From Potential to Performance: How CUs Can Capture the FinTech Partnership Opportunity

Credit unions (CUs) are entering a pivotal moment in their modernization journey. Member expectations are rising as digital-native channels, artificial intelligence (AI)-driven tools and embedded financial experiences become the norm across consumer finance. At the same time, many FinTechs—facing slower growth with national banks and looking for mission-aligned partners—are turning to credit unions as the next frontier for innovation. PYMNTS Intelligence data shows a clear inflection point: FinTech partnerships with credit unions grew by almost one-fifth this year, even as these partnerships with national banks declined by more than half.

This realignment signals a broader structural change: FinTechs increasingly see CUs as ideal partners for deploying digital tools that enhance member experience, expand access and accelerate innovation cycles. Meanwhile, CUs recognize that partnering with FinTechs is becoming the most efficient path to delivering capabilities that members now view as table stakes.

However, the opportunity is not frictionless. CUs face modernization hurdles rooted in legacy systems, resource constraints and regulatory pressures, while FinTechs often underestimate the compliance rigor required for CU collaboration. This Tracker examines the dynamics shaping CU-FinTech collaboration, including why these partnerships are gaining momentum, what both sides stand to gain—and what barriers must be overcome to convert partnership potential into partnership performance.

The Market Shift: Why FinTechs Are Turning to Credit Unions

The Value Exchange: What Each Side Gains

The Execution Gap: Why Partnerships Struggle—and How They Succeed

Building Partnership Readiness for 2026

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The Market Shift: Why FinTechs Are Turning to Credit Unions

Digital banking demand and a realignment in FinTech partnership strategy are pushing innovation toward credit unions—and away from traditional banks.

A pronounced shift in FinTech partnership momentum is underway.

The FinTech partnership landscape is tilting decisively toward CUs. Recent PYMNTS Intelligence data shows that FinTech partnerships with credit unions grew 19% year over year, even as FinTechs reduced their partnerships with national banks by 56%. Among FinTechs that offer end-user products or services through third parties, 48% now work with credit unions—up from 40% in 2024—while partnerships with national and regional banks have declined sharply.

48%

of FinTechs now work with credit unions, up from 40% last year.

Modernization pressure is accelerating CU demand for FinTech innovations.

A confluence of dynamics on both sides explains this shift. As digital banking expands, credit unions face mounting pressure. Members now expect conversational AI support, customizable card controls, biometric authentication and personalized rewards—capabilities typically found at digital banks. PYMNTS Intelligence research lists these as the top innovation priorities across CU segments, reflecting demand for solutions that keep the end-user experience safe, secure and convenient. However, for many CUs, achieving this level of modernization internally is often slow and expensive. Instead, FinTech partnerships are emerging as a more achievable route.

FinTechs see credit unions as better innovation partners than banks.

Meanwhile, as FinTechs seek new growth opportunities, they are rethinking where their solutions can have the greatest impact. With large banks increasingly building competing solutions in-house rather than partnering with external providers, many FinTechs view CUs—seeking to enhance member experience without substantial internal development—as a more accessible path to deploying tools such as automation, digital onboarding and real-time alerts. Hence, FinTechs are leaning away from partnering with national and regional banks and toward CUs and smaller institutions that actively need and adopt their solutions.

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The Value Exchange: What Each Side Gains

Successful CU-FinTech partnerships create reciprocal value: better digital tools for CU members and stronger market traction for FinTechs.

FinTech partnerships offer CUs faster modernization and stronger member engagement.

34%

of FinTechs serving CUs cite the ability to make FIs more competitive as a core competency, 2.5 times higher than FinTechs serving other institutions.

For credit unions, FinTech partnerships are increasingly the engine for modern service delivery. FinTechs can help CUs bring in-demand capabilities such as AI-operated member support chat, call center or member service solutions, card transaction management, biometric authentication, and loyalty or rewards programs to market more quickly than in-house builds would allow. These tools support the CU mission by expanding access, improving usability and personalizing financial experiences while also strengthening operational agility.

Meanwhile, FinTechs achieve differentiation and a market edge over other providers through CU partnerships.

Credit unions provide FinTechs with access to loyal, high-trust member bases that value relationship-driven service, a differentiated distribution channel where FinTech offerings stand out from mass-market deployments, and long-term partnership stability driven by cooperative governance structures. FinTechs that sell to credit unions also highlight a distinct advantage over other tech providers: 34% cite their ability to help financial institutions (FIs) be more competitive, a rate roughly 2.5 times higher than among FinTechs that do not serve credit unions.

CUs’ and FinTechs’ affinity toward these partnerships is mutual.

