On Saturday 9th April 2019, I joined a panel at ABCUL's Annual AGM & Conference in Manchester. The plenary session, hosted by Liz Barclay, was all about fintech for credit unions.
Here are a few of my thoughts on the current fintech landscape in the UK:
To give you an overview of what’s happening in FinTech, I want to start by reminding you that the rate of change in our digital landscape is accelerating and moving at a pace at which credit unions need to open their eyes to.
Think about where the country was 15 years ago. In fact, I live in a rural area and broadband wasn’t widespread; fibre certainly didn’t exist. We were all getting excited about 512kbps broadband!
Just a few years on, the iPhone was invented and it revolutionised everything. This has led us to have an amazingly buoyant market with startups and fintechs appearing from what seems like nowhere in the last 5 to 10 years. Their entire business models are built around the smartphone revolution.
TechFins are the next thing to worry about too. These are tech giants that are moving into the financial services world. Players like Amazon,Google and Apple are a real threat.
I attended FinTech Scotland last year. Revolut was there and I learned that they onboard 8000 customers a day. They now have over 4 million customers. I joined Monzo in March 2017 (2 years ago exactly) as customer number #14550. Today, Monzo has over 1,500,000 customers and their growth is accelerating. Starling have around 500,000 customers at present and are probably right now signing up around 2000 a day. If things go to plan, they'll hit the 1 million customer mark at Christmas this year.
These financial services organisations are swallowing up consumers at an alarming rate. It’s as alarming for the big banks as it should be for the credit union sector.
As a sector, credit unions need to identify ways to stay relevant and instead of just standing still or growing at a slow rate think outside the box so we can leap ahead and be a viable solution provider for the consumers which credit unions serve.
For example, what are credit union's doing to attract millennials? They are the members of the future, they think about finances differently. Borrowing for today and not planning for tomorrow. They need the help. But when asked 71% of millennials would rather visit their dentist than speak to their FS providers. An alarming statistic.
Outside of credit union's, the UK fintech market is addressing this. Inventing frictionless ways to access finance and credit.
You all remember Wonga, right? An appalling business but one which knew how to engage with its customers.
You might be surprised but almost all fintechs actually talk and work with each other. It’s common place for us to have API’s which other developers can use to move data backwards and forwards to build solutions to suit the organisations we serve.
We also recognise that we don’t have to be best at everything.Rather than develop our own AML checks, we’ll integrate with services from suppliers like Onfido. Faster payments can be handled by Clear Bank or Modulr Finance. Debit card payment processing is done through simple API’s with companies like Stripe or Acquired.
When I talk to these fintechs, they speak my language. I can consume their services and they can consume mine.
For credit unions, it’s time to act on the new entrants in the market. CUEP is over now, but the opportunity to modernise and advance your credit union is very much viable and accessible to you today. Our partnership with Glasgow Credit Union and other small and midsize credit unions demonstrates just that.
ABCUL's Town Hall consultation is setting a vision for the movement to 2025. If you ask me, those with digital first at the top of their priorities and strategies are going to be the ones that stand out and lead this market into the future.
Soar is a fintech which does just that. We work with credit unions, like Glasgow Credit Union, to provide member apps, innovative internet banking and improve internal processes to reduce the pain points for members engaging with their credit union. By doing this, we also make it easier for the credit union to grow.