CUs Put New Twist on Old Credit Cards to Offer Instant, Digital Loans

As stimulus checks and tax breaks were sent out to individuals and families throughout the pandemic, consumers banked the payments.

And that swelled deposits at credit unions.

Denise Stevens, SVP, chief product and digital officer for PSCU, told PYMNTS CEO Karen Webster that, increasingly, CUs want to branch out into lending to compete with their larger, traditional banking brethren and digital-only upstarts and use those deposits as a springboard to digital innovation.

The desire is there, but the execution is harder. For CUs, delivering streamlined, tech-enabled offerings to end-users is stymied by a fragmented landscape.

Simply put, CUs are challenged when it comes to competing with larger, deep-pocketed financial services players — especially when it comes to digital loans, originations and branding new capabilities in ways that cross-sell to current members and would conceivably enable them to grow.

“It’s very difficult to replicate these types of experiences when credit unions have multiple partners that they have to deal with,” she said.

To offer as many financial services options to their members as possible, those CUs might have separate third-party partnerships in place for lending, card processing and online banking. As a result, it’s become nearly impossible for a CU to pull everything together with speed. PSCU’s Owner credit unions expressed they continue to struggle to compete with digital-only offerings like the Apple Card — and time is of the essence or they risk losing members.

As PYMNTS and PSCU joint research has found, roughly a quarter of consumers would switch financial institutions (FIs) if they received innovative services.

Read also: 24% of Credit Union Members Would Switch FIs for Digital Innovations

“We’ve needed to figure out a way for credit unions to compete with those larger banks — at scale,” said Stevens.

Against that backdrop, PSCU said last week that it has partnered with FinTech Amount to help provide new lending functionality to CUs. That relationship begins with credit cards and will branch out from there, including instant loan approvals. PSCU also invested an undisclosed amount into Amount.

“This partnership with Amount is about true loan origination,” said Stevens. “And it allows us to do ‘true’ account acquisitions.” The CUs that take advantage of Amount’s digital credit card opening capabilities will be able to hold these loans on their balance sheet — turbocharging new membership acquisitions.

Lending, said Stevens, represents a logical complement to the solutions PSCU  already offers to its CUs. Looking beyond the credit cards, there will be a move to broaden into consumer loans and business loans.

“We’re putting all of these lending components together, integrating them into the PSCU ecosystem — and offering a full credit ‘suite,’” said Stevens.

The Loan Activity 

Though the loan originations would be enabled through PSCU/Amount, said Stevens, the CU would still underwrite and hold the loans, and PSCU will help automate the back-office workflows tied to loan management.

“We’re just giving them more flexibility, with newer technology, to combine it all,” Stevens said. Along the way, these CUs will be also able to offer buy now pay later (BNPL) options through PSCU with different installment terms as that product becomes more widely available.

CUs will be able to offer innovative products to their membership — and grow their membership (in part due to the white-label functionality of the relationship).

A new account opening would conceivably pave the way for credit card offerings to be extended, digitally and instantaneously, across digital channels.

“As a new member,” she said, “you’ve applied for a credit card and gotten approval in a matter of seconds,” where the card can be instantly provisioned to that holder’s digital wallet – with Google and Apple Pay wallets, among them, she said.

“You can quickly start spending and transacting,” said Stevens, “and that seamless experience is what we are after.”