Change is happening at an unprecedented rate within payments. Part of that is fueled by emerging technologies, but a lot of it has to do with the shift in consumer behavior and expectations. And while this will create a number of business challenges for credit unions – it will also generate a lot of opportunities.
That’s why the theme of THINK 19 – May 6 to 9 in Miami – is “Opportunity Never Rests.” As credit unions embrace innovation and transformation, they’re creating relevance, efficiency and growth. Over the course of four days, THINK 19 will take a deep dive into the opportunities created by massive demographic shifts, the e-commerce revolution, digital transformation and new collaborations between fintech and financial services.
While THINK is still months away, here are seven trends your credit union should be thinking about now:
Growing influence of Generation Z
The post-Millennial generation is 74 million strong and by 2020 is expected to surpass both Millennials and Baby Boomers as the largest demographic in America. That is a huge population of potential members that credit unions should be focused on. What does Generation Z want from their financial institution? We know they’re constantly connected to their IoT devices and have high expectations for payments: Think instant P2P, flawless security and personalized data-driven experiences. But we also know that they’re actually more money-conscious than previous generations; Almost 12 percent of Gen Zers under the age of 18 are already saving for retirement. This opens up a whole universe of new products for and ways to engage with these potential first time members.
Mobile payments gain momentum as APIs and Open Banking propel growth
Although mobile payments notoriously lag behind expectations, this will change as the mobile experience becomes more integrated and secure. One way that’s already happening is through the Open Banking movement. As more banking providers and fintechs partner to build integrated mobile apps and services, this will lead to higher mobile payments usage and an evolutionary shift toward digital experience.
AI revolutionizes fraud detection and member relationships
According to a 2018 survey from Adobe and Econsultancy, 61 percent of financial services and insurance companies are already using AI for data analysis and to improve the customer experience. AI has already been making waves but the coming year will see rapid growth in AI adoption.. We are looking forward to bringing the benefits of AI and machine learning to the fight against fraud through our COOPER Fraud Analyzer solution, currently in pilot testing and slated to launch in the coming months.
Payments as an experience
This might be more accurately described as the payments “non-experience.” The rate at which payments innovation is happening leads us to think that frictionless payments experiences will become not only common, but expected. Whether it is cashierless stores like the ones Amazon has begun building or the ability to pay for gas without having to step outside your car, the payments experiences that once seemed works of science fiction are fast becoming reality.
Alternative payments and financing gain new ground
Speaking of pushing the payments frontier, alternative payments – P2P, contactless payments, wearables and connected commerce – have seen unprecedented growth and will completely change the context of payments. Consider the fact that P2P platform Zelle saw 320 million transactions in its first year and already reaches 100 million consumers. Alternative financing is another area of payment that is poised to break out. For example, fintech incumbent Square recently announced a new program that will offer customers on-the-spot financing for large purchases when a merchant uses Square for payment processing.
Fintechs and financial institutions find synergy
Though often thought of as competitors, fintech companies and financial institutions will begin working together. Here’s why: “Fintech startups bring agility and technological know-how to the table; legacy financial institutions provide resources and regulatory acuity that’s been honed over decades. Long-standing financial institutions are banking on their wealth of experience for security and relevance in a digital era—one in which more than 30 percent of millennials say they won’t even need a bank in the next five years,” Deloitte wrote in a Quartz post. This rings even more true for credit unions. Credit unions have the advantage of long-standing member relationships and member trust, something that fintech companies understand to be critically important. Ultimately, the synergy between technology companies and credit unions may leave us wondering why either camp was trying to function without the other – collaboration is everything.
Financial services become platform and ecosystem players
The digital revolution that transformed retail, hospitality, music, transportation and video is coming to financial services. The industries that will thrive will be the ones that can create an integrated ecosystem with a shared vision. For credit unions, that means making every member touchpoint and channel seamless, secure and integrated, with data as the connective tissue. That is our vision for CO-OP and perhaps the most important trend for credit unions to watch.
These 7 trends mark a culmination – some decades in the making – of tectonic changes in financial services and the culture at large. What’s different today is the unprecedented opportunity credit unions have to harness these forces and create momentum and growth.
Are you ready for the future of payments and technology? Join us at THINK 19, May 6-8 in Miami, for four days of keynotes, breakout presentations and networking opportunities to help grow your business. Register now and enjoy a discount Fall Savings discount off the registration price.