14 THE NAFCU JOURNAL March–April 2022 “The past two years of the pandemic have really accelerated technology adoption by credit unions,” said Jeff Keltner, senior vice president of business development at Upstart. “Member needs today are vastly different than they were five years ago due to the rapid adoption of mobile technology and the bar that companies like Netflix and Amazon have set for customer service. One of the benefits of fintech’s growth in recent years is that the most advanced technologies are now within reach, and budget, for credit unions of all asset sizes.” There are a number of ways that credit unions and fintechs work together. “Every fintech partnership is built differently and begins with different goals in mind, such as improving member experiences, growing the credit union, enhancing internal operations, expanding into new member segments and more,” explained Keltner. Some credit unions work through a CUSO structure versus directly with a fintech, which is beneficial because it allows credit unions to combine their resources while still retaining ownership of the technology, he said. “The most important thing about these engagements—whether they’re through a CUSO or not—is that the relationship is viewed as a partnership rather than a vendor/buyer arrangement. Rather than something transactional, a partnership implies shared risk and reward between the two organizations—vendor relationships are much more functional whereas partnerships are strategically evaluated at the board level.” Why Partner with Fintech? “The primary reason we partnered with a fintech was to gain access to a strong performing loan portfolio that would complement what we originated organically,” said Jim Merrill, president and CEO at Inspire Federal Credit Union. “Consumers traditionally went to credit unions for personal, unsecured loans but about five to ten years ago, fintechs changed the market with their deeper pockets and an easy, convenient way for consumer to apply for and get loans.” As credit unions lost their dominance in the consumer loan space, more partnered with technology companies to regain access to those loans, he explained. “Fintechs don’t have the balance sheet capacity that credit unions have, so it can be a win-win partnership for both,” he added. “We have established credit parameters as well as underwriting requirements for loans we buy from our fintech partner, because the borrower must open an account with us and must reside in our geographic area served,” said Merrill. “These requirements not only meet regulatory requirements, but they ensure we are able to acquire new members at a low cost and establish a relationship that allows us to communicate with them about other products.” At one time, a popular product offered by Franklin Mint Federal Credit Union was a student loan, but after origination and administration of those loans was taken over by the government, the credit union no longer offered loans to students. “Then we had members approach us for loans that finance the gap between their school costs and their federal loans,” said Allan Stevens, senior vice president and chief credit officer for FMFCU. Although the credit union has a strong relationship with schools and universities in the area, there was no product that fit members’ needs. “In 2018, we intentionally looked for a fintech partner that would allow us to fill the gap,” he said. “After years of saying ‘no’ to requests for gap financing, we are able to say ‘yes’ now.” More recently, FMFCU has turned to fintech partners to find loans that can help the credit union manage its growing liquidity, said Stevens. “We have developed relationships with fintechs that We have developed relationships with fintechs that specialize in personal and vehicle loans, but also have expanded to include auto refinancing. ALLAN STEVENS, SENIOR VICE PRESIDENT AND CHIEF CREDIT OFFICER FOR FMFCU Member needs today are vastly different than they were five years ago due to the rapid adoption of mobile technology and the bar that companies like Netflix and Amazon have set for customer service. JEFF KELTNER, SENIOR VICE PRESIDENT OF BUSINESS DEVELOPMENT AT UPSTART
RkJQdWJsaXNoZXIy Nzc3ODM=