A common debate in the digital era is which type of organization has the advantage. Startups have little risk, incredible agility and the freedom to let imagination run wild. Incumbents have data, customers, an established brand and financial resources. Credit unions, incumbents in a quickly evolving financial services marketplace, have one more valuable asset startups do not – trust.
In his talk on the second day of THINK 18, CO-OP CEO Todd Clark challenged the audience of credit union leaders to see those advantages the way a new entrant to the marketplace might. “Imagine what a startup would do with those resources. Digital transformation has become about deploying the rich assets we already have as if we were a startup.”
Clark, who has worked on both ends of the incumbent-startup spectrum, knows first-hand how a new entrant to an established marketplace behaves. From the THINK 18 stage, he explained how CO-OP is putting the startup mindset to work for credit unions.
Think and Behave as a Digital Ecosystem
The central component to this strategy is the evolution of CO-OP into a world-class technology and services company that thinks and behaves as a digital ecosystem.
“For credit unions to meet consumer expectations and enable growth, we need to build and participate in an ecosystem,” said Clark. “Experts say soon there will be 12 super ecosystems covering every industry from financial services to health from housing to travel.”
A simple ecosystem Clark pointed to as an example was Trivago. By stripping data from every other travel website through the use of APIs, Trivago makes the process of finding, booking and paying for flights and hotels painless. User no longer have to visit multiple sites, yet they can have a similar assurance, knowing that’s exactly what Trivago has done for them.
“You may be wondering why Orbitz, Travelocity and others would allow Trivago an API view into their data,” said Clark. “They’ve come to the realization that ecosystems like Trivago are satisfying a huge consumer demand for immediacy, relevance and personalization. And, they figure, a little piece of something is better than nothing.”
Applying Machine Learning and AI to the Ecosystem
For the Orbitz and Travelocity firms of the world, that little piece of something isn’t limited to revenue earned from user fees. When a booking is made thanks to their API connection, they have the data, which many argue is the new currency. As participants in the travel ecosystem, the are now a part of something that’s larger than their single consumer base.
Startups in the fintech space are similarly hungry to be a part of the larger financial services marketplace. They are looking for scale, and CO-OP, alongside its credit union clients, can offer that in a big way. A 60-million-credit-union-members way.
CO-OP’s vision the ecosystem Clark described is to become an integrated set of payment and other financial services. It will allow credit union members to fulfill a variety of needs through one integrated experience. A big part of being able to do that well relies on the application of machine learning and AI to the data flowing through that ecosystem. Massive stores of data will become available to CO-OP, to credit unions, and someday to members, as more people take advantage of the seamless, secure solutions available to them from the ecosystem.
That is where CO-OP’s COOPER suite of machine learning solutions will come in. Launched at THINK 18, COOPER is CO-OP’s largest technology initiative to-date. The firm is investing millions in the solution set, the first products of which will be focused on fraud prevention.
“We feel it’s important to shore up fraud first,” said Clark, who explained that COOPER is the umbrella for all things machine learning and AI to come from CO-OP. “Consumers say they care about security, yet just over half have a PIN on their computer. Less than half have a PIN on their phone. More than any other entity in their lives, consumers trust financial institutions are protecting them. COOPER will help CO-OP put credit unions in a position to keep that trust, so that as they expand their relationships with members through this digital ecosystem, that trust carries all the way through.”
An Ecosystem Goes Beyond Omnichannel
In talking with THINK 18 host Jean Chatzsky, Clark was quick to point out that an ecosystem is not omnichannel. While a seamless experience across channels may be an outcome of the ecosystem, this is a much broader approach to the end-user experience.
“We’re not talking about building an app that does everything,” Clark insisted. “This is a group of solutions with a unified engagement layer. Members will interact in multiple ways and on their own terms. That is how we will use our legacy assets the way a startup would. We’ll apply a digital mindset to decades of experience to build out a market dominating ecosystem. Doing so is how we will exceed expectations, deepen relationship, drive revenue and ultimately grow the credit union movement.”
The original article How CO-OP is Helping Credit Unions Evolve to Become a Dominant Financial Ecosystem can be found on Insight Vault.