Research from Q2 shows that many FIs are moving away from large-scale core replacements in favor of modular modernization—layering in third-party components to upgrade functions while keeping existing systems stable. This strategy is particularly favored by credit unions. While 38% of FIs prefer third-party providers for acquiring new capabilities, that preference rises to 61% among CUs. Their top partnership priorities include digital account opening (62%), unified digital banking (50%) and digital lending (33%). Meanwhile, only 17% of banks overall planned to establish new FinTech partnerships in 2025, underscoring where demand is strongest.

Cornerstone Advisors’ 2025 outlook confirms the divergence: Banks identifying FinTech partnerships as a top growth driver fell sharply—from 29% in 2023 to 16% in 2025—while CUs doing so rose from 28% to 32% over the same period. Together, these findings point to a broad industry realignment in which credit unions and FinTechs are viewing each other as the most attractive, partnership-ready collaborators.

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The Execution Gap: Why Partnerships Struggle—and How They Succeed

The FinTech-CU partnership opportunity is clear, but execution challenges still stand in the way.

CUs’ partnership hurdles include slow processes, legacy systems and strict regulatory requirements.

While 42% of FinTechs that work with CUs cite no impediments to these relationships, 58% report facing at least one barrier, led by credit unions’ slow decision-making processes (38%) and complex rules and regulations (34%).

PYMNTS Intelligence notes that many credit unions operate on legacy core systems and relatively slow tech-adoption cycles, complicating the integration of modern, application programming interface (API)-based FinTech tools. As a result, vendor onboarding and collaboration often become more complex and time-consuming. Moreover, regulatory headwinds—including strict compliance mandates covering know your customer (KYC), disclosure, member privacy and capital management—further complicate vendor onboarding and due diligence processes.

18%

of FinTechs that do not serve credit unions cite compliance and regulatory issues as the reason.

FinTechs may fail to understand CU needs for compliance rigor.

PYMNTS Intelligence shows that some FinTechs perceive CU regulations as overly complex or assume that implementation timelines will be prohibitively long, discouraging them from pursuing otherwise viable partnerships. In practice, this can lead FinTechs to pitch solutions that do not map cleanly to CU workflows or compliance frameworks—slowing progress or derailing it altogether. In fact, among FinTechs that do not serve credit unions, 18% cite compliance and regulatory issues as the reason, making it the biggest factor after simply not carrying products in which CUs are interested, cited by 20%.

Successful partners commit to alignment.

Across the research, one theme stands out: CU-FinTech partnerships thrive when both sides commit to working in sync. Successful collaborations start by agreeing on clear roles, shared timelines and the specific member outcomes each initiative should deliver. They also establish communication routines that keep projects moving and prevent misunderstandings as requirements evolve. Finally, strong partners stay transparent about risk, data practices and regulatory expectations so issues can be identified and resolved quickly. When both teams build this kind of alignment from the outset, partnerships scale more smoothly and deliver measurable improvements for members.

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Building Partnership Readiness for 2026

As credit unions prepare for 2026, the ability to translate partnership potential into operational performance hinges on readiness. Research shows that institutions investing early in technology foundations and alignment processes are better equipped to evaluate vendors, accelerate integrations and achieve substantive improvements in member experience.

PYMNTS Intelligence recommends the following actionable roadmap for credit unions to convert potential into performance in FinTech partnerships:

Define clear partnership guidelines. Create standardized vendor-onboarding frameworks that clarify risk, compliance and integration expectations.

Strengthen foundational technology. Invest in API readiness to accelerate deployment.

Prioritize high-impact use cases. Focus on innovations—such as AI service tools, transaction alerts, biometrics and rewards—that deliver the most value to members.

Choose aligned partners. Select FinTechs that demonstrate compliance fluency and offer solutions tailored to CU workflows, not one-size-fits-all products.

Commit to shared long-term goals. Build roadmaps with agreed-upon milestones and member-value metrics, pledging to co-develop and scale over time.

FinTech partnerships are no longer experimental—they are becoming a leading mechanism for strengthening member experience and modernizing credit union operations. Institutions that adopt structured partnership models, invest in enabling infrastructure and prioritize vendors with strong compliance alignment will be best positioned to deliver next-generation digital experiences at speed and scale. As member expectations continue to rise, the credit unions that prepare now will enter 2026 with a meaningful competitive edge built on clarity, collaboration and readiness to innovate.

The right FinTech partnerships don’t just modernize credit union operations—they future-proof them. By driving scalable innovation and creating long-term sustainability, these collaborations position credit unions to thrive as member expectations and technology race ahead. Initiatives like Velera’s FinTech Engagement Program illustrate how structured collaboration can help credit unions identify aligned partners and accelerate innovation responsibly.”

Chris Corse
Principal, Emerging Partnerships, Velera