3 Questions Every Credit Union Should Ask Before Signing a Fintech Partnership
By Barb Lowman, CUDE, President of CUNA Strategic Services
As a credit union leader, you are beyond busy – you’re wearing all the hats, juggling all the balls, spinning all the plates. I get it – sometimes it's absolutely crazy!
And when you need a technology solution, sometimes the first option that pops up is the one you choose. Maybe the sales rep is determined, or the demo is super slick, or you’re just too busy to spend more time on it.
The problem, of course, is that without thorough due diligence, you can end up throwing money away. Investing in the wrong solution for your needs or discovering implementation is impossible, or something else that means you’re stuck paying a vendor for a solution that doesn’t work.
I’ve seen it happen a million times, and I’m here to tell you that no matter how busy you are, you can improve your vetting process with just three questions. Three!
Here’s my take as someone who’s seen it all:
1. Are They the Right Fit – Both the Solution AND the People?
Make sure you get specific and ask the vendor exactly how they solve your problem. Don't let them talk in generalities about "efficiency" or "member experience" – make them show you how. (And make sure you’ve already clarified internally what your priorities and top issues are that you want to address through this potential relationship.)
Then, take it a step further. Make sure the company is a good fit for your culture. Ask those softer questions: What’s your mission? What are your values? Why credit unions? Company culture is a predictor of how the partnership will actually go, so be sure to pay attention to how they communicate, how they handle pushback, and how invested they are in people helping people.
2. What Are the Integration Requirements?
Don’t assume anything – make sure you know exactly what’s needed to make the new technology work seamlessly with your existing core provider. The unplanned costs associated with core integration can break the bank on your project budget if you don't fully understand the level of investment required to make it work effectively. Plus, if the integration is ineffective, the new solution could create cumbersome manual one-off work that will not streamline or improve processes or the member experience at all, and you might end up worse off than when you started.
If your team can't get a clear, detailed answer about integration requirements and core compatibility before signing, that's your answer.
3. Is the Vendor Financially and Operationally Sound?
There's nothing wrong with being an early adopter. Some of the most valuable partnerships I've seen came from credit unions willing to take a chance on a new and promising fintech. But being an early adopter means going in with your eyes open. You’ll need to be prepared to “fail fast” and move on if it doesn’t work out, and you’ll want to ensure your credit union is protected from the risk associated with their failure.
This means asking hard questions about funding runway, leadership stability, and operational maturity. Understand what happens to your data, your members, and your project if the fintech doesn't make it. You can be an advocate of innovation and new technology while also protecting your credit union and championing your members’ best interests.
My Final Two Cents
These questions aren’t meant to slow you down or make you more risk averse. I’m sharing with you to make sure that when you do say yes (and you should say yes to the right partnerships!), you're doing it with total clarity and you’re setting your organization up for success.
Need help with your credit union’s fintech adoption strategy and vetting process? Get in touch with our team.
