audit will likely admit that they’ve been advised to increase their vendor oversight and assessment efforts—a necessary step given the rising number of cyber incidents involving third-party vendors.
Streamlining vendor management for agility
As credit unions shift from working with a few large vendors to many smaller, specialized ones, they must reimagine their vendor management process. AI-assisted vendor management platforms can play a crucial role in this transformation. Not only do these tools help credit unions complete fully compliant assessments in record time, but they also provide a more rigorous and targeted approach to risk management. This allows credit union employees to focus their efforts on real risks instead of mere check-the-box tasks.
Credit unions today face a challenging balance: they need to move faster to stay competitive, but they also need robust vendor management processes to mitigate risk. So, what gives?
Thankfully, AI can save the day again. When AI is thoughtfully applied to the vendor management process, credit unions can achieve both goals. They can enable business units to adopt the latest best-in-class fintech solutions without sacrificing the thorough risk assessments required to protect their members.
Don’t let slow vendor management hold your credit union back. Embrace an AI-driven approach that will allow you to build a cutting-edge member experience while staying on top of the risks. With the right tools in place, your credit union can grow, thrive, and allow you to provide your members with the service they deserve.
