A new partnership between the Filene Research Institute and the University of California, Irvine, aims to investigate emerging technologies and best practices in the credit union space, including looking for lessons from outside the CU system.

“I’ve worked in the credit union industry for two decades. A lot of the time credit unions will look to see what other credit unions are doing, and while there is a lot of good going on with regard to credit unions and technology, there is a lot credit unions can be learning from fintech and Silicon Valley,” said Andrew Downin, managing director of research at Filene.

The first report to come out of the partnership will focus on consumer adoption of technologies, and Bill Maurer, director of the Institute for Money, Technology & Financial Inclusion at UCI, said that one of the partnership’s goals will be to examine “the landscape of fintech and how credit unions can make better decisions and investments in emerging technologies given all the unbelievable hype that is in the payment space right now.”

Along with Maurer, the partnership team includes Filene research fellow Richard Swart, co-author of “Crowdfunding: The Corporate Era,” and Chandra Middleton, a third-year Ph.D. student studying anthropology at UCI.

“We can also benefit from the existing infrastructure of the institute I direct, which has a couple other staff members and post-doc students who we can brainstorm with and bounce ideas off of,” said Maurer.

Bill Maurer, director of the Institute for Money, Technology & Financial Inclusion at UC Irvine
Bill Maurer, director of the Institute for Money, Technology & Financial Inclusion at UC Irvine

Credit union take
To provide a credit union perspective, the two parties tapped a few forward-looking CUs with a history of innovation, including the $14 billion Tukwila, Wash.-based BECU.

“Our role is one of support and to provide real world context where it is helpful,” explained Doug Marshall, BECU’s SVP of retail. “We also will hopefully give support from a financial and a thought leadership perspective. BECU has a long tradition of innovation, so part of what we are hoping for is breakthrough innovations that would be beneficial to our members.”

For 2017, Maurer said there are a few different projects the team will be working on, including investigating financial regulations and the resulting impact on credit unions. These findings will be presented in different mediums, including white papers and interactive online presentations.

“Initially we thought this would be identifying key areas of regulator activity that credit union might want to pay more attention to, but with the election and change of administration, I think this project will become utterly fascinating,” said Maurer.

Another project will focus on the risks and misuses of fintech. Maurer informally refers to this initiative as the “dark side” project. The goal is educate credit unions on best practices when vetting and adopting fintech.

“This will include what new risks they might be open to, security threats and what kinds of new attacks are out there,” said Maurer. “We want to develop basic training materials that will help credit unions get up-to-speed on new vulnerabilities.”

Seeing the light
In certain circles within the credit unions space, fintech is viewed as a “disrupter,” but Marshall said that over the last year, he and his team have engaged with more than 40 fintech organizations to better understand respective approaches.

“These organizations move at a different speed than credit unions, but they are very consumer focused and tend to be much more empathetic,” said Marshall, conceding that there are different “sublevels” to fintech. “From these conversations, we learned, in part, that we need more technology and need to use it more thoughtfully.”

On May 18, the two organizations will hold the partnership’s first colloquium: “Sorting the Hype Cycle.” The all-day event will cover industry trends, reasons for consumer adoption and what types of technology credit unions should consider partnering with, competing against or investing in, noted Maurer.

“There will be a lot of dialogue and discussions on emerging technologies in the credit union industry,” said Marshall who will be in attendance with BECU colleagues. “I see it as an important first step that will provoke good thinking.”