The PYMNTS Intelligence report “From Rivals to Partners: The Rise of Credit Union-FinTech Collaboration,” a Velera collaboration, found that this pivot is largely fueled by escalating member expectations for robust mobile banking and seamless digital payment solutions, which in turn offer CUs growth opportunities at scale.
The shift from competition to collaboration is seeing CUs become FinTech clients. In November 2023, 16% of FinTechs that engaged with CUs viewed them as rivals. By November 2024, that figure plummeted to 1.9%.
Over the same period, the share of FinTechs identifying as vendors to CUs soared to 98%. FinTechs’ growing recognition of CUs’ desirable attributes as customers includes the fact that these banks have decades of history as member-first models and a stable, loyalty-driven consumer base.
For their part, CUs perceive FinTechs as essential technology providers, not market disruptors. Only 12% of CUs named FinTechs as top competitive threats, a contrast to the 35% who cited other CUs or community banks.
Meeting Digital Needs
CUs are seeking FinTech-enabled tools to meet digital needs and scale. Most CUs plan to embed these solutions within two years, with payments (54%), account opening (51%), digital marketing (37%) and data analytics (31%) leading the charge.
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Practical applications are already in motion.
Navy Federal Credit Union, for instance, partnered with Bloom Credit to convert bill payments into credit histories, enhancing credit access for its 14 million members.
Similarly, Indianapolis-based Financial Center First Credit Union is modernizing its digital banking infrastructure through a partnership with Alkami Technology. The collaboration streamlines account opening, payments and automated clearing house (ACH) processing, while also adding marketing and analytics tools.
These tie-ups underscore a strategic response to rising consumer expectations, aiming to modernize core functions while expanding member value.
There are some speed bumps that need smoothing.
While the share of FinTechs reporting no barriers to partnering with CUs rose from 6% in 2023 to 29% in 2024, many still face friction. Among FinTechs not currently partnering with CUs, 44% cited regulatory compliance as a top hurdle, and 42% indicated their products don’t precisely match CU needs.
Other issues include relatively smaller budgets (on the part of the CUs), slow implementation cycles and a perceived limited appetite for innovation among some CUs. The data also revealed that FinTechs are more likely to partner with software platforms (65%), merchants (62%) and digital-only banks (61%) than with CUs (40%).
A key impediment to deeper CU-FinTech integration is the onboarding process. One in five FinTechs not currently selling to CUs would reconsider if they could onboard multiple CUs simultaneously, viewing the current channel as fragmented and slow.
Addressing this process gap will help CUs capitalize on FinTech collaboration as a growth channel. Programs like Velera’s FinTech Engagement Program offer a structured framework, connecting CUs with vetted FinTechs, enabling co-developed use cases and accelerating proofs of concept.
To turn partnerships into sustainable growth, CUs should modernize integration infrastructure, standardize and simplify onboarding processes, and foster continuous improvement through data and feedback.
