The following is a transcript of the podcast episode host by Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com
Yvonne and Nish, Welcome to the podcast. Nish, I’d like to start with you. As we look forward, is 2019 shaping up to be such a transformative year for credit unions and financial institutions services in general?
Nish Modi, Vice President, Strategy & Product at CO-OP Financial Services
The way consumers engage with credit unions and financial institutions in general is rapidly
changing with the changing demographics, with the changing set of technologies being available. The way that consumers engage with the credit unions and financial institutions is changing. The way we are paying by using messaging for e-commerce transactions or peer-to-peer payments. Using APIs (application programming interfaces); a lot of technology companies are starting to use APIs to integrate nontraditional players to build from others’ innovations. That’s expanding the horizons of how we consume technology, enhance technology and our offerings to members and consumers. In general the world is going digital. By 2020, the numbers are staggering: 20 billion IoT devices globally, including wearables by 2020 about 720+ billion digital payment transactions. That’s just mind boggling. So all of that is literally leading up to setting up 2019 as a very transformative year for us as the financial services industry.
Yvonne Stelpflug, VP, Credit Products
You’re exactly right. As you mentioned, the consumer expectations are changing at such a rapid rate. And that experience is what is trumping product as a key brand differentiator. As we look toward 2019, all of this spells out new opportunities and challenges for the credit union. Within the coming year, digital transformation is no longer a question, but it’s imperative. It is absolutely important to maintain and grow their business within the credit union.
Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com
Certainly great points there. Nish, that is staggering, the 20 billion IoT devices globally. And Yvonne, when you talk about digital transformation as imperative, we’ve already started to see the tip of the iceberg in 2018, and it just gets exponentially important in 2019. But shifting gears here: Yvonne, how do you think that the changes in the payment space will impact credit unions in particular?
Yvonne Stelpflug, VP, Credit Products
Payments are the most frequent touch point between a credit union and the member. And so when you look at what that means to the business, 25–50% of a credit union’s non-interest income comes from payments. So that’s a huge segment and an important one for them to pay attention. I’s so important to get their payments and their payment strategy right for what their members and consumers are wanting. Again, it comes down to that experience. That’s what the members want: faster data-driven frictionless payment experiences. And as consumers embrace those third-party payment providers outside of the credit unions and outside the financial institution areas, credit unions must increase that share, making sure that they are playing that space of the digital wallet and modernizing that payments experience.
Nish Modi, Vice President, Strategy & Product at CO-OP Financial Services
As you look at the landscape for the enhanced, when you look at the nontraditional players, right? We already knew PayPal, then Square, traditional payment services companies, and now you look at Apple and Google and Facebook jumping into payments. It is scary but a fascinating landscape now, we look at P2P. You have PayPal’s Venmo and then you have Zelle challenging Venmo, and it’s creating some interesting dynamics in our space. Add to that, Amazon jumping into it with both feet. I mean look at their wallet and e-commerce.