As stimulus checks and tax breaks were sent to individuals and families throughout the pandemic, consumers put the payments in the bank.
And that has inflated deposits in credit unions.
Denise Stevens, SVP, Chief Product and Digital Officer for PSCUtold PYMNTS CEO Karen Webster that increasingly, UCs want to diversify into lending to compete with their traditional banking big brothers and digital-only newcomers and use those deposits as a stepping stone to digital innovation .
The desire is there, but the execution is more difficult. For UCs, delivering streamlined, technology-enabled offerings to end users is hampered by a fragmented landscape.
Simply put, UCs face challenges when it comes to competing with larger, deep-pocketed financial services players – especially when it comes to digital lending, origination and new capabilities. branding in a way that sells to current members and would theoretically allow them to grow.
“It’s very difficult to replicate these types of experiences when credit unions have multiple partners they have to deal with,” she said.
To provide as many financial service options to their members as possible, these CUs may have established separate third-party partnerships for lending, card processing, and online banking. As a result, it became almost impossible for a CU to put everything together quickly. Credit unions that own PSCUs said they continue to struggle to compete with digital-only offerings like the Apple Card – and time is running out or they risk losing members.
As joint research by PYMNTS and PSCU revealed, around a quarter of consumers would switch financial institutions (FIs) if they benefited from innovative services.
Also Read: 24% of Credit Union Members Would Switch FIs for Digital Innovations
“We had to find a way for credit unions to compete with these big banks — on a massive scale,” Stevens said.
Against this backdrop, PSCU said last week that it has partnered with FinTech Amount to help deliver new lending features to CUs. This relationship starts with credit cards and will branch out from there, including instant loan approvals. PSCU also invested an undisclosed amount in Amount.
“This partnership with Amount is about creating a real loan,” Stevens said. “And it allows us to make ‘real’ account acquisitions.” UCs that leverage Amount’s digital credit card opening capabilities will be able to keep these loans on their balance sheet, which will drive new member acquisitions.
The loans, Stevens said, represent a logical addition to the solutions PSCU already offers to its CUs. Beyond credit cards, there will be a trend to expand into consumer loans and business loans.
“We bring all of these lending components together, integrate them into the PSCU ecosystem – and offer a complete lending ‘suite’,” Stevens said.
Although loan originations are activated through PSCU/Amount, Stevens said, CU will still underwrite and hold loans, and PSCU will help automate back-office workflows related to loan management.
“We’re just giving them more flexibility, with newer technology, to put it all together,” Stevens said. Along the way, these CUs will also be able to offer buy-it-now, pay-later (BNPL) options through PSCU with different payout terms as this product becomes more widely available.
UCs will be able to offer innovative products to their members – and grow their membership (in part through the relationship’s white label functionality).
Opening a new account would presumably pave the way for expanding credit card offers, digitally and instantly, across digital channels.
“As a new member,” she said, “you applied for a credit card and got approved in seconds,” where the card can be instantly provisioned to that cardholder’s digital wallet — with wallets Google and Apple Pay, among others. them, she said.
“You can quickly start spending and transacting,” Stevens said, “and that seamless experience is what we’re looking for.”