Everyone from Google to Verizon to Walmart has a new and better way to make payments. Financial institutions still lead the pack, but there’s a constant sense that something big is on the horizon—and that credit unions should pay attention if they’re going to survive in this fragmenting world. Should you choose near field communication (NFC) or the cloud? Fight to maintain interchange or embrace data as your new business model? Offer services on your own or partner with a new provider? Every credit union is struggling to determine what they must offer to maintain—and grow—member relationships. And these difficulties are compounded by the fact that the competition is no longer just banks, but players outside the traditional financial services realm.
At Filene’s colloquium in Salt Lake City, “Future of Payments,” we brought together experts from both inside and outside the credit union system to get a handle on how the rapidly changing payments field will impact our service offerings, revenue opportunities, and member relationships. Credit unions can’t afford to take a wait-and-see approach to the payments conundrum.
What is the Research About?
Speakers addressed three key topic areas: emerging payments, the digital wallet, and credit unions in the Canadian payments milieu. These conversations were followed by a panel discussion with service providers— CO-OP, CSCU, PSCU, Fiserv, and CUCC—that was moderated by McKinsey. To wrap up the day, members of the audience were asked to choose which of four possible payments futures they felt were most likely to occur, and to discuss the challenges and opportunities that each presented. Although there were many points on which we had to agree to disagree throughout the day, there was strong support for one key point: Members want to make payments to anyone, from anywhere and through any account. Most credit unions have strengths that will serve them well in reaching this critical goal.
What Are the Credit Union Implications?
Success depends on the ability to make account and card services more attractive by positioning credit unions as a resource for better money management, developing better ways to deliver plastic, using transactional data more effectively, and being ready with a digital wallet.
The payments space is changing, and credit unions will have to change along with it to remain competitive.
Although the Canadian credit union system differs from its US counterpart in some critical ways there are certainly many opportunities for us to share: the growing threats from outside the financial services industry, the challenges presented by government regulation, and the importance of building merchant relationships. It’s too early to identify winners, but this report will help you stay pointed in the right direction.
This report is sponsored by CO-OP Financial Services, Mountain America Credit Union and the Utah Credit Union Association.