If payments are to continue as its mobile activity hub, credit unions must challenge disruptors by providing its members and business community with products and services that earn relevance and revenue.
Credit unions’ role is critical to its local economy, especially when they create value that many financial technology startups just cannot, Jon Ungerland, cofounder of Aurora, Colo.-based mobile transaction platform provider DaLand Solutions, noted.
There is a connection between the idea of generating revenue and the terror of not remaining important to its members, Ungerland pointed out. That panic seems linked to the idea that technology companies could displace traditional financial institutions such as credit unions.
However, the answer is not just in providing multiple mobile products to compete with fintech disruptors.
“Mobile access to multiple functions creates the illusion of a unified payment system. However, in a recent report from Accenture, 67% of millennials said they feel the traditional and digital experience they receive from financial institutions or credit unions is somewhat or not at all seamless,” Lois Hansen, vice president, product development, for Rancho Cucamonga, Calif.-based CO-OP Financial Services, stated.
Providing multiple products does not guarantee revenue either. “We look at revenue generation as not an end to itself. Nobody has a product out there called revenue generation. Revenue generation is a side effect of relevance,” Ungerland said.
The DaLand co-founder said revenue generation features two kinds of products, direct and indirect. Indirect products, such as traditional payment channels, debit/credit interchange income, indirect lending programs, and indirect pipelines, tend to dominate the marketplace. As a result, the margins are much more difficult to control.
The ability to generate revenue directly relates to the ability to control those conduits in the community. “If you lean more to indirect products you are more susceptible to market dynamics,” Ungerland suggested.
That is where Secured Transaction Image comes into play. DaLand Solutions built STI, a centralized encrypted token-based, mobile transaction platform, which allows credit unions to offer multiple mobile solutions through a single system.
“When credit unions control the pipeline they control the flow to their community, rather than being a spoke, they become the hub in terms of exchanging and storing value, processing transactions, being a mediator in the financial transaction world in the community economy by providing direct services,” Ungerland said.
Read a full account of the connection between relevancy and revenue generation in the Aug. 31, 2016 print issue of Credit Union Times.
