Why have credit unions and community banks been so slow to adopt digital wealth management?
The explosion in the adoption of self directed investing in the last few years and the bundling of banking and investing from both Fintech and Big Brand Banks has left Community FI's in the dust, hurting their ability to acquire and retain younger more digitally engaged customers and their deposits. So why has this market been so slow to adapt?
Credit unions and community banks have been slow to adopt self-directed investing for several reasons:
- The crypto winter hurt all of the early adopters especially in the credit union space which led to a moratorium on any similar initiatives by both online banking providers for over 12 months - we are only now beginning to emerge from this older and wiser
- Banking crisis - the sudden implosion of SVB and other banks in early 2023 made innovation suddenly a very bad word for any FI to be associated leading to a shift in focus to core business and internal processes
- If FI's were hit hard in 2023 fintech hurt even more with funding drying up and many fintechs going to the wall further reducing confidence in the sector
- Few good choices in the market - FI's are naturally conservative and with only a handful of seed stage startups focusing on this market the risks for many FI's were just too high to make a commitment
- Whilst providers like Unifimoney solved for ease of deployment FI's are still required to commit marketing and other operational resources which are constrained
- Risk Aversion: famously slow to adopt new initiatives the naturally conservative Community FI market is always looking for proof points and peer adoption creating a chicken and egg standoff and making it very hard for a nascent market to emerge
Its undoubtedly been a tough few years for Community FI's and the small group of Fintechs that serve them and have survived. Market confidence is returning though and with a new sense of realism and awareness that was not always present in the "bitcoin for all" era - brief that it was.
Unifimoney is a turnkey digital wealth management solution enabling Community FI's to compete with Fintechs and Big Brand Banks at speed, with no technical integration and low cost. We are owned by a large family office backed investment firm Palm Ventures. If you would like to speak to us please reach out or visit our website.
