Can credit unions work with fintechs to address digital challenges?

‘As a sector we need to identify ways to stay relevant’

Credit unions are still wrestling with the question of how to go digital while maintaining their founding purpose – but some fintechs are already collaborating with the sector.

Industry experts examined the opportunities and challenges brought by new tech during a plenary session at Abcul’s annual conference, held in Manchester last month.

It included input from Scottish fintech CU Soar, which provides a CMS platform and banking app and works with the 50,000-member Glasgow Credit Union.

Its chief executive Andrew Duncan told delegates that credit unions can become sector leaders by putting digital first – and warned that rival financial services organisations are signing up customers at an alarming rate by providing frictionless credit.

“As a sector we need to identify ways to stay relevant,” he said.

Anna Laycock, chief executive of Finance Innovation Lab, an organisation campaigning for financial reform to serve people and the planet, said credit unions are already bringing about change.

The question is not whether credit unions should engage with fintechs, she argued, but how. She wants to see more fintechs set up as platform co-ops, owned by workers and customers.

Sheenagh Young, chief executive of South Manchester Credit Union, talked about their experience working with fintech Nivo.

The credit union, which has 4,251 members and a loan book of £2m, signed up with Nivo at Abcul’s 2017 conference and started working with them in April 2018.

Members were enthusiastic about Nivo’s app, which allows them to talk to the credit union through secure instant messaging, and recommended the credit union’s digital service to their friends and families.

In October 2018, a loan application was up by 30% on the previous year. “Most of the increase came from new members,” said Ms Young.

Nivo also enabled the credit union to strengthen its security, allowing members to request funds through the encrypted app rather than over the phone.

Going digital is not without challenges, with staff having to adapt to new platforms and deal with multiple customer enquiries at the same time. Ms Young told credit unions to “be ready to be disrupted behind the scenes”.

Ms Laycock added that big banks had similar issues with IT systems – but had bigger pots of money to spend on fixing them, which could accelerate the technology gap between bigger institutions and smaller ones.

Matt Bland, head of communication at Abcul, said he welcomed more input from members and offered help on issues such as understanding fintetch jargon.

More reports from the Abcul conference: