Credit Unions Monetize Member Data Through FinTech Ties

Credit unions face pressure to keep pace with national, regional and local banks that are often at the forefront of developing cutting-edge financial services.

To gain access to the advanced technologies needed for mobile banking and digital payments, many credit unions are now strategically partnering with FinTechs.

Although FinTechs used to see credit unions as potential competition, they increasingly view these financial institutions as valuable customers.

The PYMNTS Intelligence report “Navigating the Evolving Landscape: FinTech and Credit Union Partnerships,” a collaboration with Velera, explored this evolving dynamic and found that it offers benefits for both sides and, ultimately, the consumer.

Partnerships Pave a Path to Competitive Advantage

For credit unions, these partnerships are essential for remaining competitive and relevant in the digital age. By collaborating with FinTechs, credit unions can quickly adopt solutions that enable the services consumers expect, such as easier mobile and contactless payments.

While some obstacles like small budgets, slow implementation times and regulations persist, the overall trend showed an increase in FinTechs reporting no impediments when selling to credit unions, suggesting a more accessible pathway for collaboration.

Embracing a partnership-oriented mindset and actively seeking out FinTech solutions can enhance credit unions’ service delivery and member experience, strengthening their market position and member loyalty. Focusing on areas where FinTech solutions are already prevalent in partnerships, like mobile and contactless payments, could yield quicker results.

For FinTechs, credit unions represent a consistent and sizable customer base. More than half of all FinTechs serve the credit union sector, primarily through vendor-client relationships. The decline in FinTechs viewing credit unions as competitors — falling from 16% in November 2023 to 1.9% in November 2024 among those selling to credit unions — underscores this shift and highlights the growing value proposition credit unions represent for the FinTech market.

The perceived challenges associated with selling to credit unions are diminishing, suggesting a more efficient and accessible business pathway. While some FinTechs don’t sell to credit unions due to concerns like product misalignment or regulatory issues, 20% of “non-selling” FinTechs would reconsider if they could onboard multiple credit unions simultaneously. This indicates that streamlining processes, potentially through bundled onboarding solutions, could unlock an untapped opportunity.

The products and services offered through these collaborations are largely focused on enabling smoother payments and digital experiences for consumers. The most common offerings include mobile wallets (65%) and contactless payments (60%), along with buy now, pay later (BNPL) services (44%), mobile banking, peer-to-peer (P2P) payments, cryptocurrency transactions and digital onboarding. These are all areas where credit unions can benefit by aligning their innovation plans with available FinTech solutions.

Although FinTechs prioritize partnerships with software platforms (65%), merchants (62%) and digital-only banks (61%), partnerships with credit unions (40%) offer growth potential as collaboration becomes smoother.