Financial technology start-ups are collaborating with credit unions to offer their clients new and improved consumer-focused products. This is a boon for fintechs as it gives them much-needed legitimacy, and it also helps to build consumer trust.
In Canada, consumers are still wary of online financial service providers, according to Grow Financial CEO and Co-Founder Kevin Sandhu.
Grow Financial offers personal loans to consumers. It has partnered with BC credit union First West and Saskatchewan’s biggest credit union, Conexus. Sandhu believes these partnerships will help his company gain access to consumers that Grow Financial would have been unable to reach on its own.
Sandhu reckons that consumers will be more open to accepting his firm’s products and services now that it has forged a partnership with reputable and trusted credit unions. This will give prospective customers assurance that the credit unions have done their due diligence and the online financial service provider is trustworthy.
Desjardins Group, which is the largest association of credit unions in Canada, has not only joined forces with fintech start-ups, but it is also providing them with funding via the association’s venture capital arm. The association is incubating these start-ups in its own innovation lab.
Desjardins Group CTO Chadi Habib said that the technology that fintech start-ups are bringing to credit unions and financial institutions is not the main draw. In fact, these organizations can hire the same talent as fintechs. However, the culture is not as easy to mimic. Financial institutions are used to working in a highly structured and regulated environment. On the other hand, fintechs are flexible and learn through mistakes and iterations. They also focus on areas that are less regulated.
Habib believes that financial technology start-ups have the ability to create seamless customer experiences and develop new risk and actuarial models. However, he does not think they will get involved in the mortgage market or take deposits from consumers.
Canada has been emphasising the importance of innovation, and this collaboration between fintechs and credit unions is a good example of this. Today, the country offers many opportunities for entrepreneurs. There are incubators and innovation labs in cities and incentives from provincial and federal governments that help entrepreneurs climb the ladder of success.
Entrepreneurs can benefit even further with a UCW MBA degree. The UCW MBA program teaches students to overcome business challenges using innovative solutions and also allows them to identify and seize opportunities to drive organizational success. This program turns graduates into successful and effective leaders.