With credit unions facing pressure from big banks, we break down fintech startups providing solutions for credit unions, from digital banking to customer engagement.
While banks are driven by profits, credit unions have a different set of incentives.
Credit unions are financial co-ops built to promote the financial wellbeing of their members. They are known for their lower fees and strong customer service.
But as big banks deploy capital to improve their tech, credit unions risk losing their customer service advantage.
Now a crop of fintech startups are emerging that could help these institutions continue growing.
Why join a credit union?
Credit unions have historically been smaller and more community-oriented than big banks. Members often access credit unions through employers or local offices, or because these institutions have ties to family or membership groups, such as a labor union or church.
Members are often drawn to join credit unions because of their top-notch customer service. A survey done by Gallup found that 52% of customers at credit unions were fully engaged by the financial institution, compared to 17% at national banks and 37% at community banks.
In addition to good customer service, credit unions hold tax-exempt status and thus are able to return profits and savings to members in the form of reduced fees, higher savings rates, and lower loan rates.
Challenges for credit unions
Despite the benefits of credit unions, banks have successfully used their wide array of products, significant marketing muscle, and large retail footprint to build much larger customer bases.