How Credit Unions and FinTechs Can Help Each Other

Credit unions (CUs) often find themselves walking a tightrope: addressing the demand for digital banking while also holding onto the value propositions and personalized services that brought their members to them in the first place.

By working with FinTechs, CUs can address that mean by accelerating development of new technologies while keeping costs low.

One such partnership happened recently between credit union trade organization Michigan Credit Union League (MCUL) and Scienaptic AI, which joined forces to bring artificial intelligence (AI) credit underwriting technology to MCUL’s member credit unions.

Some Michigan CUs, including One Credit Union and 4Front Credit, were already using Scienaptic’s AI technology. The use of AI in underwriting decisions is intended to raise the number of applicants who can be approved for credit and speed the approval process.

MCUL CEO Patty Corkery said the partnership fits well with the trade organization’s mission to help CUs provide for their members.

And Kathryn Bonesteel, vice president of partnerships for Scienaptic AI, believes the collaboration will help CUs better serve their members and minimize the risks associated with lending. MCUL’s 208 member CUs serve roughly 56% of the state’s population, with 5.8 million members and $92 billion in managed assets.

Meanwhile, the National Credit Union Association ended 2021 with a rule clarification that gives federally insured CUs guidance on forming relationships with third-party digital asset services providers, clearing the way for credit unions to offer members more direct access to cryptocurrency markets.

State-level rules and legislation will also determine how state-chartered CUs move forward. Under the new guidance, the NCUA said it will review partnerships between CUs and third-party crypto services providers in the same way it examines other partnerships, with an expectation of risk assessment, due diligence and continued monitoring by the CU in question.

A recent survey found clarity regarding regulations influenced cryptocurrency and blockchain adoption for more than 52% executives at multinationals, while 85% of crypto owners have shown interest in buying cryptocurrencies through their financial insitutions. Kyle Hauptman, NCUA vice chairman, said the rules clarification is expected to help CUs stay competitive and hold onto relationships with existing members.

To learn more about how FinTechs and CUs are working together, download your copy of the latest Credit Union Tracker, a PYMNTS and PSCU collaboration